[Congressional Record Volume 145, Number 43 (Thursday, March 18, 1999)]
[Senate]
[Pages S2881-S2897]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR FISCAL YEAR 1999

  The PRESIDENT pro tempore. Under the previous order, the Senate will 
now resume consideration of S. 544, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 544) making emergency supplemental 
     appropriations and rescissions for recovery from natural 
     disasters, and foreign assistance, for the fiscal year ending 
     September 30, 1999, and for other purposes.

  The Senate resumed consideration of the bill.
  Pending:

       Specter amendment No. 77, to permit the Secretary of Health 
     and Human Services to waive recoupment of Federal government 
     medicaid claims to tobacco-related State settlements if a 
     State uses a portion of those funds for programs to reduce 
     the use of tobacco products, to improve the public health, 
     and to assist in the economic diversification of tobacco 
     farming communities.

  The PRESIDING OFFICER (Mr. Sessions). Under the previous order, there 
will now be 90 minutes remaining on the Specter amendment, No. 77, to 
be equally divided.
  The Senator from Pennsylvania is recognized.
  Mr. SPECTER. Mr. President, before proceeding with this amendment, I 
have been asked to make this statement on behalf of the majority 
leader.
  This morning, the Senate will immediately resume consideration of the 
supplemental appropriations bill. Under the order, there will be 90 
additional minutes for debate on the pending Specter amendment, No. 77.
  All Senators are, therefore, notified that the first vote this 
morning will be at approximately 11 a.m., if all debate is used. 
Following that vote, additional amendments are expected, and Senators 
should anticipate rollcall votes throughout today's session. Any 
Senators intending to offer amendments to this legislation are 
encouraged to notify the managers so that they can be scheduled for 
consideration.
  I thank my colleagues for their attention.


                            Amendment No. 77

  Mr. SPECTER. Mr. President, I found on my desk this morning a ``Dear 
Colleague'' letter entitled, ``Oppose the Specter-Harkin Amendment That 
Seizes $123 Billion in State Funds.''
  Instead of outlining the provisions of the Specter-Harkin amendment, 
I would just refer my colleagues to this ``Dear Colleague'' letter 
signed by the opponents, and tell them that the amendment is exactly 
contrary to what is in this ``Dear Colleague'' letter, so that by 
reading the letter, they can just conclude the opposite, and they will 
have a statement of what the pending amendment is.
  Before dealing in detail with the ``Dear Colleague'' letter, or this 
misstatement, permit me to outline in very general terms that the 
pending amendment has been offered by the chairmen and ranking members 
of the two Senate committees which are charged with authorization of 
appropriations for the Department of Health and Human Services. Senator 
Jeffords, the chairman of the authorizing committee, and Senator 
Kennedy, the ranking member, are cosponsors of the amendment which has 
been offered by Senator Harkin, the ranking member on the 
appropriations subcommittee which has the responsibility for 
appropriations for the Department of Health and Human Services, and the 
subcommittee which I have the honor to Chair.
  We must survey--the four of us in our positions as chairmen and 
ranking members--the health needs of America in a very, very 
constrained budget. We have seen the budget resolution, which

[[Page S2882]]

has come out of Budget Committee, and the limitations on discretionary 
funding. Our subcommittee has the responsibility for funding not only 
the Department of Health and Human Services, but also the Department of 
Education and the Department of Labor, where so many vital programs for 
worker safety are involved.
  So our responsibility is a very heavy one. As we have observed, the 
settlement with the States is in excess of some $200 billion over a 25-
year period. The thought immediately came to mind that these funds, 
which have been obtained from settlements on tobacco issues, could be 
used and should be used in very large part, frankly, if not entirely, 
for health purposes.
  In the Appropriations Committee meeting, an amendment was offered by 
the distinguished Senator from Texas, Senator Hutchison, to have the 
Federal Government relinquish all claims to these funds, and have these 
funds paid entirely to the State governments.
  I can understand the popularity of this kind of an amendment.
  It is backed by all 50 Governors; it would be shocking if it weren't. 
It is backed by all 50 State legislatures; it would be shocking if it 
weren't. It is backed by all State attorneys general; again, it would 
be shocking if it were not.
  I support the proposition that there ought to be minimal strings, 
minimal requirements mandated by the Federal Government, especially in 
the context where we mandate requirements and do not fund them.
  Last week, we passed the Ed-Flex bill to give flexibility to the 
States. But I submit to you that it is fundamentally different to say 
that where there are Federal appropriations for a specific purpose, 
there ought to be latitude for State governments and local governments 
to figure out how to spend those funds, contrasted with saying that all 
of $200 billion-plus ought to go to the States to spend as they choose, 
when some States have already made an announcement that they intend to 
use these funds, at least in part, for highway construction or for debt 
retirement.
  When a settlement is reached on matters of this sort by State 
governments and officials representing the States, those funds 
realistically are impressed with the trust, where the claims are 
brought because of damages due to public health, due to tobacco. There 
is a specific purpose that the lawsuits were started, and that was to 
redress public claims on these important areas. Even without a Federal 
direction limiting, in some way, or articulating a portion of these 
funds to go for medical purposes, it is my legal judgment that those 
funds are impressed with the trust. I would not be surprised to see 
that, if the State governments undertake spending on items far afield, 
they may face a class action or taxpayer suits or people who have been 
injured by tobacco seeking to impress that trust.
  We had a hearing in the appropriations subcommittee this Monday. Our 
subcommittee took up the issue on an emergency basis to try to see if 
we could find some area for resolution. We heard testimony from the 
Governor of Kentucky and the attorneys general of Pennsylvania, Texas, 
and Iowa. Those four witnesses all emphasized the desirability of 
having some resolution of this issue so that they could make plans for 
their budgets.
  I agree with that proposition. A very forceful letter was filed by 
the Secretary of Health and Human Services, Donna Shalala, strenuously 
objecting to having the money paid over to the States, because the 
Federal law gives her the authority to make an allocation as to how 
much of those funds should be deducted from the Federal obligation to 
the States on Medicaid.
  The States have the obligation under Federal law to sue to collect on 
claims that Medicaid has. And the States have the authority--and 
exercise the authority--to release the tobacco companies from liability 
to the Federal Government. That is provided for under existing Federal 
law. So for those who say that the Federal Government can bring 
lawsuits, it simply is not so, because those claims have all been 
released.
  It may be, Mr. President, that we are in an area where largely, if 
not entirely, the States will recognize the duty to use these 
settlement proceeds for tobacco-related purposes. The distinguished 
attorney general of Pennsylvania, Mike Fisher, who testified on Monday, 
outlined a program for the use by Pennsylvania of $11.3 billion. I 
believe that, in conjunction with our distinguished Governor Tom Ridge, 
there will be a program to use these funds for tobacco-related 
purposes. But it is not sufficient to say that States may recognize 
this obligation, because States may not recognize the obligation, as we 
have already seen from preliminary indications of spending these funds 
on unrelated purposes--debt reduction and highway construction.
  In a ``Dear Colleague'' letter that has been circulated today, which 
I referred to earlier, the statement is made:

       The Specter-Harkin amendment will require every Governor--
     each year--for the next 25 years to submit a plan to 
     Washington asking for permission on how to spend fifty 
     percent of the State's own money.

  That is flatly wrong.
  It is true that there is a 20-percent requirement for smoking 
cessation education to try to dissuade youngsters from smoking and a 
30-percent requirement on medical plans. But there is no need for 
Governors to submit a plan to Washington asking for permission on how 
to spend that money, that 50 percent. That is a matter where the 
Governors only have to tell the Department of Health and Human Services 
how the money was spent after in fact it is spent. They don't have to 
submit a plan, and they don't have to ask for prior authorization.
  The ``Dear Colleague'' letter further says:

       This is a classic ``Washington Knows Best'' policy, an 
     unprecedented Federal power grab.

  In a sense, it is complimentary to call it an ``unprecedented Federal 
power grab.'' Considering all the Federal power grabs that have been 
recorded historically, this is really a gentle nudge to the States, 
saying that here we have funds realized from a tobacco settlement with 
a statement of policy that 50 percent ought to be used for a specific 
purpose.
  On the 50 percent, it is actually on the low side. The facts show 
that some 50 percent of the funds involved here come from Medicaid, so 
that the percentage could have been substantially higher.
  So, Mr. President, it is my hope that we will have a statement of 
congressional policy on this vote today which will, in a very gentle 
way, without regulations, without the requirement of submitting the 
plan to Washington, simply say to the Governors that at least 50 
percent ought to be used for tobacco-related purposes, such as 
education to discourage children from smoking, where we see a very high 
rate of juvenile smoking and overwhelming statistics of deaths 
resulting from juvenile smoking--where we have a reasonable amount 
allocated for that educational purpose, and a reasonable amount--some 
30 percent--allocated not only for public health measures but also for 
aiding smoking cessation.
  Mr. President, I ask unanimous consent that a letter supporting my 
amendment from the American Lung Association dated March 17, 1999, and 
a letter of support from the Campaign for Tobacco-Free Kids dated March 
18, 1999, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                    American Lung Association,

                                                   March 17, 1999.
     Hon. Arlen Specter,
     U.S. Senate, Washington, DC.
       Dear Senator Specter: The American Lung Association is 
     pleased to support the legislation you are introducing with 
     Senator Harkin that requires states spend the federal share 
     of tobacco settlement funds on tobacco and health purposes. 
     The American Lung Association is a strong supporter of the 
     Medicaid program. However, if the decision is made to forego 
     the federal share of the Medicaid recovery, legislation like 
     your proposal must be enacted to ensure that the funds are 
     spent on tobacco control, prevention and cessation activities 
     and health programs. It would be extremely shortsighted not 
     to use these resources to reduce the cause of the disease 
     that led to the need for the recovery in the first place.
       We favor your approach and the similar proposal by Senators 
     Kennedy and Lautenberg (S. 584) because they require tobacco 
     settlement dollars to be invested in tobacco control and 
     improving the public health.
       Effective tobacco education, prevention and cessation 
     programs will help reduce the horrible toll tobacco takes on 
     American families. Reducing tobacco use also will help reduce 
     the enormous cost to taxpayers that tobacco-related disease 
     imposes. Investing

[[Page S2883]]

     funds in the public health programs will improve the health 
     of millions of Americans. We also support efforts to help 
     tobacco growing communities diversify their economies.
       To ensure their efficacy, the American Lung Association 
     supports rigorous federal review, evaluation and oversight of 
     tobacco control programs. Congress should contain Medicaid 
     costs and promote public health by affirming the authority of 
     the Food and Drug Administration to regulate tobacco 
     products, implementing a vigorous national advertising and 
     education program to counter the tobacco industry's marketing 
     efforts and by enacting other policies and programs to reduce 
     tobacco use.
       The American Lung Association looks forward to working with 
     you to enact strong legislation to combat the addiction, 
     disease and death caused by tobacco.
           Sincerely,
                                                    Fran Du Melle,
     Deputy Managing Director.
                                  ____

         Campaign for Tobacco-Free Kids--National Center for 
           Tobacco-Free Kids,
                                   Washington, DC, March 18, 1999.
     Hon. Arlen Specter,
     U.S. Senate, Washington, DC.
       Dear Senator Specter: The Campaign for Tobacco-Free Kids 
     fully supports your amendment to the supplemental 
     appropriations bill to require states to spend 20 percent of 
     the money they receive from their settlements with the 
     tobacco companies on comprehensive programs to prevent 
     tobacco use. The Federal government has a legitimate claim to 
     a share of the settlement money and should condition its 
     waiver of the federal share on states funding effective 
     tobacco prevention programs.
       Investing in tobacco prevention will save lives and money. 
     the evidence continues to build that statewide tobacco 
     prevention strategies are effective in reducing tobacco use. 
     Several states already have tobacco prevention campaigns and 
     have reduced overall smoking levels within their borders at a 
     faster rate than elsewhere in the country. And while youth 
     smoking rates have risen dramatically nationwide, they have 
     decreased or increased much more slowly in these states. Just 
     this week, results were released showing decreases in teen 
     smoking in Florida less than a year after that state's 
     comprehensive tobacco program was launched.
       In addition to saving lives, decreasing tobacco use will 
     save money. Public and private direct expenditures to treat 
     health problems caused by smoking annually total more than 
     $70 billion. Aggressive tobacco prevention initiatives in 
     every state would reduce these costs for federal and state 
     governments as well as for businesses and individuals. 
     Requiring the states to devote resources to solving the 
     tobacco problem will save federal dollars in the future.
       We heartily endorse your efforts to ensure that funds from 
     the tobacco settlement are used to address the reason for the 
     lawsuits in the first place--reducing the number one 
     preventable cause of death in this country. Thank you for 
     standing up for America's kids.
           Sincerely,

                                             Matthew L. Myers,

                                      Executive Vice President and
                                                  General Counsel.

