[Congressional Record Volume 143, Number 155 (Friday, November 7, 1997)]
[Senate]
[Pages S11993-S11996]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MACK (for himself, Mr. Harkin, Mr. DeWine, Mr. Santorum, 
        Ms. Collins, Ms. Snowe, Mr. D'Amato, Mr. Smith of Oregon, Mrs. 
        Boxer, Mr. Kennedy, Mrs. Feinstein, Mr. Lautenberg, Mr. Graham, 
        Mr. Dodd, Mr. Durbin, and Mr. Wellstone):
  S. 1411. A bill to amend the Internal Revenue Code of 1986 to 
disallow a Federal income tax deduction for payments to the Federal 
Government or any State or local government in connection with any 
tobacco litigation or settlement and to use any increased Federal 
revenues to promote public health; to the Committee on Finance.


        THE NATIONAL INSTITUTES OF HEALTH TRUST FUND ACT OF 1997

  Mr. MACK. Mr. President, today I am joined by Senators Harkin, 
DeWine, Santorum, Collins, Snowe, D'Amato, Smith of Oregon, Boxer, 
Kennedy, Feinstein, Lautenberg, Graham,

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Dodd, Durbin, and Wellstone in introducing legislation that begins to 
realize the paramount goal of doubling funding for the National 
Institutes of Health [NIH] over the next 5 years. The bill ensures that 
any tobacco settlements or judgments are not tax deductible.
  As currently crafted, the global settlement specifically allows the 
tobacco companies to deduct the entire amount of their payments. That 
is a possible $128 billion break on their tax bill. I believe it is 
fundamentally wrong to allow them such a free ride at taxpayers' 
expense. More importantly, any settlement should provide funds for 
biomedical research, including funding to find better treatment and 
cures for the diseases caused by tobacco.
  Although the Tax Code often allows settlement amounts to be 
deductible, the current law provides that fines or penalties paid to a 
Government entity are not. The unprecedented situation we face with the 
tobacco industry demands that the Congress define these payments as 
more akin to such a fine or penalty. If a businessman cannot deduct a 
speeding ticket he received on his way to a meeting, tobacco shouldn't 
be able to deduct its payment for guaranteed immunity and certainty of 
liability. Which is worse, a speeding ticket or knowingly addicting and 
killing millions of Americans?
  I want my colleagues to understand that the success of our efforts on 
this front does not hinge on the enactment of a final Federal 
settlement. The bill applies to any settlement or judgment at the State 
or Federal level. As such, if the tobacco companies are found liable in 
any forum, or see fit to settle any of their cases with governmental 
entities, those payments will not be deductible. However, the bill 
leaves in place the deductibility of compensatory sums paid to 
individuals for harm done to them. Now is the time for Congress to step 
forward and pledge that we will not be a party to any tobacco 
settlement that comes at taxpayers' expense.
  Allowing the companies to state that they are willing to pay $368.5 
billion to the Government, when in reality they are only paying two-
thirds of that amount, is false advertising. The bill corrects this 
misleading situation to the benefit of thousands, perhaps millions, of 
Americans whose tobacco-related illnesses might be cured now through 
medical research.
  As my colleagues will recall, the Senate passed by a vote of 98 to 0 
a Sense of the Senate Resolution that Congress, and the Nation, should 
commit to the goal of doubling funding for NIH over the next 5 years. 
The actions we are taking today will help us to achieve that goal.
  The tax revenues which will be derived as a result of making the 
settlement or judgments nondeductible will be used to establish the 
National Trust Fund for Biomedical Research. Each year, after the 
President has signed the Labor/HHS/Education bill into law, the moneys 
in the medical research trust fund established by this bipartisan 
legislation will be allocated to NIH for biomedical research.
  Research has demonstrated that many diseases can be prevented, 
eliminated, detected earlier, or managed more effectively through a 
vast array of new medical procedures and therapies.
  For the first time in history, overall death rates from cancer have 
begun a steady decline in the United States. Ten years ago, cancer 
patients were offered little hope of survival. Today, however, if a 
breast cancer is detected at an early stage, there is a 94-percent 
survival rate. Today, 80 percent of children diagnosed with acute 
lymphoblastic leukemia [ALL] are alive and free of the disease 5 years 
after diagnosis.
  Genetic research has enabled Americans to learn if they are more 
likely to develop osteoporosis, breast cancer, Lou Gehrig's disease and 
other illnesses. Scientists now know that, in at least 50 percent, and 
possibly as many as 80 percent, of all cancers, one gene--p53--is 
damaged. If cancer cells growing in a dish are given healthy p53 genes, 
they immediately stop proliferating and die.
