Could The Tobacco Deal All Go Up In Smoke?
By Charles Bierbauer/CNN
WASHINGTON (May 22) -- The Senate is going off to light its Memorial Day
barbecues while it leaves its tobacco legislation smoldering. Could the fire
go out while Congress is gone?
The $516 billion, 25-year-plan which won approval in the Senate Commerce
Committee is on hold on the Senate floor. When the Senators return in 10 days
it will either metamorphose into something broadly acceptable and probably less
ambitious or fall victim to competing interests.
Those interests bear inspection. This is not a case of Republicans vs.
Democrats. It is more a matter of whether a bipartisan middle ground will hold against conservatives who want to do less to tobacco companies and
liberals who want to extract more from tobacco.
The Senate at times legislates by smoke and mirrors. But this does not
mirror the usual smokescreen.
Thursday the extremes came together to defeat that part of the proposal
which would have put an $8.5 billion a year cap on the tobacco companies'
lawsuit liability. That limitation is not a bar to lawsuits. But it is
seen as the necessary tradeoff to get tobacco to curtail its cigarette
advertising aimed at teenagers. Absent a liability cap the tobacco companies
are expected to refuse to sign away their First Amendment constitutional right
of speech -- advertising, in this case.
Who pulled the cap off? Liberals who do not think tobacco deserves such
protection. Conservatives who do not want the tobacco legislation in the first
"We obviously experienced a setback," said Senator John McCain, the
Arizona Republican responsible for drafting the bill. "But this is not going
to change the ultimate result."
Well, it might.
Congress could still proceed to significantly raise the price of
cigarettes. That measure is considered essential to deter young Americans from
beginning to smoke. The Senate confirmed its intention to highly tax tobacco
when it rejected one proposal to add $1.50 a pack to the price of cigarettes
and another to add nothing. A substantial majority voted to raise the price of
a pack of cigarettes by 65 cents next year, with yearly increases until $1.10
is added by 2003.
But who'll pay it? Not the tobacco companies. They would just pass the
cost through to consumers. After all, if price is supposed to be a
deterrent, it's got to come out of the smokers' pockets.
That gives conservatives a surprisingly populist argument. Missouri
conservative John Ashcroft sounds like Massachusetts liberal Ted Kennedy.
"This takes from families a very serious portion of the resources they use
to take care of one another," Senator Ashcroft complained on the Senate floor.
The average pack-and-a-half a day smoker would pay $365 more in 1999 to
cover the added tax and $602 more in 2003, according to the Tax Foundation, a
non-partisan, though generally anti-tax research organization in Washington.
Since there are simply more smokers among low-income Americans than
upper-income, one-third of the anticipated tobacco revenues will come from
those earning less than $15,000. Two-thirds would come from those with incomes
of $35,000 or less, according to the Tax Foundation.
"The cold reality is this is a massive regressive crushing tax on blue
collar Americans," Texas' Republican Senator Phil Gramm complained.
Ashcroft, Gramm, and Oklahoma Republican Don Nickles are outspoken
opponents of McCain's plan. Nickles is number two in the Republican
leadership. Majority Leader Trent Lott is largely mute on the issue since his
brother-in-law represented state attorneys general in negotiating last year's
tentative agreement with the tobacco industry. That makes Nickles' voice
louder in the debate.
To stiffen his argument against the McCain tobacco bill Nickles takes aim
at two constituencies Republicans usually like to help--farmers and lawyers.
"We are going to make farmers millionaires," says Nickles, referring to
proposals to come to the aid of effected tobacco farmers.
"We are going to leave a blank check in here for attorney fees," Nickles
says of the potential billions lawyers could reap from a settlement bettering
half a trillion dollars.
The tobacco bill is complicated legislation to start with. Its lines of
support and opposition are complex, convoluted and even counterintuitive.
Four states -- Mississippi, Florida, Texas and Minnesota -- have individually
reached their own multi-billion dollar settlements with the tobacco companies.
Other states will pursue similar agreements. They should.
There was never any guarantee last year's tentative settlement would hold
up, particularly since it could not be implemented without Congressional
action. The Senate's effort may fall short of meeting the requirements of
that settlement, most notably in the limited liability/limited advertising tradeoff.
Meanwhile, as the clock ticks toward the fall election season when nothing
much gets done in Congress, the House waits and watches the Senate.
And even if Congress passes legislation extracting a huge cost from the
tobacco companies and the tobacco consumers, a further debate and dispute looms
as to how best to use those billions. If it all doesn't go up in smoke first.
If it does, liberals who really want to strap tobacco can blame themselves
for falling in with conservatives. Conservatives who really see such a deal as
unfair and unfounded can thank themselves for finding such willing accomplices.