  Mr. SPECTER. Mr. President, how much time has been consumed?
  The PRESIDING OFFICER. The Senator has spoken for 12 minutes.
  Mr. SPECTER. I thank the Senator.
  Does the Senator from Hawaii, who was on the floor first, seek 
recognition on this issue?
  Mr. AKAKA. Mr. President, I would like to speak on the emergency 
supplemental and rescissions bill.
  Mr. SPECTER. Mr. President, in that case, I yield 5 minutes to the 
Senator from Rhode Island on this amendment.
  The PRESIDING OFFICER. The Senator from Rhode Island is recognized.
  Mr. REED. Mr. President, I thank the Senator from Pennsylvania for 
yielding the time, and I also commend him and Senator Harkin for their 
amendment to this supplemental bill. They have done something that I 
think is incredibly important, and that is to provide some emphasis on 
smoking cessation and also public health in the use of the funds from 
the tobacco settlements that the States are beginning to receive.
  The amendment by Senator Specter and Senator Harkin strikes a very 
reasonable balance between the desires of the Governors to use these 
funds and also the willingness of the Federal Government to forgo its 
share of the tobacco settlement, and also the need to ensure that we do 
have in place significant tobacco prevention activities, as well as 
being able to meet other public health priorities. This amendment 
reserves 25 percent of the overall settlement to these priorities--
smoking cessation and public health--and allows 75 percent of the funds 
to be spent at the discretion of the States. I think this is an 
appropriate way to deal with the proceeds of the tobacco settlement.
  When we consider the fact that the basis of these claims rested upon 
Medicaid spending by the States, and we also consider the significant 
contribution the Federal Government makes to the Medicaid Program, it 
is not unrealistic--in fact, it is entirely appropriate--that we would 
be able to, and should be able to, lay out some broad guidelines as to 
the use of a small portion of the settlement funds. I can't think of 
any more appropriate topic of concern at every level of government than 
the reduction of smoking in this society.
  Let's step back a minute. This process of suing the tobacco 
companies, this process that led to the settlements, is not about 
getting some money for new highways or new types of programs at the 
State level. It started with the realization that smoking is the most 
dangerous public health problem in this country and we have to take 
concerted steps to do that. The suits resulted in a settlement, 
financially, but it won't result in the effective eradication, 
elimination, or reduction of smoking unless we apply those proceeds to 
smoking cessation programs and other public health initiatives that are 
critical to the health and welfare of this country.

  We know that each day more than 3,000 young people become regular 
smokers. We also know that 90 percent of those who are long-term 
smokers began before they were 18 years old. So there is a critical 
need for more and more efforts particularly targeted at youngsters to 
ensure that they do not start the habit of smoking, and by requiring a 
certain portion, a rather small portion, of the proceeds of these 
settlements to that end is, again, not only sensible but it is 
compelled by the crisis we face in the public health area of smoking in 
the United States.
  One of the other things that we must also recognize is that this 
settlement represents a concession, an acknowledgement by the tobacco 
industry that their marketing practices were sinister, that they 
targeted young people, and that, in fact, their product causes disease 
and death. And in that context we have to respond with some of these 
funds to recognize the public health impact of smoking overall. On both 
the law and the logic, it seems to me entirely appropriate that this 
amendment should not only be debated but passed.
  I think we have to recognize, too, that what the amendment proposes 
is not some type of grandiose Federal program. It simply directs the 
Governors and the legislatures in their own way, form, and fashion to 
use these funds for very broad programmatic initiatives in public 
health which encompass such things as smoking cessation.
  So this is not an overwhelming usurpation of State and local 
prerogatives by the Federal Government; it is a common way to deal with 
problems that got us here in the first place, the fact that smoking, 
particularly youthful smoking, is one of the major public health crises 
in this country.
  I believe Senator Specter and Senator Harkin have balanced and 
complemented the way in which States are using these funds.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. REED. Their efforts are complementing what States are doing. Our 
Lieutenant Governor, Bernard Jackvony, is proposing this initiative.
  I hope we can all stand behind this amendment, and I thank the 
Senator for yielding me time.
  Mrs. HUTCHISON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I have two speakers on the amendment, 
but I know Senator Akaka wants to speak on the bill. I would like to 
ask him if he could take 5 minutes--and then let us get back to the 
amendment--equally divided from Senator Specter's side and my side.
  Mr. AKAKA. Mr. President, I thank my friend from Texas for yielding 
me this time. I want her to know that I will be speaking on the 
emergency supplemental and rescissions bill.
  Mrs. HUTCHISON. I understand that the Senator was not aware we had 
set aside this time by unanimous consent for the amendment. So I am 
happy to give him 5 minutes equally divided between Senator Specter's 
side and my side, if he will do that, and then allow us to go back to 
the amendment under

[[Page S2884]]

the current unanimous consent agreement. Is that acceptable?
  Mr. AKAKA. I certainly would accept that, and I thank my friend from 
Texas.
  The PRESIDING OFFICER. The Senator from Hawaii.
  Mr. AKAKA. Mr. President, I rise to express my concern on the FY 1999 
emergency supplemental and rescissions bill. I support disaster relief 
for Central America and the Caribbean, emergency relief for America's 
farmers in crisis, and aid to Jordan to implement the Wye River 
agreement. It is important that these priorities be funded.
  My concern is that one of the budget offsets to pay for this bill 
pits these important foreign and domestic needs against the needs of 
the country's poorest families--something that Hawaii's poorest 
families can ill afford. This supplemental bill seeks to defer $350 
million in funding from ``unobligated balances'' under the Temporary 
Assistance for Needy Families (TANF) Program until fiscal year 2001. 
The language in the bill requires deferral of portions of states' 
unobligated TANF funds.
  The deferral is based on the states' share of total unobligated 
funds. Preliminary estimates show this means Hawaii would not be able 
to spend about $800,000 of its TANF funds until fiscal year 2001.
  It is my understanding that my friend from Alaska, chairman of the 
Appropriations Committee, Senator Stevens, is working to find a 
different offset so that the $350 million in TANF funds will not have 
to be deferred. I strongly encourage him in these efforts and urge that 
this be done.
  In the meantime, we all know that TANF replaced the Aid to Families 
with Dependent Children welfare program in 1996. I am a critic of the 
TANF Program for failing to provide an adequate safety net for low-
income families. However, I am adamant that full funding must continue 
to go to the states to assist welfare families and their children. No 
part of it should be deferred to offset supplemental spending.
  The term ``unobligated,'' may seem self-explanatory. Anyone may think 
that a $350 million deferral of unobligated funds under the bill would 
apply to funds that have simply not been spent under this program. 
Proponents would argue that welfare rolls have fallen so far that this 
money is not needed by states, which is why it remains unobligated. 
However, Mr. President, we know that funding decisions by state and 
local governments take time. Transfers of expenditures must go through 
a process. States often commit funding to counties and local 
governments that is not transferred immediately, so the amount is not 
taken off the states' books.
  The fact is many states rely heavily on these unobligated funds and 
have already committed them for a wide variety of uses, such as 
distribution to counties and local agencies, ``rainy day'' funds for 
contingencies such as economic downturns that swell the rolls and leave 
states without enough money until the next federal payment, transfers 
into child care and social services activities, or other basic expenses 
to help low-income families become self-sufficient.
  My state of Hawaii continues to plan uses for all available funds to 
provide child care services to our TANF families so that they can be 
given a chance to continue at their jobs and make it work. Hawaii is 
doing this the right way, instead of simply looking at the numbers and 
acting to drop welfare recipients off their rolls. Hawaii is truly 
``teaching them to fish,'' so that they truly achieve self sufficiency.
  Deferring release of TANF funds for a number of years and using the 
$350 million for emergency spending violates the agreement made when 
TANF was passed. I have a letter here from Governor of Hawaii, Benjamin 
Cayetano, dated March 12th, that describes the agreement between 
Governors, Congress, and the administration that the entitlement nature 
of the old AFDC Program would be replaced with a set amount of funding 
to states under TANF. I ask unanimous consent that the letter be 
printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                   March 12, 1999.
     Hon. Daniel Akaka,
     U.S. Senate, Hart Office Building,
     Washington, DC.
       Dear Senator Akaka: I am writing you today to express 
     concern about information I have received which predicts 
     Congress will attempt to cut the funding for the Temporary 
     Assistance for Needy Families (TANF) Program this year. My 
     concern is that there was an agreement between the Governors, 
     Congress, and the Administration that the entitlement nature 
     of the Aid to Families with Dependent Children (AFDC) Program 
     would disappear in favor of a set amount of funding in block 
     grant form under TANF.
       The funding under TANF is not overly generous. If fact, in 
     Hawaii, we have not experienced a decrease in the welfare 
     population and every dollar is needed.
       I have been told that Congress may be viewing unspent TANF 
     allocations as a surplus that could be used to fund other 
     initiatives. This is being discussed even though child 
     poverty has increased since the passage of Welfare Reform.
       While I cannot speak for other States, I can assure you we 
     are trying very hard to assist welfare recipients to become 
     employed and self-sufficient. It appears many States may have 
     tightened their eligibility criteria, but have not been 
     successful in getting welfare recipients employed. If this is 
     the case, the States will be needing their TANF allocation to 
     address the continuing hardships of these families.
       I hope you will agree that the TANF funding needs to be 
     safeguarded to provide States with the necessary resources to 
     assist welfare families. Thank you for your attention to this 
     matter. Your strong support is greatly appreciated.
       With warmest personal regards,
           Aloha,
                                             Benjamin J. Cayetano.

  Mr. AKAKA. To use TANF funding as an offset abrogates this agreement. 
I hope my colleagues, the appropriators, are working to keep this 
agreement intact. Hawaii and other states need this money to assist 
poor families.
  And of all states, Hawaii needs assistance the most.
  Mr. President, our Nation is enjoying the longest peacetime expansion 
in American history--yet Hawaii is not benefiting from this expansion. 
While the country is enjoying the lowest unemployment in nearly 30 
years and tremendous job creation, Hawaii is losing jobs and its people 
are having a difficult time finding work at a living wage. Our 
unemployment rate is at 5.7 percent as of November 1998--well above the 
country's average of 4.3 percent. Bankruptcy filings increased more 
than 30 percent form 1997 to 1998. Retail sales fell 7 percent from 
$16.3 billion in 1997 to $15.2 billion in 1998. These are some recent 
economic indicators. Hawaii has been suffering from an economic 
downturn for most of this decade. As if this were not enough, my state 
has had to endure the worst of all states from the economic crisis in 
Asia. The Aloha State welcomed 11 percent fewer tourists from Japan and 
other parts of Asia in 1998. If anything should be slated for emergency 
funding, Hawaii should.
  With all of this need, you can see why $800,000 in TANF funding means 
a lot to my state. The number of families in Hawaii receiving 
assistance under this program has increased since the new law was 
passed. According to the Hawaii Department of Human Services, as of 
January, 1999, 16,575 single-parent families and 7,119 two-parent 
families were on the rolls, for a total of 23,694 families receiving 
assistance. This represents an increase of more than 2,000 families 
since 1995 when the number of families receiving assistance was 21,480. 
Hawaii's numbers have increased because of the tough economic 
conditions we are now enduring.
  Hawaii needs every bit of our TANF funding to make sure that our poor 
families continue to be self-sufficient. This is stated in the letter I 
submitted earlier from Governor Cayetano. We have not put our 
unobligated balances aside for a rainy day fund because we do not have 
enough of it--we need to use every dollar we have for caseloads now.
  Once again, I urge my colleagues on the Appropriations Committee and 
the gentleman from Alaska, Chairman Stevens, to continue working to 
find another $350 million offset for this emergency supplemental bill, 
rather than defer much-needed TANF funds.
  The PRESIDING OFFICER. The Senator's 5 minutes have expired.
  Mr. AKAKA. I thank the Chair. I thank the Senator from Texas for 
yielding me time.
  Mr. GORTON addressed the Chair.

[[Page S2885]]

  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, will the Senator from Texas yield me 5 
minutes at this point?
  Mrs. HUTCHISON. Mr. President, I yield 5 minutes to the Senator from 
Washington.
  The PRESIDING OFFICER. The Senator from Washington is recognized for 
5 minutes.
  Mr. GORTON. Mr. President, one of the ways in which the Congress of 
the United States has been the bane of every Governor and State 
legislator in the United States of America is its constant willingness 
to impose unfunded mandates on States and on local communities. We 
constantly pass laws that tell States and local communities what they 
are to do, but we rarely pass appropriations sufficient to cover the 
costs of carrying out those duties.
  Just last week we debated the overwhelming unfunded mandate that is 
included in our rules relating to the education of special needs 
students, and, in fact, we moved, at least slightly, in the direction 
of funding some portion of those unfunded mandates. Here, on the other 
hand, we have the exact mirror image of an unfunded mandate originally 
imposed by the Congress of the United States. Here we are asked, in 
this amendment, to decide that billions of dollars recovered by almost 
every State in the Union in tobacco litigation against tobacco 
companies will be appropriated, effectively, by the Federal Government, 
unless the States agree on the way in which we think that money ought 
to be spent.
  Mr. President, 50 percent of all recoveries that the States have 
made, pursuant to this amendment, must be spent in accordance with this 
amendment, and detailed regulations are promulgated by the Federal 
Government for every State in the country. Every Governor will have to 
make a new application every year for 25 years and meet these 
requirements or will, in effect, lose an amount of money equal to 50 
percent to 100 percent of the money that State has already recovered in 
an action in which the United States of America was not a party at all.
  That is fundamentally unfair. It makes an assumption, an unwarranted 
assumption, that these were Medicaid claims that were presented by the 
States of the United States. My attorney general, the attorney general 
of the State of Washington, Christine Gregoire, one of the three or 
four leaders of this effort, brought and prosecuted a case through much 
of the trial period, before it was ultimately settled, without the 
slightest mention of Medicaid. There were all kinds of fraud and 
contract and tort claims connected with this litigation, quite 
independent of Medicaid claims on the part of the various States of the 
United States of America. Last year, this body spent weeks debating 
whether or not we should control the settlements that the States were 
making. We ultimately abandoned that effort and left it entirely to the 
States.
  As a consequence, we have absolutely no right, at this point, to tell 
the States how they are to spend their money. Many are already engaged 
in extensive and sometimes successful antismoking efforts. Many have 
priorities that are different than the priorities here in the U.S. 
Senate. But if Members of the U.S. Senate want to control the spending 
in their own States, money that their own States have recovered, they 
should run for the State legislature, not for the Senate of the United 
States.