  We now know that if one inherits a mutated gene for hemochromatosis, 
more commonly known as iron overload disease, a disease which affects 
approximately 1 million Americans, then one will actually develop the 
disease. The benefit of knowing this is that giving blood is an 
effective way to manage the disease.
  Because of the advances made in biomedical research, people with 
Parkinson's disease, AIDS, Alzheimer's disease, and other ailments are 
living longer and healthier lives. We are on the verge of cures and new 
treatments for diseases which have plagued our society for many years. 
Research is the key which will unlock the knowledge needed to find 
these cures.
  But doubling our commitment to NIH, we could improve the grant 
success rate from 25 to 40 percent. More patients would have access to 
clinical trials. Approximately 2 percent of all cancer patients are now 
enrolled in clinical trials. We could increase that to 20 percent. The 
result is that more families would have access to the most effective 
state-of-the-art treatment.
  Patients would also benefit by advances in new methods of treatment 
including gene therapy, immunotherapy, spinal cord rejuvenation; 
helping diabetics naturally produce insulin; relief for Parkinson's 
disease patients, and reduction in heart disease, which is the leading 
cause of death in the United States.
  We have entered a new era of medical research in this country, but we 
must provide the necessary funding in order to translate discoveries 
into new methods of diagnosis and treatment.
  There can be little argument that scientific advances will also have 
a significant positive impact upon our Nation's economy. They will 
result in reduced health expenditures for Medicare, Medicaid, DOD, VA, 
and other public and private health programs. A recent study by the 
National Science Foundation concluded that every dollar spent on basic 
research permanently adds 50 cents or more each year to national 
output.
  In addition, the medical technology industry provides high-wage jobs 
to millions of Americans. Investment in basic science helps the United 
States compete in the global marketplace in such industries as 
pharmacology, biotechnology, and medical technology. Combined with the 
actions taken earlier this year to reform the FDA, public and private 
investment in biomedical research will ensure our ability to compete in 
this important industry and create new jobs.
  Mr. President, there are millions of Americans who are fighting a 
day-to-day battle against cancer, sickle cell anemia, AIDS, 
osteoporosis, Parkinson's disease, and other ailments. Their lives are 
in our hands. They are asking for hope and the opportunity for a cure. 
We must act now.
  This legislation is supported by more than 175 organizations 
representing a broad base of research, patient, health professions, 
consumer, and education communities. I ask unanimous consent that a 
list of these organizations be included in the Record.
  I urge my colleagues to join this bipartisan effort to help achieve 
the goal of doubling NIH funding over the next 5 years.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

   Organizations Supporting Mack-Harkin Tobacco Research Fund as of 
                            November 6, 1997

       1. Alliance for Eye and Vision Research.
       2. Alzheimer's Association.
       3. American Academy of Allergy, Asthma and Immunology.
       4. American Academy of Child and Adolescent Psychiatry.
       5. American Academy of Dermatology.
       6. American Academy of Neurology.
       7. American Academy of Opthalmology.
       8. American Academy of Orthopaedic Surgeons.
       9. American Academy of Otolaryngology-Head and Neck 
     Surgery, Inc.
       10. American Academy of Pediatrics.
       11. American Academy of Physical Medicine and 
     Rehabilitation.
       12. American Association for Cancer Education.
       13. American Association for Cancer Research.
       14. American Association for Dental Research.
       15. American Association for the Surgery of Trauma.
       16. American Association of Anatomists.
       17. American Association of Colleges of Nursing.
       18. American Association of Colleges of Osteopathic 
     Medicine.
       19. American Association of Colleges of Pharmacy.
       20. American Association of Immunologists.
       21. American Association of Pharmaceutical Scientists.

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       22. American Cancer Society.
       23. American College of Cardiology.
       24. American College of Clinical Pharmacology.
       25. American College of Medical Genetics.
       26. American College of Neuropsychopharmacology.
       27. American College of Rheumatology.
       28. American Dermatological Association.
       29. American Federation for Medical Research.
       30. American Foundation for AIDS Research.
       31. American Gastroenterological Association.
       32. American Geriatrics Society.
       33. American Heart Association.
       34. American Liver Foundation.
       35. American Lung Association.
       36. American Optometric Association.
       37. American Pediatric Society.
       38. American Physiological Society.
       39. American Podiatric Medical Association.
       40. American Psychiatric Association.
       41. American Psychological Association.
       42. American Psychological Society.
       43. American Sleep Disorders Association.
       44. American Society for Biochemistry and Molecular 
     Biology.
