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The U.S. Senate's decision to set aside a tobacco bill may have ended one fight over marketing restrictions only to set in motion a second fight.

Republicans -- who effectively killed tobacco legislation offered by Sen. John McCain (R., Ariz.), calling it big government and big taxes -- now are almost desperate to pass a more narrowly tailored bill so they can say they took some action on the politically hot issue.

The urgency has increased the prospects of tobacco legislation being drafted by the House GOP leadership.


The House package originally included a provision removing the deductibility of expenses for tobacco ads, but the House leadership late last week dropped that proposal, reacting to conservative concerns.

Still, ad groups are worried the deductibility issue will resurface.

"It is obviously dangerous, until the last second," said Dan Jaffe, exec VP of the Association of National Advertisers. "There are more turns in this than in a rollercoaster."


House Speaker Newt Gingrich (R., Ga.) is to unveil his tobacco plan this week. He is expected to recommend the anti-drug ad program now being conducted by the White House Office of National Drug Control Policy be expanded to take on underage tobacco use, and that the Food & Drug Administration be given clear authority over tobacco.

He may also propose strengthening laws against selling to underage smokers.

The deductibility issue's high visibility this late in the tobacco debate has been worrisome to ad and media groups, since advertising long has been considered a legitimate business expense. They contend that allowing deductibility of one industry's ads but not anothers unconstitutionally favors one type of commercial speech over another.

"Either you have a net revenue tax system with business deductions provided to businesses, or we change the whole tax system into a beauty contest where you only get a deduction when you believe speech is beautiful," said Mr. Jaffe. That "would be be a terrible development."

Some people characterize advertising as "corporate welfare," and claim advertising deductibility is a "subsidy" Congress can eliminate. Republicans view the elimination of a tax deduction as a far preferable alternative to raising taxes.

Actually, the Senate last week offered some support to those who see eliminating deductibility as an alternative. Shortly before killing the McCain bill, it approved an amendment from Sen. Jack Reed (D., R.I.) that would stop deductibility for tobacco ads from a marketer for a year if an ad placement violated a Food & Drug Administration tobacco-ad rule.

Even some senators who fought that addition to the McCain bill, questioning the FDA's authority, said they would look more charitably at the House legislation.

"We will take a look at it," said Sen. Don Nickles (R., Okla.), assistant majority leader.


Still unclear is how much support limited tobacco legislation would get. Democrats said they weren't wedded specifically to the McCain bill but said they want a comprehensive package.

The defeat also increases the importance of the lawsuit challenging the FDA's tobacco rules, now under review by the U.S. Court of Appeals for the 4th District.

In the suit, tobacco marketers and ad groups are arguing the FDA has no authority to regulate tobacco or tobacco advertising, and also are contesting the constitutionality of advertising regulation.

The McCain bill would have given the FDA the right to regulate tobacco and tobacco ads, and left only the constitutional issues to be decided.

The Senate defeat came after a $45 million TV ad campaign from tobacco companies lobbying against the legislation. Its success could have an impact on future advertising on public policy issues, possibly prompting more spending from groups taking their case directly to the public.

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