  The position taken by the Senator from Texas and her companion, the 
Senator from Florida, a position that was accepted by the Senate 
Appropriations Committee, is the right and just position. This money 
was recovered by the States, this money belongs to the States, and the 
spending of this money should be determined by each of the 50 States of 
the United States of America.
  It is no more difficult than that. It is as simple as that. We have 
already imposed too many unfunded mandates on the States by our 
substantive legislation here. Let's not do essentially the same thing 
by telling States that money they have already recovered has to be 
spent on our priorities, rather than their own. Support the position of 
the Senator from Texas and Florida. Reject this amendment.
  The PRESIDING OFFICER (Mr. Bennett). The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I yield 10 minutes to my distinguished 
colleague from Iowa, Senator Harkin.
  Mr. HARKIN. Mr. President, again I thank my friend and my colleague 
and my leader, Senator Specter, for bringing forth this amendment, 
which is common sense and which goes to the heart of what the smoking 
problem in America is all about. It is about health.
  I might just say, at the outset, really the provision in the 
supplemental bill we are talking about should not even be on the 
supplemental. It is not an appropriations measure. It more 
appropriately ought to be in the Finance Committee, but it was slipped 
in as a rider on the appropriations bill, the amendment offered by the 
Senator from Texas, Senator Hutchison.
  What Senator Hutchison's amendment says is all the money already 
recouped by the States in their settlement with the tobacco companies 
should be kept by the States and they can do with it whatever they want 
to do with it. That is all right as far at the State's money goes.
  I have no problem with that. But that also includes the Federal share 
of Medicaid. As I have continually pointed out, under the Social 
Security Act the States are required to go after recoupments in 
Medicaid from third parties. In fact, they are the only ones who can 
sue for third party recoupment. The Federal Government is preempted 
from doing that. Only the States can do that. So they act as an agent 
for the Federal Government and recoup them. Keep in mind, the law 
states, regarding any money recouped by the States for Medicaid, the 
Federal portion has to be returned to the Federal Government.
  We have to keep in mind what we are talking about here. Are we 
talking about the fact that the tobacco companies didn't build a number 
of highways in Texas? Or that they did not build prisons in Alabama? Or 
they did not build a sports arena in Michigan--or on and on and on? No. 
That is not why these lawsuits were brought. They were brought because 
tobacco is the biggest killer we have in America today. You add up 
alcohol, accident, suicide, homicide, AIDS, illegal drugs, fires--add 
them all up and tobacco kills more a year than all of these combined.

  What has this tobacco debate been about, that we have been here for 
years and years on end debating? That is what it is about. Tobacco is 
hooking young people, getting them addicted. And the tobacco companies 
have lied and lied and lied, year after year, and covered up, and 
fought with powerful money and powerful interests here in Washington to 
keep us from doing what we need to do to protect the public health. 
That is what it is all about.
  Now, the CDC estimates that smoking among high school students has 
risen 32 percent since 1991--32 percent. The tobacco companies say they 
are going to cut down on their advertising to kids and stuff. If they 
really want to do that, get rid of the Marlboro Man. You don't see the 
Marlboro Man disappearing, do you? No, he is still out there. And the 
Virginia Slims and all that kind of stuff is still out there; the 
Marlboro gear--that is all out there. They are still hooking kids.
  Tobacco, an estimated $50 billion a year in health care costs alone, 
and a big portion of that is borne by the Federal taxpayers who finance 
over half the costs of Medicaid.
  Again, to repeat for emphasis' sake, what does the Specter amendment 
do? It only would require the States to use 20 percent of the total 
settlement to reduce tobacco use and 30 percent for public health 
programs or tobacco farmer assistance, helping some of our tobacco 
farmers, and we would then waive the Federal claim to the tobacco 
settlement funds. We do not dictate what the States spend their money 
on. If the States want to take their portion and build a sports arena, 
that is up to the voters of that State. I can tell you if it happened 
in my State, I would be on the side of any other taxpayers in my State, 
suing the Governor or anybody else who was spending the money that way, 
because I think that money is held in trust for the very purposes which 
I just enumerated, and that is to cut down on smoking and to help the 
public health.
  CBO estimates the Federal share would be about $14 billion over 5 
years.

[[Page S2886]]

Others are saying that the Federal Government had no role in these 
lawsuits. I just covered that.
  Under the Social Security Act, it is the responsibility of the States 
to recover any costs and, in fact, the law states that only the States 
can file such suits.
  I want to correct something that was said last night by my colleague 
from Alabama, Senator Sessions. He claimed that only one State had 
filed suit to recover tobacco-related Medicaid costs. Sorry. That is 
wrong. In fact, the following States had Medicaid claims in their 
lawsuits: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, 
Florida, Hawaii, Iowa, Illinois, Indiana, Kansas, Maryland, 
Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, New 
Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, 
Rhode Island, South Dakota, Texas, Utah, Washington and Wisconsin--all 
had Medicaid claims in their lawsuits.
  I think this is really the crux of it--whether or not a State 
included a Medicaid claim isn't the issue. The fact is every State that 
settled in November of 1998, and that included all 50 States and the 
territories, even those that did not include a Medicaid claim in their 
suit, waived their right to recover tobacco-related Medicaid costs in 
the future. Why do you think that was put in the settlement? If, in 
fact, the lawsuits were not about Medicaid, why do you think that the 
tobacco companies came in and insisted, as a condition of the 
settlement, that the States had to waive their right for any future 
suits based on Medicaid? It is curious. If that is not what this was 
all about, why did they put that in there? Because the tobacco 
companies, smart lawyers that they have got, knew this is what it is 
about. It is about health care. It is about hooking kids on smoking.
  They could see that the States are going to get all this money. What 
do the States want to do with it? They want to reduce debt. They want 
to build prisons and highways. They want to reduce taxes.
  How many are going to use it to cut down on what the tobacco 
companies are most afraid of? What they are afraid of is losing young 
people who would not be smoking, who won't take up the habit. That is 
what they are afraid of. That is why they put it in there. Not only did 
the settlement waive the right of the States forever to sue to recoup 
for Medicaid, it waives our rights, the Federal Government's rights to 
sue. Why? Because under the Social Security law, only the States can 
sue for recoupment under third parties. When they waive their right, 
they waive our rights. The States, in making this deal with the tobacco 
companies, have effectively taken away the right of the Federal 
Government to go into court and to go after tobacco companies to get 
the Federal taxpayers' share of the money for the health care costs of 
Medicaid. That is what it is about.
  The provision put in by the Senator from Texas says let them have it. 
Let the States have all this money. If they want to build highways, let 
them build them. I tell my colleagues, I know where the tobacco lobby 
is on this one. The tobacco lobby is foursquare for this provision in 
the bill, because they do not want States spending money to cut down on 
teen smoking. Some States will. I compliment and commend the Governor 
of my own State of Iowa who has said that they will use a large portion 
of this for education, intervention, cutting down on youth smoking. How 
much, I do not know, a large portion of it.

  Again, this is a bipartisan, commonsense amendment. For the life of 
me, I do not know why anyone would oppose it, unless it is under some 
theory that we can't tell the States what to do with this money. I 
don't want to tell the States what to do with their money, but when the 
Federal taxpayers provide over 50 percent of Medicaid monies to the 
States and we are paying 50 billion bucks a year in health-related 
costs and much of that through Medicaid, then I think we have a right 
and an obligation to say that some portion of that money that is 
Federal money ought to go for health-related purposes.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. HARKIN. Mr. President, I ask unanimous consent for 3 additional 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HARKIN. For example, in Maine, I am told the Governor wants to 
use it for a tax cut. In Michigan, the Governor wants to use the 
settlement for college scholarships; no funds for tobacco prevention. 
The Nevada Governor wants it for college scholarships. New Hampshire's 
Governor wants the money for education; no proposal on tobacco. In New 
York, the Governor wants to spend 75 percent for debt relief. In South 
Dakota, the Governor wants money for prisoners, nothing on tobacco. In 
Rhode Island, the Governor wants money to cut the car tax. That is all 
well and good, but that is not what this is about.
  I say to my friends, we have a statement of policy from the Executive 
Office of the President which says, referring to the emergency 
supplemental bill, S. 554:

       Were the bill to be presented to the President with the 
     Senate Committee's proposed offsets and several objectionable 
     riders discussed below, the President's senior advisers would 
     recommend that he veto the bill.

  One of the provisions:

       A provision that would completely relinquish the Federal 
     taxpayers' share of the Medicaid-related claims in the 
     comprehensive State tobacco settlement without any commitment 
     whatsoever by the States to use those funds to stop youth 
     smoking. Federal taxpayers paid more than half, an average of 
     57 percent of Medicaid smoking-related expenditures. The 
     Administration believes that the States should retain those 
     funds but should make a commitment that the Federal share of 
     the settlement's proceeds will be spent on shared national 
     and State priorities: to reduce youth smoking, protect 
     tobacco farmers, improve public health and assist children.

  So there we have it. If this amendment stays in there untouched, the 
President's senior advisors will recommend a veto.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I want to thank my Scottish cousin, Senator 
Graham, for letting me go first so I can go back to the Budget 
Committee.
  I am very happy to be here and join both Senator Graham of Florida 
and my colleague from Texas in strongly opposing this amendment.
  The idea that the Federal Government is trying to seize $18.9 billion 
from the States to spend in Washington, DC, when we had nothing to do 
with their settlement and when we were in the process of trying to 
impose our own taxes and, in fact, when the President has in his budget 
the imposition of new taxes on tobacco, is absolutely outrageous.
  The amazing thing is the President proposes taking the money away 
from the States and then giving them a bunch of money, but then telling 
them how to spend it.
  This amendment is the height of absurdity. In my State, this 
amendment would tell Texas that we have to spend $4 billion on smoker 
cessation. We could literally hire thousands of people and have a 
personal trainer for each person who are chewing tobacco or dipping 
snuff. Why should the Federal Government have the right to tell the 
States how to spend this money?
  I suggest our colleagues read the tenth amendment of the 
Constitution--powers not specifically delegated to the Federal 
Government are reserved to the several States and to the people.
  This amendment is an outrageous power grab. Where we in Washington, 
the day before yesterday, were trying to be the school board for all 
America, now we are trying to tell the States how to get people to stop 
smoking, when we have done a very poor job of it in the Federal 
Government. We are trying to tell the States how to spend their money. 
Somewhere this has got to stop. My suggestion to our colleagues is, if 
you want to run the schools in America, quit the Senate and go run for 
the school board.
  If you want to be a State legislator, leave the Senate and run for 
the State senate or the State house or run for Governor. Our job is not 
to tell the States how to spend their money.
  This is an outrageous amendment. I just cannot understand the logic 
of this, other than the belief that only we know what is best. The idea 
that we on the floor of the Senate will tell Texas how they have to 
spend $4 billion over this period is absolutely absurd--that Texas has 
to file a report every year

[[Page S2887]]

with Health and Human Services, and then they have to approve how Texas 
is spending its own money that the Federal Government had nothing to do 
with, had no part in claiming, no role in the settlement. In fact, in 
the President's budget this year where he tries to reclaim this money, 
he is talking about imposing a tobacco tax. Are we going to let the 
States tell us how to spend that money? I think not.
  I congratulate my colleague from Texas. This is an amendment that 
deserves to be defeated overwhelmingly. I hope 80 or 90 of our fellow 
Senators will vote against this amendment. Again, if you want to tell 
Texas how to spend its money, quit the Senate, move to Texas, establish 
residence, run for the State legislature; if you can get elected, go at 
it. But do not get elected from another State and come here and try to 
tell our State or any other State how to spend its money.
  The Federal Government needs to butt out. We have plenty of our own 
problems to deal with here. Social Security is going broke, Medicare is 
going broke quicker, and what are we doing? The day before yesterday, 
we were trying to run all the schools in the country as a national 
school board. Today we are trying to spend money in every State to tell 
them how to deal with their tobacco settlements.
  It seems to me we are running away from real problems that we ought 
to be solving and trying to find somebody else's problems to solve 
where we don't have any responsibility if things go bad.
  Again, I congratulate my colleague from Texas. I congratulate the 
Senator from Florida. I thank him for letting me come in and speak at 
this time. I yield the floor.
  Mr. GRAHAM addressed the Chair.
  The PRESIDING OFFICER. If the Senator will withhold, does the Senator 
from Texas yield to the Senator from Florida?
  Mrs. HUTCHISON. I yield 10 minutes to my colleague.
  Mr. GRAHAM. Mr. President, I thank my colleague and Teutonic cousin 
for his kind remarks and for his comments against this misguided 
amendment.
  First, I strongly support the original purpose of this legislation, 
which is to provide relief to our neighbors in the Central American 
countries and the Caribbean which were so devastated last year by a 
series of hurricanes.
  I had the opportunity to visit Honduras, Nicaragua, El Salvador, and 
Dominican Republic which were primarily affected by those hurricanes 
and can testify that the need is great and that the humanitarian 
assistance which the United States has already provided, and which this 
legislation will allow us to continue, has been of immeasurable value 
and has added to the strength of the relationship between the United 
States and those affected countries.
  I also strongly support the tobacco recoupment amendment which was 
added in the Appropriations Committee by my colleague, the Senator from 
Texas. In addition to the wisdom of the amendment, there is a sense of 
urgency to move forward with this. Many State legislatures are meeting 
as we meet this week. Many of those legislatures are well along toward 
their adjournment date. Many of those States are awaiting our action on 
this issue to make a determination as to what is the most appropriate 
way to utilize funds that have been secured through the tobacco 
settlement for purposes that will benefit their citizens.
  We need to resolve this issue and resolve it in a way that has been 
suggested by the amendment recommended by the Appropriations Committee, 
which is that the Federal Government keep its hands off this money 
which has been secured solely as a result of the actions of the States.
  Let me give a brief history of this issue, with particular focus on 
the State of Florida, which was one of the first four States to secure 
an individual settlement with the tobacco industry.
  Under the leadership of our departed friend and colleague, Lawton 
Chiles, the Florida Legislature amended its law to allow a specific 
statute to be passed, under which the State brought litigation against 
the tobacco industry. At the time that occurred, Governor Chiles wrote 
a letter to Attorney General Janet Reno suggesting that the Federal 
Government join in the lawsuit--not join in the lawsuit as it relates 
to any specific claim, such as the Medicaid claim, but, rather, join in 
the lawsuit to advance Federal interests that were at stake. I will 
talk later about what those Federal interests are.
  This is the letter--and I quote it in part--dated June 6, 1995, which 
was sent from the Attorney General to the Governor of Florida:

       Dear Governor Chiles: Thank you for your letter concerning 
     the possibility of the Department of Justice participating in 
     the State of Florida's lawsuit against cigarette 
     manufacturers. As you know, similar suits have been filed by 
     the States of Mississippi, Minnesota and West Virginia. At my 
     request, the Department's Civil Division has been monitoring 
     the tobacco litigation. Thus far, we have not been persuaded 
     that participation would be advisable. We will continue to 
     actively monitor these cases, however, and will reconsider 
     this decision should circumstances persuade us otherwise in 
     this regard.

