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 | TOBACCO DEAL: TO SIGN, OR NOT TO SIGN? July 11, 1997 |
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Attorney General Richard Blumenthal responds:
Your questions were answered by Congressman Henry Waxman (D-CA) and Connecticut Attorney General Richard Blumenthal
Questions Asked in this Forum:
Will the agreement end all price supports to the tobacco industry?
Why did the state of Mississippi receive a higher individual settlement than it had requested?
Shouldn't a deal be approved now, rather than risk no deal at all?
Since tobacco is a legal substance, won't the courts strike down any efforts to control it?
If tobacco is considered such a "lethal" substance, why isn't it banned altogether?
Will the agreement prevent the FDA from regulating nicotine, and will the President veto it?
Additional Comments
Online NewsHour Links
July 9, 1997:
Former FDA commissioner David Kessler questions the wisdom of endorsing the Attorneys General proposal.
June 20, 1997:
A panel discussion on the agreement reached between tobacco manufacturers and state attorneys general.
May 20, 1997:
Research strongly suggests that second-hand smoke is a possible cause of heart disease.
April 18, 1997:
Experts debate the future of the tobacco industry.
April 18, 1997:
A background report on the tobacco industry's decision to settle.
March 20, 1997:
Smoking cigarettes is addictive and can cause cancer, admits the Liggett Group.
February 28, 1997:
A report about selling cigarettes to teens and new government rules to prevent under-age smoking.
February 10, 1997:
FDA Commissioner David Kessler discusses his contentious term as commissioner of the Food and Drug Administration.
August 23, 1996:
Brennan Dawson, of the Tobacco Institute, and FDA Commissioner David Kessler debate new restrictions on tobacco sales.
July 5, 1996:
Mark Shields and Kate O'Beirne explore Sen. Bob Dole's comments that tobacco may not be addictive.
When attorneys general for 40 states announced on June 20th they had made an historic agreement with the tobacco industry, many hoped Congress would easily approve it. The goal, according to Matthew L. Myers of the National Campaign for Tobacco-Free Kids, who helped negotiate the deal, was to "put in place the first truly comprehensive nationwide system designed to drive down the number of children who become addicted to tobacco products each day, and help adults who are already addicted to quit." The agreement calls on tobacco companies to:
pay billions of dollars for a host of public education and health programs; reimburse states for the cost of treating tobacco related illnesses; set aside a multi-billion dollar fund to compensate smokers who win individual lawsuits against the tobacco companies; and severely curtail marketing and advertising cigarettes, especially to teenagers. Joe Camel and the Marlboro Man would be history. Tobacco billboards would disappear, as would sponsorship of sports events. T-shirts, hats and other items targeted to kids would also vanish.
The settlement took months of intensive negotiation. The tobacco industry is rich, powerful, and until recently, doggedly determined to fight any efforts to reform its marketing tactics. To maintain its position, it has even allegedly lied under oath to Congress that it was unaware that nicotine is addictive. So, sign the deal?
Not so fast, says Congressman Henry Waxman (D-CA) whose committee leaders of the tobacco industry allegedly were lied to during a 1994 House investigation.
"The agreement eliminates class action suits, the state lawsuits, and the right of individuals to bring addiction claims; it caps what individuals can recover annually; " wrote Waxman in a recent Washington Post article. "And it allows the industry to pay for judgments against it -- including judgments based on future wrongdoing -- by reducing its payments for child health insurance and other public health needs."
Waxman further criticizes that on the regulatory side, the settlement gives the industry "something equally unprecedented: It effectively bars the FDA from regulating the nicotine content of cigarettes."
Waxman also warns to watch the "fine print" in the 68-page agreement. "One provision mandates that the industry pay for the settlement by raising cigarette prices, not by reducing profits. Another makes all industry payments (to states and education programs) tax deductible, in effect forcing taxpayers to pick up 35 percent of the costs."
Two similar questions from:
David Satterthwaite, Plymouth, MI:
The Federal government already provides price supports for tobacco. Under this agreement, the government would also be obligated to provide 35% of the health care expenses associated with this industry's product. The industry ends up getting two government subsidies, then, instead of one. Please comment.R. Joseph Haberlen, Pittsburgh, PA:
Will the negotiations include a measure to end subsidies paid the tobacco industry? They must also stop. We can no longer subsidize an industry that manufactures death.
