[Congressional Record Volume 144, Number 66 (Thursday, May 21, 1998)]
[Senate]
[Pages S5280-S5308]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

  The Senate continued with the consideration of the bill.
  The PRESIDING OFFICER. The Senator from Rhode Island has the floor.


                           Amendment No. 2433

  Mr. CHAFEE. Mr. President, let me offer a few thoughts on why I 
believe the amendment authored by my good friend from New Hampshire, 
Senator Gregg, should be rejected.
  Senators Tom Harkin, Bob Graham and I struggled with the liability 
issue when we were developing our own antitobacco bill, the so-called 
KIDS Act. We began our deliberations with a review of the global 
settlement that was reached by the 40 attorneys general from the 
various States. In summary, we concluded that we could not support some 
of the provisions of that legislation; namely, the prohibition on class 
action suits.
  The attorneys general agreed that no class action suits would be 
permitted and there would be a ban on punitive damages against the 
industry. That is what the industry got out of the negotiation with the 
attorneys general, amongst other things.
  Given the tobacco industry's behavior, how could we, the three of us 
working on that legislation, possibly accede to tort protections that 
would nullify entire categories of lawsuits, leaving injured parties 
high and dry?
  But there were balancing factors which also had to be weighed, Mr. 
President. The industry's consent is terribly important to the 
implementation of a comprehensive national tobacco policy. It is far 
better to have the industry at the table and agreeing.
  Certainly, endless litigation serves no one's interests but the 
lawyers. Thus, something had to be done to create a more certain 
environment, both for the plaintiffs and for the tobacco companies. 
Hence, we decided to include an annual liability cap in our bill of $8 
billion; $8 billion would be paid out each year and that was it. If 
there were subsequent suits and judgments had been brought and earned 
previous thereto or subsequent, they would fall in line and collect in 
the ensuing years.

[[Page S5281]]