  There were no subsequent reconsiderations, and the Federal Government 
essentially said, ``We will stand apart from these States' efforts.'' 
Stand apart until the States, having spent enormous amounts of money, 
effort, and political resources now have secured a settlement.
  At this point, the Federal Government wishes to invite itself back 
into this litigation by, in the President's budget proposal, taking 
half the money and having the Federal Government spend it or, in this 
amendment proposal, having the Federal Government serve as the parent 
for the States and tell them how to spend their tobacco settlement 
money.
  The assumption of this legislation started with another letter from 
Washington which went to the States which stated, in effect, that the 
Federal Health Care Financing Administration was going to initiate an 
administrative collection procedure under an arcane provision of the 
Social Security statute--specifically, 1903(D)(3)--in which it would 
recoup a substantial portion of the States' settlements.
  The specific language which was relied upon by the Federal Health 
Care Financing Administration is the language which states:

       The pro rata share to which the United States is equitably 
     entitled, as determined by the Secretary, of the net amount 
     recovered during any quarter by the State or any political 
     subdivision thereof with respect to medical assistance 
     furnished under the State plan. . . .

  Mr. President, I argue that that statute, which is the basis of the 
Federal efforts to recoup, is inapplicable to the tobacco litigation. 
What that statute was intended to do was, in the case where a State 
had, for instance, overpaid a provider and subsequently received a 
repayment, that a portion of that repayment that was related to the 
percentage of the Federal Medicaid share under the State Medicaid plan 
would go back to the Federal Government.
  This was not recovered pursuant to any State health care plan. It was 
recovered based on litigation brought by the States on a variety of 
claims against the Federal Government. And that is the first of two 
fundamental erroneous assumptions behind this amendment. And that first 
assumption is that 100 percent of the collections that the States have 
made were as a result of the Medicaid claims; and, therefore, that the 
Federal Government can legitimately assume the right to control its 
share or 50 percent of those funds. That assumption is just 
fundamentally incorrect.

  First, Florida's causes of action included a violation of the State's 
RICO statute, the Racketeer-Influenced and Corrupt Organizations 
statute. Fourteen other States filed a similar RICO claim. Remedies 
available to the States under RICO statutes are enormous: disgorgement 
of profits and treble damages. I argue that these claims far exceed any 
money damages available under the Medicaid claim.
  Twenty-eight States filed claims under violations of consumer 
protection laws. Remedies include significant monetary penalties per 
violation--per sale of each pack of cigarettes--plus disgorgement of 
profits. For instance, the Missouri remedy allows for a penalty of 
$1,000 per pack of cigarettes sold. The Oregon remedy was up to $25,000 
per violation, which could have potentially totaled billions of 
dollars.
  Thirteen States filed under public nuisance. In Iowa, the remedy 
requested was equal to not the profits made through cigarette sales, 
but the price of cigarettes sold in each year involved.

[[Page S2888]]

  Twenty States filed antitrust claims. Available remedies again 
include disgorgement of profits and treble damages.
  In three States, the courts dismissed the Medicaid claims--Indiana, 
Iowa, and West Virginia. So those States' claims could not have 
included a Medicaid component because it had been rejected by the 
courts prior to the settlement.
  Further, the State of Florida, which did have a Medicaid claim among 
all of its other claims, estimates that at most only 10 percent of its 
entire settlement could have been attributed to Medicaid.
  I ask the Senator from Texas if I can have an additional 5 minutes.
  The PRESIDING OFFICER (Mr. Santorum). Does the Senator from Texas 
yield an additional 5 minutes?
  Mrs. HUTCHISON. I am happy to yield an additional 5 minutes to the 
Senator from Florida. If he can take any less than that, we have other 
Members signed up for the time. Thank you.
  Mr. GRAHAM. So Mr. President, the first assumption that all this 
money was generated by Medicaid claims is fundamentally inaccurate.
  The second assumption, which is that unless Washington acts the 
States will fritter this money away, is a fundamental assault against 
the principles of Federalism: That we are a Nation in which political 
power is divided between the States and the Federal Government, and 
that we have a respectful appreciation of the responsibility of our 
State partners.
  In the case of the State of Florida, through the use of the initial 
tobacco settlement money, 250,000 children who previously did not have 
financing for health care now have that financing. That was proposed by 
former Governor Lawton Chiles. Current Governor Jeb Bush has suggested 
the establishment of an endowment so that these funds would be 
protected in perpetuity and the interest earnings from that endowment 
would be used for a variety of children's and seniors' programs. That 
not only indicates the care with which the States are using, but the 
fact that it is a bipartisan issue, the appropriate use of these funds.

  Let us face it, those State officials, those Governors, those State 
legislators are just as much accountable to the voters as we are. And 
should they act in a way that the voters consider to be inappropriate, 
they will suffer the consequences of those actions.
  Mr. HARKIN. Will the Senator yield?
  Mr. GRAHAM. Let me complete my final comments, and then I will yield.
  Mr. HARKIN. OK.
  Mr. GRAHAM. Mr. President, what we have at stake here is that the 
Federal Government is dealing with the wrong issue at the wrong time. 
It is time for the Federal Government to move on. The way in which the 
Federal Government should move on is by pursuing its own litigation 
against the tobacco industry rather than trying to steal a portion of 
the State settlement.
  I was, therefore, very pleased that the President, in his State of 
the Union Message, indicated that it was the intention of the Federal 
Government to pursue precisely such a course of action.
  Let me say, Mr. President, that for those of us, like Senator Harkin 
and others, who joined last year in an effort to craft a bipartisan 
tobacco bill, we recognize that the most significant way in which we 
will reduce teenage smoking is to increase the price of cigarettes. 
Every other technique to reduce teenage smoking pales in comparison 
with increasing the price. The Centers for Disease Control has 
estimated that for every 10-percent increase in the price of 
cigarettes, there will be a 7-percent reduction in smoking by 
teenagers.
  The Federal Government's potential claims against the tobacco 
industry are much greater than the States. The Medicare Program is much 
larger than Medicaid. The Federal Government has all the array of 
antitrust and RICO claims which the States so successfully pursued.
  What we need to be encouraging the administration to do is to 
aggressively carry out the direction of the President to effectively 
bring action against the tobacco industry. And those will be the funds 
that will be 100 percent under the control of the Federal Government 
for the purposes that it considers most appropriate.
  My own feeling is that we ought to use a substantial share of those 
Federally derived funds from successful litigation against the tobacco 
industry to add to the solvency of the Medicare trust fund, and then to 
use a portion of those to assist in financing what the American people 
desperately want, which is a prescription drug benefit, a major share 
of which will go to dealing with the illnesses generated by tobacco 
use.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. GRAHAM. So Mr. President, I appreciate the leadership that the 
Senator from Texas has provided. I appreciate her generosity and time. 
I urge the defeat of this amendment.
  Mr. McCAIN. Mr. President, I rise today in support of this amendment 
offered to earmark a portion of the tobacco settlement proceeds for 
health and anti-smoking programs. The use of the money for these 
purposes goes to the very heart of my support for the global settlement 
a year ago and my reason for sponsoring a bill to implement the 
settlement.
  It was never my intention or understanding that this money would be 
used for building roads, prisons, or to simply inflate the government's 
coffers. It was my understanding and intent that the money would be 
used primarily to fight the evils of the tobacco industry and to keep 
3,000 kids a day from starting to smoke.
  I am also a strong proponent of states' rights. In considering this 
amendment, it is my understanding that no federal approvals are 
required, but only that reports be filed demonstrating that the funds 
are being used in programs designed to achieve the public health goals 
of the litigation. This information is important for Congress and the 
Administration to have so that we can continue to evaluate the need for 
federal legislation addressing any issues not covered by the settlement 
agreement. If the states are successful in achieving what the 
litigation and settlement set out to achieve, then there will be no 
need for additional action. If not, we can revisit the issues.
  I do not perceive this amendment as requiring federal approval of all 
state spending or programs, but as an informational requirement. I am 
certainly open to further discussion on how to best ensure that the 
money is being spent as intended, to keep kids from smoking.
  I hope that we will continue the dialogue on this very important 
issue and that we can reach consensus on how to ensure that the 
settlement funds are used to protect kids, if not today, then as the 
bill progresses to the House and conference.
  Mr. KENNEDY. Mr. President, I am very concerned about a number of 
provisions in the supplemental appropriations bill.
  First, I strongly oppose the offsets included in this bill, which 
will take money away from programs that help the most vulnerable 
Americans.
  Before I discuss the specific offsets, let me begin with a reminder--
emergency supplemental funds do not need to be offset. This is the law 
and it is grounded in the understanding that Congress needs to act 
expediently when disaster strikes. Emergencies are just that, 
emergencies, and they require swift action and the ability to release 
funds quickly. We do not need offsets to provide essential assistance 
to Central America, our farmers, or U.S. steel workers.
  Nevertheless, a series of offsets have been proposed that will hurt 
the most vulnerable Americans, low-income children and families and 
immigrants. Included in their offset package, are proposals to defer 
$350 million in Temporary Assistance to Needy Funds (TANF), a $285 
million cut in the Food Stamp Program, and a $25 million recision in 
INS programming which will reduce INS' ability to provide immigration 
benefits and services. A $40 million cut in INS border enforcement is 
also being proposed.
  Taking from one poor, vulnerable community to pay for the needs of 
another is unacceptable. We must draw the line here to prevent the 
raiding programs that help poor children and families.
  In 1996, when the Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA) was passed, Congress gave states the 
authority and flexibility to design their own unique

[[Page S2889]]

programs to help low-income families move from welfare-to-work. The 
TANF program provides fixed block grants to the states totaling 
approximately $16.5 billion annually. TANF is a new program that 
supports a wide array of services. States are using their funds to 
assist needy families, strengthen job preparation, and promote self-
sufficiency. Across the country, states and social service agencies are 
developing and implementing the best strategies to move their clients 
from welfare to self-sufficiency.
  In addition to giving states the authority to develop their own 
assistance programs for low-income families, Congress also gave them 
the power to carry forward unobligated TANF funds for future use. 
States were expressly given the ability to tap into unspent funds at 
any point during the five-year block grant period, to optimize 
flexibility and meet their own unique needs and circumstances. In FY98, 
states obligated or spent 84% of the total federal funds received. 
Nineteen states have obligated 100% of their FY98 TANF funds.
  The Republican Leadership seems to have confused ``unobligated'' with 
``unneeded.'' Nothing could be further from the truth. There are a 
variety of reasons why some states have unobligated funds. Many states 
have specifically set aside part of their funds in a ``rainy day'' 
account. This reflects wise planning. The strong economy and low 
unemployment rates which we are currently enjoying may not last 
forever. These states will be prepared because they have set aside 
sufficient funds to protect themselves if the economy turns downward.
  Other states have experienced large caseload declines but require 
further state legislative action to reprogram funds from cash 
assistance to other investments, such as child care and job training, 
which promote work and end dependency. Other states have proceeded 
slowly because they chose to engage in careful planning and needs 
assessment research before embarking on innovative new efforts to move 
people from welfare to work. Now, they are ready to utilize their 
funds, and now the feds are trying to take back these funds.

  Let me also point out that unobligated funds are not surplus funds. 
These funds are essential to the overall success of welfare reform. 
Many of the families remaining on welfare face substantial barriers to 
employment including lack of educational and workforce skills, 
substance abuse, domestic violence, and disability. States anticipate 
that greater investments will be required if families are going to 
successfully transition from welfare-to-work. As an increasing number 
of families with infants and young children move into the work force, 
the need and competition for child care, particularly during evening 
hours, will continue to expand. Without assistance, many states will 
not be able to provide needed services to low-income families.
  Now, just a few years after dramatically overhauling the welfare 
system, the Republican Leadership wants to take $350 million in 
unobligated TANF funds to offset some of the expenses incurred by the 
Emergency Supplemental Act. This is unacceptable. Congress told states 
to spend their money carefully, to engage in thoughtful long-term 
planning, and that they could keep their unobligated funds, and here we 
are two years later, changing the rules of the game.
  The Republican Leadership also wants to take $252 million from the 
Food Stamp Program base appropriations level. Senate appropriators 
contend that these funds would otherwise be unspent. Once again, the 
Republicans are taking a short-sighted approach. First, assuming these 
funds are unspent, they are not unneeded. The current base 
appropriations level provides an important cushion to meet 
unanticipated need. Second, recently released statistics on hunger and 
undernutrition suggest that we need to reinvest in food assistance 
programming. Hunger is still an urgent problem. The recent decline in 
food stamp use from 28 million to under 19 million does not mean that 
hunger is no longer a significant concern. Just a few weeks ago the 
Urban Institute reported that one-third of America's children are in 
families grappling with hunger and food insecurity.
  We cannot let this happen. We cannot take any more money from 
programs that help children and needy families. Furthermore, Congress 
must uphold its commitment to the states--federal money pledged to the 
states should not be taken away, especially when emergency funding is 
available without offsets.
  Another disturbing aspect of the Supplemental is the inclusion of the 
Hutchinson Medicaid Amendment. This issue does not belong in an 
emergency appropriations bill. If approved, the long-term cost to 
Medicaid of this amendment would be approximately $140 billion. No 
serious consideration has been given to the enormous impact that could 
have on national health policy. Instead of being used to deter youth 
smoking and to improve the nation's health, the language in the 
Committee bill would permit states to use these federal Medicaid 
dollars to pave roads, to build prisons and stadiums, and to fund state 
tax cuts. Those are not appropriate uses for Medicaid dollars. Congress 
has a vital interest in how those federal dollars are used.