Congressman Henry Waxman responds:
There is no reason that taxpayers should subsidize an industry when the consequence of using the industry's product is death. It is important to remember that tobacco is the leading cause of preventable death in the United States - over 400,000 Americans die each year due to cigarette smoking.
The settlement proposed by the Attorneys General and tobacco industry lawyers did not address the issue of crop insurance subsidies or other direct spending programs which support tobacco. However, the proposal designates all payments made by the industry as ordinary business expenses. As a result, these expenses will be tax deductible. If you assume that tobacco companies pay the standard corporate tax rate of 35 percent, $129 billion of the proposed settlement costs will be borne by the taxpayers.
I believe that taxpayers should not have to subsidize the tobacco industry, and any tobacco legislation should not give the industry special tax treatment.
Subsidies for tobacco farmers are provided by Congress and, though they are not currently a part of the proposed settlement agreement, I am sure they will be discussed and addressed before Congress completes its review. The Koop-Kessler Committee has recommended the elimination of federal price supports, but recognizes the need for some transitional aid for farmers. This is a matter for Congress and the federal government to review and address.
A question from Lawrence Steingold,
Va. Beach, VA:It seems strange to me that Mississippi Attorney General Mike Moore headed up the negotiation and his is the only state that has settled with the tobacco companies for four times more than he asked for. Why did he receive so much more than he asked and doesn't that undercut his authority when it comes to arguing for the agreement? His state now has a financial interest in the outcome.
Attorney General Richard Blumenthal responds:
Attorney General Moore is actively lobbying for the proposed tobacco settlement and will continue to be one of its leading advocates because he understands that only with a comprehensive plan can Mississippi and the country realize many of the important public health goals of this agreement.
Attorney General Moore settled his case because his state's trial was to begin on July 7 and both he and the industry agreed that it would be better not to go to trial while the settlement plan was pending. Under the settlement with Mississippi, the state would receive more money than it asked for from the industry, but the $3.6 billion figure is based on payments over 25 years.
The lawsuit originally called for nearly $1 billion but the time period was not specified. If Congress passes a national settlement, Attorney General Moore and the industry have agreed that settlement will take precedence over the Mississippi settlement.
Congressman Henry Waxman responds:
Attorney General Moore has made an important contribution to tobacco control through both his lawsuit and negotiations with the tobacco industry. I commend him for his energy, dedication, and hard work on this issue.
However, public health experts have examined the proposal negotiated by the attorneys general and the tobacco company lawyers and have raised serious concerns about many of its provisions. Dr. C. Everett Koop has stated that the attorneys general have been "snookered" by the tobacco industry, and Dr. David Kessler has said that on closer examination the settlement "gave with one hand, and took back with the other." The problem may have been that with so much money on the table, the attorneys general were simply too eager to make public health concessions.
A comment from Barry Warner, Bristol, MA:
In retrospect it will always seem as if more could have been had, and certainly the tobacco companies will not give more than their very well considered position requires, BUT there is a tide in the affairs of tobacco companies. Cut a deal now and move forward, because I doubt that there will be another opportunity. Your thoughts? Congressman Henry Waxman responds:
I have heard the argument made that we are at the high water mark and must immediately pass the settlement intact - as drafted by the Attorneys General and the tobacco industry - or the moment will be lost.
However, in dealing with legislation that will have such longstanding and sweeping public health implications, we must carefully evaluate not only what we stand to gain but what we must give up in return. We should pass legislation only if we can gain more for the health of the American people than we can by the combination of litigation, legislation, and regulation.
I don't think we are at the high water mark. The tobacco industry is facing numerous and growing threats from all sides. In the last year alone, substantial and historic changes have taken place. Liggett became the first cigarette company to admit that cigarettes cause disease and that nicotine is addictive.
The FDA's ability to regulate nicotine as a drug and its ability to fully regulate tobacco has been confirmed in a North Carolina court. And hundreds of court cases are proceeding in states from coast to coast. In Minnesota alone, the court is reviewing 250,000 secret documents hidden behind the cloak of "attorney client privilege."
Dramatic changes are taking place, and I believe the momentum is continuing to grow. I think the real risk is that in the rush to grasp the opportunity, we will squander the chance to make a lasting improvement for public health.
Attorney General Richard Blumenthal responds:
We cannot -- and should not -- miss this historic opportunity to save lives. Some 3,000 children take up smoking every day and one-third of them will die from the habit. One of the greatest benefits of this comprehensive plan is that the country receives immediate changes that would be time-consuming and difficult, and in some cases impossible, to achieve in court. Let's work together to improve the plan, but it should pass.
