Taxpayers Burned in Deal with Devil

June 20, 1997

Taxpayers Burned in Deal with Devil

The announcement by the state attorneys general today that they have reached “an agreement in principle” should be viewed by everyone who cares about the ravages of tobacco with extreme skepticism.

AWe question how the attorneys general can announce a deal in principle with those who have no principles,” said Public Citizen President Joan Claybrook. AAnd taxpayer beware: You will be losing over $120 billion in tax revenues from this deal.”

The public won’t know the true impact of this deal until a detailed settlement is made public and the implementing legislation is drafted. President Clinton was right to refuse to comment until he can review all the details.

AThe public health community is in the middle of preparing a blueprint for tobacco control, under the leadership of former FDA Commissioner David Kessler and former Surgeon General C. Everett Koop. When that blueprint is completed in the next two weeks, citizens should use it as a guidepost against which to measure the particulars of the settlement,” said Alan Morrison, Senior Attorney at Public Citizen Litigation Group.

Even in the absence of details, it is very doubtful that this is a good deal for the public. Consider the following:

* Although the industry will pay almost $370 billion dollars over 25 years, almost every penny will be tax deductible, which means the U.S.Treasury will lose $123 billion in tax revenues and the American people will underwrite this settlement out of their paychecks.

* Because most smokers are addicted, the industry can raise its prices to cover its added costs. Addicted smokers will have no choice but to pay and pay.

* Every time the public health community has “won” a regulatory battle with the tobacco industry, the industry has turned its defeat into victory. Why should this time be different, since the industry’s record for truth is as bad as it gets?

* We have yet to be told how the pot of money is going to be divided. How much will go to the victims, how much to the states, and how much to the lawyers?

Here are some things to watch out for:

Are there limits placed on when and how nicotine can be regulated by the FDA?

What secret documents will finally be disclosed to the public concerning the industry’s wrongful conduct and the health consequences of tobacco?

Are there limits placed on the rights of tobacco victims to sue for actual damages? (We know there are for punitive damages, yet what industry deserves them more?)

What about the rest of the world? Are we giving the tobacco industry a green light to kill abroad, just the way they have done here, and will foreign sales be used to pay the amounts required in this deal?