THE GOP AMENDMENT

WASHINGTON (AP) -- With the tacit approval of the White House, Republicans
muscled an election-year tax cut through the Senate on Wednesday night,
attaching a break for lower- and moderate-income couples to legislation
designed to reduce teen smoking.

The provision designed to lessen the impact of the so-called ``marriage
penalty'' was adopted by voice vote, but only after Democrats failed, 50-48,
in an effort to derail it.

The GOP amendment, crafted by Sen. Phil Gramm, R-Texas, would offer a tax
break for all couples earning less than $50,000 a year. In addition, it
would allow all self-employed individuals to deduct the full cost of their
health insurance from their income taxes, effective immediately.

Gramm cast his proposal as a "rebate'' for the low-income Americans who
would be hit hardest by the tobacco legislation, with its $1.10-a-pack
increase in the price of cigarettes.

``The point that we're making is if we're trying to raise the price of
cigarettes to discourage smoking cigarettes that's one thing, but if we're
raising taxes for tens of billions of dollars for spending, then why not
give part of it back?'' Gramm said.

But Democrats charged that the proposal would siphon off too much of the
money the bill is expected to raise for a variety of smoking-related programs.

Sen. Edward M. Kennedy, D-Mass., ticked off the programs to be financed by
the tobacco bill, including money for states to pay certain health care
costs. ``Which of these smoking-related initiatives would the senator from
Texas eliminate?'' Kennedy asked.

The Senate vote marked the second victory in as many days for Republicans
who are laboring to remake the politically popular tobacco bill into
something less objectionable to the GOP rank and file.

On Tuesday night, the Senate added an anti-drug provision to the measure,
including more money for drug interdiction, curbs on loans to students with
drug convictions and a ban on federal needle exchange programs.

The tax cut developments came at the end of a day of backstage bickering
over details. The roll call votes occurred hours after originally
anticipated, vindicating Senate Democratic Leader Tom Daschle's midmorning
forecast:

``Anybody that would declare victory today would be a fool. ... I anticipate
several more lows before we're done,'' Daschle said.

Throughout the day, there were repeated reminders of the perilous political
and legal crosscurrents at work:

- -- A jury in Jacksonville, Fla., found in favor of a family of a cigarette
smoker, ruling that Brown & Williamson Tobacco Corp. was negligent and must
pay relatives at least $500,000 for the man's death. It was a reminder of
the legal jeopardy that had forced Big Tobacco to the bargaining table with
state attorneys generals.

- -- While Republicans said a tax cut would ease the way for passage of the
tobacco bill, an anti-smoking coalition including the American Cancer
Society declared its opposition. The group said Gramm's proposal ``could
wipe out funding'' for the public health programs in the legislation.

- -- Gramm, one of the most conservative senators, came under pressure from
fellow conservatives who feared his tax cuts, once passed, would make it
easier to pass a bill they oppose.

Sen. Kay Bailey Hutchison, R-Texas, she would vote for her fellow Texan's
proposal, but added: ``I urge my colleagues to quit trying to put this bill
in shape but instead to go back and start all over again.''

At the White House, where President Clinton spoke Tuesday of a ``principled
compromise'' on tobacco legislation, spokesman Mike McCurry, said of the
Republicans, ``They have gone from an appetite for a much more expansive
approach on tax cuts now to what is, in effect, a fairly targeted approach
to middle income tax relief.''

Gramm's proposal would grant a $3,300 tax deduction, phased in over several
years, for married couples with incomes of under $50,000. Only 25 percent of
the value of the deduction would be given for 1999, and the break would rise
slowly, reaching 50 percent in 2006 and 100 percent in 2008.

Gramm pegged the cost of his measure at $16 billion over the next four years
and $30 billion over the following five years. In all, he said, it would
send one-third of the money raised in the tobacco bill back to taxpayers.

But Democrats said the increased benefits beginning in 2008 would cause the
cost of the tax break to balloon beyond the ability of the tobacco bill to
pay for it. The result, they said would be to require the use of projected
budget surpluses.

Other issues remain to be dealt with, including Republican proposals to cap
fees for lawyers who worked on the huge lawsuits against Big Tobacco, and
proposals to assist tobacco farmers.

As drafted, the bill would raise the price of cigarettes and require tobacco
companies to pay penalties if they fail to meet targets for reductions in
teen smoking.

Aside from the states, money raised would go for research on smoking-related
disease, to help farmers and to finance a campaign to discourage teen smoking.

Checked-by: Melodi Cornett