SMOKING GUN? January 15, 1998 The NewsHour with Jim Lehrer Transcript

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According to documents released today, R.J. Reynolds used the cartoon character Joe Camel to target young smokers. In response, President Clinton has urged Congress to act quickly on tobacco legislation. After a background report, the man who released the documents, Congressman Henry Waxman, joins a discussion on what the federal government should do about under-aged smoking.

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A RealAudio version of this segment is available. NEWSHOUR LINKS: January 15,1998 Background report on the documents implicating R.J. Reynolds. 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

JIM LEHRER: Joining us now, Congressman Waxman, Democrat of California. He's the ranking Democrat on the Health Subcommittee of the House Commerce Committee; Bruce Reed, the White House senior domestic policy adviser, who serves as the President's point man on tobacco legislation; Sen. John McCain, Republican of Arizona, chairman of the Senate Commerce Committee; and Manny Goldman, a tobacco industry analyst with the Paine Weber brokerage firm. We invited RJR to participate, but they declined. Congressman Waxman, do you agree with the President that these documents say loud and clear to Congress pass this legislation?

"Don't target the children."

REP. HENRY WAXMAN, (D) California: Absolutely. The President set out for us our goal, making sure that tobacco companies don't target the children. This is the market that they've been seeking. These documents today clearly illustrate that one of the major tobacco companies was in a very cynical and clear way targeting and implementing a strategy to get kids as young as 14 years of age to smoke, so if we're going to deal with this problem, let's look at how we stopped the companies going after our kids. That should be the focus, not how to bail out the tobacco industry, how to solve their problems, but how to protect the public health.

JIM LEHRER: Now, Mr. Reed, the President wants some changes in the deal as it now stands, correct, before Congress passes it and sends it to him?

The President takes a stand.

BRUCE REED, White House Domestic Policy Adviser: Yes. The President has set forth some clear principles that he'd like to see in tobacco legislation. First and foremost, in order to stop kids from taking up smoking in the first place we need to raise the price of cigarettes. And the President has called for a combination of price increases and penalties on the industry that would raise cigarette prices by up to $1.50 over the next 10 years if we can't bring youth smoking down. As I said, we'd also like to see stiff penalties on the tobacco industry if they don't meet these targets to reduce youth smoking because these documents make very clear that for too long the tobacco industry bottom line has been hooking kids.

JIM LEHRER: Sen. McCain, do you see it the same way, that these documents say that loud and clear?

Sen. McCain: "I read in the Washington Post that senior White House officials would rather have a fight with the Republicans in Congress than move forward in a bipartisan fashion."

SEN. JOHN McCAIN, Chairman, Commerce Committee: I haven't seen the documents, but I'm sure that they do, and they should know the Congress has asked for thousands of documents which will be forthcoming and give us more information on this. But let me just make a point here. Mr. Reed says that the President wants us to make changes. After the settlement was reached, the White House said in 30 days they would have a specific legislative proposal. Ninety days later they came up with a set of principles. We have written--my committee has written twice to the President of the United States asking for specific legislative proposals. And so far we have gotten no response. It's very easy for the President and Mr. Reed to say they want us to enact legislation. If they really want it, then they should come forward with specific legislative proposals as we do when we deal with any other piece of legislation so the Congress can move forward in a partnership, and it's very disturbing when I read in the Washington Post that senior White House officials would rather have a fight with the Republicans in Congress than move forward in a bipartisan fashion.

JIM LEHRER: What's going on, Mr. Reed?

BRUCE REED: Well, I think we've been very clear about where we'd like to see tobacco legislation and we're not interested in playing politics here. We definitely want to get something done. As Congressman Waxman will recall, when we put forward a detailed health care bill, the reaction we got from Congress was quite the opposite. Why are you sending us all these reams of details? Let us know what your principles are. Let us know what you really care about. That's what the President has done. And we said to anyone in either party we're prepared to sit down anywhere, any time, and work this thing out.

Will the President propose specific legislation?

JIM LEHRER: But you're not going to send a bill up there, right?

BRUCE REED: No. The President has laid out clear principles. The budget that he puts forward next month will be even more detailed in how he'd like to see this matter handled. And we're going to work together on a bipartisan basis with Chairman Bliley and Congressman Waxman--

JIM LEHRER: He's the chairman of the House Committee.

BRUCE REED: Yes, he is.

JIM LEHRER: How does that sound to you, Senator? Feeling better now?

SEN. JOHN McCAIN: Well, of course, it's fascinating because Mr. Reed and his friends at the White House were sent over a very specific legislative proposal on product liability reform for which they said there would be no deviation. The fact is that in the Washington Post a senior ranking official, perhaps Mr. Reed can identify who it was, said, yes, we'd rather have to fight for the Republicans and make this an election year issue. We'd like to work together in a bipartisan fashion. We can do so more effectively if they send us a legislative proposal, as they do on almost every proposal that the administration makes, for clearly we don't want to fight.

JIM LEHRER: Mr. Reed, just for the record, does the President want to make this a partisan issue--

BRUCE REED: Absolutely not. This is not about politics. It's not about money. It's not about one goal reducing teen smoking. And I think that that's a goal that every Democrat, every Republican can work together to meet.