  While the structure of the cap in Senator McCain's bill is somewhat 
different than the cap we had in our bill, nonetheless the intent is 
the same. The cap in the McCain bill does not stop a single lawsuit. It 
doesn't prevent a single lawsuit from being brought. It doesn't stop 
one injured party from being able to collect. Moreover, only those 
tobacco companies that accept and abide by the terms of this bill will 
be able to obtain the financial predictability that is provided by this 
liability cap. In other words, the company doesn't get the cap unless 
it agrees to a series of requirements upon the companies or company 
that we believe are very important to reach a fine settlement.
  What are some of these? What do the tobacco companies have to do to 
be eligible for a so-called cap? It must sign a national protocol, a 
binding consent decree to assure it will abide by all terms of the 
McCain bill. It must agree not to delay its implementation through 
endless court challenges. These terms they must agree to, amongst other 
things, are: They must make very steep annual payments to the Federal 
Government. They must meet tough annual youth smoking reduction 
targets. In other words, there are percentages that youth smoking must 
go down each year. The companies have to meet those requirements. It 
obviously encourages them to come forward with ingenious stop-smoking 
efforts or cease from smoking or decline from taking up smoking. They 
must pay large fines if they fail to meet these goals.
  What they also agree to is to fundamentally alter the way the tobacco 
products are manufactured and distributed, and they accept the 
regulation of tobacco products by the U.S. Food and Drug 
Administration, so-called FDA.
  If tobacco companies fail to abide by the terms of this bill, they 
are not going to be eligible for the liability cap. The liability cap 
is something that helps the companies reach some certitude of what 
their payments are going to have to be. But if they don't meet these 
terms, they lose the rights under the cap. If they fail to meet the 
annual youth smoking reduction targets by more than 20 percent in any 
given year, they lose the protection of the cap. If they are caught 
evading the antismoking provisions, they lose the protection of the 
cap. So this isn't some giveaway to the tobacco industry. It is a 
necessary trade-off to obtain a strong national tobacco control policy.
  At the end of the day, when all is said and done, we hope the tobacco 
industry will return to the table and sign the consent decrees which 
will accompany this bill. If the Gregg amendment is adopted, it 
reduces, obviously, the chances for that occurring.
  What is the incentive for a tobacco company to come to the table if 
they lose even this cap protection? If we all are for obtaining the 
strongest possible antitobacco policy, then we ought to vote to table 
this amendment; that is, the amendment of the distinguished Senator 
from New Hampshire.
  President Clinton supports the cap, as do many others who want a 
tough national policy to discourage youth smoking. Giving some 
predictability to tobacco companies who are willing to change the way 
they do business, it seems to me, is a small price to pay to get them 
at the table and participating in implementing these tough policies--
indeed, the advertising policies to cease certain types of 
advertisements and to enter into other kinds of advertisement directed 
toward encouraging young people to give up smoking or to deter them 
from taking it up in the beginning.
  So, Mr. President, I believe that the cap is a very worthwhile part 
of this McCain bill. And I urge my colleagues to reject the proposed 
amendment.
  I thank the Chair.
  Mr. MACK. Mr. President, there are few industries I consider more 
vile than the cigarette manufacturers. I believe they lied to the 
American people and knowingly addicted millions to their harmful 
product. It is with this disgust and anger in mind that I encourage my 
colleagues to vote against the Gregg Amendment.
  Although at first blush it may seem the ``right'' thing to strike the 
liability cap if we want to punish the tobacco manufacturers, in effect 
we will have done exactly what they want us to do: Kill the bill. We 
should first ask ourselves what we are trying to accomplish with this 
legislation: Reduce teen smoking, fund worthy tobacco-related programs 
while holding harmless innocent parties such as farmers. Would the 
Gregg Amendment further any of those goals? No.
  The provision stricken by this amendment does not grant immunity to 
anyone, rather it sets a yearly cap on what they will pay and allows us 
to charge fees, put in place advertising restrictions and conduct 
strict oversight. In essence, it keeps the companies out of bankruptcy 
thereby allowing us to keep a close eye on them and force them to undo 
some of the damage they have done. The liability cap of $8 billion per 
year cuts off no one's rights or payments, other than for those who 
want to settle their claims. Taking it away would likely result in many 
aggrieved parties going unpaid because the companies would file for 
bankruptcy protection, effectively shutting out meritorious plaintiffs 
from recovery.
  For those of my colleagues worried about the tax burden imposed by 
tobacco legislation, I would think they would all vote against this 
amendment as well. If the Gregg Amendment is passed and the liability 
cap stricken, the fee would then become a pure tax and the overall tax 
burden on the American public would likely double. Here's why: The 
current bill would then not settle any state lawsuits, but rather 
simply impose a tax of at least $1.10. Because those state suites would 
continue, and likely be successful or settled, we should expect that 
the states will begin to impose their own taxes on tobacco. That means 
we see a $2-3.00 per pack increase in taxes--which is outrageous. In 
short, if you want to do nothing but tax and spend, vote for the Gregg 
Amendment. If you actually want to try and solve some of the problem of 
reducing teen smoking you should vote against it.
  Mr. HARKIN. Mr. President, we are engaged in a historic debate and 
action on a plant that brought death and disease to millions of people 
in this country for 300 years. The outcome of our work will determine 
whether this nation moves to a sensible tobacco policy that will 
prevent the premature death of millions of our children or continues on 
the path of death and disease.
  This is truly a historic, once in a lifetime opportunity to save 
lives and protect children. When else have we had legislation before us 
that truly could save millions of American lives? It is an opportunity 
I've been working towards since 1977 when I first introduced 
legislation to end taxpayer subsidies to tobacco advertising.
  The need for bold action couldn't be clearer. Today, as in any other 
day, 3,000 children in America will take up a deadly habit that will 
cut 1,000 of their lives unnecessarily short. That's more than 3 jumbo 
jets full of children crashing every day. And the problem is getting 
worse. Smoking among high school seniors is at a 17-year high.
  It is not reflected in this chart, but the CDC just reported that the 
percentage of high school students who smoke has increased from 27.5 
percent in 1991 to 36.4 percent in 1997. They further found that a 
shocking 42.7 percent of students--and these are kids generally between 
14 and 17--used cigarettes, smokeless tobacco or cigars in the past 30 
days. We also know that the vast majority--fully 90 percent--of adult 
and lifelong smokers begin at or before their 18th birthday.
  We can change all that. We know the key ingredients to reducing teen 
smoking. We know that a comprehensive set of reforms is needed. We need 
solid authority and resources for the FDA to oversee tobacco products. 
We need an aggressive education and counter advertising effort. We need 
community-based prevention. We need to expand our research. We need to 
have strong financial incentives for tobacco companies to take every 
action to cut teen smoking. And, most importantly, we need to price 
cigarettes out of the range of children.
  Every major public health expert agrees that the single most 
important component of a comprehensive strategy to cut child smoking is 
a sudden and significant price increase. This is the centerpiece of S. 
1889, the KIDS Act, I introduced with Senator John Chafee and Senator 
Bob Graham. Our bipartisan legislation provides for a

