Following this article, we have set up a special moderated discussion section for those who wish to comment. After you read the article, be sure to add your opinion.
The only way to understand the Great Tobacco Heist of 1997 is to follow the money. To be sure, the proposed tobacco settlement is filled with chicanery, political career enhancement and good old-fashioned government power grabs. But it is the money that counts.
Follow the money |
And there is a lot of it -- $370 billion -- flowing from the tobacco companies to the federal and state governments under the proposed settlement. Mississippi has already won $3.4 billion on its own. The federal government in Washington will get billions and the right to regulate to the micron everything and anything shaped like a tube and filled with bad things.
A big boost for Big Government
From a politician's perspective, the proposed tobacco settlement is a dream come true. First, billions of dollars will be available for expanding the size and scope of government. New programs of every kind, from health, social counseling and education, to police force expansion can be established, staffed and funded in perpetuity. There's $100 million a year in R&D money to learn how to discourage people from smoking; another hundred or so to help people to learn to quit; and even $75 million a year for sports teams that lose tobacco sponsorships. A new non-profit organization dedicated to anti-smoking education will receive half-a-billion dollars a year.
And very best of all, not a dime of the cost of doing any of this need come from the non-smoking public. Government spending is dramatically raised, but income taxes are not. The whole thing is paid for by the Darth Vaders of public health, the truly evil tobacco companies, and their allegedly addicted customers.
Last but not least, the concerned and caring politicians who brought us all these governmental riches will be re-elected from here to eternity. We are witnessing the birth of a whole new generation of politicians.
In short, it is a scam. And it is not only likely to come to pass, but it is also likely to begin a new political era in America.
So just what is it that the tobacco companies have done that will cost hundreds of billions of dollars in fines and all sorts of other restrictions and sanctions? They sold a product the public wanted to buy, under regulations approved by the government, with a tax structure that pays more than the public cost of the use of the product. For this, they are vilified.
Villains and hypocrites
While tobacco companies deserve their fair share of blame, there's plenty to go around. A large portion of the tobacco company payments will flow to the states to help cover their health care costs, the very same states that have been collecting billions of dollars of excise and sales taxes on the sales of tobacco products to their people.
The state of Florida -- which will receive a relatively healthy share of the payments -- at one time actually produced unfiltered cigarettes in its prisons to give to inmates and to sell to municipalities.
Even the federal government shares some of the blame. They weren't above selling cut-rate cigarettes on military bases.
Nevertheless, big tobacco must now pay the price of its success. The companies have signed an agreement to pay hundreds of billions of dollars in fines, drastically cut their product's advertising, and pay even more fines if consumers don't actually use less of their product. If underage smoking does not fall by 30% in five years, 50% in seven, and 60% in ten years, tobacco companies will pay as much as $2 billion a year in penalties. And the tobacco growers are lining up too -- they want $6 billion to help them switch to other crops and/or a protectionist requirement that a higher percentage of American tobacco be used in cigarettes.
The slippery slope of social engineering
But this may be only the beginning, for what tobacco hath sown, distilled spirits, cheeseburger and automobile companies may reap. Squeezing money for government programs out of the profits of companies selling things that can harm you may fund the next wave of America's social engineering.
We don't (yet) see the alcohol industry paying the costs of alcoholism. We don't blame the automobile industry when drivers choose to drive recklessly -- or to drink and drive -- and ends up killing themselves or others.
And, what about the fast food restaurants that are contributing every day to the number of deaths from heart disease and colon cancer? Should McDonalds be paying, say, $5 billion a year to Washington if cheeseburger sales do not decline?
What we are witnessing is the birth of Prohibition II. We have seen this movie before; it features bootlegged product, glamorization of its use, increases in crime, and public disgust with government.
