Forget Complexity; Keep It Simple

The tobacco industry has been at the table trying to trade promises of better behavior in exchange for capping its liability for its past and, perhaps, future misbehavior. In its attempt to get the most out of this deal, public health forces have insisted on a grab bag of “comprehensive” legislation to control tobacco. The result is a series of proposals too complex for the public to understand; the most likely outcome is a rescue of the tobacco industry.

It is time to forget comprehensive legislation and pass a simple and clean bill that advances public health without giving the tobacco industry anything. Such a bill should include three simple provisions:

* Increase the federal tobacco tax.

* Impose significant penalties on the tobacco companies to provide an economic incentive to stop selling tobacco to kids.

* Finance federal tobacco control efforts.

All the rest of the issues being discussed today should be dropped.

Increasing the price of tobacco will reduce consumption. Rather than trying to force up the price of tobacco by increasing the cost of doing business through some sort of “settlement” with the tobacco industry, it is simpler and more efficient simply to raise the tax on tobacco products. Since no state or individual’s rights will be compromised in exchange for a tax increase, there will be no fights with the states or private sector about how the money is to be spent. It will be a federal tax to be spent by the federal government on tobacco control programs, helping farmers, helping the states sue the tobacco companies, and other programs, including tax relief.

Everyone wants to discourage kids from smoking. In the meantime, the cigarette companies are making millions selling cigarettes ultimately consumed by kids. Rather than the complex “look-back” provision setting targets for reducing teen tobacco use, which the tobacco industry could easily work around, each individual company should be charged a fee equal to twice the value of their tobacco products consumed by kids every year. (Surveys can give us the numbers with fair accuracy.) This amount would roughly equal the long-term revenue these new addicts would provide the industry. Over time, the multiplier should be increased to go from simply keeping the companies from making money off the new addicts to one that creates active disincentives for selling cigarettes that kids consume. The penalties should be levied company by company, not industrywide, to provide economic incentives for individual companies to change their marketing practices (and reward those that do).

California’s Proposition 99 anti- smoking program has shown that a large, aggressive anti-tobacco industry campaign can persuade adults to quit and kids not to start. A national program modified on California’s would cost only $1 billion a year. What about all the other things being discussed: the FDA, advertising restrictions, youth access and immunity? Forget them for now.

The FDA has already asserted jurisdiction over tobacco products as drug delivery devices. And, while the tobacco industry is appealing, FDA jurisdiction has already weathered its first legal challenge. The original strategy for the rule was sound and we should let the FDA defend its judgment in the courts.

The advertising restrictions being proposed in the settlement are weak by international standards and the tobacco industry is well practiced in getting around such rules. They are not worth giving the tobacco industry immunity, particularly since many states and cities are already enacting such restrictions without giving the industry anything.

A strong economic disincentive directed at the individual tobacco companies will reduce youth smoking more effectively than the kind of advertising and youth access rules being discussed. The tobacco companies know how to get kids smoking and, given proper economic motivation, they will know how to stop kids from smoking.

Since the perceived need for granting the tobacco companies immunity is to get them to go along with advertising restrictions, there will no longer be any need for Congress to preempt state consumer protection, fraud, racketeering and other laws to protect the tobacco industry. The states and others will be free to pursue or settle their lawsuits--and spend the money they earn however they want.

It is, after all, the states and localities that have made real progress on tobacco. They have passed clean indoor air laws, including California’s smoke-free bar law. They are ending tobacco advertising through a combination of legislation and strong settlements of their lawsuits against the tobacco industry, which have recovered billions and restricted tobacco industry marketing without giving anything away. The proper role for Congress and the federal government is to facilitate state and local action, not preempt it.