[Congressional Record Volume 143, Number 121 (Friday, September 12, 1997)]
[Senate]
[Pages S9246-S9248]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 HIDDEN COSTS OF THE TOBACCO SETTLEMENT

  Mr. KENNEDY. Mr. President, 30 years ago this week, Senator Robert 
Kennedy addressed the World Conference on Smoking and Health in New 
York City on ways to address the mounting death rate attributed to 
cigarette smoking. He spoke to the conference about the difficulty of 
convincing people, particularly the Nation's youth, that smoking can 
kill them. He emphasized the grim statistics of premature death and 
illness caused by smoking.
  Today, 30 years later, little has changed. Over 400,000 Americans die 
from smoking-related diseases each year. In fact, in 1993, smoking was 
attributed to one in every five deaths--more than alcohol, car 
accidents, fires, homicides, suicides, drugs, and AIDS combined.
  This chart, Mr. President, shows very accurately what the impact of 
cigarettes is in terms of the mortality of Americans--the red line 
being 418,000. These are all statistics from the Centers for Disease 
Control--from alcohol, 105,000; car accidents, 46,000; suicides, 
30,000, and so on. This is a very clear graph about the magnitude of 
the impact of the use of cigarettes, of which 90 percent of smokers 
start when they are children of 14 or 15 years of age. It is an issue 
that must be addressed in any kind of agreement that this body is going 
to sanction or support.
  One million young people between the ages of 12 and 17 take up the 
deadly habit every year, 3,000 new smokers a day, and 90 percent of the 
current adult smokers began to smoke before they reached the age of 18. 
If nothing is done to reverse this trend in adolescent smoking, the 
Centers for Disease Control and Prevention estimate that 5 million of 
today's children will die prematurely from smoking-caused illnesses.
  Congress and President Clinton have a historic opportunity to protect 
current and future generations from the scourge of nicotine addiction 
and tobacco-induced illnesses.
  Study after study has shown that the most powerful weapon in reducing 
smoking, particularly by the Nation's youth, is to raise the price of 
cigarettes. A $1.50 price increase, as Dr. Koop and Dr. Kessler have 
advocated, would have a double benefit. It would reduce youth smoking 
by more than half over the next decade and provide some compensation to 
the Federal Government for the damage that smoking has done.
  Most health economists agree that in addition to Medicaid, tobacco 
imposes a heavy toll, exceeding $20 billion a year, on numerous other 
Federal health programs, including Medicare, the Department of Defense 
health programs for military personnel, veterans health programs, and 
the Federal employees health benefit programs.
  To compensate the Federal Government fairly for these high costs, the 
total settlement would have to be more than doubled from its current 
figure.
  The State attorneys general have done a very impressive job in 
working out the tobacco settlement, but their primary focus was on 
reimbursing the States for the States' participation in the Medicaid 
Program. They did not have the responsibility to try to ensure the 
protection for the Federal Treasury in terms of these other health-
related programs--Medicare, the veterans programs and others.
  If you evaluate those programs and the costs, as Professor Harris has 
done in his testimony before the Senate Judiciary Committee and also 
before the Labor and Human Resources Committee, you would see that the 
cost of treating tobacco-related illnesses to Medicare alone are 
approximately $9.3 billion, and others have calculated the Medicare 
costs to be substantially higher. Yet the proposed settlement provides 
not a single penny to the Federal Government for the recovery of these 
expenses.
  As I mentioned, the State attorneys general have obtained a fair 
reimbursement under the pending settlement for the costs imposed on 
Medicaid. It would be unreasonable and irresponsible for Congress and 
the Clinton administration to let Joe Camel and the Marlboro man off 
the hook for the high costs imposed on Federal health programs.
  Already this year the tobacco industry had the audacity to write a 
special-interest loophole in the budget legislation requiring the 
Federal Government to deduct the $50 billion amount generated by the 
increased cigarette tax devoted to children's health from the

[[Page S9247]]