Larger warnings of dire health threats on cigarette packages may only add cache to smoking. In England, Death Head cigarettes, which are sold in black-and-white packaging featuring the skull and crossbones, are a smashing success. Advertising bans are ineffective; Portugal has one of the highest smoking rates in Europe and yet cigarette advertising
The "Bitten & Hisses" car |
has been banned for decades. At the recent Grand Prix of Great Britain cigarette advertising was banned on the racecars. So the Benson and Hedges car changed its wording, over top of the company logo, to "Bitten and Hisses."
Smoke 'em if you got 'em
In short, the whole scheme will not work, but so what? Everyone will get their cash, more agencies and "non-profits" will be created, the pols will be re-elected, and we did the right thing, didn't we?
Of course the Congress still must approve the agreement, so there is plenty of time to increase the government's take, expand regulations further, and harangue the big bad tobacco companies one more time.
There is still plenty of time for all involved to keep blowing smoke.
Pete du Pont is editor of IntellectualCapital.com. He is also a former Republican member of Congress and Governor of Delaware.
7/17/97 Michael Stanger mstanger@us.oracle.com
The fundemental issue is the social cost of the cigarette
smoking and the resulting burdens on the Medical System.
I argue that smokers knew what they were doing and should
be held accountable for the damage they caused and the expensive bills. Smoking
is an enjoyable habit with large costs associated. People
have known this for years. Big Tobacco should dole out money for prevention and addiction programs for current smokers. People who are suffering from cigarette related damage caused by situation where they had no control of the exposure have a right to
damages an avenue should exist for them to pursue claims. The remaining money, and their should be plenty of it since the states don't deserve to have their medical
systems supported and fattened should be directed to the next generation. Pre-natal care programs, research programs,
fitness and other health relate subjects. Farmers should also be slowly weened off the the tobacco
crop. Ultimately, Big
Tobacco deserves to pay but they should not be bled dry
by the politicians. Think of the future not the past.
7/17/97 Chip schoch@csi-health.com
I beg to differ with Mr. Stanger, but the fundamental issue is the cost in terms of liberty. The states complain that tobacco costs them so much in medical expenses, yet no one questions the axiom that the state should be allowed to extract funds from one segment of society and use them to pay for the health care of another segment. If the states weren't in the health care business to begin with then they wouldn't have a case. I agree with Pete. First its tobacco, next its cheesburgers. Soon its gonna be your vice!
7/17/97 Michael DeBow medebow@samford.edu
The most outrageous aspect of the tobacco settlement is the prospect that the plaintiffs attorneys hired by the state attorneys general to "represent" the states in these lawsuits will receive billions of dollars in fees out of the settlement amounts. I wonder what hourly rate this will come to?
Write your congressmen now and object to this raid on the public treasury by the trial bar.
7/17/97 Kristen Schroeder kristen@c4west.eds.com
It would be nice to think that smoking only hurts those who choose to do it; that tobaco companies have a God given, constitutional right to sell their product. But, the facts are that people die from tobaco even though they never smoked a day in their lives. Tobaco companies have known for years that their product is not just addictive but kills the customer and the customer's family, friends and anyone around them. It's time for this industry to own up to what it's been doing to our society. It's time for them to pay and pay and pay. Think of drugs like Thalidamide (spelling?); a drug recalled because of it's devistating effects. Tobacco has devistating effects as well yet you argue not to regulate it. A few thousand perhaps suffered from Thalidamide but millions suffer from tobacco. It's time to take steps to eliminate the next generation of smokers. We propably won't succeed but we must keep trying. By the way, prohibition failed because it's not possible eliminate a drug that so many people use every day. This new legislation on tobacco will not create a prohibition of tobacco, it serves as a weapon in the ongoing struggle. Tobacco, unfortunatly, will be around for generations to come but at least it won't be quite so profitable.
7/17/97 Andrew abrecher@erols.com
Regulating cheeseburgers? Get real. Cheeseburgers aren't addictive. McDonalds hasn't been lying to the public for decades about how unhealthy cheeseburgers are. I haven't had any problems from second-hand cholesterol. There's no slippery slope here. Maybe, just maybe alcohol might get targeted, but given how responsible and attentive the major beer producers have been in promoting responsible drinking, encouraging MADD groups, etc it seems very unlikely.