       45. American Society for Cell Biology.
       46. American Society for Clinical Nutrition.
       47. American Society for Clinical Pharmacology and 
     Therapeutics.
       48. American Society for Dermatologic Surgery.
       49. American Society for Microbiology.
       50. American Society for Nutritional Sciences.
       51. American Society for Pharmacology and Experimental 
     Therapeutics.
       52. American Society for Reproductive Medicine.
       53. American Society for Therapeutic Radiology and 
     Oncology.
       54. American Society of Cataract and Refractive surgery.
       55. American Society of Clinical Oncology.
       56. American Society of Hematology.
       57. American Society of Human Genetics.
       58. American Society of Nephrology.
       59. American Society of Tropical Medicine and Hygiene.
       60. American Thoracic Society.
       61. American Uveitis Society.
       62. American Urogynecologic Society.
       63. American Urological Association.
       64. America's Blood Centers.
       65. Arthritic Foundation.
       66. Association for Medical School Pharmacology.
       67. Association of Research in Vision and Ophthalmology.
       68. Association of Academic Health Centers.
       69. Association of Academic Physiatrists.
       70. Association of American Cancer Institutes.
       71. Association of American Medical Colleges.
       72. Association of American Universities.
       73. Association of Anatomy, Cell Biology, and Neurobiology 
     Chairpersons.
       74. Association of Independent Research Institutes.
       75. Association of Medical and Graduate Departments of 
     Biochemistry.
       76. Association of Medical School Microbiology and 
     Immunology Chairs.
       77. Association of Medical School Pediatric Department 
     Chairmen.
       78. Association of Minority Health Professions Schools.
       79. Association of Pediatric Oncology Nurses.
       80. Association of Professors of Dermatology.
       81. Association of Professors of Medicine.
       82. Association of Schools and Colleges of Optometry.
       83. Association of Schools of Public Health.
       84. Association of Subspecialty Professors.
       85. Association of Teachers of Preventive Medicine.
       86. Association of University Environmental Health Sciences 
     Center.
       87. Association of University Professors of Ophthalmology.
       88. Association of University Programs in Occupational 
     Safety and Health.
       89. Association of University Radiologists.
       90. Astra Merck.
       91. Cancer Research Foundation of America.
       92. The Candlelighters Childhood Cancer Foundation.
       93. Citizens for Public Action.
       94. Coalition for American Trauma Care.
       95. Coalition of Patient Advocates for Skin Disease 
     Research.
       96. College on Problems of Drug Dependence, Inc.
       97. Columbia University.
       98. Communication Disorders Program University of Virginia.
       99. Consortium of Social Science Associations.
       100. Cooley's Anemia Foundation.
       101. Corporation for the Advancement of Psychiatry.
       102. Cystic Fibrosis Foundation.
       103. Digestive Disease National Coalition.
       104. Dystonia Medical Research Foundation.
       105. Dystrophic Epidermolysis Bullosa Research Association 
     of America, Inc.
       106. East Carolina University School of Medicine.
       107. Emory University.
       108. The Endocrine Society.
       109. ESA, Incorporated.
       110. Families Against Cancer.
       111. Federation of American Societies for Experimental 
     Biology.
       112. Federation of Behavioral, Psychological and Cognitive 
     Sciences.
       113. Foundation for Icthyosis and Related Skin Types.
       114. Fred Hutchinson Cancer Research Center.
       115. Friends of the National Library of Medicine.
       116. Fox Chase Cancer Center.
       117. Gay Men's Health Crisis.
       118. General Clinical Research Center Project Directors 
     Association.
       119. Glaucoma Research Foundation.
       120. Immune Deficiency Foundation.
       121. Inova Institute of Research and Education.
       122. Joint Council of Allergy, Asthma & Immunology.
       123. Juvenile Diabetes Foundation International.
       124. The Lighthouse, Inc.
       125. Lombardi Cancer Center.
       126. Lupus Foundation of America.
       127. Lymphoma Research Foundation of America.
       128. Medical Library Association.
       129. National Alliance for Eye and Vision Research.
       130. National Alliance for the Mentally Ill.
       131. National Alopecia Areata Foundation.
       132. National Association for Biomedical Research.
       133. National Association for Pseudoxanthoma Elasticum.
       134. National Association of Children's Hospitals.
       135. National Association of State Universities and Land-
     Grant Colleges.