A question from Al Goldberg,
N. Miami Beach, FL:The attempt by the Attorneys General to blackmail the tobacco companies is so bizarre and unconstitutional that I marvel that this scheme would even be started by people versed in law. Contract law must find the inequities in such an attempt.
The last time I looked, the manufacture and sale of tobacco products in this nation were still legal and, for the life of me, I simply cannot see how the Courts will allow this so-called agreement to stand.
Please comment.
Attorney General Richard Blumenthal responds:The manufacture and sale of tobacco products is legal, but many of the actions of this industry clearly are not. The industry has conspired for decades to deceive the public and to market its products to our children -- who are not legally allowed to buy the products.
In addition, each of the states is seeking to recover money each state has spent in treating smoking-related illnesses. Though individuals may choose to smoke, the taxpayers of my state and others did not make such a choice and should be compensated by the industry for the money paid to treat tobacco-related illnesses.
Congressman Henry Waxman responds:
I believe the attorneys general's cases are very strong. Although the cases use some new legal theories, many of the cases also rely on well-established state consumer protection laws. I doubt there could be a more clean-cut consumer fraud than the tobacco industry's decades-long campaign to deceive the American public.
A question from Scott Crook, Pocatello, ID:
Although I understand the economics driving this tobacco settlement, I am a bit concerned about the message that the settlement sends. Essentially, isn't the message of this deal that as long as the tobacco industry is willing to pay a price we are willing to allow them to continue to poison us?
If the basis for the deal is that tobacco is a dangerous, addictive substance, why would we ever allow the industry peddling the offensive product to exist?
Congressman Henry Waxman responds:
My view is that any tobacco legislation should not be a payoff by the industry for a green light to continue business as usual. If there is any tobacco legislation, it should force wholesale changes in the industry.
Any settlement needs to include financial incentives so that the industry will be hit where it hurts - their bottom line - and to give them the incentive to change their practices. The tobacco industry cannot be allowed to continue to market to our children, make misleading health claims, and continue to hide their research and knowledge of the consequences of tobacco use. The industry should not be immunized for their past misconduct.
Attorney General Richard Blumenthal responds:
Though the media may portray this as a settlement all about money, that is far from the truth. My primary objective has been and will continue to be to stop the illegal marketing of products to our children and, thus, reduce the number of young people who smoke.
The public health benefits of this proposal are tremendous -- funding for cessation and counter-marketing programs, new warnings on tobacco products, restrictions on tobacco marketing and funding for enforcement. Together, those efforts can reduce the likelihood that people will smoke and help save thousands, if not millions, of lives.
The Online NewsHour Editors ask:
1.) Former FDA commissioner Kessler says he thinks this agreement will limit the FDA's ability to regulate nicotine. Does it? If it does how? And if it doesn't, why does he say it does?
2). The White House is apparently going to declare this deal "inadequate." Is there any chance that the deal will pass Congress with White House opposition? Would the deal need Presidential approval? If so, could Congress find a veto-proof majority?
Attorney General Richard Blumenthal responds:
The proposed settlement agreement limits the Food and Drug Administration's ability to ban nicotine from tobacco products in terms of both time and procedure. It requires, for example, the FDA to examine the possibility that reductions in nicotine will lead to a black market.
I support proposals, such as those made by Drs. Koop and Kessler to eliminate these restrictions. I am not aware of any health expert who believes that an immediate elimination of nicotine would be wise. Some 50 million Americans are addicted to nicotine and an immediate ban on nicotine would lead to massive black market sales. I support reductions in nicotine levels as soon and large as possible and hope that one day it can be banned.
Indeed, the Koop-Kessler report represents a profoundly impressive and significant effort to strengthen the settlement without scuttling it. I agree with nearly all of the recommendations. Many are measures that we sought at the bargaining table.
I welcome improvements in this proposal and am very hopeful that the President will use his office to bring the industry back to the table and improve this settlement proposal. Unlike ordinary legal settlements, this settlement is a work in progress. I do believe an improved settlement plan will win the President's approval and will pass Congress. Without the President's approval, it is doomed.
Congressman Henry Waxman responds:
The proposed settlement severely limits the FDA's ability to regulate nicotine by creating two hurdles to the FDA exercising its authority.
