Federal Sharks Circle Big Tobacco

One could almost hear the glee of the Washington money-changers when a federal judge determined last week that the government’s $280-billion civil racketeering suit against tobacco manufacturers could proceed.

Sans rhetorical flourishes, the idea behind the lawsuit is to re-create on the federal level the same sort of payday that the states have enjoyed since they cut a deal with the tobacco industry in 1998. That deal, known as the Master Settlement Agreement, or MSA, ended lawsuits pending against the industry by the states in exchange for a payout of more than $200 billion spread over 25 years, and the elimination of most cigarette advertisements.

There was, some may remember, not supposed to be a federal component to this particular crusade. The tobacco industry made the inexplicably foolish mistake of taking then-Atty. Gen. Janet Reno at her word when she declared that the federal government did “not have an independent cause of action” against tobacco manufacturers. Go on and make your deal, she cooed. We’ll just be here as an “honest broker.” So the deal was made, happiness abounded and everyone went their separate, merry ways, right? Wrong.

The real effect of the MSA was akin to dumping a truckload of chum off the coast of the Litigious Sea. Sharks in the White House, the Justice Department, Congress and beyond turned their snouts to the action. The unconditional surrender of tobacco companies sent out the signal of a wounded animal: The bottom feeders were aroused.

And so, in his 1999 State of the Union address, Bill Clinton apparently found the word “deal” as indefinable and expendable as he once found the word “is.” He announced that the federal government would file suit against tobacco manufacturers under the questionable auspices of the RICO Act (passed in 1970 to crack down on the mob).

The argument of the federal case is that up to $280 billion of past cigarette profits were “ill-gotten gains” used to perpetuate “pervasive fraud” against “youth-addicted smokers.” That is, by the feds’ definition, anyone who smoked five cigarettes a day by age 21. Apparently, the fact that it is legal to smoke, vote and, well, be an adult at 18 is meaningless.

And if the federal government does get its $280 billion, what will happen with it? Nothing useful, if Washington follows the example of the states. A recent report by the General Accounting Office revealed that, of the billions of settlement dollars flowing yearly into state coffers, only 2% of the money is spent on tobacco control and less than 20% on health-related programs. This, despite endless rhetoric from states at the time of the deal that made it sound like the money would be used to reduce smoking.

In a particularly obscene twist, more than half a dozen states have invested portions of their settlement money in index funds that include the very tobacco companies they felt morally obligated to sue.

The true intent of the states’ lawsuits was probably best summed up by Alabama Atty. Gen. Bill Pryor, who said: “The main objective of the tobacco lawsuits was to raise revenue. Using lawsuits to raise revenue is far easier than raising taxes the old-fashioned way. This method bypasses the need for representatives of the voters to approve the tax.”

Ah, yes, democracy rears its ugly head. So let’s get this straight: The government gets loads of free money to do with whatever it wishes, the tobacco companies raise cigarette prices and go on with business as usual, and the poor sap who wants to enjoy a perfectly legal product, which Congress has no intention of banning, pays for it all.

The tobacco industry cut a deal with the government to achieve what Neville Chamberlain once called “peace in our time.” It didn’t work. Instead, it merely emboldened a tyrannical minority in love with the idea of decree by lawsuit. And we have the gall to complain now about lawsuits against fast-food companies? It will not end there. It never does.