       136. National Campaign to end Neurological Disorders.
       137. National Caucus of Basic Biomedical Science Chairs.
       138. National Coalition for Cancer Research.
       139. National Committee to Preserve Social Security and 
     Medicare.
       140. National Council on Spinal Cord Injury.
       141. National Eczema Association for Science & Education.
       142. National Foundation for Ectodermal Dysplasias.
       143. National Marfan Foundation.
       144. National Mental Health Association.
       145. National Multiple Sclerosis Society.
       146. National Organization for Rare Disorders.
       147. National Osteoporosis foundation.
       148. The National Pemphigus Foundation.
       149. National Perinatal Association.
       150. National Psoriasis Foundation.
       151. National Vitiligo Foundation, Incorporated.
       152. New York University Medical Center.
       153. Oncology Nursing Society.
       154. Parkinson's Action Network.
       155. Prevent Blindness America.
       156. Prevention of Blindness.
       157. PXE International Inc.
       158. Radiation Research Society.
       159. Research America.
       160. Research Society on Alcoholism.
       161. RESOLVE.
       162. Roswell Park Cancer Institute.
       163. Society for Academic Emergency Medicine.
       164. Society for Inherited Metabolic Diseases.
       165. Society for Society for Investigative Dermatology.
       166. Society for Neuroscience.
       167. Society for Pediatric Research.
       168. Society for the Advancement of Women's Health 
     Research.
       169. Society of Gynecologic Oncologists.
       170. Society of Medical College Directors of Continuing 
     Medical Education.
       171. Society of University Otolaryngologists.
       172. Society of University Urologists.
       173. St. Jude Children's Research Hospital.
       174. Sudden Infant Death Syndrome Alliance.
       175. Tourette Syndrome Association, Inc.
       176. United Scleroderma Foundation, Incorporated.
       177. University of California, Berkeley School of 
     Optometry.
       178. Women in Ophthalmology.
       179. Women's Dermatologic Society.

  Mr. HARKIN. Mr. President, today Senator Mack and I, joined by a 
strong bipartisan group of our colleagues, are introducing legislation 
that would prevent tobacco companies from claiming the settlement or 
judgement payments as a tax-deductible expense, and use the resulting 
savings to substantially expand our Nation's investment in the search 
for medical breakthroughs.
  It is important to note that this common sense proposal is the first 
major tobacco legislation this year to be introduced with strong 
bipartisan support. We have 16 cosponsors--8 Democrats and 8 
Republicans--and I believe we'll have many more as more of our 
colleagues have the time to review this bill. Senator Mack and I are 
also very pleased to have the support of over 170 organizations from 
across the Nation signed up in support of this plan.
  During the negotiations that led to the proposed national tobacco 
settlement, lawyers for the big tobacco companies insisted on a 
provision stating

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that ``all payments pursuant to this agreement shall be deemed ordinary 
and necessary business expenses.'' This means that all payments under 
this proposal, an estimated $368.5 billion over 25 years, would be tax 
deductible. Thus the industry could write off about 35 percent of the 
entire settlement payment of $368.5 billion, as well as any future 
payments or fines. So, if this were allowed to happen, the American 
people--not Big Tobacco--would be forced to pay approximately $130 
billion of the tobacco settlement.
  But the American people have paid enough. They've paid by having 
their kids deliberately targeted in slick advertising campaigns. 
They've paid by having the industry lie to them about the health 
effects of tobacco. And they've paid with disease and death.
  Tobacco products kill more than 400,000 Americans every year--that's 
more deaths than from AIDS, alcohol, car accidents, murders, suicides, 
drugs, and fires combined. Last year, close to 5,000 Iowans died from 
smoking related illnesses.
  Mr. President, our bipartisan bill would close this outrageous 
loophole in the proposed national tobacco settlement, and open a new 
source of funding for investing in health research.
  And that's what we really need. The proposed settlement provides 
funding for smoking cessation programs, anti-smoking education 
programs, and FDA enforcement--but only a tiny amount is set aside for 
vital scientific research on lung cancer, emphysema, and heart disease.
  The Senate is already on record, in a vote of 98-0, to double the 
budget of NIH within 5 years. If we create a trust fund for medical 
research as I have been calling for since 1993 and deposit in it the 
savings from the elimination of this special interest loophole, we 
could take a major step to meet the Senate's objective and make even 
more headway in curing killer diseases.
  A fund for health research would provide additional resources for our 
search for medical breakthroughs over and above those provided to NIH 
in the annual appropriations process. The fund would greatly enhance 
the quality of health care by investing more in finding preventive 
measures, cures and more cost effective treatments for the major 
illnesses and conditions that strike Americans.
