[Congressional Record Volume 144, Number 31 (Thursday, March 19, 1998)]
[Senate]
[Pages S2239-S2242]
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 discuss my legislation S. 
1755, legislation that would amend the Internal Revenue Code to deny 
tobacco companies any tax deduction for their advertising and 
promotional expenses when those expenses are directed at the most 
impressionable group in our society, children.
  In a recent editorial in the Journal of the American Medical 
Association, Doctors C. Everett Koop, David Kessler, and George 
Lundberg wrote, ``For years the tobacco industry has marketed products 
that it knew caused serious disease and death. Yet, it intentionally 
hid this truth from the public, carried out a deceitful campaign 
designed to undermine the public's appreciation of these risks, and 
marketed its addictive products to children.''

  Numerous studies have implicated the tobacco industry, their 
advertising and promotional activities, as a major cause in the 
continued increase in youth smoking throughout the United States in 
recent years. Research on smoking demonstrates that increases in youth 
smoking directly coincide with effective tobacco promotional 
activities.
  My legislation, S. 1755, addresses this key element in an ongoing 
public debate about controlling youth smoking in the United States. My 
legislation could stand on its own, or it can easily be incorporated 
into comprehensive legislation, which is beginning to be considered 
here in the Senate. With or without congressional action on the 
Attorney General's proposal and suggested settlement which took place 
last summer, it is time for Congress to act now to stop the tobacco 
industry's practice of luring children into untimely disease and death.
  I am pleased to have join me as cosponsors Senator Boxer, Senator 
Chafee, and Senator Conrad. I also want to recognize the leadership 
over many years of my colleagues, Senator Tom Harkin, along with former 
Senator Bill Bradley, who have in the past called for the total 
elimination of tax deductions for tobacco advertisers. While I concur 
with Senator Harkin that the deduction is a questionable use of our tax 
dollars, I would also like to emphasize that my legislation does not go 
that far.
  My legislation is designed to eliminate this deduction if it is used 
deliberately, explicitly, and consciously to attract young people, 
children, to smoking. Limiting the access of children to smoking is a 
critical part of

[[Page S2240]]

any comprehensive tobacco settlement. My approach is a constitutionally 
sound way to do this. We have had discussions about the first amendment 
and the fact that the industry and others claim that only voluntary 
controls would be permissible under the first amendment. But it is 
quite clear under the first amendment that Congress has the authority 
and ability to limit tax deductions. So my legislation not only gets at 
one of the major issues involved in the debate over tobacco, it does so 
in a way which is completely consistent with the Constitution.
  Now, the advertising restrictions I am talking about are generally 
those that were agreed to by the industry in their discussions with the 
Attorneys General. These restrictions have been incorporated in 
legislation which Senator Conrad introduced, and I joined as a 
cosponsor, along with 29 other Senators. S. 1638, provides for and 
codifies those restrictions that will go a long, long way in preventing 
youth access to smoking.
  Now, under my legislation, if the manufacturers do not comply with 
these restrictions, if they choose to conduct the kind of reckless 
advertising campaigns they have in the past, then they would forfeit 
the deductibility of these expenses. Now, these restrictions are 
appropriately tailored to prevent the advertising and marketing of 
tobacco directed at young people in our society. These restrictions are 
very similar to those proposed by the Food and Drug Administration. 
Indeed, they are very close to those agreed to by the industry in the 
June 20 proposed settlement.
  Key components of these restrictions are, first, a prohibition on 
point-of-sale advertising, except in adult-only stores and tobacco 
outlets; second, a ban on outdoor advertising; third, a prohibition on 
brand-name sponsorship of sporting or entertainment events; fourth, a 
prohibition on the use of human images, cartoon characters and cartoon-
type characters in their advertising; fifth, no payments for 
``glamorizing'' tobacco use in performances or in media that appeals to 
minors; sixth, requiring black and white text advertising and labeling 
so as not to heighten the appeal of cigarette products on the shelf; 
seventh, a prohibition on tobacco product identification on entries and 
teams in sporting events; finally, a prohibition on Internet 
advertising. These are very sensible, very thoughtful restrictions and, 
I must emphasize, should be essentially agreed to by the industry as 
their way of meeting the challenge of limiting access to cigarettes by 
young people in this society.