  Fifty-seven cents of every Medicaid dollar spent by the states comes 
from the federal government. The cost of Medicaid expenditures to treat 
people suffering from smoking-induced disease was at the core of state 
lawsuits against the tobacco industry. While the federal government 
could legally demand that the states reimburse Washington from their 
settlements, I believe the states should be allowed to keep one hundred 
percent of the money. However, the federal share must be used by the 
states for programs that will advance the goals of protecting children 
and enhancing public health which were at the heart of the litigation 
and are consistent with the purposes of Medicaid. That would be an 
eminently fair and reasonable compromise of this contentious issue.
  While there were a variety of claims made by the states against the 
tobacco industry, the Medicaid dollars used to treat tobacco-related 
illness constituted by far the largest claim monetarily, and it formed 
the basis for the national settlement. As part of that settlement, 
every state released the tobacco companies from federal Medicaid 
liability, as well as state Medicaid liability. Medicaid expenditures 
heavily influenced the distribution formula used to divide the national 
settlement amongst the states. In light of these undeniable facts, the 
dollars obtained by the states from their settlements cannot now be 
divorced from Medicaid. States are free to use the state share of their 
recoveries in any way they choose. However, Congress has a clear and 
compelling interest in how the federal share will be used.
  States should be required to use half of the amount of money they 
receive from the tobacco industry each year (the federal share) to 
protect children and improve public health. At least thirty-five 
percent of the federal share would be spent on programs to deter youth 
smoking and to help smokers overcome their addiction. This would 
include a broad range of tobacco control initiatives, including school 
and community based tobacco use prevention programs, counter-
advertising to discourage smoking, cessation programs, and enforcement 
of the ban on sale to minors. Three thousand children start smoking 
every day, and one thousand of them will die prematurely as a result of 
tobacco-induced disease. Prevention of youth smoking should be, without 
question, our highest priority for the use of these funds. Reducing 
youth smoking would, of course, result in a dramatic savings in future 
Medicaid expenditures. The state settlements provide the resources to 
dissuade millions of teenagers from smoking, to break the cycle of 
addiction and early death. We must seize that opportunity.
  The remainder of the federal share should be used by states to fund 
health care and early learning initiatives which they select. States 
could either use the additional resources to supplement existing 
programs in these areas, or to fund creative new state initiatives to 
improve public health and promote child development.
  Smoking has long been America's foremost preventable cause of disease 
and early death. It has consumed an enormous amount of the nation's 
health care resources. Finally, resources taken from the tobacco 
companies would be used to improve the nation's health. A state could, 
for example, use a portion of this money to help

[[Page S2890]]

senior citizens pay for prescription drugs, or to provide expanded 
health care services to the uninsured. Funds could be used to support 
community health centers, to reduce public health risks, or to make 
health insurance more affordable.

  For years, the tobacco companies callously targeted children as 
future smokers. The financial success of the entire industry was based 
upon addicting kids when they were too young to appreciate the health 
risks of smoking. It is particularly appropriate that resources taken 
from this malignant industry be used to give our children a better 
start in life. States could use a portion of these funds to improve 
early learning opportunities for young children, or to expand child 
care services, or for other child development initiatives.
  Congress has an overwhelming interest in how the federal share of 
these dollars is used. They are Medicaid dollars. They should not be 
used for road repair or building maintenance. They should be used by 
the states to create a healthier future for all our citizens, and 
particularly for our children.
  These problems with the supplemental need to be fixed. Congress 
shouldn't let emergency assistance get bogged down by these extraneous 
provisions. A clean supplemental should be approved as quickly as 
possible so that this aid can go out quickly to those in greatest need.
  Mr. GRASSLEY. Mr. President, I rise today to express my opposition to 
the amendment offered by Senators Specter and Harkin that is based on a 
``Washington Knows Best'' policy. Under this amendment, every 
Governor--each year--for the next 25 years would be required to submit 
a plan to Washington asking for permission on how to spend fifty 
percent of the state's own money. I'm voting ``no'' to this 
``Washington Knows Best'' amendment.
  My state of Iowa stands ready to receive $1.7 billion over the next 
25 years for its share of this landmark settlement. Iowa began a 
thoughtful process years ago to establish a framework to guide the 
state on how to utilize these new resources should the state succeed 
with its case against the tobacco industry. Two years ago, after much 
state and local deliberation, the Iowa Legislature passed laws 
establishing a governing framework. Now that success has come for Iowa, 
it is prepared. Among top priorities for the use of these new funds are 
increased medical assistance and programs to reduce teen smoking. 
Furthermore, Iowa's Governor Vilsack enthusiastically advocates a 
number of new initiatives for combating teen smoking, including an 
initiative to spend $17.7 million of its settlement money on tobacco 
prevention and control programs. I am confident in the leadership of 
our Governor and State Legislature in deciding how to best spend its 
resources for the well-being of Iowans.
  The states are entitled to the full amount of their settlement. Years 
ago, the states began to organize their case against the tobacco 
industry. They sought assistance from the federal government in their 
efforts, but received none. The states took on all the risk, and 
invested all of the time, money and energy. They have been rewarded for 
their commitment to the case with a landmark settlement. It is unfair 
for Congress, at this very late stage, to dip into the state's multi-
billion dollar settlement. What's more, last year Congress made 
attempts at a federal settlement but failed. Congress is in no position 
to interfere with what the states have independently accomplished.
  Mr. CRAIG. Mr. President, as a cosponsor of Senator Hutchinson's bill 
to protect the states' claims on the funds from the settlement that 
they negotiated with the tobacco industry, I oppose the Harkin-Specter 
amendment.
  I am not a lawyer, and maybe that's why I'm not particularly 
impressed by all the legal hairsplitting we've been hearing from the 
government's lawyers about their claim to these funds. But you don't 
have to be a lawyer to recognize unfairness when you see it.
  In fact, I think my little granddaughter would recognize the story 
that's unfolding in Washington today: it's called the ``Little Red 
Hen.'' As my colleagues probably will recall, this story is about some 
people doing all the work and other people, who didn't lift a finger to 
help, wanting to share in the product of that work.
  In this case, we have the states who initiated lawsuits against the 
tobacco industry, who took all the risks, who received no assistance 
from the federal government in making their claims, and who ultimately 
succeeded in negotiating the historic Master Settlement Agreement last 
November. Now that the work has been done by these 46 little red hens, 
and the other four who negotiated individual settlements, the federal 
government wants to sweep in and take over.
  Mr. President, I do not think what we have here is an attempt to 
assert legal rights, but an attempt to assert control. Quite simple, 
the federal government wants to direct the spending of these funds by 
the states, despite the fact that this effort is likely to provoke more 
litigation, which in turn will only prevent the funds from being used 
to benefit the health or welfare of any state's residents. I do not 
think the federal government has the law on its side, and I know it 
doesn't have the equities or even common sense on its side.
  At this point, I ask unanimous consent to have printed in the Record 
a letter from Idaho Attorney General Al Lance, objecting to the 
attempted money grab.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                               Office of the Attorney General,

                                      Boise, ID, January 13, 1999.
     Hon. Larry Craig,
     U.S. Senate, Washington, DC.
     Re: Idaho tobacco settlement monies.
       Dear Senator Craig: You are no doubt aware that Idaho 
     settled its lawsuit against the tobacco defendants. Under the 
     settlement agreement, Idaho is set to receive annual payments 
     totaling $711 million over the first 25 years of the 
     settlement. Now that the settlement is complete, it is my 
     understanding that the Clinton Administration intends to lay 
     claim on a significant portion of settlement monies for its 
     own use. This is wrong. I ask that you help Idaho protect 
     itself from this money grab by supporting appropriate federal 
     legislation.
       Idaho was one of 40 states that filed suit against various 
     tobacco defendants, alleging violations of various state 
     statutes. In Idaho's complaint we sought reparation for 
     damages incurred by the State, as well as civil penalties, 
     costs, and fees as a result of the defendants' actions. We 
     alleged as damages the increased Medicaid costs attributable 
     to tobacco use, which Idaho has spent, as well as the 
     increased insurance premiums attributable to smoking that the 
     State has paid for its state employees. We sought civil 
     penalties under our consumer protection laws.
       Section 1903(d) of the Social Security Act provides that a 
     State must allocate from the amount of any Medicaid-related 
     recovery ``the pro-rata share to which the United States is 
     equitably entitled.'' Relying upon this statute, it is our 
     understanding that the Health Care Financing Administration 
     will be taking the position that Idaho's settlement payments 
     represent a credit applicable to Idaho's Medicaid program, 
     regardless of whether the monies are received directly by the 
     State's Medicaid program. This should not be so.
       It is not equitable for the federal government to take the 
     fruits of the states' efforts. This is particularly true in 
     this case. Idaho filed its suit, took significant risks, and 
     fought for significant changes in how the tobacco industry 
     will market its products. What did the Clinton Administration 
     do in this regard with the federal government's vast 
     resources? Nothing.
       I have great confidence that Idaho's Legislature will 
     properly determine how Idaho's tobacco proceeds should be 
     spent. I am sure you share that trust as well. That will not 
     happen, however, if the federal government is allowed to take 
     that money and spend it as it pleases. I ask for your 
     assistance in making sure that does not happen.
           Sincerely,
                                                    Alan G. Lance,
                                                 Attorney General.

  Mr. CRAIG. I wholeheartedly agree with Attorney General Lance's 
confidence that the Idaho state legislature is quite capable of 
properly determining how Idaho's share of the tobacco settlement should 
be spent.
  It is my strong hope that the Senate will defeat this amendment and 
allow my state's legislature, and those of the other 49 states, to make 
these decisions without interference.
  Mrs. MURRAY. Mr. President, we have a difficult decision before us. I 
believe most, if not all of us, hope the states will do the right thing 
and spend the tobacco litigation money to stop underage smoking, reduce 
adult smoking, and provide critical public health services. I know I am 
unequivocally committed to those objectives and will

[[Page S2891]]

therefore support the Specter-Harkin amendment to ensure they do so.
  That said, I want the states to have the greatest degree of 
flexibility and discretion in allocating these settlement funds to the 
health needs of their residents as possible. This amendment does just 
that. It broadly requires states to spend 20 percent of the settlement 
on programs to reduce the use of tobacco products, including 
enforcement, school education programs, and advertising campaigns. It 
also requires 30 percent to be spent on public health.
  If we do not reduce smoking and stop at least some of the 3,000 new 
kids per day from smoking, the federal taxpayer will end up the loser. 
That is why we should have a voice in directing use of these funds. The 
Medicare Trust Fund is financially solvent only until 2009, so we need 
to do everything possible to reduce overall health care costs. If one 
state does not reduce the deadly impact of smoking, the federal 
taxpayers will foot the bill. So, all American taxpayers have a big 
stake in reducing smoking. They have the right to push all states to 
save their tax dollars by reducing health care costs.
  Still, the Specter-Harkin amendment targets only a portion of 
settlement dollars; just that portion that could be attributed to the 
federal share of Medicaid. Because Medicaid is a federal-state 
partnership and the settlement includes claims arising out of this 
program, federal taxpayers have a valid claim to make in how those 
settlement dollars are spent.
  I am proud of my home state of Washington. It has already made a 
commitment to public health and smoking reduction. The Specter-Harkin 
amendment only reinforces what my state has done. Once again Washington 
state is a leader on protecting public health and saving the premature 
death of five million of today's children. I have attached a letter I 
received from the Western Pacific Division of the American Cancer 
Society urging me to support this amendment for these very reasons, to 
support the ``health of our kids and our families.''
  I also continue to support Senator Hutchinson's work to ensure the 
states receive the credit they deserve. They have scored a major 
victory for public health. The success of the Attorney's General in 
their settlement with the tobacco companies is unprecedented. I applaud 
them and especially Washington's Attorney General, Chris Gregoire, who 
has been a champion in this cause.
  The federal government must not rely on the states to do all of its 
work for them. It is the responsibility of the federal government to 
recover Medicaid funds and I will urge the Administration to move 
forward with necessary litigation. The federal government must seek 
restitution from the tobacco companies for the years of lies and 
deception that have resulted in the premature deaths of millions of 
Americans. Smoking-related illnesses are still the number-one killer of 
Americans.
  I am pleased Senators Specter and Harkin could find the appropriate 
balance between the rights of the states to enjoy their well-deserved 
settlement funds and the rights of federal taxpayers to ensure those 
funds are spent to protect the public health and reduce their future 
tax obligations under Medicare and Medicaid by reducing the cost of 
tobacco-related illnesses.
  The PRESIDING OFFICER. Who yields time?
  Mrs. HUTCHISON. Parliamentary inquiry. How much time do I have left?
  The PRESIDING OFFICER. The Senator has 13 minutes.
  Mrs. HUTCHISON. Thank you, Mr. President.
  Mr. HARKIN. Parliamentary inquiry. How much time do we have left?
  The PRESIDING OFFICER. Ten minutes 11 seconds.
  Mrs. HUTCHISON. Does the Senator from Iowa wish to go at this time? 
Because if not, Senator Voinovich was next in line for our side.
  The PRESIDING OFFICER. Time is controlled by the Senator from 
Pennsylvania.
  Who yields time?
  Mrs. HUTCHISON. Mr. President, I yield up to 5 minutes to the Senator 
from Ohio.
  The PRESIDING OFFICER. The Senator from Ohio is recognized for 5 
minutes.
  Mr. VOINOVICH. Mr. President, as a former Governor, I introduced my 
own tobacco recoupment legislation. I am pleased to be an original 
cosponsor of Senator Hutchison's and Senator Graham's bipartisan 
legislation.
  Under this settlement, the tobacco companies agreed to pay 46 States, 
including Ohio, $206 billion over 25 years. Four other States 
previously won a $40 billion settlement. Ohio was slated to receive 
$9.8 billion over 25 years, beginning with $400 million in 2000 and 
2001.
  I just want you to know that the Nation's Governors are adamantly 
opposed to imposing restrictions on State funding. I have distributed a 
letter from the chairman and vice chairman of the National Governors' 
Association. It will be on the desk of all of the Senators expressing 
their adamant opposition to the amendment.
  Mr. President, I ask unanimous consent that letter be printed in the 
Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                              National Governors' Association,

                                                   March 17, 1999.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate,
     The Capitol, Washington, DC.

