-Caveat Lector-
Washington Times-December 28, 2000
Youths remain lit up
Pete du Pont
A lasting legacy of the Clinton administration will be its
legal battle against the nation's four largest tobacco companies.
As with almost all of his other "legacies," it is unlikely to
garner rave reviews from future historians.
In late 1998, shortly after 46 states settled their
differences with Big Tobacco in a $206 billion agreement, Mr.
Clinton decided to get the federal government a slice of the
lucrative action.
He threw down the gauntlet in his 1999 State of the Union
speech, asking the Justice Department to claim damages against
Big Tobacco under three federal statutes. As Mr. Clinton leaves
office, however, it is worth asking if there has been a winner.
The Master Settlement Agreement reached with those 46 states
forced onerous concessions from the nation's four big tobacco
companies — Philip Morris, Brown and William son, R.J. Reynolds
and Lorillard. To their credit, they have fulfilled their end of
the bargain, and then some.
First, the companies were required to pay $206 billion over
25 years to the states, including an upfront payment of nearly
$13 billion through 2003 and $9 billion each year after.
In addition, the MSA banned the sale and distribution of
apparel and merchandise with cigarette brand logos. No more
tobacco brand names at stadiums and arenas. Restrictions were
extended on outdoor advertising. No free samples are allowed
except at adult-only facilities. They even limited the size of a
pack of cigarettes.
My personal favorite, though, is the ban on cartoon
characters in cigarette advertising. For the common link in all
legal action against the tobacco industry, you see, is kids. The
states, the Justice Department and the Clinton administration
claim one unifying goal: Stop kids from smoking.
If the overarching goal of litigation against Big Tobacco is
to save our children from the unhealthy effects of smoking by
breaking the industry, the four largest U.S. tobacco companies
sure don't look like losers.
RJR will report a growth rate of more than 32 percent for
the year 2000, Lorillard projects almost 42 percent. Brown and
Williamson forecasts 19 percent and change.
Speaking of change, the National Association of Convenience
Stores reports cigarettes continue to account for nearly 30
percent of all in-store purchases.
In addition, the U.S. tobacco industry generated annual
trade surpluses totaling more than $50 billion for the decade
ending in 1999, according to the Tobacco Merchants Association.
Of course, tobacco's 1999 surplus contribution of nearly $4
billion was the best since 1988. Then there's the stock market.
R.J. Reynolds and Lorillard Tobacco are trading at 52-week
highs, and Brown and Williamson and Philip Morris contribute
heavily to large margins reported by their parent companies.
So much for crippling the tobacco industry. But there's
always the settlement money. The stated purpose of those payments
was to educate kids against smoking.
A tally last year by the National Conference of State
Legislatures shows some of the money has been distributed for
health-care services and children's programs, but a lot of it
also has been spent on private lawyers who helped negotiate the
MSA.
Recent word comes from North Carolina that several
legislators there want to use part of an estimated $4.6 billion
in settlement money to patch holes in the state's budget.
In California, Orange County supervisors are challenging the
constitutionality of a measure mandating that most of the
county's $750 million in settlement money be spent on
health-care. They want to use it to pay off the county's debts.
So what about the kids? The latest count we could find (for
1999) shows less than 10 percent of tobacco settlement funds are
actually being spent to keep kids from smoking.
The latest figures from the Centers for Disease Control show
the percentage of eighth-, tenth- and 12th-grade students who
smoke daily hasn't changed much in the past 20 years.
Eighth- and 10th-grade usage is down slightly, and
12th-grade usage is up slightly, but the difference from rates in
the 1990s shows little statistical significance.
While America's big four tobacco companies report record
share prices, almost 1 in 4 American 12th-graders claims to smoke
cigarettes daily.
Perhaps they're rebelling against the nonstop nagging of
federal nannies and sniffian groups like the Campaign for
Tobacco-Free Kids.
So who is winning the Clinton administration's war against
tobacco? Only the lawyers. Celebrity ones like Dickie Scruggs and
David Boies, sitting on top of huge tobacco windfalls, are filing
class-actions against HMOs — a move they themselves concede will
result in dramatic increases in health-care premiums for most
Americans.
The Scruggs, the Boies and their cohorts already have walked
away with billions of dollars. Now hundreds of government
attorneys and private lawyers for foreign governments are
sharpening their pencils for yet more rounds of litigation.
We all hope fewer kids will smoke. But in the final
analysis, the only real winners in this unseemly process are
members of the plaintiffs' bar.
Pete du Pont, a former governor of Delaware, is policy chairman
of the National Center for Policy Analysis in Dallas. Distributed
by BridgeNews.
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