  On numerous occasions, the industry has said: Well, unless we get 
full immunity, we will not voluntarily give up our right to advertise 
to children. Well, today I am offering an alternative that I think 
would persuade them that they should stop this advertising to children. 
This enforcement mechanism does not rely on their voluntary compliance. 
It simply recognizes the bottom line of these companies and says: If 
you want to persist in advertising to minors, then you will forfeit the 
ability to deduct these expenses from your tax bill.
  Now, Mr. President, the importance of this issue is enormous. The 
facts speak for themselves. Today, some 50 million Americans are 
addicted to tobacco. One out of every three of these individuals will 
die prematurely because of their tobacco addiction. Three-fourths of 
present smokers today want to quit, but they can't because it is an 
addiction. Less than a quarter are able successfully to quit.
  Tobacco is costly in terms of lives lost and in terms of the amount 
of resources consumed every year in this society, which literally goes 
up in smoke. It is estimated that in the United States alone over $100 
billion a year is expended in health care costs and lost productivity.
  Each pack of cigarettes sold generates about $3.90 in smoking-related 
costs to society. Tobacco accounts to more than $10 billion in costs a 
year to the Medicare system and $5 billion each year in terms of costs 
to the Medicaid system. In my home State of Rhode Island, the smallest 
State in the Union, health expenses related to smoking were estimated 
at about $186 million in 1996. These are staggering totals. The cost of 
smoking and lives lost and resources consumed is a serious, serious 
issue in this country. This problem clearly starts with children.
  Ninety percent of adult smokers began to smoke before they were 18 
years old. The average youth smoker begins at the age of 13 and becomes 
a daily smoker by the age 14\1/2\. You have young people as early as 13 
beginning to smoke and within a year and a half many of them are hooked 
for the rest of their lives.
  Each year, 1 million American children become smokers, and one-third 
of them will die from lung cancer, emphysema, and similar tobacco-
related illnesses. Unless current trends are reversed, 5 million kids 
who are 18 and younger today will die prematurely because of smoking. 
You know, there has been a lot of attention has been paid to smoking, 
and we are finally seeing some positive results. There are many signs 
that adults are beginning to realize the dangers of smoking.
  In my home State of Rhode Island, the adult rate of smoking is 
stabilizing. But, shockingly, smoking among high school students has 
increased by 25 percent. This is not an accident--the tobacco industry 
has targeted its advertising to lure children to smoke. It is a dilemma 
that companies face, when every year your customers die--and many die 
because of your products--you have to find replacements. For 
generations, the industry has targeted efficiently the children of this 
country.
  Mr. President, this is a real nationwide public health crisis. I have 
a chart that depicts ``students who reported smoking,'' prepared by the 
University of Michigan. They found that daily smoking among seniors in 
high school increased from 17.2 percent in 1992 to 22.2 percent in 
1996. It continued to climb to 24.6 percent in 1997, representing a 43 
percent increase in daily smoking among our Nation's high school 
seniors over the past 5 years. At a time when we are all appalled at 
the health consequences of smoking, we are seeing an increase in 
smoking among high school seniors.
  It is far too easy for children to buy these products. It is against 
the law in every State in this country to sell tobacco products to 
minors. Yet, it has been estimated that children buy $1.26 billion 
worth of cigarettes and other tobacco products each year.