SEN. JOHN McCAIN: Then the Washington Post was incorrect in the quotes by a senior White House official, I take it?

BRUCE REED: The President has been very clear; he wants to get this done.

JIM LEHRER: Mr.--Congressman Waxman, where do you come down on this? Should the President be sending a specific bill, or should you and other members--you and Sen. McCain and other members of Congress write a bill?

REP. HENRY WAXMAN: This shouldn't be a partisan issue, and I've been impressed by the courageous leadership that Sen. McCain has given to this matter, and I've also been impressed by the integrity under which Chairman Tom Bliley has tried to get all the information, listen to all points of--

JIM LEHRER: He's a Republican Congressman from Virginia.

REP. HENRY WAXMAN: Right. And he and I differed on a number of issues, particularly tobacco, because he presents Virginia, the home of Philip Morris Tobacco. But he has indicated his willingness to talk about these issues and try to see if we can find some common ground. I hope we work together on a bipartisan basis, but one thing I want to point out is that when Sen. Lott said that any legislation is dead, I just thought that was inappropriate for him to make that statement. This is not a partisan issue, but we do have to remember that the leadership in the House, Newt Gingrich particularly, and the leadership in the Senate, have received millions of dollars in campaign contributions for the tobacco companies. I don't think they ought to go and look at ways to accommodate the tobacco companies' interest. Let's work together and get a bill.

Will the party leadership push hard to pass tobacco legislation?

JIM LEHRER: Sen. McCain, how about that, that the leadership, your leadership is not really pushing this very hard?

SEN. JOHN McCAIN: Well, I think they are, and I think that they are committed to addressing the major problem that afflicts America, and that is, young people smoking. We all know that 3,000 young people every day start smoking, and that's terrible, and it has to be eliminated. Sen. Lott was reacting to the quotes in the Washington Post when senior White House officials say that they'd rather have a fight with the Republicans. Naturally, Sen. Lott is going to react in a dissatisfied fashion. But I know that Sen. Lott, who has basically recused himself, except for his leadership position, Sen. Nichols and others have committed to trying to address this issue at least on teen smoking, we'd like to have an overall settlement as envisioned in the agreement that was negotiated by the AG's. I don't know if we can or not, but we have the obligation. I don't think the American people would appreciate it if we didn't.

JIM LEHRER: All right. Just for the record, the reason Sen. Lott recused himself is that his brother is involved in the litigation.

SEN. JOHN McCAIN: Brother-in-law.

JIM LEHRER: Sorry. Brother-in-law. Mr. Goldman, I have not forgotten you out there in San Francisco. As somebody who follows the tobacco industry, what do you think would happen to this agreement from the tobacco industry's point of view if the White House and members of Congress start fooling with it in a major way?

Will the money go to the federal government or to the states?

MANNY GOLDMAN, Tobacco Industry Analyst: Okay. Well, just keep in mind, I am an independent person here. I have no axe to grind with anyone, the tobacco or other--the other side. I'm just trying to forecast what will happen. I think the settlement, as currently written, won't be changed all that much. I'd be very surprised to see it change dramatically. What you have in the agreement are quite a number of things that really were not expected initially in terms of the degree of FDA regulation, agreeing to OSHA regulations. The amount of money is tremendous, $368 1/2 billion is just slightly less than the Gross National Product of spending. So we're talking large dollars; we're talking money to the states; money to different agencies, health advocate groups, to the FDA. It's really an extraordinary document. And if someone had said two or three years ago that there would be such a document on the table, I don't think anyone would have believed it. So it's quite an unusual thing. My guess would be that if there were major tampering to the agreement, it would put it in jeopardy. I think there will be some changes. I think it'll probably end up somewhat more than the $368 1/2 billion. But I don't think it would be enormously more. And I think kind of the innards of the agreement, as it currently stands, probably will stay the same in terms of the look-back provisions regarding youth smoking, in terms of the FDA, in terms of money to the states. I don't think that's going to change an awful lot.

JIM LEHRER: Why not? Why don't you think it will change?

Higher taxes could create an "unsavory" black market.

MANNY GOLDMAN: Because I don't think there's a lot of wiggle room on the part of the companies. The way the agreement is currently written, after a period of 10 years, to cover the costs associated with the agreement, cigarette prices at retail would have to go up about $1.50. And if you add a lot--if you layer a lot onto that, then you get to the point that it jeopardizes not just the sales of cigarettes--that's not what I'm talking about --but it jeopardizes the legal sale of cigarettes. If you have too large an increase--as Canada found--if you have too large an increase in cigarettes prices, then all of a sudden you have under the table cigarettes being marketed by unsavory elements. And that happens to be, I believe the key factor in just how much the agreement can be increased by in terms of total dollars. That's really a key factor.

JIM LEHRER: So if the tobacco companies are pushed too far beyond which they cannot go, or which they decide they cannot go, they will just say, forget it, let's go to court?