     Hon. Thomas A. Daschle,
     Minority Leader, U.S. Senate,
     The Capitol, Washington, DC.
       Dear Majority Leader and Senator Daschle: As the Senate 
     moves forward with consideration of the Emergency 
     Supplemental Appropriations bill, we write to inform you of 
     the nation's Governors' strong support for language now 
     included in the bill that would protect state tobacco 
     settlement funds. In addition, we are adamantly opposed to 
     any amendments that would restrict how states spend their 
     tobacco settlement money. The settlement funds rightfully 
     belong to the states, and states must be given the 
     flexibility to tailor the spending of the tobacco funds to 
     the needs of their citizens.
       There is a proposal under consideration, the Harkin/Specter 
     amendment, to require states to earmark 20 percent of the 
     settlement funds for smoking cessation programs, and an 
     additional 30 percent for health care programs. Governors are 
     adamantly opposed to any restrictions on the tobacco 
     settlement funds, but even more so to this proposal, because 
     it obligates state tobacco settlement funds to federal 
     programs or to specific state programs only if approved by 
     the Secretary of HHS.
       Furthermore, although the nation's Governors agree with the 
     goal of substantially reducing smoking, we are strongly 
     opposed to earmarks on smoking cessation on the basis that it 
     represents unsound public policy. There are already four 
     major initiatives that are going into effect to reduce 
     smoking.
       1. The price of tobacco products has already increased 
     between 40 cents and 50 cents per pack. Additional price 
     increases may come over time as companies attempt to hold 
     profit margins and make settlement payments. These price 
     increases will substantially reduce smoking over time.
       2. The tobacco settlement agreement already contains two 
     major programs funded at $1.7 billion over ten years 
     dedicated to reducing smoking. $250 million over the next ten 
     years will go towards creation of a national charitable 
     foundation that will support the study of programs to reduce 
     teen smoking and substance abuse and the prevention of 
     diseases associated with tobacco use. An additional $1.45 
     billion over five years will go towards a National Public 
     Education Fund to counter youth tobacco use and educate 
     consumers about tobacco-related diseases. The fund may make 
     grants to states and localities to carry out these purposes.
       3. The settlement agreement has a significant number of 
     restrictions on advertising and promotion. The settlement 
     prohibits targeting youth in tobacco advertising, including a 
     ban on the use of cartoon or other advertising images that 
     may appeal to children. The settlement also prohibits most 
     outdoor tobacco advertising, tobacco product placement in 
     entertainment or sporting events, and the distribution and 
     sale of apparel and merchandise with tobacco company logos. 
     Further, the settlement places restrictions on industry 
     lobbying against local, state, and federal laws. Over time, 
     these restrictions on tobacco companies' ability to market 
     their products to children and young adults will have a major 
     impact on smoking.
       4. States are already spending state funds on smoking 
     cessation and will substantially increase funding as the 
     effectiveness of programs becomes established. Many states 
     have already invested years in program design, modification, 
     and evaluation to determine the best ways to prevent youth 
     from taking up cigarette smoking and helping youth and adults 
     quit smoking. Governors and states are highly motivated to 
     implement effective programs. We see the human and economic 
     burdens of tobacco use every day in lost lives, lost wages 
     and worker productivity, and medical expenditures for 
     tobacco-related illnesses.
       All of these initiatives are likely to substantially reduce 
     tobacco consumption. It would be foolish to require large 
     expenditures over the next 25 years to such programs without 
     a good sense of how these initiatives will reduce the current 
     level of

[[Page S2892]]

     smoking. Any additional expenditures for smoking cessation 
     must be carefully coordinated with these other four major 
     policy initiatives as they will cause smoking behavior to 
     shift dramatically. Furthermore, while there have been some 
     studies on the effectiveness of alternative smoking cessation 
     programs, the ``state of the art'' is such that we just do 
     not know what types of programs are effective. States are 
     still in the process of experimentation with effective 
     methods of preventing and controlling tobacco use; there is 
     no conclusive data that proves the efficacy of any particular 
     approach.
       Governors feel it would be wasteful, even counterproductive 
     to mandate huge spending requirements on programs that may 
     not be effective. Governors need the flexibility to target 
     settlement funds for state programs that are proven to 
     improve the health, welfare, and education of their citizens 
     to ensure that the money is wisely spent. Furthermore, the 
     federal government must maintain its fiscal commitment to 
     vital health and human services programs, and not reduce 
     funding in anticipation of increased state expenditures.
       We strongly urge you to vote against the Harkin/Specter 
     amendment and support flexibility for states to tailor the 
     spending of the tobacco funds to the needs of their citizens.
           Sincerely,
     Gov. Thomas R. Carper,
                                      Chairman, State of Delaware.
     Gov. Michael O. Leavitt,
                                     Vice Chairman, State of Utah.

  Mr. VOINOVICH. The proposition is clearly unsupportable, for the 
following reasons:
  First of all, States filed complaints that included a variety of 
claims--consumer protection, racketeering, antitrust, disgorgement of 
profits and civil penalties for isolations of State laws.
  Medicaid was just one of the many issues in many cases. Furthermore, 
State-by-State allotments were determined by the overall health care 
costs in each State and not based on Medicaid expenditures--not based 
on Medicaid expenditures.
  Medicaid was not even mentioned in some cases. As a matter of fact, 
in Ohio the Medicaid claim was thrown out of court. The Federal 
Government was invited to participate in the lawsuits, but the Federal 
Government declined. States bore the risk of initiating the suits and 
the burden of the unprecedented lawsuits against a well-financed 
industry. It was not until after the States prevailed that the Federal 
Government became interested.
  The tobacco settlement negotiated between attorneys general and the 
tobacco companies is completely different from the agreement that 
failed to pass in the 105th Congress.
  With the failure of that legislation, the States were forced to 
proceed with their own State-only lawsuit and settlement.
  States must be given the flexibility to tailor their spending to the 
unique needs of their citizens. And States will spend their funding on 
a variety of local needs--health, education, welfare, smoking cessation 
programs.
  Many Governors, through their state-of-the-State speeches or proposed 
legislation, have already committed publicly to spending these funds 
for the health and welfare needs of their citizens.
  The majority of the Governors have already made commitments to create 
trust funds and escrow accounts that will ensure that the tobacco 
settlement funds are spent on health care services for children, 
assistance for growers in the States that will be affected, education, 
and smoking cessation.
  Two major programs--this is really important--in the settlement are 
already dedicated to reducing teen smoking and educating the public 
about tobacco-related diseases. Two hundred and fifty million dollars 
will create a national charitable foundation to support the study of 
programs to reduce teen smoking and substance abuse and prevent 
diseases associated with tobacco use. An additional $1.5 billion will 
create a National Public Education Fund to counter youth tobacco use 
and educate consumers about tobacco-related diseases.
  In addition, the settlement agreement has significant restrictions on 
advertising and promotion--such as bans on advertising and lobbying 
against local, State, and Federal laws--which will have an impact on 
youth smoking. In other words, the tobacco companies can no longer 
lobby against legislation that will deal with cessation of use of 
tobacco.
  States are already spending State funds on smoking cessation. They 
don't need the Federal Government to put a mandate in place. There is 
simply no way that States can spend 20 percent of these funds on 
smoking cessation programs. These programs cannot absorb this level of 
funding. As smoking levels decline, as expected under the settlement, 
it will become impossible for States to spend this level of funding 
effectively.
  This amendment forces States to spend an incredible--listen to this--
$49 billion on just one objective: Denying them the ability to use 
these funds to best meet the needs of their citizens. The notion that 
the compassion and wisdom of Washington exceeds that of our State 
capitals is not only wrong, it is offensive. The Governors and the 
local government officials in this country care as much about smoking 
cessation as the Members of this Congress.
  I will never forget during welfare reform the people who were telling 
us that we didn't care as much about people as the people in 
Washington. They said it would be a race to the bottom. The fact of the 
matter is, it is a race to the top.
  Mr. President, I think we should overwhelmingly defeat this 
amendment. It is not appropriate for this piece of legislation.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. How much time remains?
  The PRESIDING OFFICER. The Senator from Texas has 7 minutes 37 
seconds.
  Mrs. HUTCHISON. I yield Senator Brownback up to 3 minutes.
  The PRESIDING OFFICER. The Senator from Kansas is recognized for 3 
minutes.
  Mr. BROWNBACK. I thank the author of this amendment from Texas, as 
well as our colleague from Florida.
  The idea that we would tell the States how to spend this money from 
this litigation is absolutely wrong. It is just wrong on its face. The 
people who are proposing it, I respect their motivation; they are 
trying to reach out and save lives and to stop these health problems. I 
think their motivation is appropriate, but the direction and the 
apportionment that is taking place on the States is the wrong way to do 
it.
  In every State in the country that has been a part of this 
litigation, there is now ongoing a healthy and vigorous debate about 
how best to spend the tobacco settlement funds. It is happening in 
Kansas, my State. I am being contacted by the Kansas Legislature in 
very strong terms. ``Do you not think that we care about what happens 
to the people here? Do you not have enough problems in Washington to 
deal with, that you have to tell us what to do with this? We are the 
ones who brought this litigation forward.'' They are quite offended 
that we would try to direct them and tell them what to do with these 
funds that they pursued in litigation and that they need. They are 
offended as well because they think we don't believe they know what is 
best for Kansans.

  I agree with them. I laud my colleague from Texas, Senator Hutchison, 
in what she is doing. I note, as well, that in Kansas in the debate and 
in the funding proposal that we have, 50 percent of all the funds to 
Kansas are going to children's health care program funds for prevention 
and cessation. We are putting in 50 percent which was enacted in the 
legislature. But we should not require them to go to HCFA after they 
have appropriated the money and see if they agree or see if they are 
going to have to do something different.
  With almost unprecedented unanimity, every State Governor, Attorney 
General, and State legislature has directly backed the Hutchison-Graham 
language. In fact, in many cases it is the No. 1 Federal issue for the 
106th Congress by a number of these groups. I applaud my colleague. The 
debate is happening at the right place now. We should not impose a 
``Washington knows best'' approach.
  Mrs. HUTCHISON. I yield up to 4 minutes to the Senator from Kentucky.
  Mr. McCONNELL. I thank the Senator from Texas for her outstanding 
leadership on this issue. As has been stated by all the speakers, 
basically this is an amendment to tell the States how to spend money 
that they achieve through a settlement with the tobacco industry. Not 
only money, but a huge amount of money--$40 billion--just on

[[Page S2893]]

tobacco use reduction advertising and programs.
  To contrast that with the advertising budgets of private enterprise 
in this country, ``Advertising Age'' said U.S. companies spend a total 
of $208 billion on advertising all of their products last year. The top 
100 advertisers spent a total of $58 billion last year. In California 
and New York, this would mean $5 billion worth of ads to each of those 
States; in Pennsylvania, $2.25 billion worth of ads; and in my State, 
$700 million worth of ads.
  Mr. President, this would be one of the most massive advertising 
campaigns in the history of the country, probably the most massive in 
the history of the country--public or private. Because advertising 
rates in my home State are not particularly high, that could translate 
into over 1,000 days of nonstop TV commercials. That is almost 3 years. 
And we think political campaigns go on too long.
  Contrast this with all Federal Government drug control spending of 
$16 billion. Members get the picture. If the Specter amendment were 
approved, we would have the Federal Government spending more money, by 
far, attacking a legal product than the Clinton administration 
currently spends in its war on drugs. There is $40 billion targeted at 
tobacco use, $16 billion against illegal drug use. It makes a person 
wonder if it would be better to simply pay America's 40 million smokers 
$1,000 apiece to quit. Send them $1,000 checks each, to quit. It would 
be a lot cheaper than what we have before the Senate.

  As has been stated by other speakers, the National Governors' 
Association has strongly committed itself to supporting antitobacco 
programs in the respective States. The States know better how to spend 
this money and will do so efficiently through existing State 
mechanisms. If the Federal Government dictates how the States should 
spend the money and the mechanisms are not there, the States will have 
to create them--creating even more bureaucracy.
  The final outrage is that this amendment requires the elected 
Governors of the States to report to Secretary Shalala on how they are 
going to spend their money. This is truly an egregious effort by the 
Federal Government to dictate to the States how they ought to spend 
money that they are entirely entitled to under any system of justice.
  Let me repeat: This calls for a $40 billion advertising campaign 
against a legal product, yet the Federal Government currently spends 
only $16 billion in its illegal drug enforcement effort.
  The Hutchison proposal is the correct one. This amendment should be 
defeated.
  The PRESIDING OFFICER. The Senator from Pennsylvania has 10 minutes 
11 seconds, and the Senator from Texas has 40 seconds.
  Mr. LOTT addressed the Chair.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. LOTT. Parliamentary inquiry. Rather than just waiting here, whose 
time is being used?
  The PRESIDING OFFICER. The time of the Senator from Pennsylvania is 
running. If neither side is yielding time, time will have to be 
deducted equally between both sides.
  Mrs. HUTCHISON. Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Unless the Senator gets unanimous consent, 
time will be deducted equally.
  Mrs. HUTCHISON. I ask unanimous consent that my 40 seconds be 
reserved.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, I yield 5 minutes to the Senator from 
Iowa.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. HARKIN. Mr. President, I thank my chairman and friend from 
Pennsylvania for his leadership on this issue.
  Again, let's cut through all the arguments, all the smoke and the 
haze, if you will. What is this about? It is about public health. It is 
about cutting down on youth smoking. That is what it is about.
  Now, my friend from Florida--with whom I wanted to engage in a 
colloquy, but I understand he had to go to a committee meeting--pointed 
out that a lot of the States sued on different bases--RICO, 
racketeering, prices--but 32 States, including Florida, included 
Medicaid. As any good lawyer can tell you, it is the old ``spaghetti 
theory'' of suing. You just throw the spaghetti at the wall, and 
whatever sticks, that is what you go on. They just threw a bunch of 
stuff in there when they sued to recoup from the tobacco companies.