First, the FDA must use the formal rulemaking process. Unlike the current informal rulemaking procedure which can be concluded within a year or two, formal rulemaking requires proceedings that take many years to conclude. Peanut butter regulations that were adopted using the formal process took ten years to complete.
Second, the settlement requires the FDA to prove that lowing nicotine levels will not create a black-market demand for tobacco products with higher nicotine yields. This standard is impossible to meet - one simply cannot prove a negative. This is clearly unacceptable to the public health community and to the Administration. As President Clinton said: "Would we deny the FDA the right to protect 100 percent of our children because there might be a few black-market cigarettes around?"
The White House has set up an interagency task force to examine the proposed settlement and to make recommendations to the President. In addition, the White House has now received the report of the Koop-Kessler Committee which has conducted an intensive examination of the public health issues related to tobacco. They are carefully considering the proposal before making final judgement on the package as a whole, but they have already begun raising serious concerns.
Since any tobacco legislation must be signed by the President in order to become law, his support is critical. It will be very difficult for any proposal opposed by the President to pass the Congress or to become law over his veto.
Claudia Scott, Due West, SC:
As a teenager, I am appalled that Congress believes that tobacco companies will stop aiming at children/teenagers. The tobacco companies need customers and when the middle aged smokers die out, they will need the teens of today to take the place.
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Sam Stetson, Washington, D.C.:
If the current deal between states attorney generals and the tobacco products manufacturers is to be rejected by Congress, what then?
Would Congress attempt to draft its own deal with this industry? How feasible would this option be considering the influence of this commercial sector on our national legislature via its Washington lobbies and political action committees?
Would private citizens, states, and localities continue to have the right to file class action suits against these manufacturers in the manner that they have prior to the deal? In other words, would the "old order" be better than any conceivable deal?
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Glenn Buxton, Dayton, OH:
This agreement is a slap on the wrist to these multi-billion dollar companies. Their product has done as much, or more, damage to the lives of American citizens as the drug lords we are condemning throughout the world.
It is a first step toward what should be the ultimate goal, elimination of the marketing of an addictive substance that results in a slow agonizing death for the consumer.
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Jeanne Goessling, Evanston, Il:
A parallel aspect of the tobacco controversy, which I never hear discussed, is tobacco as a crop. When is the federal government going to get out of the tobacco business, and what can be done to wean farmers away from a very profitable crop?
I understand there are incentives for Bolivian farmers to stop producing drug crops. What appeal can be made, what incentive can be offered to farmers who have built their lives around tobacco and the tobacco companies, if we really want to get tobacco out of our lives? The farmers aren't part of the settlement, but they will be affected by the results of it.
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Jack Cristofani, Shawnee, KS:
Maybe I'm missing something here. Why is an agreement worked out between big tobacco and the states Attorney Generals something that Congress has to have anything to do with in the first place? If Congressional approval is so crucial, then why wasn't Congress actively involved in the negotiations that led to the agreement? ______________________________
Joan C. Bossart, Emeryville, CA
I believe it would be a grave mistake for the Congress to approve the current tobacco agreement. It does not go far enough. This agreement is too favorable to the tobacco industry--the profits of the tobacco companies will remain virtually unchanged. I realize that it is important for them to have a profitable balance sheet, but I think if the current agreement is approved, they will be laughing all the way to the bank.
1. They will pass on their costs to their consumers by raising cigarette prices in the U.S. and by increasing sales overseas.
2. They will essentially be immune from any further lawsuits.
3. Many of the payments they have agreed to make will be tax deductible! Why should American taxpayers in effect subsidize them?
4. The FDA will have no say over the amount of nicotine contained in cigarettes.
Even though it may take much longer to reach an agreement, I think the Congress will be caving in to tobacco interests if it approves the agreement now.
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Karen Silver, Bronx, NY:
I am hoping that the view expressed by C. Everett Koop and Dr. Kessler gets adopted.
I would be very frightened by a solution that lets the tobacco companies write their own regulatory ticket. Nicotine is a drug -- in fact, it's a deadly poison -- and is therefore subject to regulation on that basis.
Not only is it a drug, it's a high-reward drug that has some people smoking one after the other because their receptor sites can't be without it. I would like to see nicotine gradually made illegal. The cigarette manufacturers have made it clear that they see cigarettes as a drug delivery system in their secret memos. Fine, they are creating a drug delivery system. So they can't moan and complain when the government agrees with them and makes them stop what they're doing.
We have a nation of drug addicts who are destroying themselves and others around them. It's time to stop the pushers.
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