[Congressional Record Volume 144, Number 26 (Thursday, March 12, 1998)]
[Senate]
[Pages S1902-S1903]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CHILDREN'S HEALTH PRESERVATION AND TOBACCO ADVERTISING COMPLIANCE ACT

   Mr. REED. Mr. President, I rise today to announce 
legislation that would amend the Internal Revenue Code to deny tobacco 
companies any tax deduction for their advertising and promotional 
expenses, when those ads are aimed at America's most impressionable 
group, children.
  This bill addresses a key element in our ongoing public debate on 
tobacco: industry's ceaseless efforts to market to children. My 
legislation can stand on its own, or can easily be incorporated into a 
comprehensive tobacco bill. With or without Congressional action on the 
state attorney generals' tobacco settlement, it is time for Congress to 
put a stop to the tobacco industry's practice of luring children into 
untimely disease and death.
  I am pleased to be joined today in introducing this legislation with 
Senators Boxer and Chafee, and I would also like to recognize the 
leadership of my colleagues on this issue. Senator Harkin, along with 
former Senator Bradley and others, has made continuous efforts over the 
years to completely eliminate the tax deduction for tobacco 
advertising. And while I concur with Senator Harkin that the deduction 
is a questionable use of our tax dollars, I would like to emphasize to 
my colleagues that this bill does not eliminate the deduction for 
tobacco manufacturers, as long as they do not advertise to children.
  Limiting the promotion of tobacco products to children is a necessary 
part of any comprehensive effort to prevent tobacco use by minors. My 
legislation offers a constitutionally sound way to enforce strong 
tobacco advertising restrictions, with or without federal tobacco 
legislation on the proposed tobacco settlement.
  The advertising restrictions contained in our bill are included in 
S.1638, legislation introduced by Senator Conrad, cosponsored by myself 
and 29 other Senators. S. 1638 establishes strong restrictions 
regarding the promotion of tobacco products to minors.
  Under my bill, if tobacco manufacturers do not comply with the 
proposed advertising restrictions, the manufacturer's ability to deduct 
the cost of tobacco advertising and promotion expenses would be 
disallowed.
  These advertising restrictions are appropriately tailored to prevent 
the advertising and marketing of tobacco to minors. The restrictions 
contained in this legislation are similar to those contained in the FDA 
rule and the June 20 proposed settlement. Key components of these 
restrictions include: a prohibition on point of sale advertising except 
in adult only stores and tobacco outlets; a ban on outdoor advertising 
within 1000 feet of schools and publicly-owned playgrounds, and outdoor 
advertising beyond those areas restricted to black-and-white text only; 
and, a prohibition on brand-name sponsorship of sporting or 
entertainment events.
  On numerous occasions, tobacco industry executives have indicated 
that unless they receive liability protections, they will continue to 
advertise as they do now. Today I am offering an alternative 
enforcement mechanism because failure to act on this issue is a failure 
to meet the needs of our children.


                             Youth Smoking

  Mr. President, the importance of this issue is enormous. The facts 
speak for themselves. Today, some 50 million Americans are addicted to 
tobacco. One of every three long-term users of tobacco will die from a 
disease related to their tobacco use. About 3/4ths (70 percent) of 
smokers want to quit, but less than one-quarter are successful in doing 
so.
  Tobacco addiction is clearly a problem that starts with children: 
almost 90 percent of adult smokers started using tobacco at or before 
age 18. The average youth smoker begins at age 13 and becomes a daily 
smoker by age 14\1/2\.
  Each year, one million children become regular smokers--and one-third 
of them will die prematurely of lung cancer, emphysema, and similar 
tobacco caused diseases. Unless current trends are reversed, five 
million kids under 18 currently alive today will die from tobacco 
related disease.
  In my home state of Rhode Island, while overall cigarette use is 
declining slightly, it has increased by more than 25 percent among 
high-schoolers.
  It is far too easy for children to buy cigarettes and chewing tobacco 
through vending machines and at retail outlets. Despite the fact that 
it is against the law in all 50 states to sell cigarettes and smokeless 
tobacco to minors, children purchase an estimated $1.26 billion worth 
of tobacco products each year.