  More and more, we are learning that these children are beginning to 
smoke because of industry advertising and promotional efforts. A recent 
study by John Pierce and some of his colleagues in a Journal of the 
American Medical Association article found clear evidence that tobacco 
industry advertising and promotional activities can decisively 
influence children who have never smoked before, to begin smoking.
  Among the findings, they found that tobacco industry promotional 
activities in the mid-1990s will influence almost 20 percent of those 
who turn 17 years of age each year to try smoking. At least 34 percent 
of youth experimentation with cigarettes is attributed to the 
advertising and promotion efforts of the tobacco industry.
  They surveyed nonsmokers who were in high school, and they found that 
among nonsmokers, 56 percent had a favorite cigarette advertisement. 
They have been programmed--preprogrammed, if you will--to begin to 
smoke. Eighty-three percent of those nominated either Camel or Marlboro 
as their favorite ad. In fact, Camel was the favorite among children 
ages 12 and 13. Again, it is no wonder, because, as we all know, 
companies rely on cartoon characters like Joe Camel, giveaways of hats, 
T-shirts, and key chains, and promote recreational activities and 
sporting activities, targeting much of their efforts toward young 
people.
  Industry advertising is consistent with the history of the tobacco 
industry, in terms of trying to deceptively promote their products, to 
make of their products appear to be something they never were and never 
will be. They are spending huge amounts of money to do so, and they 
have been doing it consistently. This is an industry whose record is 
one of irresponsibility toward children in our society. They have said 
in the settlement with the Attorneys General that they want to change 
their culture. They recognize the bad old days and they want to do 
something different. I think we have to seriously question whether or 
not this will take place, whether or not they

[[Page S2241]]

will do this, unless we impose significant restrictions on their 
ability to influence the young people of this country.
  Now, the story of the tobacco industry is, in many cases, a story of 
advertising in the United States. If you approach someone my age and 
ask them, ``What does LSMFT mean?--and I see Senator Torricelli here, 
who probably would say of course he knows--younger people might think 
that it is gibberish. We all know that it means ``Lucky Strike Means 
Fine Tobacco.'' Now, to pull that out of your subconscious, if you are 
40 years or older, just like that, is because it was drummed into us 
persistently through tobacco advertising. It was a little jingle or 
acronym that kids would recognize. Then, of course, we all remember, 
going back years, the slogan ``sold American.'' All of these are part 
of our culture. All of them program young people in particular to be 
receptive and welcoming to the suggestion that they should smoke.
  (Mr. SMITH of Oregon assumed the chair.)
  If you go back to the 1950s, the industry at that time was trying to 
suggest that tobacco was a healthy product. They advertised, for 
example, ``More doctors smoke Camels than any other cigarette.'' Of 
course, they have someone that looks like a doctor with a cigarette. 
And the suggestion is pretty clear: These are good for you. If doctors 
smoke them, they must be great for you. We all know that is absolute 
nonsense.
  We know, and the industry knew then, that smoking could cause serious 
health problems and not would benefit your health.
  In 1953, another tobacco company had a slogan: ``This is it. L&M 
filters are just what the doctor ordered.'' This line of suggestion led 
consumers to the misleading conclusion that smoking was good for you.
  Again, we today know as they knew then that this is precisely what a 
doctor would tell you not to do. But their deception and their 
advertisements live on. I do not know if they have really changed their 
culture. Today, we have Winston ads which are attempting to sound like 
tobacco is a health food, with promotional claims saying ``no 
additives.'' Of course, tobacco contains formaldehyde and chemicals 
that would kill you, and will kill you, if you smoke cigarettes long 
enough.
  We also have the Camel advertisements. They have abandoned Joe Camel, 
the cartoon character, but now have ``Live Out Loud''--a very 
attractive ad, designed to appeal not to any rational decision about 
smoking. It is designed to be suggestive, particularly to young people, 
that this is a sexy thing to do, that it is an adult thing to do, it is 
something that has style and panache, the things young people want to 
have in their lives, to be grown up.
  So we have an industry now that is still catering to the young people 
of our country.
  Recently released documents from the tobacco industry trial shed much 
more light on what has been taking place for years. And the conclusion 
is inescapable. These companies have been targeting the young people of 
America. News reports recently disclosed that an RJR researcher named 
Claude Teague wrote in a 1973 memo, ``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 a C.A. Tucker, vice president of 
marketing, to the board of directors of RJR Industries in 1974 
concluded: ``This young adult market''--let me stop for a moment. 
``This young adult market''--if you ask me who is the young adult--I 
would say a young adult is 24, 25, 26. What does the industry think a 
young adult is?

       This 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.

