TOBACCO ROW March 12, 1998 The NewsHour with Jim Lehrer Transcript

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President Clinton endorsed a new tobacco bill that, among other things, does not grant the tobacco industry immunity from future lawsuits. Following a background report, Margaret Warner and guests revisit the tobacco deal and examine the new bipartisan bill introduced in the Senate.

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A RealAudio version of this segment is available. NEWSHOUR LINKS: January 29, 1998 Steven Goldstone, the CEO of RJR Nabisco, acknowledges the health risk of tobacco products. January 16, 1998 Texas and Minnesota have suits pending against the tobacco companies. January 15, 1998 Documents show R.J. ReynoldsCalifornia used Joe Camel to attract young smokers. December 31, 1997 California bans smoking in just about all in-door public places, including bars. August 25, 1997 Florida settles with the tobacco industry for $11.3 billion deal. Online Forum Congressman Waxman and Connecticut Attorney General Blumenthal debate the tobacco settlement. June 20, 1997 A panel discussion the tobacco settlement. May 20, 1997: Research strongly suggests that second-hand smoke is a possible cause of heart disease. April 18, 1997: Experts discuss the future of the tobacco industry. March 20, 1997: The Liggett Group admits that smoking cigarettes is addictive and can cause cancer. Browse the NewsHour's coverage of law and health. OUTSIDE LINKS: Food and Drug Administration

MARGARET WARNER: Unlike the agreement negotiated last year, the bill introduced today would not give the industry immunity from future class action lawsuits, but it would place a cap of $8 billion on the amount of damages the industry would have to pay in any one year. Among other things, the bill would also raise the price of a pack of cigarettes by $1.50 over the next two years, limit tobacco company advertising to black and white text messages only, and grant the Food & Drug Administration full authority to regulate tobacco as a drug. Joining us now are Senator Bob Graham, Democrat of Florida, one of the bill's main sponsors; Michael Moore, attorney general of Mississippi, who took a lead in negotiating the earlier settlement; John Garrison, chief executive officer of the American Lung Association; and David Adelman, a tobacco industry analyst for the investment firm Morgan Stanley-Dean Witter. Sen. Graham, how is this bill, in your view, an improvement over what was negotiated earlier?

Sen. Graham: "Over the 25-year life of this legislation it would increase the total amount of contribution by the tobacco industry by almost $300 billion beyond what was in the attorney general's settlement."

SEN. BOB GRAHAM, (D) Florida: First, I want to commend the attorneys general for the outstanding service that they rendered to the nation by initiating the state lawsuits which led to this global settlement. If states like Mississippi and Florida had not taken the initiative, we would not in March of 1998 be in a position to consider a national tobacco settlement. So I commend them and recognize their enormous leadership. The legislation that Sen. John Chafee and Tom Harkin and I introduced today differs from the attorney general's proposal in several ways. Two of those are, first, it would increase the price of cigarettes by $1.50 a pack over the next two years. Over the 25-year life of this legislation it would increase the total amount of contribution by the tobacco industry by almost $300 billion beyond what was in the attorney general's settlement. And second, it does not provide for any shield of the tobacco industry against class action suits, or against punitive damages.

MARGARET WARNER: Mr. Garrison, from the Lung Association, what do you think of this bill?

JOHN GARRISON, American Lung Association: Well, the American Lung Association is concerned with one major flaw in the bill, and that flaw does give special legal protection to the tobacco industry. And that is the cap that was mentioned earlier. The $8 billion cap. We just don't think that this industry, this rogue industry, should be given any special protection. It's an industry that over 400,000 Americans die from smoking its product--it's an industry where we have found that they have targeted kids as young as five years old. They've withheld documents. So while this bill has many strong features and certainly is stronger than the deal that was enacted by the attorneys general, it still has this major flaw, and the Lung Association feels that we can have the provisions of this bill without letting the tobacco industry off the hook, and that's the major problem here. And it doesn't have to be a problem, we don't think.

MARGARET WARNER: Sen. Graham, are you letting the industry off the hook with this cap?

SEN. BOB GRAHAM: Absolutely not. What the cap is, is every year for the duration of this agreement the tobacco industry must contribute $4 billion into a fund which would be used to pay off settlements that were reached for past or future tobacco-related diseases and injuries. It would then provide if in any year the amount of those judgments exceeded $4 billion, there will be an additional $4 billion or $8 billion per year. If there were insufficient funds in any one year available through that trust fund to meet the judgments that have been secured, they would go over into the next year and can be paid out of the next year's $8 billion allotment. We believe that this is a fair provision. It does not give the tobacco industry any barriers to being sued in a class action format, or for punitive damages. It does not restrict the ability of local, state, or federal governments to sue for claims that they might have against the tobacco industry. It does give the tobacco industry a degree of stability in terms of what their ultimate annual obligation will be. Frankly, this industry is going to be asked over the next 25 years to pay an excess of $600 billion, $600 billion under our legislation. We think this will put the industry in a position that it can meet that enormous obligation, which will be so important in order to achieve the objectives, particularly the objectives of reducing teen-age smoking.

