Relating to the expenditure of funds by the Federal Government under National or State tobacco industry settlements.

Bars the expenditure of funds received by the Federal Government as a result of Federal legislation implementing any portion of a national tobacco industry settlement to create, maintain, or expand Federal programs unless such expenditures are specifically authorized by the terms of such legislation. Prohibits the expenditure of funds received by the Federal Government as a result of any State settlement to create, maintain, or expand Federal programs.

Directs the Secretary of the Treasury to disburse such funds (in excess of those spent on programs specifically designated to receive funds by such legislation) to provide tax relief, restore borrowed trust fund accounts, and reduce the national debt as follows: (1) one-third to be invested in marketable Government securities and held in a Tax Cut Offset Trust Fund for use as the Congress directs to offset future revenue reductions; and (2) two-thirds to exchange any special issue nonmarketable Government bonds in the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund with marketable Government securities.

Requires the Secretary, when such Funds no longer hold nonmarketable Government securities, to direct that the two-thirds allocation be used to exchange special issue nonmarketable Government securities with marketable securities in the Highway Trust Fund. Directs the Secretary to use such allocation for repayment of the public debt when all Government trust funds no longer hold nonmarketable Government securities.

Declares that, notwithstanding any law except the Line Item Veto Act, the receipts and disbursements of all funds not to exceed the value of those referred to in this Act shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of: (1) the Federal budget as submitted by the President; (2) the congressional budget; or (3) the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act). Exempts such receipts and disbursements from any statutory general budget limitation on expenditures and net lending (budget outlays) of the U.S. Government.

Directs the Secretary, upon expenditure from a Government trust fund of any money not so counted, to sell a corresponding amount of marketable Government securities from the trust fund and reduce the fund balance accordingly.