  That is a 1974 memo. Contemporary advertisements for another brand, 
Kool, has the same strategy, same approach; exciting young themes; auto 
racing; green, cool, clear colors; excitement; vitality; robust--all of 
the things that ultimately are the exact opposite of long-term 
cigarette smoking; again, very attractive; deliberately targeted to 
attract a wide audience, but certainly to attract young people to 
smoke.
  The Mangini documents also indicate that RJR had been secretly 
conducting extensive surveys on the smoking habits of young people for 
years and years.
  A 1990 document on ``Camel Brand Promotion Opportunities'' states 
that, ``(t)arget smokers are approaching adulthood . . . their key 
interests include girls, cars, music, sports, and dancing''--again, 
heightening the appeal to the youth market. You can see it reflected in 
advertisements. What could be more exciting and dramatic than a race 
car driver?

  In 1982, the chairman and chief executive officer of R.J. Reynolds 
Tobacco Company, Edward Horrigan, testified before the House Commerce 
Committee that, ``(p)eer pressure and not our advertising provides the 
impetus for smoking among young people.''
  And this is a consistent argument that the industry makes: It is not 
advertising, it is just peer pressure among young people wanting to be 
like their buddy. That was 1982.
  A 1986 memo on the new Joe Camel advertising campaign--Joe Camel, a 
product of R.J. Reynolds Tobacco Company--said:

       Camel advertising will be directed toward using peer 
     acceptance/influence to provide the motivation for target 
     smokers to select Camel. Specifically, advertising will be 
     developed with the objective of convincing target smokers 
     that by selecting Camel as their usual brand they will 
     project an image that will enhance their acceptance among 
     their peers.

  What could be more cynical? What could be more hypocritical than 
standing before the House Commerce Committee, and saying, ``It is not 
our advertising, it is peer pressure,'' and then conducting campaigns 
that are deliberately designed to create that peer pressure?
  As I said before, if you look at these documents, they persistently 
refer to the ``young adult smoker.'' So the industry will say, ``Well, 
of course we are trying to get customers, but they are young adults.'' 
But their vision of the young adult is much different than my vision, 
and I think any reasonable person, because it became a code word for 
teen smokers.
  For example, a 1987 document discussing ``Project LF'' Camel Wides, 
states, ``Project LF is a wider circumference non-menthol cigarette 
targeted at younger adult male smokers, primarily 13-24 year old male 
Marlboro smokers.''
  Another document suggested, as a way of operating within advertising 
restrictions, ``transfer(ing) Old Joe (Camel's) irreverent, fun loving 
personality to other creative properties which do not rely on models or 
cartoon depictions.''
  Again, the beat goes on. The excuses change. The rationalizations 
change. The characters change. Old Joe Camel takes a seat on the bench. 
But another fun-filled, irreverent theme designed similarly to attract 
young people takes its place.
  Given this record, I am deeply skeptical that this industry will 
truly reform. Unless we have strong provisions which make it in their 
economic best interests to change, they will not change. That is, once 
again, why I think this legislation is very, very important.
  This industry spends a huge amount of money each year to try to hook 
kids on tobacco. We know from the documents and from the research, that 
this is one of the major motivating factors. We know that advertising 
plays a pivotal role in the decision of young people to smoke. We know 
they try to use peer pressure. We know that for years they have tried 
to attract generation after generation of young people to smoking.
  We know the advertising pays off. Eighty-six percent of underage 
smokers prefer one of the most heavily advertised brands--Marlboro, 
Newport, or Camel. The barrage of advertising has a devastating and 
deadly effect on our children.
  One of the advertising campaigns that has been most subject to 
scrutiny in the last few years has been the Joe Camel campaign by R.J. 
Reynolds.

[[Page S2242]]