MANNY GOLDMAN: Well, I think that's--it's kind of a remote possibility at this point. But I don't think that it's one that be excluded. I mean, the companies can walk, except for giving money to Mississippi and Florida and maybe shortly to Texas and to Minnesota, those are cases, the latter two that are currently in process, except for that, the companies haven't given money to anyone. So they still have the money in a sense, and they're willing to part with a great deal of it. And I think that's an important factor, but it has to be on what they consider reasonable terms. So there has to be a meeting of the minds here. I don't think they're likely to walk. But it's not a possibility that can be excluded.

JIM LEHRER: Senator, how do you read the wiggle room factor here?

SEN. JOHN McCAIN: Well, I think that Dr. Koop's and Dr. Kessler and many of the outside organizations will play kind of the roles of referees on this issue. I agree with Mr. Goldman, that it probably wouldn't be changed too much. But, clearly, these documents raise the issue of immunity. And that's going to have to be looked at very carefully.

The immunity issue.

JIM LEHRER: Explain what you mean by that.

SEN. JOHN McCAIN: Immunity for the tobacco companies in return for these enormous payouts.

JIM LEHRER: Which is what they want in exchange for the money; they want to have immunity from lawsuits, and these documents you think would be terrific in a lawsuit, right?

SEN. JOHN McCAIN: Well, Dr. Kessler said, you know, we found the smoking gun here. I'm not sure. I'd like to see all of the documents and let the CEO's testify, but that's going to be under pressure and also, as was mentioned, there may be a requirement for more money, but also Congress is very unwieldy in dealing with a multi-jurisdictional issue like this one. I'm convinced we can--working with the White House and in a bipartisan fashion--solve at least the major challenge here of teen smoking.

JIM LEHRER: Mr. Reed, how do you feel about the wiggle question in terms of how much more there is to do here before the deal falls through completely?

BRUCE REED: Well, I think the attorneys general got us off to a good start, but there are going to have to be some important changes in order to meet the President's demands. Most important is that we need to put serious financial incentives that will penalize the industry if teen smoking doesn't go down. There's no point in having a comprehensive peaceful legislation to attack teen smoking if we don't think it's going to work. So that's the most important issue for us.

MANNY GOLDMAN: Jim.

JIM LEHRER: Yes. Mr. Goldman.

MANNY GOLDMAN: I would like to just bring up one other thing that I think is a very important issue, and that is the issue of who the money goes to. The way the settlement is currently written, money goes to the states, to agencies, and so forth. As I understand it, the administration has proposed the lion's share of the money, or some large amount going to the federal government for their programs, and some much smaller amount going to the states. And that can be a real difficult one in terms of coming to an agreement, because it's a large change in the settlement. So that's something that occurred fairly recently.

JIM LEHRER: But that's from a standpoint it would be the states who would object to that, rather than the tobacco companies, though, right?

MANNY GOLDMAN: Right. But it's a kind of thing that can keep a deal from actually happening.

SEN. JOHN McCAIN: And we're going to hear from the governors on that.

The uncertain future of the tobacco settlement.

REP. HENRY WAXMAN: I want to point out that we don't need a deal for the Congress of the United States to act, and we also don't need tobacco companies to sign off on it. They might need a deal to settle litigation, but if we're going to enact rational tobacco policy, we ought to decide what that policy ought to be. Now, that deal that the AG's and tobacco companies entered into, as far as I'm concerned, is dead.

JIM LEHRER: It's dead?

REP. HENRY WAXMAN: Yes. It'll be a reference point on some of those issues, but it's a wish list for the tobacco companies. They get immunity from liability from all their past conduct; they get immunity from and no accountability for their future activities; they--they take away some of the jurisdiction the FDA we think already has to regulate tobacco; they have a very weak performance standard to make sure that we reduce teenage smoking. We need to figure out what is rational, and the first thing that's rational is to stop them from going after our kids before we'd ever consider the issue of immunity. It seems to me we've got to get a lot of more documents. And what we revealed today is just a part of what we need to know. There are other companies involved, other documents. We ought to have it all before we start even considering giving them the special treatment.

JIM LEHRER: Mr. Goldman.

MANNY GOLDMAN: Well, it's kind of an interesting thing because the issue of immunity is really a key one. It's basically a deal-breaker. You know, nothing comes free. And the kinds of things that constitute the settlement, which I guess were worked out by the tobacco companies on the one hand and the various health advocate groups and others on the other hand, you know, have an awful lot in there that is really extraordinary. And we do have documents coming up that I'm sure will be--will be discussed further, and there may be more documents, who knows? I think this is a very, very important period over these next couple of months because there will be congressional hearings, and I'm sure that all of these issues will come to the fore, but ultimately when push comes to shove, however you do it, the issue of immunity, I think, ends up being a key one, however that's worked on.

REP. HENRY WAXMAN: It really is chutzpah for the tobacco companies to think that they can lie to the Congress, go after our children, deny that there are consequences from smoking, and then ask that they be forgiven for their actions.

JIM LEHRER: A quick word from Sen. McCain. Yes, sir.

SEN. JOHN McCAIN: Very briefly, in all due respect to my friend from California, we have to have a vehicle. We have to have a framework. The AGs deserve to have that as the vehicle. Sure, it's going to be changed, but that's still got to be the initial way that we approach this issue, in my view.

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