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Clinton will try to save tobacco deal

Settlement

But Congress probably won't act this year

September 15, 1997
Web posted at: 8:01 p.m. EDT (0001 GMT)

WASHINGTON (CNN) -- President Clinton will launch a bid Wednesday to salvage much of the proposed $368 billion tobacco settlement worked out in June between the tobacco industry and most state attorneys general, sources told CNN Monday.

Clinton apparently has decided against seeking line-by-line changes in the complicated settlement and won't press Congress to act on the accord this year, White House aides said Monday.

Instead, the president is expected to broadly outline his demands for future legislation necessary to implement a settlement, said the aides, speaking on condition of anonymity.

Among other things, Clinton will endorse efforts in Congress to eliminate a $50 billion tax break for the tobacco industry that is included in the recently passed balanced-budget agreement.

Settlement graphic

Clinton, sources said, wants to give the Food and Drug Administration full power to regulate tobacco, and will demand strict enforcement of regulations -- with the aim of reducing the number of young people who smoke.

President weighed his options

Clinton has been studying the settlement agreement since it was announced in June following six months of negotiations between the tobacco industry and the attorneys-general.

Last Friday, the president met with Health and Human Services Secretary Donna Shalala and his domestic policy adviser, Bruce Reed, to consider his options.

Clinton

One White House source said the president will make clear that he wants Congress "to move quickly on legislation."

But given the complexity of the issue and the Congressional timetable in advance of a recess, most observers doubt anything could be passed this year.

Florida gets first payment

Meanwhile Monday, the tobacco industry paid the state of Florida the first installment in the landmark $11.3 billion settlement worked out last month.

The state, however, will not be able to spend that money right away. It goes into an escrow account until Florida settles with its private lawyers on their fees.

Gov. Lawton Chiles symbolically endorsed a giant check at a news conference Monday afternoon in the state capital.

"Today is the first of many paydays for our people from the historic tobacco settlement," Chiles said.

The first installment of $750 million was electronically transferred into a state bank account, but will be held in escrow, collecting interest at an annual rate of 5.45 percent, adding up to $113,541.66 every day.

Private lawyers, hired by Florida to fight its three-year legal battle with the tobacco companies, contend that they are due $1.4 billion under a fee agreement signed with the state. State officials say the final settlement provided for a $250 million fee.

Chiles said he had no problem with having the money sit in escrow and draw interest while he and his staff decide how to spend it. They've been deluged with suggestions from experts who run anti-smoking campaigns.

Chiles said he would remove tobacco billboards from areas near schools, ban vending machines accessible to children and prohibit tobacco ads in sports arenas and on public transit systems.

Senior White House Correspondent Wolf Blitzer contributed to this report.

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