                      The Industry's Track Record

  As we look to a bright future for our children, Congress must learn 
from the lessons of the past. Those lessons teach us that the tobacco 
industry made its money by marketing cigarettes to children, knowing 
full well that cigarettes are addictive products with severe health 
consequences. The proposed settlement reached last June is based on the 
presumption that this industry can and wants to change its corporate 
culture--a culture that has yielded incredible revenue by capitalizing 
on the vulnerabilities of our children.
  The story of the tobacco industry and youth smoking in the United 
States is the story of the advertising industry. In the 1920s, 
cigarette manufacturers solicited doctors to try their products, later 
advertising ``20,679 Physicians Say Luckies are Less Irritating'' and 
``For Digestion's sake, smoke Camels.'' In a case against Reynolds 
Tobacco, decided in March 1950, the FTC found that Camel advertisements 
had been worded in such a way as to declare that the brand was 
harmless, and, as such, were false and deceptive.
  An advertisement in 1953 read: ``This is it. L&M filters are just 
what the doctor ordered.'' Another advertisement from that time period 
claimed: ``More Doctors smoke Camels than any other cigarette.''
  And today, we have Winston ads that attempt to sound like a health 
food promotion, proclaiming ``no additives.'' The new Camel ad--``Live 
Out Loud''--is a not so subtle stand in for the ``cool'' Joe Camel.
  From recently released documents, we know that the tobacco industry 
has sought to market its tobacco products to children for decades. News 
reports disclosed that an RJR researcher named Claude Teague had 
written a 1973 memo that stated ``if our Company is to survive and 
prosper, over the long-term we must get our share of the youth 
market.''
  Documents obtained through the Mangini litigation further document 
these efforts. A Presentation from CA Tucker, Vice President of 
Marketing, to the Board of Directors of RJR Industries (Sept. 30, 1974) 
concluded: ``this

[[Page S1903]]

young adult market, the 14-24 age group. . .represent(s) tomorrow's 
cigarette business.'' That same presentation said: ``For Salem, 
significant improvements have been made in the advertising, designed 
for more youth adult appeal under its greenery/refreshment theme. These 
include: more true-to-life young adult situations. More dominant 
visuals. A greater spirit of fun. . .For Camel Filter, we. . .will have 
pinpointed efforts against young adults through its sponsorship of 
sports car racing and motorcycling.'' The Mangini documents also 
demonstrate that RJR has been secretly conducting extensive surveys of 
the smoking habits of teenagers for decades.

  Given this track record, I am deeply skeptical of the tobacco 
industry and its willingness to change its behavior. Yet they say they 
are willing--my bill will put them to the test.


            Billions Spent Each Year on Tobacco Advertising

  At every turn, the tobacco industry has come up with a slick new way 
to hook kids on tobacco. And we know from research that advertising 
targeted to children can play a pivotal role in an adolescent's 
decision to smoke.
  Through the years, the tobacco companies have designed a way to 
attract generation after generation to smoking. Examples of industry 
practices are endless. Eighty-six percent of underage smokers prefer 
one of the three most heavily advertised brands--Marlboro, Newport or 
Camel.
  One of the advertising campaigns most markedly aimed at young people 
is the Joe Camel campaign. After RJ Reynolds introduced this campaign, 
Camel's market share among underage smokers jumped from 3 percent to 
over 13 percent in 3 years.
  Although Congress banned cigarette advertising on television in 1970, 
tobacco companies routinely circumvent this restriction through the 
sponsorship of sporting events that gives their products exposure 
through television.
  Data from the Federal Trade Commission indicates how much the 
industry spends on these activities. Advertising and promotion 
expenditures have increased tenfold since 1975. In 1975, the industry 
spent $491 million. In 1995 alone, tobacco manufacturers spent $4.9 
billion on advertising and promotional expenditures.
  The federal government subsidizes tobacco advertising through a tax 
deduction (generally a 35% deduction) for advertising expenses. In 
1995, this subsidy cost the American taxpayers approximately $1.6 
billion. In terms of lost revenues to the Federal Treasury, it is 
certainly not an insignificant amount of money.
  In effect, the federal government is subsidizing the industry's 
advertising costs. For example, in 1995, the cost of the cigarette 
advertising deduction covered the total amount spent by the industry on 
coupons, multi-pak promotions, and retail value added items, such as 
key chains, and point of sale advertising--the kind of items that are 
most attractive to our children.


                         Constitutional Issues

  The First Amendment does not entitle tobacco companies to target 
children. The Supreme Court has said that commercial speech enjoys only 
limited protection. It is interesting to note that tobacco companies 
have not challenged the right of the government to restrict their 
advertising in other ways, such as the 1971 ban on broadcast 
advertising for tobacco products.
  The industry has said that it must be offered liability limits for 
them to ``consent'' to advertising restrictions. In effect, the 
industry is saying, if Congress wants the companies to stop illegal 
efforts to induce children to smoke, then Congress should protect the 
industry from legal action. And the hypocrisy of the industry's 
position is that they would like the immunity protections in statute 
but say that the advertising restrictions ``cannot be imposed by 
statute or by rule.''
  Some in the industry have suggested that without liability 
protections, the tobacco industry will continue to market to children. 
A USA Today article on February 19, 1998 stated that industry spokesman 
Meyer Koplow ``warned that the industry might return to practices such 
as cartoon advertising if Congress fails to grant protection from 
lawsuits.''
  The tobacco industry, the advertising industry, and others have said 
that they would challenge statutory restrictions on advertising. While 
I believe that S. 1368 and other proposals do not violate the 
constitution, I recognize the uncertainty surrounding the provisions in 
this and other bills.
  What is certain is that Congress has the authority over the tax code. 
This legislation uses that authority to put an end to the tobacco 
industry's practice of targeting children.
  Mr. President, I urge my colleagues to join me in this effort to 
protect America's children.

                          ____________________