Some Truths About The Tobacco Agreement


I was listening to one of the conservative media's many national television talk shows when the subject of the proposed tobacco settlement came up. The consensus of the talking heads in attendance was that the settlement was not only the best that could be expected but the best that America could ever want. With support like that, I decided, the settlement must really punish the tobacco manufacturers and will be costing them most of their profits for many years to come.

I resolved to do some real research on the issue in order that I could intelligently speak on the question with my faithful readers and so that I could inform all of you of exactly what was being put before Congress for enacting into law.

Well, I shouldn't have been as surprised as I was when I discovered precisely what the agreement entailed. To say the very least, and to paraphrase an old country and western song, you are being given the shaft and the tobacco companies are getting the gold mine. So what else is new, you might ask?

To begin with, the settlement requires that the tobacco companies repay state and federal governments for health care costs related to tobacco products. The agreement's claim is for about $15 billion a year, which sounds generous until one learns that the actual yearly costs to all governments and health care insurance providers are closer to $100 billion yearly. Also conspicuously absent are any formulas for inflation.

Next, since it was the specter of thousands of class action lawsuits against these companies by those injured or killed by tobacco products that led to this compromise, I thought that these legal avenues would remain as a deterrent against further tobacco company conspiracies. Imagine my shock (Yup! That's meant to be sarcasm) when I found that the agreement forbids any lawsuits from seeking punitive damages, resulting in only a possibility of actual losses minus legal fees. While this would seem to be an obvious violation of every American's Seventh Amendment's guarantee of due process, the American people will be asked to just ignore that little difficulty.

The cost of this agreement's pay outs would certainly prove detrimental to the tobacco companies and their stockholders, I assumed. Otherwise, I wondered, what would be the punitive aspect of any such deal? Well, turns out that it won't cost the companies or their stockholders a penny. The cost of each pack will simply increase to cover the expense. In fact, it has been estimated that not only will the company will see a larger profit, since the revenue will increase and the cost of advertising will decrease due to other sections of the agreement, but stock prices will also sharply increase due to the extreme limitations on any further legal actions by ill or deceased smokers and their families. In both ways, the tobacco company enjoys the superior benefits.

Okay, I figured, at least the terms of the agreement will greatly reduce teenage smoking since penalties were included if it was shown that advertising was demonstrated to be targeted at that age group. Again, (Yawn!) it not only isn't so but the tobacco companies actually comes out ahead in either event. If they don't purposely target teens but only publish the advertising in areas certain to be accessed by children, they can claim they are abiding by the law while acquiring new and younger consumers at the same time. If they are accused of dealing to minors, they only have to demonstrate the vague proof that they took "reasonably available measures" to prevent sales to teens in the appeals process to receive a 75% reduction in those penalties. Thus, selling and advertising to minors would prove extremely profitable once again because the revenue these children would provide would be far more than the minor penalties paid. Again, score one for the tobacco companies.

Okay, then. At least the FDA would have the power to regulate the drug nicotine, right?!? No, actually the FDA would be forced to prove that any demand to decrease nicotine levels won't create "significant demand for contraband", a requirement that is impossible to even intimate let alone prove so earlier court rulings that the FDA has jurisdiction over the uses and levels of nicotine are effectively overturned. Furthermore, since tobacco companies have been moving the majority of their sales overseas, they only have to dramatically increase the nicotine levels in those products to insure massive profits (and tens of millions of deaths yearly). If, in some remote possibility, the FDA is able to regain control of the tobacco companies and the drug they produce, the companies only have to turn to provisions in the GATT treaty which allows them to sue the government to overturn any rulings which they feel produces an "unfair impediment to trade". Since Corporate America insured that this clause is slanted firmly in the direction of business, the result is to guarantee success for tobacco companies every time.

Congress has the final say over this agreement but don't expect any intelligent results from them, either. The two leading soft money contributors to the GOP were, surprise, Philip Morris and R.J. Reynolds. Even the $300,000 bribe, er, loan tobacco flack Bob Dole fronted Newt Gingrich to pay off the penalties he accrued over violating campaign finance laws was given to Dole only six days earlier by tobacco lobbyist Verner Liipfert. Anyone who doesn't believe that the entire deal has been fixed at this point probably votes a straight party ticket rather than taking the time to think for themselves.

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Copyright 3/20/98