7/17/97 wilfred c zcmr69a@prodigy.com
What a bunch of pro-tobacco baloney.
The Cheeseburger Defense isn't even original. The wholly amoral tobacco spokesman in Chris Buckley's hilarious fiction work, "Thank You For Smoking," made up The Cheese Defense on a TV talk show to steamroller some concerned physician.
Sure, alcohol is a concern and maybe it will come some day, but it begs the issue. And Pete, you want to end the "prohibition" against cocaine just because some shady characters are making money on it? Are you coming out in favor of legalizing that addictive, sorry, "allegedly addictive" drug too? Interesting position, Pete.
Maybe the British have some rhetorical tips for Pete from the good old days of the Opium War, the war they fought expressly to insure that the Chinese continued to buy the opium a few British businessfolk manufactured in India.
And what will these lawyers get? I didn't see any numbers, and I didn't hear him calling for some measure to limit fees. Just let the tobacco companies off completely, right Pete?
7/17/97 David Friedman namdeirf@gwis2.circ.gwu.edu
Consider the odd and ironic economics of tobacco regulation: tobacco, already a social pariah, is unlikely to be manufactured and distributed by anyone but the already-established comapnies. K-Mart marketing its own brand of cigarettes, for examples, is laughable. So, byt tightening the regulation of cigarettes, the government effectively guarantees US tobacco companies more profits than ever. There is a reason Wall St. loves tobacco companies: every quarter, tobacco companies make more profits, which they shovel back into production and stock dividends (Phillip Morris' dividend is among the highest of the DJIA). So, if anything, the government's attempts at regulation are only complicitous in the long term health of tobacco companies.
7/18/97 Douglas A. Gray dagray@stthomas.edu
Many people who have never driven a day in their lives die from the effects of cars (accidents, pollution, and the like). Shall we prohibitively regulate driving? (My answer is Yes, but tell that to the 17-year-olds.) If the dough from the tobacco settlement goes to anti-tobacco education, cancer research and treatment, I'm no more opposed to it than I am to states controlling & taxing liquor sales and using the money for the same sorts of programs. Anything else, as the Governor ably points out, smacks of Prohibition and/or the late, lamented Era of Big Government.
7/18/97 David Borden borden@intr.net
The cost of smoking argument -- that smokers should pay for their health care costs through taxation -- falls short when one looks at the larger picture that many smokers die relatively young, saving the Social Security system large amounts of money. That doesn't make it a good thing -- I'd much rather that people stopped smoking, lived longer lives, regardless of the Social Security cost. But the fact that I have this humane impulse doesn't make the cost argument any more intellectually correct.
7/18/97 David Borden borden@intr.net
Wilfred C. asked:
"you want to end the 'prohibition' against cocaine just because some shady characters are making money on it?"
My answer would be an unequivocal yes. The violence of the illicit drug trade has done incalculable damage to the inner cities, not to mention to the nations to our south that prohibition has plunged into civil conflict and instability. Wilfred should follow his own advice and learn the true history of the prohibition laws. Prohibition of cocaine and the opiates didn't have much to do with any reasoned cost-benefit analysis, nor even with the actual impact of cocaine use at the time (far less destructive than it is now under prohibition), but rather had a lot to do with racist rhetoric and fear. E.g. "negro cocaine fiends with superhuman strength raping white women". (Actual language from the New York Times in 1914.)
I recommend readers to the book "Confessions of an English Opium Eater". The author, whose name escapes me but who is considered to have been one of the great authors, was addicted to opium. As his life and addiction progressed, he became less able to achieve, and had a less happy, fruitful life. But it was not the life-threatening disaster that opiate addiction is today. I think it's Dover that has an edition of the book out for a mere dollar.
The real problem isn't drugs, the problem is ignorance. A tremendous amount of information on drug policy is available on the web at http://www.druglibrary.org.