MARGARET WARNER: Mr. Adelman, how do you think the industry will look at this?

Mr. Adelman: "I think, overall, the industry would find that today's proposal is seriously flawed."

DAVID ADELMAN, Morgan Stanley Dean Witter: I think, overall, the industry would find that today's proposal is seriously flawed. And I think that they would point to three or four different issues. At a starting point, a cap in and of itself, insufficient level of liability and protection, a cap in the June 20th agreement was present, but there were several other protections that the industry negotiated and discussed as the public health officials and with 40 attorney generals, and a cap on a stand-alone basis is going to be problematic. This is not a contract; this is a bill and a bill in the future by a Congress in the future can be changed. So it doesn't provide from a practical perspective any long-term liability protection. I doubt the industry will support it, and, therefore, the marketing restrictions that are proposed are clearly unconstitutional without the industry's voluntary agreement as well.

MARGARET WARNER: All right. I want to get to that point. Sen. Graham, just respond on the point that he just made that from the industry's perspective, an $8 billion annual cap isn't much of a protection.

SEN. BOB GRAHAM: Well, the purpose of this legislation, frankly, is not to come on bended knee to the tobacco industry and ask for their sufferings as to what the representatives of the American people can pass. What we are focused on are those 3,000 teen-agers who today started smoking, 1,000 of whom will die prematurely of a tobacco-related disease. Those are the lives that we are trying to save by our legislation. I believe the most significant way in which we are going to reduce teen-age smoking is by getting the price of cigarettes up to $1.50 a pack as quickly as possible, which our bill does, and I believe that it will have a dramatic positive effect in terms of reducing teen-age smoking, and, therefore, the future premature loss of life.

MARGARET WARNER: Mr. Adelman, couldn't Congress just go ahead and come up with a bill, whether or not the industry likes it? What does it mean when you said it might threaten some other parts?

DAVID ADELMAN: Well, on a couple of issues, the Senator, himself, you know, characterizes his proposal as a settlement. A settlement involves a degree of negotiation, and I think that the June 20th agreement was a carefully crafted one that took into account the industry, its economics, its importance as an employer, as a supplier, and as a customer of a variety of industries. It took into account the fact that it was going to voluntarily agree to unprecedented degrees or restrictions on its behavior and similarly give up very significant First Amendment marketing rights. And I think that the industries are likely to voluntarily agree to this and, therefore, would challenge and I think ultimately be victorious in challenging the marketing restrictions that are contained in this agreement.

MARGARET WARNER: You mean go to court?

DAVID ADELMAN: Absolutely.

MARGARET WARNER: Mike Moore, your view of this bill, and particularly this immunity liability issue.

MICHAEL MOORE, Attorney General, Mississippi: Well, first, I'm real encouraged by what Senator Chafee and Harkin and Graham have done. I mean, finally we have some movement. There are some real issues that continue to be debated. I think this is probably a real good first negotiation gambit. I mean, the amount of money in this thing I'm certain the industry will fight, but Senator Graham, I'm sure, is trying to provide more money for us to reduce teen-age smoking.

MARGARET WARNER: So it's roughly almost--as he said--$300 billion more?

Attorney Geneal Moore: "It's one of the finest deals that I've seen so far."

MICHAEL MOORE: It could be as much as twice as much as the original agreement, it could be even more when you look back--I mean, they could end up paying $35 billion a year and frankly the net assets of the entire industry are $30 billion, so I don't now where we end up, but I have to tell you, I am so encouraged by what they've done on the market in advertising restrictions and the like. There is a point, though, that we need to get something that will get all the marketing advertising restrictions that we've proposed in our agreement, and frankly, they placed in this deal, but we need some level of compliance by the industry, whether you want to call it a consent or agreement. Otherwise, we'll find ourselves back in court with people challenging the market and advertising restrictions. On our agreement, you know, we proposed consent decrees where they agree and waive their First Amendment rights, and these guys do the same thing. But if they don't get some of the protections that they want, they may not be able to comply or to agree. It would be a shame if we didn't get a deal because of that, but this is definitely in the right direction. It's one of the finest deals that I've seen so far.

MARGARET WARNER: But, I mean, briefly, are you saying that you think if they didn't agree and they went to court to challenge these advertising restrictions on First Amendment grounds, that they could--that the tobacco companies could well prevail?