  But it is interesting to note that, in the final settlement, the 
States waived their rights in the future to sue to reclaim any moneys 
under Medicaid. Why was that put in there? I will tell you why. Because 
the tobacco companies wanted it in there, because it not only precluded 
the States from suing, it precludes the Federal Government from 
recouping Federal shares of money for the health costs that we pay out 
in Medicaid to take care of people who are sick and dying of tobacco-
related illnesses. That is what this is all about.
  Some say we should not mandate to the States how to spend their 
money. We are not trying to do that. The basis of this is public 
health. At least a portion of the Federal moneys--not even all of it--
ought to go to smoking cessation programs and for a variety of other 
public health programs.
  The Senator from Pennsylvania knows as well as I do--we sit on the 
Appropriations Committee as chairman and ranking member--we have a lot 
of public health needs out there. We are getting shortchanged. I know 
States have needs for highways, bridges, sports arenas, prisons and 
things like that; but I daresay they did not bring these suits against 
the tobacco companies because the tobacco companies weren't building 
enough highways or sports arenas or prisons or anything else. What they 
brought it on was the health problems that tobacco companies are 
causing their people.
  Well, I might also point out that, in the previous settlement with 
the Liggett tobacco company, some States did give back their portion of 
that settlement to the Federal Government, covering the Medicaid 
portions of those costs. I don't have the exact figures, but I believe 
Florida was one of those States--Florida, Louisiana, and Massachusetts 
were the three States that returned some of that money. So that is 
really what this is about.
  I know the Governors have weighed in on this, both Democrats and 
Republicans. Well, I can understand their point. They are trying to get 
as much money as they can for their States; that is their 
responsibility. But it seems to me that we have to look at the national 
picture and what this is all about. It is about health care and cutting 
down on teen smoking. That is what this is really about.
  To cut through all the smoke and haze, let us do our responsibility 
to the Federal taxpayers, to the Medicaid Program, and give some 
guidance and direction--not explicitly saying how the States have to 
spend it; let them use their wisdom--but give them guidance and 
direction and say that at least 20 percent has to be used for smoking 
cessation and 30 percent for a broad variety of other public health 
measures, including helping tobacco farmers switch from that crop to 
others. It is the only decent thing to do.
  I reserve the time I have. How much time do I have?
  The PRESIDING OFFICER. The Senator from Pennsylvania has 4 minutes 31 
seconds.
  Mr. HARKIN. I yield that back to the Senator from Pennsylvania.
  Mr. LOTT addressed the Chair.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. LOTT. Mr. President, since all time has been used, except for 
maybe 5 minutes--40 seconds for the opponents and 4\1/2\ minutes or so 
for the proponents--I would like to use leader time to state my 
position on this issue.
  This morning I happened to be listening to one of the Washington, DC, 
all-news radio stations. There was an ad on there done by the 
Lieutenant Governor of Maryland, Kathleen Kennedy Townsend, speaking 
about the importance of tobacco cessation campaigns. Now, I wondered 
who paid for that, how that was being supported. Why was a Lieutenant 
Governor--a candidate for Governor--being used in this ad? It relates 
to this whole debate. I think probably the State of Maryland is paying 
for that campaign, or maybe it is a campaign unrelated to all this. But 
the point there is that there is already a lot being done, and there is 
going to be

[[Page S2894]]

a lot more done in the smoking cessation campaigns by the States.
  Mr. President, this is a very fundamental argument. It goes to the 
heart of the broader question: Does the Federal Government have the 
great wisdom reposing here in the Secretary of HHS, or do States have a 
certain modicum of wisdom of their own?
  Frankly, I trust the Governor of Pennsylvania and the legislature in 
Pennsylvania. I trust the Governors of Iowa and Illinois, and the 
legislature in Ohio, and in my own State, to make the best decision for 
the people in that State. There are those here who think the Federal 
Government has to review this, the Federal Government has the answer, 
the Federal Government must direct how this money is spent. I don't 
agree with that. That is the fundamental argument here on this issue 
and on a lot of others, as well.
  First, a little history. How did this all begin? Well, whether you 
agree with it or not, or whether I like it or not, it began in my State 
of Mississippi. An attorney general developed this lawsuit and, to 
their credit, they did a fantastic job. The Federal Government wasn't 
involved. The Federal Government could not find a way to get involved. 
They did it. It was Mississippi, Florida, Texas, Washington State, all 
across the Nation. The States, through their attorneys general and 
their lawyers, did the job and they got settlements. They got the 
money. They won the issue.
  Now, the Federal Government shows up and says, oh, by the way, give 
me that. The truth of the matter is, there are many people in this city 
who think all of that money, or somewhere between 50 and 77 percent of 
that money, should come to Washington, even though the Federal 
Government did nothing to win this settlement. They weren't a positive 
force. But they have the temerity to show up and say the law requires 
this or that and they want that money. I want to emphasize again that 
you are talking about a very substantial portion of that money.
  Now, I want to submit for the Record--I don't know if there are 
already in the Record--a letter I received from the National Governors' 
Association, signed by Governor Carper of Delaware, a Democrat, and 
Michael Leavitt, the Republican Governor of Utah, addressed to Senator 
Daschle and myself.
  I ask unanimous consent that this letter be printed in the Record, 
along with a letter I received from Secretary Shalala.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                               National Governors Association,

                                                   March 17, 1999.
     Hon. Trent Lott,
     Majority Leader,
     U.S. Senate,
     The Capitol,
     Washington, DC.

     Hon. Thomas A. Daschle,
     Minority Leader,
     U.S. Senate,
     The Capitol,
     Washington, DC.
       Dear Majority Leader and Senator Daschle: As the Senate 
     moves forward with consideration of the Emergency 
     Supplemental Appropriations bill, we write to inform you of 
     the nation's Governors' strong support for language now 
     included in the bill that would protect state tobacco 
     settlement funds. In addition, we are adamantly opposed to 
     any amendments that would restrict how states spend their 
     tobacco settlement money. The settlement funds rightfully 
     belong to the states, and states must be given the 
     flexibility to tailor the spending of the tobacco funds to 
     the needs of their citizens.
       There is a proposal under consideration, the Harkin/Specter 
     amendment, to require states to earmark 20 percent of the 
     settlement funds for smoking cessation programs, and an 
     additional 30 percent for health care programs. Governors are 
     adamantly opposed to any restrictions on the tobacco 
     settlement funds, but even more so to this proposal, because 
     it obligates state tobacco settlement funds to Federal 
     programs or to specific State programs only if approved by 
     the Secretary of HHS.
       Furthermore, although the Nation's Governors agree with the 
     goal of substantially reducing smoking, we are strongly 
     opposed to earmarks on smoking cessation of the basis that it 
     represents unsound public policy. There are already four 
     major initiatives that are going into effect to reduce 
     smoking.
       1. The price of tobacco products has already increased 
     between 40 cents and 50 cents per pack. Additional price 
     increases may come over time as companies attempt to hold 
     profit margins and make settlement payments. These price 
     increases will substantially reduce smoking over time.
       2. The tobacco settlement agreement already contains two 
     major programs funded at $1.7 billion over ten years 
     dedicated to reducing smoking. $250 million over the next ten 
     years will go towards creation of a national charitable 
     foundation that will support the study of programs to reduce 
     teen smoking and substance abuse and the prevention of 
     diseases associated with tobacco use. An additional $1.45 
     billion over five years will go towards a National Public 
     Education Fund to counter youth tobacco use and educate 
     consumers about tobacco-related diseases. The fund may make 
     grants to states and localities to carry out these purposes.
       3. The settlement agreement has a significant number of 
     restrictions on advertising and promotion. The settlement 
     prohibits targeting youth in tobacco advertising, including a 
     ban on the use of cartoon or other advertising images that 
     may appeal to children. The settlement also prohibits most 
     outdoor tobacco advertising, tobacco product placement in 
     entertainment or sporting events, and the distribution and 
     sale of apparel and merchandise with tobacco company logos. 
     Further, the settlement places restrictions on industry 
     lobbying against local, state, and federal laws. Over time, 
     these restrictions on tobacco companies' ability to market 
     their products to children and young adults will have a major 
     impact on smoking.
       4. States are already spending state funds on smoking 
     cessation and will substantially increase funding as the 
     effectiveness of programs becomes established. Many states 
     have already invested years in program design, modification, 
     and evaluation to determine the best ways to prevent youth 
     from taking up cigarette smoking and helping youth and adults 
     quit smoking. Governors and states are highly motivated to 
     implement effective programs. We see the human and economic 
     burdens of tobacco use every day in lost lives, lost wages 
     and worker productivity, and medical expenditures for 
     tobacco-related illnesses.
       All of these initiatives are likely to substantially reduce 
     tobacco consumption. It would be foolish to require large 
     expenditures over the next 25 years to such programs without 
     a good sense of how these initiatives will reduce the current 
     level of smoking. Any additional expenditures for smoking 
     cessation must be carefully coordinated with these other four 
     major policy initiatives as they will cause smoking behavior 
     to shift dramatically. Furthermore, while there have been 
     some studies on the effectiveness of alternative smoking 
     cessation programs, the ``state of the art'' is such that we 
     just do not know what types of programs are effective. States 
     are still in the process of experimentation with effective 
     methods of preventing and controlling tobacco use; there is 
     no conclusive data that proves the efficacy of any particular 
     approach.
       Governors feel it would be wasteful, even counterproductive 
     to mandate huge spending requirements on programs that may 
     not be effective. Governors need the flexibility to target 
     settlement funds for state programs that are proven to 
     improve the health, welfare, and education of their citizens 
     to ensure that the money is wisely spent. Furthermore, the 
     federal government must maintain its fiscal commitments to 
     vital health and human services programs, and not reduce 
     funding in anticipation of increased state expenditures.
       We strongly urge you to vote against the Harkin/Specter 
     amendment and support flexibility for states to tailor the 
     spending of the tobacco funds to the needs of their citizens.
           Sincerely,
     Gov. Thomas R. Carper,
                                      Chairman, State of Delaware.
     Gov. Michael O. Leavitt,
     Vice Chairman, State of Utah.
                                  ____



                                               Washington, DC,

                                                   March 15, 1999.
     Hon. Trent Lott,
     U.S. Senate, Russell Senate Office Building, Washington, DC.
       Dear Senator Lott: I am writing to express the 
     Administration's strong opposition to the provision approved 
     by the Senate Appropriations Committee as part of the FY 1999 
     supplemental appropriations bill that would prohibit the 
     Federal Government from recouping its share of Medicaid funds 
     included in the states' recent settlement with the tobacco 
     companies. The Administration is eager to work with the 
     Congress and the states on an alternative approach that 
     ensures that these funds are used to reduce youth smoking and 
     for other shared state and national priorities.
       Under the amendment approved by the committee, states would 
     not have to spend a single penny of tobacco settlement funds 
     to reduce youth smoking. The amendment also would have the 
     practical effect of foreclosing any effort by the Federal 
     Government to recoup tobacco-related Medicaid expenditures in 
     the future, without any significant review and scrutiny of 
     this important matter by the appropriate congressional 
     authorizing committees.

[[Page S2895]]

       Section 1903(d) of the Social Security Act specifically 
     requires that the States reimburse the Federal Government for 
     its pro-rata share of Medicaid-related expenses that are 
     recovered from liability cases involving third parties. The 
     Federal share of Medicaid expenses ranges from 50 percent to 
     77 percent, depending on the State. States routinely report 
     third-party liability recoveries as required by law. In 1998, 
     for example, states recovered some $642 million from third-
     party claims; the Federal share of these recoveries was $400 
     million. Over the last five years, Federal taxpayers recouped 
     over $1.5 billion from such third-party recoveries.
       Despite recent arguments by those who would cede the 
     Federal share, there is considerable evidence that the State 
     suits and their recoveries were very much based in Medicaid. 
     In fact, in 1997, the States of Florida, Louisiana and 
     Massachusetts reported the settlement with the Liggett 
     Corporation as a third-party Medicaid recovery, and a portion 
     of that settlement was recouped as the Federal share.
       Some also have argued that the States are entitled to reap 
     all the rewards of their litigation against the tobacco 
     industry and that the Federal Government can always sue in 
     the future to recover its share of Medicaid claims. This 
     argument contradicts the law and the terms of the recent 
     State settlement. As a matter of law, the Federal Government 
     is not permitted to act as a plaintiff in Medicaid recoupment 
     cases and was bound by the law to await the States' recovery 
     of both the State and Federal shares of Medicaid claims. 
     Further, by releasing the tobacco companies from all relevant 
     claims that can be made against them subsequently by the 
     States, the settlement effectively precludes the Federal 
     Government from recovering its share of Medicaid claims in 
     the future through the established statutory mechanism. The 
     amendment included in the Senate supplemental appropriations 
     bill will foreclose the one opportunity we have under current 
     law to recover a portion of the billions of dollars that 
     Federal taxpayers have paid to treat tobacco-related illness 
     through the Medicaid program.
       The President has made very clear the Administration's 
     desire to work with Congress and the States to enact 
     legislation that resolves the Federal claim in exchange for a 
     commitment by the States to use that portion of the 
     settlement for shared priorities which reduce youth smoking, 
     protect tobacco farmers, assist children and promote public 
     health. I would urge you to oppose efforts to relinquish the 
     legitimate Federal claim to settlement funds until this 
     important goal has been achieved.
           Sincerely,

                                             Donna E. Shalala,

                                           Secretary of Health and
                                                   Human Services.