amount the industry would pay under the tobacco settlement. I am 
pleased that the Senate voted to repeal this flagrant provision earlier 
this week, and I commend Senator Durbin and Senator Collins for their 
outstanding effort. But its surreptitious inclusion in the budget 
legislation demonstrates that nothing has changed in big tobacco's 
continuing efforts to subvert reasonable legislation.
  The Federal Government has the same claim for recovering health costs 
as the States that are suing the tobacco industry for billions of 
dollars in Medicaid expenses.
  You could have a situation where one person was in a hospital bed 
under the Medicaid Program, in the next bed a person might be under the 
Medicare Program, and in another bed somebody might be there under the 
Veterans' Administration health care program. All of the patients may 
have the same kind of illness as a result of their addiction to 
nicotine.
  The attorneys general looked out for the individuals who receive 
Medicaid. But certainly the taxpayers and the Medicare trust fund ought 
to be able to receive compensation for the costs to the Medicare 
system.
  If the tobacco industry understood and agreed to compensation under 
Medicaid, it is difficult for me to see why they should not also agree 
to the compensation under Medicare, the veterans health care programs, 
or other health programs which are supported by the American taxpayers.
  The tobacco companies admitted that cigarettes are deadly. They have 
accepted the necessity for broad new restrictions on cigarette 
marketing and advertising. They have admitted their liability for 
billions of dollars in compensation for tobacco-induced illnesses. 
Having made these admissions and concessions, the industry can no 
longer put up a smokescreen and maintain its past position of total 
denial. Clearly, the tobacco industry should pay more and can pay more. 
Given Joe Camel's deep pockets and the substantial toll that tobacco 
imposes on the Federal Government, doubling the final settlement is 
reasonable, justifiable, and affordable.
  A doubling of the settlement would have a number of important public 
health benefits. I believe that the test ought to be what the impact of 
the settlement will have on the public health of this nation, primarily 
in terms of youth smoking.
  Mr. President, the doubling of the settlement would require that the 
tobacco industry increase the price of their products by about $1.50 to 
compensate the Federal Government and the States for the costs of 
smoking.
  Professor Harris estimates that under the current settlement, 
cigarette prices would only rise by 62 cents a pack. Since teenage 
smokers are very sensitive to price increases because of their lack of 
income, a 62-cent price hike would reduce tobacco use by the Nation's 
youth by only 18 percent over the next decade, which is significantly 
less than the settlement's requirement that teenage smoking drop by 58 
percent in 10 years.
  There have been extensive studies and extensive review of what has 
happened when the price of cigarettes has gone up and what the impact 
has been upon youth smoking.
  We have also seen that, where the price has gone up and the tobacco 
industry has redoubled their efforts in advertising, still young people 
will go out and purchase cigarettes. There are studies that make the 
clear case that when you have a significant increase in the price of 
tobacco products and have effective advertising restrictions, you have 
a dramatic impact in reducing teenage smoking. That ought to be our 
objective, and it ought to be our objective at the beginning of the 
process, not at the end of the process.
  The best estimates by those who have reviewed what the price increase 
ought to be in order to discourage young people from purchasing 
cigarettes is at least $1.50 a pack. Such an increase would move us 
much closer to the objective which has been agreed to in the settlement 
of a reduction of 58 percent in youth smoking over the next several 
years. With a $1.50 increase, the tobacco industry will be able to meet 
these youth smoking reduction targets, and will at least partially 
compensate Federal health care programs for their expenditures due to 
tobacco-induced illnesses.
  Doubling of the settlement would also bring cigarette prices in the 
United States in line with other industrial nations. With a 62-cent 
increase, cigarette prices in Europe will still be far higher than in 
America. With the 62-cent increase, we are talking about the price in 
the United States being $2.56 a pack. In Canada, it is $3.06 a pack. In 
Germany, it is $3.18 a pack. If we have a $1.50 increase, the United 
States will be at $3.44. This figure is, in effect, doubling the amount 
of resources that would be paid by the cigarette companies.
  This is the price increase recommended by Dr. Kessler and Dr. Koop, 
which would have a dramatic result in reducing teenage smoking. When 
you look at that increase, even though it appears to be quite 
significant, it still puts a pack of cigarettes cheaper in the United 
States than it would be in France, where it is $3.47 a pack, or in 
Denmark, where it is $4.75, or Ireland, at $4.94, or the United 
Kingdom, at $5.27. We would still be in the lower range of the 
industrialized nations of the world. The best estimate and review by 
those who understand the workings of the tobacco companies believe that 
they can afford that.
  So, doubling the settlement amount would raise an additional $10 to 
$15 billion a year over the next quarter century to improve the health 
of the Nation's citizens or other important purposes. For example, we 
could extend the recently enacted children's health insurance program 
for low- and moderate-income working adults. We are talking about the 
sons and daughters of working families who are starting off as teachers 
or as police officers or social service workers--all starting out at 
$28,000 or $29,000 a year. We could also act on the new knowledge about 
the important role of the first 3 years in a child's life by launching 
an initiative to transform the lives of millions of children. We have 
learned dramatically in the last several years that early intervention 
has a significant impact in building skills and confidence in young 
people. With all of the research that has been done on the brain and 
early development, we are finding out that children in those first 
years have immense capacity for learning. We know the vacuum that is 
out there in so many different parts of America. There are children who 
are not being encouraged to expand their horizons. Even at the very 
earliest age, we ought to be about trying to find the ways that we can 
stimulate that early learning experience for children.
  This is a matter of national importance. President Clinton has made a 
strong commitment to improving the early years of children. We would 
have an opportunity to really respond to that very, very important 
human need--the need that families are facing.
  The tobacco industry can easily afford the $1.50 increase in prices. 
There is broad support within the public health community for a price 
increase as high as $2 a pack. Dr. Koop and Dr. Kessler and the members 
of the commission have endorsed such an increase, and so has the 
American Cancer Society.

  Doubling the settlement payment is the right thing to do. It will 
provide a fair measure of compensation to the Federal Government and 
the American taxpayer for the hundreds of billions of dollars that 
smoking-induced illnesses have cost us.
  Robert Kennedy closed his speech 30 years ago with these words which 
are equally true today:

       We must be equal to the task, for the stakes involved are 
     nothing less than the lives and the health of millions. . . . 
     But this is a battle which can be won.

  Congress and President Clinton should accept nothing less than a 
doubling of the tobacco settlement, and I urge my colleagues' support.
  Mr. President, I think most of us would agree this Congress is going 
to be hard pressed this year to get about the business of resolving 
this issue. But the tobacco settlement will be a matter of enormous 
importance and consequence at the beginning of the next Congress. It is 
important that we begin to establish some parameters in which to 
consider these various agreements. It is important to provide some 
criteria by which we can judge whether the proposal is beneficial to 
the country or whether it is a proposal that needs to

[[Page S9248]]

be enhanced, as I believe this one does need to be.
  So, this is a matter of enormous importance for the public health of 
the American people for the future. We must make sure we are not going 
to involve the nation's children in the nicotine addiction which has 
brought such tragedy and loss of life into so many families of this 
country. We can do something about it. It is a challenge for all of us, 
and I hope we are going to be up to the task.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Allard). The Chair recognizes the Senator 
from Montana. I remind the Senator from Montana there is a 10-minute 
limitation.

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