TOBACCO POLICIES

Every day, 3,000 children become smokers -- 1,000 have their lives shortened as a result. Almost 90 percent of adult smokers began smoking by age 18 and today, 4.5 million children aged 12 to 17 -- 37 percent of all high school students -- smoke cigarettes. Tobacco is linked to over 400,000 deaths a year from cancer, respiratory illness, heart disease and other problems. To end this public health crisis, we must have a focused public health effort to reduce youth smoking. The 1998 state tobacco settlement was an important step in the right direction, but more must be done to protect our children and hold the tobacco industry accountable: raise the price of cigarettes; re-affirm full FDA authority to regulate tobacco products; support critical public health efforts to prevent youth smoking; protect farmers and farming communities; work with states and Congress to enact tobacco legislation to settle Federal Medicaid claims; and recover from the tobacco companies the direct health care costs incurred by the Federal government as a result of smoking.

· Raise the Price of Cigarettes, So Fewer Young People Start to Smoke. Public health experts agree that the single most effective way to cut youth smoking is to raise the price of cigarettes. Last year, the President called for an increase of $1.10 per pack (in constant dollars) to help cut youth smoking in half within five years. This year, because of the increases already agreed to between the tobacco companies and the states, we can reach the target with a legislated increase of half this amount, 55 cents per pack.

The funds that result from this policy will cover tobacco-related health care costs. Each year, the Federal government spends billions of dollars treating tobacco-related diseases for our armed forces, veterans, and federal employees. It is fitting that the tobacco industry reimburse U.S. taxpayers for these costs, just as it already has agreed to do for the States.

· Reaffirm the Food and Drug Administration's(FDA's) Full Authority to Keep Cigarettes out of the Hands of Children. The Administration will again support legislation that confirms the FDA's authority to regulate tobacco products in order to halt advertising targeted at children, and to curb minors' access to tobacco products. While the state settlement limits tobacco advertising, it still allows certain marketing practices targeted at children, including newspaper and magazine advertising and retail signs near schools. Moreover, only by reaffirming FDA's authority can Congress ensure that America's children are protected from the next generation of tobacco industry marketing. We should take this matter out of the courts and ensure that the FDA -- the nation's leading health consumer protection agency, providing oversight over food, drugs, and medical devices -- has full authority to protect our children from tobacco.

· Support Critical Public Health Efforts to Prevent Youth Smoking. The budget provides $68 million -- double last year's level -- to help support tobacco prevention programs in states and local communities. The budget increases funding for the Centers for Disease Control's tobacco control efforts by one-third, from $74 to $101 million. The budget also provides an additional $56 million for a smoking cessation program in the Department of Veterans' Affairs for any honorably discharged veteran who began smoking in the military. The budget also includes a $5.2 million initiative in the Bureau of Alcohol, Tobacco and Firearms to enable ATF to enforce the excise increase proposed in the budget.

· Protect Farmers and Farming Communities. States, farmer, and industry representatives recently produced a $5 billion agreement to provide financial assistance to tobacco farmers and their communities. This Administration supports this agreement and remains committed to protecting tobacco farmers and their communities. The Administration will work with all parties, as needed, to ensure the financial well-being of tobacco farmers, their families, and their communities.

· Enact Tobacco Legislation to Settle Federal Claims on State Medicaid Recoveries. Since U.S. taxpayers paid a substantial portion of the Medicaid costs that were the basis for the state settlement with the tobacco companies, Federal law requires that the Federal government recoup its share. However, the Administration will work with the States and the Congress to enact tobacco legislation that, among other things, resolves these federal claims in exchange for a commitment by the states to use tobacco money to support shared national and state priorities which reduce youth smoking, promote public health and children's programs.

· Recover Federal Health Costs from Tobacco Companies.In addition to these Medicaid costs, tobacco-related health problems cost Medicare and other Federal programs billions of dollars each year. To recover these losses, the U.S. Department of Justice intends to bring suit against the tobacco industry, and the budget provides $20 million to pay for necessary legal costs. The Administration will propose that recoveries be used to preserve and protect Medicare for future generations.