The Senate Finance Committee voted yesterday to maintain a permanent 16 cents-per-pack cigarette tax and to add new taxes for snuff and chewing tobacco, but in a bit of legislative sleight of hand, added a tobacco price-support bill sponsored by Sen. Jesse Helms (R-N.C.).
The price-support bill is not normally within Finance Committee jurisdiction, but it was added on a 10-to-4 show-of-hands vote, in a deal worked out by Helms and Senate Majority Leader Robert J. Dole (R-Kan.). The negative votes were Sens. John Chafee (R-R.I.), Daniel P. Moynihan (D-N.Y.), Max Baucus (D-Mont.) and Bill Bradley (D-N.J.).
The cigarette package was attached to a $38 billion, three-year deficit-reduction package that would make large cuts in Medicare and raise nearly $16 billion in new taxes. Those provisions were agreed on earlier, leaving the tobacco price-support question the final and most controversial provision.
The Helms bill, which opponents charge is a bailout to rid the tobacco growers and industry of the costs of a huge surplus piling up from past support programs, would face stiff going on the Senate floor if it came up by itself.
The Finance Committee's deficit-reduction measure cannot be filibustered under Senate rules, giving the tobacco provisions a far better chance of ultimate passage.
In return, Helms pledged in a letter to Finance Committee Chairman Bob Packwood (R-Ore.) that he and other tobacco-state senators would not oppose permanent extension of the 16-cent cigarette tax. Under existing law, the tax would revert to 8 cents a pack on Oct. 1.
The 10-to-4 vote followed separate voice votes approving the 16-cent cigarette tax and a Dole proposal to impose a new tax of 24 cents a pound on snuff and 8 cents a pound on chewing tobacco.
Helms said yesterday that he had warned Dole and other leaders that the cigarette-tax extension, which tobacco senators fear would cut sales, would have faced "the goldarndest filibuster you've ever seen" if it came up alone, and would have faced stalling moves by tobacco-state senators even as part of the deficit-reduction measure.
There was speculation that, as part of the deal with Helms, Dole won a promise that Helms would allow a final Senate Agriculture Committee vote on a high price-support extension bill for wheat, cotton, corn, rice, peanuts and sugar that he opposed. That bill was cleared Thursday night by the Agriculture Committee, where Helms is chairman.
But Helms denied that yesterday, saying he had never intended to block a vote on the farm bill. Dole also said getting the farm bill out was not part of the deal and scoffed at speculation by some senators that he was helping Helms in return for past support in the leadership race.
Helms said the major impetus for Dole, aside from Helms' promise not to oppose the cigarette tax, was that the tobacco bill is "the best proposition that could be achieved" to dispose of $4 billion in surplus tobacco, which "Uncle Sam will have to eat," unless the tobacco bill is passed.
In the House, prospects for the Helms tobacco bill are uncertain. Rep. Charlie Rose (D-N.C.), chairman of the Agriculture Committee's tobacco subcommittee, opposes the structural changes in the tobacco-support program favored by Helms.
Instead, he persuaded the House Ways and Means Committee in its version of the deficit-reduction bill, now awaiting floor action, to allocate 1 cent of the 16-cent cigarette tax to prop up the existing tobacco support program.
The $38 billion in deficit-reduction measures in the Finance bill consists of over $22 billion in program cuts in fiscal 1986- 88, and almost $16 billion in tax increases.
The program cuts include $11.8 billion from Medicare, primarily by holding payment rates to hospitals to a one-half of 1 percent increase, far less than the medical inflation rate that normally is allowed ($6.5 billion); cuts in payments to hospitals for training interns, residents and other health personnel ($3 billion); freezing Medicare payments to most doctors ($663 million), and making Medicare the secondary payer to private insurance for employed persons 69 and over at their option ($950 million).
Other program reductions would result from stepping up Medicaid collection of private-insurance benefits in cases where Medicaid patients have private coverage ($450 million); imposition of customs "user fees" of $5 on persons entering the United States by plane or boat except from contiguous countries and certain Caribbean islands ($995 million); increasing the government's insurance premium for guaranteeing private pensions from $2.60 a worker to $8.10 per year ($622 million), and terminating general revenue sharing ($8.4 billion).
The nearly $16 billion in revenue increases over 1986-88 includes: mandatory extension of the Medicare tax to all state and local government employes on Sept. 30, 1986 ($5.1 billion); the permanent 16-cent cigarette tax ($4.9 billion); the new taxes on smokeless tobacco ($100 million); increased tax collections through beefing up the collections practices of the Internal Revenue Service ($2 billion) and customs bureau ($1.2 billion); added Superfund taxes ($1.7 billion), and exclusion of persons just switching out of student status from the right to use federal income tax income-averaging if it includes years when they were students ($1.2 billion).