Derick Arciniega, 4, brushes his teeth along with his preschool classmates… (Los Angeles Times )
The conventional wisdom among lawmakers is that if you're going to propose a new program, you should also propose a way to pay for it. That's more fiscally responsible than simply dipping deeper into the Treasury and worrying about the consequences later.
Nevertheless, there's something wrong about President Obama's proposal to make preschool available to more low-income children at the expense of tobacco addicts. If the point of the preschool expansion is to benefit society as a whole, why should only one (admittedly disfavored) group of people pay for it?
The president's budget calls for a "Preschool for All" partnership with states to enable all 4-year-olds from low- and moderate-income families to go to pre-kindergarten classes. The price tag for this effort and related early childhood services: $77 billion over 10 years, most of it coming in the latter half of that decade.
To finance all this, the president would nearly double the federal excise tax on tobacco products, then increase the tax annually to adjust for inflation. For cigarettes, the tax would increase from about $1 a pack to just under $2. In the administration's view, this is a win-win; not only would the tax hike generate enough money to pay for the early childhood development programs, it "would also have substantial public health impacts, particularly by reducing youth smoking."
It's certainly true that taxing something tends to discourage people from doing it. And as a matter of tax policy, it's better to discourage people from smoking than to deter them from working overtime or saving more. But what's good for tax policy isn't necessarily fair, which is the problem here.
If the administration were proposing to raise tobacco taxes solely to increase funding for cancer research or to reduce the amount Medicare and Medicaid spend on chronic diseases, that would be both fair and good tax policy. It's not; instead, it's seeking to fund a program that has broad benefits and widespread appeal -- and no relationship to the ills caused by tobacco. The only connection is that low-income Americans whose children would benefit from the extended preschool program also happen to be the ones most likely to smoke.
"Since the release of the first Surgeon General’s Report on smoking in 1964, smoking has become ever more concentrated among populations with lower incomes and fewer years of education," Lorna Schmidt of the Campaign for Tobacco-Free Kids wrote in January. "In the past, the highest income Americans smoked at levels even greater than the poorest; now they smoke at barely half the rate of those with the lowest income."
In other words, Obama's preschool initiative would be paid for largely by the people it is supposed to benefit.
You could certainly argue that revenue is fungible, so the new tobacco taxes could just as easily be said to pay for research grants at the National Institutes of Health. But the administration declared that the tax hike on tobacco was for one specific purpose: to pay for the new preschool program and other early childhood development initiatives. I have no love for tobacco or smokers, but I can't help but think they're getting picked on here.
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