MICHAEL MOORE: Well, a consent decree usually means that the two parties have consent to all the restrictions that are in the bill, and we were going to have them sign contracts too in a protocol, so if we didn't have their voluntary agreement waiver of their First Amendment rights, we might have some problems in court down the line. I'll bet you, though, what's going to happen is the provisions of this bill, the provisions that we have, and the work that McCain and Hatch and other people are doing are going to be put together in a bill they can get enough Democrats and Republicans to get this thing passed. So I'm encouraged.

MARGARET WARNER: All right. Let me go back to Senator Graham. What about the point that for practical purposes, you actually do need the industry to be comfortable enough with this not to go into court and challenge it?

SEN. BOB GRAHAM: Well, it would certainly be desirable to add to the list of people who are supporting this legislation, which include the President of the United States, the leaders of the major health organizations, such as the American Cancer Society, a strong letter of support from Dr. Koop and Mr. David Kessler for the legislation that Sen. Chafee, Harkin, and myself introduced today. If we could add the industry as a supporter, recognizing their public responsibilities and recognizing their need to atone for past actions, it would be obviously that much better. But we are prepared to proceed forward with the legislation we've introduced, which we think is fair, balanced, will achieve the objective of reducing teen-age smoking, and it is the type of legislation that the American public expects us to enact, so that we can save literally millions of lives over the next generation.

MARGARET WARNER: John Garrison, I know you think that $8 billion cap doesn't go far enough. But listening to this argument on the other side, does it concern you--I mean, would you be troubled if Congress went ahead with a bill that the industry didn't support? How important do you think it is--is it to get the industry in on this?

Mr. Garrison: "But we don't have to have the tobacco industry telling us what we can do, or influencing what we could do, or making a deal with them."

JOHN GARRISON: I don't think it's important at all to get the industry into it. I don't think that Congress needs to worry about the industry. The advertising part I think is a red herring because there are Supreme Court case law that indicates that if you have--if you're doing illegal advertising or deceptive advertising, you can't do that, and certainly what has been revealed by the documents that have been covered so far is that this industry has done exactly that, marketing to kids. So we shouldn't be put aside. This is a diversionary tactic. While we can go ahead and we can get the taxes on the cigarettes, we don't have to have the immunity. We don't have to have a cap. Even Doctors Kessler and Koop and their support of certain parts of this bill indicated they did not support the cap and so I think we need to keep that in mind. But this--a lot can be done, will be done. The American people does want it done. But we don't have to have the tobacco industry telling us what we can do, or influencing what we could do, or making a deal with them.

MARGARET WARNER: Attorney General Moore, you've been up on the Hill a lot trying to sell your earlier proposed deal. What would you say are the political prospects for it or for this bill? Where do you think this is headed?

MICHAEL MOORE: Well, I have to tell you again, I'm so proud of these three senators because I've read what they've done today, and it is a tremendous piece of work. I think what's going to happen, practically speaking, is they tell me that McCain's Commerce Committee--

MARGARET WARNER: This is Sen. John McCain, Republican--

MICHAEL MOORE: The Commerce Committee is where most of the action is going to take place, and I'm not a senator, so maybe that's true, maybe it's not, but I seem to believe it because that's where all the evidence is. I think what you'll see is this bill go there. I think you'll see Senator Conrad's bill go there, and I think--

MARGARET WARNER: Kent Conrad.

MICHAEL MOORE: Pieces of--

MARGARET WARNER: Democrat.

MICHAEL MOORE: --all those bills, see what they can get enough votes for, both Democrats and Republicans, and frankly, I'm so encouraged I think we're going to get this thing done and have a bill marked up in the next three weeks. And that's--I really do. I think that's an important piece. I mean, Sen. Graham has done an outstanding job working with--bipartisanly with Sen. Chafee and Sen. Harkin. They're headed in the right direction, and I think we're off to the races. I just want to say thanks again to Bob because he knows how hard we've been fighting this in Florida.

MARGARET WARNER: Sen. Graham, three weeks away?

Sen. Graham: "There is no step that America could take that would have a greater impact in terms of the health of these people, the reduction of unnecessary deaths, than this legislation on tobacco."

SEN. BOB GRAHAM: Well, that's very encouraging. Mike, I appreciate what you've said. I don't know if I could quite bet on doing it in three weeks, but I think that the chances of passage of a comprehensive tobacco bill have moved up substantially in the last few days, and I'd hope that the legislation that Sen. Chafee, Harkin, and myself have introduced will contribute to that, and it's very important to get--this is a rare opportunity. There is no step that America could take that would have a greater impact in terms of the health of these people, the reduction of unnecessary deaths, than this legislation on tobacco. We cannot miss this opportunity, and I am confident that what happened today will bring that opportunity closer to reality.

MARGARET WARNER: All right. Well, Sen. Graham, Mr. Adelman, and Mr. Garrison, and Attorney General Moore, thank you all four very much.

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