  In 1993 and 1994 I argued that any health care reform plan should 
include additional funding for health research. Health care reform was 
taken off the front burner but the need to increase our Nation's 
commitment to health research has only grown.
  While health care spending devours nearly $1 trillion annually our 
medical research budget is dying of starvation. The United States 
devotes less than 2 percent of its total health care budget to health 
research. The Defense Department spends 15 percent of its budget on 
research. Does this make sense? The cold war is over but the war 
against disease and disability continues.
  Increased investment in health research is key to reducing health 
costs in the long run. If we can find cures for lung cancer, emphysema, 
and heart disease, the savings would be enormous.
  Mr. President, I do everything I can to increase funding for NIH 
through the appropriations process. But, given the current budget 
situation and freeze in discretionary spending what we can do is 
limited. Without action, our investment in medical research through the 
NIH is likely to decline in real terms.
  The NIH is able to fund only about 25 percent of competing research 
projects or grant applications deemed worthy of funding. This is 
compared to rates of 30 percent or more just over a decade ago. Science 
and cutting edge medical research are being put on hold. We may be 
giving up possible cures for diabetes, Parkinson's, cancer, and 
countless other diseases.
  Our lack of investment in research may also be discouraging our young 
people from pursuing careers in medical research. The number of people 
under the age of 36 even applying for NIH grants dropped by 54 percent 
between 1985 and 1993. This is due to a host of factors but I'm afraid 
that the lower success rates among applicants is making biomedical 
research less and less attractive to young people.
  I am tremendously heartened by the significant bipartisan coalition 
of 16 Senators that has formed in support of our bill. Our colleagues 
who have joined with us on this legislation understand that health 
research is an investment in our future--an investment in our children 
and grandchildren.
  Mr. President, this legislation is common sense, bipartisan--and it's 
the right thing to do. Senator Mack and I join in asking our colleagues 
for their willingness to carefully review our proposal. Certainly any 
tobacco legislation that this Congress adopts next year should 
contribute significantly to our Nation's commitment in the search for 
medical breakthroughs.
  Mr. DODD. Mr. President, I rise today to join my colleagues, Senator 
Mack, Senator Harkin, and others in introducing the National Institutes 
of Health Trust Fund Act of 1997. This bill, very simply, is intended 
to ensure that payments made by the tobacco industry under any 
settlement legislation enacted by Congress on behalf of the people of 
this Nation, will be the full responsibility of the tobacco companies.
  Many of us were dismayed to learn that under current law, those 
payments could be deducted by these companies as a business expense--
effectively reducing the cost to manufacturers by one-third. I don't 
think that this is what the negotiators of the settlement intended, nor 
is it what the public expects. This bill would disallow the 
deductibility of the proposed settlement or the settlement of any other 
tobacco-related civil action. The tax revenues from the disallowance of 
the deduction, estimated at $100 billion, would go toward a trust fund 
for the National Institutes of Health.
  My primary interest in the tobacco settlement originates in the 
dramatically high incidence of teen smoking in our country. The 
statistics are startling--3,000 young children begin smoking each day 
and over 90 percent of adults that smoke started before the age of 18. 
Our hope and expectation is that with resources generated by a tobacco 
settlement, we can fund effective programs to help addicted teens quit 
smoking and prevent most children from ever starting.
  In essence, we want to encourage young people to take responsibility 
for their health. Tobacco companies must set a precedent for our youth 
by taking full financial responsibility for the damage they have 
inflicted on the public health of the Nation. Tobacco companies have 
already conceded the points that tobacco is harmful and addictive and 
information that would have been useful to our understanding of tobacco 
addition was withheld. Avoiding full payment of penalties for their 
actions through the tax deduction loophole is ethically wrong, even if 
legal. The tobacco industry needs to serve as an example for the 
children of the Nation by accepting the full financial consequences of 
the settlement.
  Just a few months ago, the public loudly voiced its disgust with the 
covert attempt to give the tobacco industry a $50 billion credit toward 
payment of a future settlement. While we were successful in eliminating 
that loophole, an unfortunate repercussion has been the exacerbation of 
the public's doubts about the settlement. Even if they didn't before, 
many now believe that the industry will exploit any loophole to escape 
its responsibility. We must restore the public's faith in this process. 
We must send a clear message that any tobacco settlement reached will 
be grounded in the principle that tobacco companies take full 
responsibility for their actions. That objective can best be achieved 
by swift passage of this bill.
                                 ______