U.S. Studies Plan to Sell Up to $4 Billion in Bonds to Finance Fight Against Drugs

The Bush Administration, hoping to enlist citizens’ pocketbooks as well as their hearts in the war on drugs, is considering a plan to issue up to $4 billion in “Drug War Bonds” to help finance top spending priorities in the federal anti-drug effort, Administration officials said Monday.

The plan, modeled on the popular sale of Victory Bonds during World War II, was first proposed last week by members of the House Republican Conference. National drug control policy director William J. Bennett has already voiced support for the scheme, which is now being weighed by the Treasury Department, officials said.

Under the proposed Drug War Bond Act, Treasury would issue up to $4 billion in small-denomination bonds that would mature within 12 years and pay annual dividends of up to 4%. Proceeds would be placed in a new “Drug War Trust Fund” to pay for new prison construction, new federal judges and prosecutors, and anti-drug education programs.

Conversation With Darman

Bennett, who as the nation’s top anti-drug official would administer the fund, expressed support for the plan last week in a conversation with Budget Director Richard G. Darman, officials said.

“Bennett certainly finds the idea interesting,” said Donald R. Hamilton, a spokesman for the drug policy office. “He is attracted to the notion that people who invest in the bonds could actively participate in the anti-drug effort.”

Hamilton said Bennett had stopped short of formally endorsing the plan, regarding the fiscal elements of the drug fight as the responsibility of Darman. Although Office of Management and Budget officials declined to discuss the plan, a Treasury spokesman said the department was studying it.

An aide to Bennett described the bonds as a convenient but tangible way for citizens to get involved in the anti-drug effort. Other proponents have suggested that they be made available to schoolchildren through the sale of “drug bond stamps” that would be collected in a savings book until it could be exchanged for a bond.

Fiscal Constraints

The creation of the drug bonds could also help the Bush Administration resolve the looming clash between its ambitious anti-drug rhetoric and the reality of fiscal constraints.

On a cross-country tour last week, Bennett appeared to outline an ambitious anti-drug strategy that would include significant aid to state and local governments in an effort to improve conditions in drug-stained inner cities.

He warned candidly that such an effort could require substantial additional federal spending--a dodgy prospect given President Bush’s firm pledge not to raise taxes. And Bennett seemed to reiterate that warning Monday in a session with reporters after a meeting with a delegation of U.S. mayors.

“I’ll go on record,” he said. “Crack is worse than taxes.”

Legislation to permit the sale of drug bonds was introduced without fanfare last week with Rep. Jerry Lewis (R-Redlands) as principal sponsor.

In a recent letter to Republican colleagues, Lewis described the proposal and said: “The War on Drugs, like every war fought by this country, will never be won until we mobilize and involve the American people.”