  Mr. LOTT. The Governors say:

       . . . we are adamantly opposed to any amendments that would 
     restrict how States spend their tobacco settlement money.

  They point out that 20 percent of the settlement funds, under this 
amendment, would have to go for smoking cessation, and then another 30 
percent for health care programs. But also what the States do has to be 
approved by the Secretary of Health and Human Services. Why? What do 
they have at HHS that the various States don't have, and why can't they 
decide on their own what is best for their people?
  They say in their letter they are opposed to earmarks on smoking 
cessation on the basis that it represents unsound public policy.
  They then go on to say that there are many things already being done. 
In fact, the settlement agreement contains two major programs funded at 
$1.7 billion over 10 years dedicated to reducing smoking, and $250 
million over the next 10 years will go toward the creation of a 
national charitable foundation that will support the study of programs 
to reduce teen smoking. An additional $1.45 billion over 5 years will 
go toward the National Public Education Fund to counter youth tobacco 
use and educate consumers about tobacco-related diseases.
  So there is a great deal already being done. There is a significant 
number of restrictions in the settlement with regard to advertising and 
promotion of smoking. The States are already, on their own, spending 
funds for the smoking cessation campaign.
  The Governors need flexibility. That is what they say. In one State, 
perhaps, they need more money for smoking cessation. Fine. Perhaps they 
need more money for child health care. I think under this amendment 
that would be fine. But in another State perhaps they need it for HOPE 
scholarships, like Governor Engler in Michigan has been talking about. 
Or perhaps in another State, like my own, they want to use these funds 
for juvenile detention facilities, which, by the way, would be smoke-
free. But there is a real need there. Let the States make those 
decisions.
  Again, I want to point out that in the letter from Secretary Shalala 
she notes that the Federal share of Medicaid expenses ranges from 50 to 
77 percent. And they don't want anything to happen here that would not 
allow them to come back around later and try to get more, or large, 
chunks of this money.

  I think that is typical Federal Government arrogance: ``We have the 
solutions. We have the greater knowledge.'' I fundamentally reject 
that. I think the people closer to the problems are closer to the 
people, whether it is the farmers, or the children, or health care 
needs of the children in their States. I represent one of the poorest 
States in the Nation. We have tremendous needs for our children based 
on problems of poverty. We have needs across the board. We know what 
those needs are better than some all-powerful Federal Government.
  So I just want to urge that this amendment be defeated.
  I don't think, by the way, that every year for the next 25 years the 
States should have to submit their plan to the Department of Health and 
Human Services. Maybe the next Department will be headed by a 
Republican-appointed Secretary of HHS. ``Frankly, I don't care, my 
dear.'' I think the States can do this on their own. The Federal 
Government wants the money. Or, if they don't get the money, they want 
to control it.
  That is one of the reasons I am glad to serve in the Senate today--so 
I can fight just such ideas as this, that the Federal Government has 
the answers and should have the control. We should reject this 
amendment and allow the States to do what is best for their people. 
They know what the needs are. They will provide the right decision.
  I yield the floor.
  Mr. SPECTER addressed the Chair.
  The PRESIDING OFFICER (Mr. Allard). The Senator from Pennsylvania.
  Mr. SPECTER. Mr. President, Senator Kennedy has been tied up in 
committee. He has requested 1 minute. I am anxious to see how the 
distinguished Senator from Massachusetts will handle the single minute. 
I yield 1 minute to the Senator.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KENNEDY. I thank the Senator, and the Chair.
  Mr. President, let me just add my voice in support of the Specter-
Harkin amendment. Basically, as we all know, the States have waived the 
Federal Medicaid rights. So they understand that there are Federal 
interests. I think it is pretty understandable to all of us, because we 
understand how the Medicaid Program was established.
  The really compelling interest that was successful in the States that 
brought about the settlement in the first place related to the health 
hazards that individuals were afflicted with. This seems to me to be an 
eminently fair and reasonable balance between the Federal interests and 
the State interests. It seems to be focused in the areas of health 
care, and also the prevention of smoking. I think that is basically 
what the families of this country want. It makes a good deal of common 
sense. It is consistent with what this whole battle has been about, and 
this is a well targeted, well thought out, and a very compelling 
amendment to be able to do so.
  One of the most disturbing aspects of the Supplemental is the 
inclusion of the Hutchinson Medicaid Amendment. This issue does not 
belong in an emergency appropriations bill. If approved, the long-term 
cost to Medicaid of this amendment could be as high as $125 billion. No 
serious consideration has been given to the enormous impact that cost 
could have on national health policy. Instead of being used to deter 
youth smoking and to improve the nation's health, the language in the 
committee bill would permit states to use these federal Medicaid 
dollars to pave roads, to build prisons and stadiums, and to fund state 
tax cuts. Those are not appropriate uses for Medicaid dollars. Congress 
has a vital interest in how these federal dollars are used.
  Fifty-seven cents of every Medicaid dollar spent by the states comes 
from the federal government. The cost of Medicaid expenditures to treat 
people suffering from smoking-induced disease was at the core of state 
lawsuits against the tobacco industry. While the

[[Page S2896]]

federal government could legally demand that the states reimburse 
Washington from their settlements, I believe the states should be 
allowed to keep one hundred percent of the money. However, the federal 
share must be used by the states for programs that will advance the 
goals of protecting children and enhancing public health which were at 
the heart of the litigation and are consistent with the purposes of 
Medicaid. That is what the Specter-Harkin amendment would accomplish. I 
am pleased to be an original cosponsor of it. It is a fair and 
reasonable compromise of this contentious issue.
  While there were a variety of claims made by the states against the 
tobacco industry, the Medicaid dollars used to treat tobacco-related 
illness constituted by far the largest claim monetarily, and it formed 
the basis for the national settlement. As part of that settlement, 
every state released the tobacco companies from federal Medicaid 
liability, as well as state Medicaid liability. Medicaid expenditures 
heavily influenced the distribution formula used to divide the national 
settlement amongst the states. In light of these undeniable facts, the 
dollars obtained by the states from their settlements cannot now be 
divorced from Medicaid. States are free to use the state share of their 
recoveries in any way they choose. However, Congress has a clear and 
compelling interest in how the federal share will be used.
  In exchange for a waiver of the federal claim, states should be 
required to use half of the amount of money they receive from the 
tobacco industry each year to protect children from tobacco and improve 
the nation's health. If the funds are used in that way, this investment 
will dramatically reduce future Medicaid expenditures.
  Under the Specter amendment, at least twenty percent of a state's 
recovery would be spent on programs to deter youth smoking and to help 
smokers overcome their addiction. This would include a broad range of 
tobacco control initiatives, including school and community based 
tobacco use prevention programs, counter-advertising to discourage 
smoking, cessation programs, and enforcement of the ban on sale to 
minors. Three thousand children start smoking every day, and one 
thousand of them will die prematurely as a result of tobacco-induced 
disease. Prevention of youth smoking should be, without question, our 
highest priority for the use of these funds. The state settlements 
provide the resources to dissuade millions of teenagers from smoking, 
to break the cycle of addiction and early death. We must seize that 
opportunity.
  An additional thirty percent would be used by states to fund health 
care and public health programs which they select. States could either 
use the additional resources to supplement existing programs in these 
areas, or to fund creative new state initiatives to improve health 
services.
  Smoking has long been America's foremost preventable cause of disease 
and early death. It has consumed an enormous amount of the nation's 
health care resources. At long last, resources taken from the tobacco 
companies would be used to improve the nation's health. A state could, 
for example, use a portion of this money to help senior citizens pay 
for prescription drugs, or to provide expanded health care services to 
the uninsured. Funds could be used to support community health centers, 
to reduce public health risks, or to make health insurance more 
affordable.
  For years, the tobacco companies callously targeted children as 
future smokers. The financial success of the entire industry was based 
upon addicting kids when they were too young to appreciate the health 
risks of smoking. It would be particularly appropriate for resources 
taken from this malignant industry to be used to give our children a 
healthier start in life.
  Congress has an overwhelming interest in how the federal share of 
these dollars is used. They are Medicaid dollars. They should not be 
used for road repair or building maintenance. They should be used by 
the states to create a healthier future for all our citizens.
  I thank the Senator from Pennsylvania for yielding this time.
  Mr. SPECTER. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 3 minutes.
  Mr. SPECTER. I yield myself 2 minutes.
  Mr. President, in response to the comments by the distinguished 
majority leader on the obligation under this amendment to submit a 
plan, it is simply not so; States do not have to submit the plan to the 
Federal Government. All the States have to do is submit a ``report'' 
which shows how the funds ``have been spent.'' So there is no 
obligation to submit a plan.
  When the distinguished majority leader talks about the temerity of 
the Federal Government, there is enough temerity on all sides to go 
around. But that is not the issue here. The States brought the 
lawsuits, because that is what the law requires, and the States have an 
obligation to abide by the decision of the Secretary of Health and 
Human Services, who makes the allocation.
  Here we have litigation which has brought a settlement on tobacco-
related causes. This is a modest approach on spending, indicating broad 
standards for State compliance, and only 50 percent related to tobacco. 
If no legislation were enacted on specifics, these funds would 
certainly be impressed with the trust.
  When the majority leader talks about spending the funds for juvenile 
detention, that is very important. But that is simply not related to 
tobacco. When there is talk about using it for debt reduction of the 
States, that is very important. But it is not related to tobacco 
causes. These are funds produced from a tobacco settlement, and if the 
States do not use these funds in this way, my legal judgment is that 
these funds are impressed with a trust enforceable by any citizen of 
the State. But this is an accommodation which will allow a reasonable 
amount of the moneys to be used for tobacco-related purposes.
  I reserve the remainder of my time.
  Mrs. HUTCHISON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I believe that this amendment is the 
worst of all worlds. It would require every State every year for 25 
years to submit a plan about how it is going to spend its own money. 
What happens if a State legislature is not in session and the Secretary 
of HHS says, ``I don't think your plan meets my standards for tobacco 
cessation or health programs,'' and the State legislature is then in 
the position of losing Medicaid funds and having to call a special 
session to either change its programs to meet the requirements of the 
Secretary of HHS, or take the hit, or not serve its own people under 
Medicaid?
  Mr. President, this is State money, it is not Federal money. There is 
no relationship between Medicaid in many of these State lawsuits.
  I hope my colleagues will reject this amendment.
  The PRESIDING OFFICER. The Senator from Pennsylvania has 1 minute.
  Mr. SPECTER. Mr. President, in conclusion--the most popular words of 
any speech--this proposal is a very modest approach on a multibillion-
dollar--$200 billion--settlement that has been brought by the chairmen 
and ranking members of the committees in the Senate charged with 
allocating funds for Health and Human Services. There is no plan which 
has to be submitted by the Governors. That is repeated again and again. 
All the Governors have to do is say how they will spend the money. I 
agree with the principle of leaving maximum flexibility to the States 
when we make allocations. But this is for a generalized purpose, and 
that is all we are asking for here. In light of the very substantial 
budgetary shortfalls, this money ought to be used, at least in part, 50 
percent for the purposes of solving the problems caused by tobacco.
  I yield the remainder of my time.
  Mrs. HUTCHISON. Mr. President, I move to table the amendment, and I 
ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion of 
the Senator from Texas to lay on the table the amendment of the Senator 
from Pennsylvania. On this question, the yeas and nays have been 
ordered, and the clerk will call the roll.

[[Page S2897]]

  The legislative clerk called the roll.
  The result was announced--yeas 71, nays 29, as follows:

                      [Rollcall Vote No. 53 Leg.]

                                YEAS--71

     Abraham
     Allard
     Ashcroft
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Brownback
     Bryan
     Bunning
     Burns
     Campbell
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     Crapo
     Domenici
     Dorgan
     Edwards
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Johnson
     Kerrey
     Kerry
     Kyl
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     Mack
     McConnell
     Moynihan
     Nickles
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                                NAYS--29

     Akaka
     Baucus
     Boxer
     Breaux
     Byrd
     Chafee
     Cleland
     Daschle
     DeWine
     Dodd
     Durbin
     Feingold
     Harkin
     Jeffords
     Kennedy
     Kohl
     Landrieu
     Lautenberg
     McCain
     Mikulski
     Murkowski
     Murray
     Reed
     Reid
     Sarbanes
     Specter
     Stevens
     Wellstone
     Wyden
  The motion to lay on the table the amendment (No. 77) was agreed to.
  Mr. MURKOWSKI. Mr. President, I move to reconsider the vote.
  Mrs. HUTCHISON. Mr. President, I move lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. MURKOWSKI. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Is there objection?
  Mr. MURKOWSKI. Mr. President, it is not my intention to object, but 
there is a matter to clear up with the leadership, if I may have 30 
seconds.
  Mr. President, I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. MURKOWSKI. My preference is to continue the quorum call. I 
understand it has been agreed to by my colleague.
  The PRESIDING OFFICER. The clerk will continue to call the roll.
  The legislative clerk continued with the call of the roll.
  Mr. STEVENS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Under the previous order, the Senator from Texas, Mrs. Hutchison, is 
recognized to offer an amendment relative to Kosovo.
  Mr. STEVENS. Mr. President, I ask unanimous consent that that matter 
be set aside and that the Senator from Arkansas be recognized for up to 
15 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. LINCOLN. I thank the Senator from Alaska.

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