7/18/97 Marilyn Keller Rittmeyer mkr@merle.acns.nwu.edu
You won't find someone who believes in liberty more than I do, and thus, I believe that people ought to have the liberty to smoke or not, just as long as their smoking does not affect me financially or otherwise. (Note however that the definitive answer regarding the financial and health effects of smoking on non-smokers remains to be resolved.) My belief in liberty does not extend necessarily to individuals under the age of 18, however. I find it unconscionable that the tobacco companies are now targetting the teenagers of Russia and Asia now that they can no longer target American youth.
7/18/97 Jae Shin jzs20@cis.pitt.edu
I find the arguement about cheeseburgers and cars completely absurd. First, those two products are not addicting physically or mentally. Second, neither industry has been trying to cover up data nor deliberately attempting to get the general populace addicted to its product. It wasn't very long ago that documents from some of the major Tobacco companies showed that they had deliberately researched how they could capture the youth of America along with adjusting the nicotine levels in cigarettes. Oh, and doesn't anyone remember that wonderful Senate hearing in which the directors for said companies testafied under oath that they did not think that cigarettes were addictive or harmful to one's health? Of course there is the issue of how the Prohibition failed misrably, but the legalization of illegal drugs would have its own affects, and could give such substances a hint of respectability. Now concerning the comment about how it is cost-effective to save on social-security, I find that absurd considering the cost of all of the side-affects of cigarettes and the health problems they cause.
7/19/97 R Campion Rcampion@multipro.com
Maybe the cig. mfgrs should go out of bus. Let the folks grow their own. Last week i smashed a finger nail with the hammer. Should i sue? Cmon lets take responsability for what we do ourselves. Get a life. Why is it that everyone else is responsable for something that i choose to do????????
7/20/97 Allen Moulton amoulton@mit.edu
The tobacco agreement is clearly a huge scam. There is an easy way to kill it while still punishing the tobacco companies and discouraging smoking. The cost of the agreement is to be paid by a 75 cent per pack price increase. All Congress has to do is raise the tax on cigarettes by the same 75 cents and give the whole amount back to the public in other tax cuts. Price increases are the only proven way to cut consumption.
7/21/97 Jae Shin jzs20@cis.pitt.edu
For people addicted to cigarettes, the price increase is not going to make a difference. Yes, I understand the need for personal responsability, but in light of the evidence against the Tobacco companies upon how they deliberately tried to get their consumers addicted to their products, I feel that they need to pay somehow. Now I don't think that a law-suit is very successful and would rather see them go to prison for Perjury, Contempt of Court, and First Degree Murder (premeditated), that is unlikely to happen and so a law-suit is better then nothing. What disturbs me is the issue raised here of precedence. This matter could have the disturbing affect of convincing people that they are not responsable for actions that are harmful to themselves. Unfortunately, America is a nation gone mad in terms of law-suits and "victimization". In the end, I feel that people should be held accountable for their own actions, and would like to see the Tobacco manufacturers be held accountable for theirs.
7/21/97 Michael I. Krauss mkrauss@gmu.edu
As a professor of Tort law (and, I might add, a lifelong non-smoker), I am repelled by this "agreement". It is an unconstitutional follow-up to some patently unconstitutional state legislation (specially in Florida). The states' claim that they are protecting "innocent tax-payers" is a particularly obnoxious sham. States cannot offer to pay someone's health costs and then sue for something the payee could not have recovered himself! This perversion of private law by public law is patent when one realizes that the honest thing to do would have been to increase tobacco taxes -- a move too risky for these gutless politicians.
7/21/97 John Anderson
The people responding above, who disagree with Pete and support the settlement, are right... based on their belief that gov't should be extremely authoritative, near totalitarian. Unfortunately, America is based on free-enterprise, a concept these people do not seem to grasp. As Pete pointed out, the tobacco companies sold a product legally. If gov't now determines this is wrong, how can gov't justifiably force a retroactive punishment? And how can you use 'addictive' as a factor for such totalitarian enactments? So cars and burgers are not addictive in some sense. Caffiene is, so let's go after Pepsi and Coke. It all comes down to personal freedoms, both in consumer choice and business. this is a blatant violation of freedom, and we just moved one step closer to China.