[[Page S5282]]

$1.50 increase in the per pack price of cigarettes--$1.00 the first 
year and another 50 cents the next.
  As Dr. C. Everett Koop and Dr. David Kessler said, this proposal is 
``tough medicine for a tough problem.''
  Our approach, according to the CDC and other experts, would cut 
smoking by children in half, over the next three years. That's the 
sharpest and fastest reduction achieved by any bill proposed to date.
  The bill before us, as reported out of the Commerce Committee, has a 
number of commendable features. In many ways it is very similar to the 
Harkin-Chafee-Graham KIDS Act. It has strong FDA provisions, strong 
public health provisions and its look-back and liability provisions 
have been substantially improved. We are very pleased that much of our 
work is reflected in the bill and we commend Senator McCain for his 
good efforts.
  However, on the crucial question of price, the bill is inadequate. 
The bill would increase the price of a pack of cigarettes by $1.10 over 
5 years. To have the greatest impact on teen smoking the price should 
be increased by at least $1.50 a pack over a very short period of time.
  I will be doing everything, working with my colleagues, on a 
bipartisan basis, to correct this fundamental shortcoming of the 
pending measure.
  While I'll have a lot more to say about many aspects of this 
legislation, I want to focus the remainder of my remarks today on this 
critical issue of price. I do this not only because it is the most 
important feature of the legislation, but because it has been the focus 
of an onslaught of misleading television, radio and print ads as well 
as statements and mailings by the tobacco industry in my state of Iowa 
and around the nation.
  The tobacco companies have been making a number of false arguments 
about the impact of increasing the price to cut down on teen smoking. 
Most disturbing have been their statements that teens don't respond to 
price increases--that increasing the price won't have an effect on the 
rates of underage smoking.
  These accusations are not only run counter to the finding of every 
major public health organization and countless economists and studies, 
they contradict the industry's own internal documents and analyses that 
they tried to hide from the American people for so long.
  Many studies published in respected journals have clearly documented 
the impact of price increases on teen smoking. The most recent 
estimates from the CDC is that for every 10 percent increase in the 
real price of cigarettes, the prevalence of teen smoking is cut by 7%.
  In its report this year, Taking Action to Reduce Tobacco Use, the 
Institute of Medicine of the National Academy of Sciences concluded 
that ``the single most direct and reliable method for reducing 
consumption is to increase the price of tobacco products. . . .''
  In 1994, the Surgeon General's report Preventing Tobacco Use Among 
Young People concluded that increases in the real price of cigarettes 
significantly reduces cigarette smoking and that young people are at 
least as price sensitive as adults.
  And we have to look no further than our neighbors to the north--
Canada--to find a real world example of the impact of price increases 
on teen smoking. As this table shows (attached) when real prices in 
Canada increased from $2.09 to $5.42, the number of 15-19 year olds 
smoking fell from 42 percent to 16 percent--a drop of 62 percent. 
However, when tobacco taxes were reduced, youth smoking began 
increasing after 15 years of decline.
  As I said earlier, in addition to the abundant evidence on youth 
smoking and price, the tobacco industry themselves have admitted this 
in a number of their internal documents. For example, a 1981 Philip 
Morris document said, ``In any event, and for whatever reason, it is 
clear that price has a pronounced effect on the smoking prevalence of 
teenagers. . . .''
  A 1987 Philip Morris document further details their knowledge and 
concern about the relationship to price and hooking kids as the next 
generation of smokers. The document says:

       You may recall from the article I sent you that Jeffrey 
     Harris at MIT calculated, on the basis of Lewit and Coate 
     data, that the 1982-83 round of price increases caused two 
     million adults to quit smoking and prevented 600,000 
     teenagers from starting to smoke. Those teenagers are now 18-
     21 year olds . . ., 420,000 of the non-starters would have 
     been PM smokers. Thus, if Harris is right, we were hit 
     disproportionately hard. We don't need to have that happen 
     again.

