Big Tobacco Wields Big Ax on Senate Bill

Big Tobacco is back.

The very same lawmakers who until recently could not put enough distance between themselves and the cigarette manufacturers now are making the case for why the only tobacco bill with bipartisan support is too onerous for the companies. As a result, Congress’ drive to pass legislation aimed at curbing smoking is in danger of stalling out.

The cigarette manufacturers achieved this remarkable feat by attaching a “big government, big taxes” label to the bill approved last month by the Senate Commerce Committee on a 19-1 vote. The bill raises the price of cigarettes by $1.10 a pack over five years and authorizes federal regulation of tobacco as a drug.

The industry’s message was calibrated to resonate with the Republicans who control Congress--and it did. “Everybody knows that the Commerce Committee bill cannot be the final bill,” said Senate Judiciary Committee Chairman Orrin G. Hatch (R-Utah), one of the bill’s most vocal critics. “The way it is written, the companies cannot live with it.”

Hatch said he is working on an alternative bill that is much easier on the manufacturers.

Senate Majority Leader Trent Lott (R-Miss.) said of the bill: “It’s too big, it’s got to come down. . . . The way it is now, it can lead to black markets of cigarettes and bankruptcy by the companies.”

The chairman of RJR Reynolds Co., one of the nation’s leading tobacco manufacturers, made the same case to an audience of Wall Street investment analysts Friday.

“We’re talking about massive new taxation, massive new profits for government, massive new bureaucracies, punitive price increases for adults--all under the cover of reducing underage smoking,” said Steven F. Goldstone.

Goldstone’s remarks highlight the essential problem facing lawmakers. Public health experts believe that only heavy regulation of the tobacco industry and a sharp increase in the price of cigarettes will cut the rate of teen smoking. Yet both actions have the greatest impact on adults--who use tobacco legally and constitute the vast majority of customers.

Furthermore, the tone of the debate in Congress comes across as a criticism of a smoker’s decision to smoke. Moralizing never sits well with the public and neither do taxes, which many people believe the government will waste on programs they don’t care about.

“Clearly there’s a regulatory aspect to the tobacco legislation, sort of a nanny-state kind of message,” said Burdett Loomis, a professor of political science at the University of Kansas. “And we do know if tobacco companies can frame the debate to be about restricting people’s choices, those arguments work pretty well with the public.”

Armed with extensive information from polling and focus groups, cigarette manufacturers have mounted a $20-million-plus advertising campaign capitalizing on the points that play best with the public.

Manufacturers also are enlisting tobacco farmers, industry workers, restaurant owners and convenience store operators, 25% of whose revenues come from cigarette sales. In Charlotte, N.C., last week, senior executives of the four major tobacco companies met with tobacco farmers for four hours.

In addition, the industry, long a Goliath in campaign contributions, is contemplating an escalation of its efforts to defeat anti-tobacco lawmakers in November, according to industry sources.

It is hardly surprising that lawmakers are listening. Many of the industry’s “big government, big taxes” arguments are the same ones Republicans used to win the majority in Congress in 1994. The result so far has been a slowdown in Senate action on the legislation as factions form among Republicans with different ideas about how to craft a measure to reduce teen smoking.

Some conservatives, such as Hatch, are talking about jettisoning the bill altogether and writing a much narrower proposal. Others, such as Lott, appear to want to strip down the bill, authored by Commerce Committee Chairman John McCain (R-Ariz.), but keep its essential format. Still other Republicans, such as Sen. John H. Chafee of Rhode Island, are closer to the Democrats, who want legislation more stringent than the McCain bill.

In the House, there is little consensus among rank-and-file lawmakers about the need for a bill. Southerners of both parties are nervous about the prospect of raising the tobacco tax. At the same time, many lawmakers, including Speaker Newt Gingrich (R-Ga.), oppose giving the industry any of the legal protections it wants.

Meanwhile, the Democrats, sensing a possible election year issue, are sharpening partisan knives.

“Republicans have to make the decision as to whether they’re going to side with the tobacco companies or the kids of this country,” Senate Minority Leader Tom Daschle (D-S.D.) said Thursday on the Lehrer News-Hour. “We’ve tried to be conciliatory partners [with Republicans] . . . but obviously that isn’t working.”

However, Daschle praised McCain, who--despite a barrage of criticism from his GOP colleagues--said he remains optimistic about the fate of his legislation.

“These things have ups and downs; I still think we’re going to muddle through,” said McCain, who has been in frequent communication with top White House officials.

Still, Goldstone’s speech on Friday signaled an industry on the political rebound.

In addition to decrying big government and higher taxes, Goldstone played to the public’s fear of crime, painting a picture of the nation after cigarette prices increase, when, he said, organized crime would control the cigarette business.

“They [the smugglers] turn to the gang members and they [can] sell more cigarettes than marijuana and it’s less risky. . . . Pretty soon look-alike brands are produced by offshore manufacturers,” predicted Goldstone.

While economists say a black market in cigarettes exists because of wildly varying state tobacco taxes, and some believe it would worsen with a price hike, it is hard to know just how severe the problem could become. It is also unclear whether it would be a nationwide problem or largely confined to states that border Mexico, where cigarettes are far cheaper.

Goldstone showed special scorn for GOP lawmakers, who in the past have often helped keep the lid on anti-smoking measures.

“What amazes me is . . . all of this is from a Republican Senate,” said Goldstone, who also criticized GOP House members.

However, such criticisms may backfire. The last thing Republicans want is to be seen as defenders of the industry. “Make no mistake--Republicans in the House of Representatives represent the American people, not the tobacco companies,” said Christina Martin, spokeswoman for Gingrich.