7/21/97 John Anderson
Ted Kennedy and others defend the settlement as just compensation to gov't socialized medical programs (i.e., Medicare), which they claim are going bankrupt because of smoking. Misguided, as usual, Ted. The problem with these programs is socialism itself. It is a costly, and often ineffective, policy. If smoking were eliminated, several other factors would ruin Medicare and other programs. Why? Because these programs are flawed to begin with. Don't try to save them by stripping us of one more liberty. Eliminate them, and restore the freedoms and liberties on which America was founded.
7/22/97 Don Coyote
I agree. Follow the money. Note that the money will not be flowing back to the taxpayers that paid the taxes that went into the Medicaid programs supposedly hurt by high smoking claims. Why does the money stop at the government level? What this settlement really does is make governments and tobacco companies partners, a partnership that will be enriched by more tobacco-related revenue. So stay tuned for more expensive smoking. Look at how states treat the liquor industry as a guide (huge taxes, heavy regulation, and even state ownership of liquor stores). The other point, of course, is that the state governments are decrying the terrible addiction of tobacco. But these same states have no problem monopolizing for themselves the addiction of gambling, which they have managed to grow to a $40 billion dollar a year state revenue source. They have no problems with people being addicted. They just want their cut.
7/22/97 AllenM
So we now will raise the cost of smoking. Who will bear the brunt of this cost? The poor. Who will tend smoke just as much as they do now? The poor. Who has quit smoking over the last two decades? The elite and the middle class. So we should be asking why we are sponsoring a noticably regressive tax on an addiction. What about a twinkie tax next? We could base it on the sugar content of the product and funnel the proceeds to our failing health system. But wait? Don't we subsidize sugar??? Errr tobacco? I am confused, shouldn't we just start fixing the really ridiculous things that are going on, rather than concentrating on these soundbite issues.
7/22/97 Biren
I agree with John Adamson, we are a nation based on free-enterprise. How can the government take away the rights of adults by regulating a product that has been legally sold in the US for decades? How can they retroactively punish legal comapnies? Next in line will be other addictive substances like alcohol, caffeine, sugar etc. I wonder how many people would like it if numbers were relased that reflected their investment losses in mutual funds which hold tobacco stocks by further tobacco regulation. Would people like it if numbers were released that showed how much money is saved in social security payments and medical costs because of a smoker's decreased lifespan (while this sounds terrible, such numbers can be looked at unemotionally only).
7/23/97 George Ney ney@migal.co.il
1. Could someone direct me to reliable data concerning the effects of passive smoking?
2. What effect has the Tobacco Settlement on the right of individuals directly harmed by smoking to seek compensation?
3. Is there a definable line between "psychological addiction" and "habit", such as their effect on dopamine receptors?
7/23/97 Andrew abrecher@erols.com
Is there the freedom to shout "fire" in a crowded theater? Is there the freedom to slander someone in public? No, and there's no freedom to lie to the public for three decades about the harm of a product being sold. That's called fraud, folks, and that's most certainly not legal.
7/23/97 David Hoover hooverd@crysv1.ncifcrf.gov
The fundamental reason for the lawsuits against the tobacco industries is that nicotine is addictive, the tobacco companies deliberately modulated the content of this compound in order to improve sales, and then lied about both of these facts. I agree that the price paid by the industries is too steep. The simplest answer to the dilemma is to outlaw the retail consumerism of nicotine. If the tobacco companies can sell their products after removing the nicotine, all the better. I would predict that on removal of nicotine from the cigarettes, far fewer people would actually smoke, but a small hard core group would always continue. This would allow the industries to remain in business, although not in the business of providing highly addictive drugs, such as nicotine.