 When they began this campaign Camel's market share among underaged 
smokers was 3 percent. Within 3 years of Joe Camel, the cartoon 
character, the giveaways, the promotional items, underage market share 
jumped to 13 percent--13 percent who would likely become long-term 
smokers.
  Although Congress banned television advertising in 1970, the 
companies routinely get around it through the sponsorship of televised 
sporting events.
  Marlboro did an analysis of an automobile race they sponsored. Again, 
it is against the law to advertise on TV. It was found that the 
Marlboro logo was seen 5,093 times during this televised broadcast 
race, accounting for a total of 46 minutes of exposure during a 93-
minute program. That is probably better than if they were buying 30-
second spots to sponsor the show directly.
  Data from the Federal Trade Commission shows how much the industry 
spends, which has increased dramatically over the last twenty years.
  In 1975, the industry spent $491 million. In 1995 alone, tobacco 
manufacturers spent $4.9 billion--$491 million in 1975; by 1995, $4.9 
billion. On Tuesday, the Federal Trade Commission released their most 
recent numbers from 1996 showing that advertising expenditures 
increased 4 percent over 1995. The industry spent in 1996 over $5 
billion.
  We are helping, however, because the industry is able to deduct these 
expenses. Generally, they can deduct 35 percent of these expenses 
through their business operations. In 1995, this subsidy--our 
contribution to hooking kids--amounted to $1.6 billion in lost revenue 
to the Federal Treasury.
  This is not an insignificant amount of money. In fact, year by year, 
the amount of tax expenditures on advertising that the industry has won 
through this provision of the Internal Revenue Code has increased. In 
effect, we are subsidizing them to conduct Joe Camel campaigns. We are 
subsidizing them to build peer acceptance and peer pressure for young 
people to smoke. In 1995, the cost of the cigarette advertising 
deduction covered the total amount the industry spent on coupons, 
multipack promotions, and retail value-added items, like key chains and 
giveaways, in addition to point of sale. In fact, many of these items 
are the things that kids like the most--the jackets, the T-shirts, and 
the hats. The things that are trendy among young people are effectively 
paid for by the tax deduction.
  Over the last few decades, the industry has changed some of their 
tactics, but their goal remains the same. With the demise of television 
advertisements--I must point out at this time that there are some 
commentators who suggest that the reason the industry was so 
cooperative in ending television advertising at that time, the late 
1960s, was because there were good antismoking commercials on TV that 
began to have an effect--that people, when confronted with a good 
countercampaign, begin to think twice. But, nevertheless, the industry 
is off the air. But what they have done is shift their approach.
  You can see from this chart, which depicts various categories of 
advertising, that biggest jump--from 1985 to 1995--was in the area of 
specialty items. These include shirts, caps, sunglasses, key chains, 
calendars. In 1985, the industry spent $211 million. By 1995, they were 
spending $665 million.
  Again, these are the types of promotional items that are most 
appealing to young people. The industry has increased their 
expenditures on public entertainment. Public entertainment includes the 
sporting events and other public events, which mean exposure to a wide 
audience, but is significantly comprised of children.
  Spending has declined in newspaper and magazine advertising. Once 
again, this is a changing strategy, but a very consistent goal; to fill 
the ranks of dying smokers each year with a new generation of 
Americans.
  Now, let us put this in perspective. The industry is spending $4.9 
billion on advertising. That is double the Federal Government 
appropriations for the National Cancer Institute and four times the 
appropriation for the National Heart, Lung and Blood Institute. In 
1995, the tobacco industry spent, as I said, $4.9 billion on 
advertising, 40 times the amount we are spending on lung cancer 
research.
  There are issues before us with respect to the Constitution, the 
first amendment. Indeed, I think my legislation is within our province. 
Clearly, it does not run afoul of the first amendment, which none of us 
in this Chamber would like to do. I believe the restrictions in Senator 
Conrad's bill would stand constitutional muster. It is clear these 
provisions, removing the deduction, stand strongly in support of the 
first amendment.
  Mr. President, we have to act, and we have to act promptly. There are 
literally thousands of children each day who are becoming addicted to 
tobacco. They will die prematurely. We can save many of them if we act. 
The industry has demonstrated through many, many years that they are 
dedicated to the bottom line and are indifferent to the health of the 
American children. It is our responsibility to protect the children of 
this country. We should have no illusion. They will only stop targeting 
children when it costs them money. We should ensure, at a minimum, that 
we do not subsidize their appeal to children, we do not support their 
efforts to target children, and that we will disallow their deduction 
if they do not change their practices and begin to advertise 
responsibly to the adults of this country and not the children of this 
country.
  Mr. President, I yield back the remainder of my time.
  Mr. BROWNBACK. Mr. President, I ask unanimous consent to use up to 15 
minutes of the time Senator Hagel was allotted this morning.
  The PRESIDING OFFICER. (Mr. Smith of Oregon). Without objection, it 
is so ordered.

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