  A 1982 RJR Reynolds document--that I ask unanimous consent to have 
included in the Record at this point--states clearly that an increase 
in the price of cigarettes will result in ``thousands of new smokers 
lost.'' This document says that a 15.1 percent increase in the real 
price will result in the loss of 93,000 ``new smokers'' aged 13 to 17 
years old.
  So when the tobacco companies now argue that increasing the price of 
tobacco products won't impact youth smoking--they are once again 
blowing smoke. They are once again trying to deceive the American 
people.
  So, Mr. President, we have important work to do this week. We have 
the opportunity to do a lot of good and strike a blow for our children 
and for public health. I look forward to working with my colleagues, on 
a bipartisan basis, to seize this opportunity.
  Tobacco reform is the issue of 1998. It is the crown jewel of this 
Congress. And passing a strong comprehensive tobacco bill is an 
opportunity we simply can't let pass by.
  Unfortunately, victories in the tobacco wars have come few and far 
between. In 1988, we finally changed Federal law on smoking in 
airplanes. It was a full ten years later, and after failing one time, 
the Senate took its next step last September by passing the Harkin-
Chafee plan to fully fund enforcement of the FDA youth ID check.
  But I am more hopeful now than ever that we can pass a comprehensive 
plan that would once and for all change how this nation deals with 
tobacco and dramatically cut the number of our kids addicted to this 
deadly product. Mr. President, our goal is to be on the Senate Floor 
three years from now announcing that indeed, child smoking has been cut 
in half. We should all put our energies into making that happen.
  Mr. FRIST. Mr. President, I rise to speak about the pending tobacco 
legislation. I am concerned that we have gotten off track in our 
consideration of comprehensive tobacco legislation and the importance 
of preventing children smoking.
  Our focus must be youth smoking.
  In an earlier speech on this floor, I reminded my colleagues of some 
of the alarming statistics about youth smoking. I will not dwell on all 
of those statistics; however, it is important to remember that 3,000 
kids will start smoking today, and 1,000 of those children who start 
smoking over these 24 hours will die prematurely. Our purpose is to 
prevent these deaths.
  I urge my colleagues to focus on the health of our children, and 
their children--to keep in mind youngsters traveling that tricky path 
from childhood to adulthood, surrounded by temptations and convinced of 
their own invincibility. What can we do to make it more likely that 
these children will arrive at adulthood without crippling addictions?
  Mr. President, before answering that question and discussing the 
pending legislation, I want to pause and recall some recent history 
that helps explain how we have reached this point in the legislative 
process.
  For many years, individuals were not successful in suing the tobacco 
industry because of the ``assumption of risk'' doctrine. No jury would 
side with the plaintiff because the smoker assumed the risks associated 
with smoking. However, a group of State attorneys general got together 
and started suing the industry to recover Medicaid cost for smoking 
related illness, thus avoiding the ``assumption of risk'' doctrine.
  In the course of these lawsuits, internal industry documents were 
made public. From these documents, we learned that the Industry knew a 
lot more about the addictive nature of nicotine and the destructive 
effects of smoking tobacco than was previously thought.
  Some states began to settle for huge sums from the tobacco industry. 
Mississippi settled in 1996 for $3 billion. Florida and Texas were the 
next to settle, for $11.5 billion and $15.3 billion respectively. And, 
as we have all read in the last week, Minnesota is the most recent to 
settle--at $6.6 billion.

[[Page S5283]]

  In the spring of 1997, everyone came to the bargaining table --40 
attorneys general, the industry, members of the plaintiffs' bar, and 
public health groups. They all sat down and worked out an historic 
tobacco settlement on June 20, 1997. The basic elements of the June 
20th settlement included:
  Industry payments of $368.5 billion over 25 years--to be funded by 
raising the price of cigarettes by $.70 per pack over 10 years;
  Advertising restrictions--the industry voluntarily limited its First 
Amendment rights;
  Youth access provisions and tough licensing for retailers who sell 
tobacco;
  $2.5 billion per year for smoking cessation programs, public 
education campaigns and state enforcement;
  FDA authority to regulate tobacco and smoking;
  No class action suits or suits by any government entity;
  Immunity for the industry from all punitive damages for past actions; 
and
  Individuals were allowed to bring suits to recover compensatory 
damages for past conduct and compensatory and punitive damages for 
future conduct.
  Because the settlement required the enactment of federal law, it came 
before Congress. We are here because the June 20th settlement requires 
us to be here. Implementing the provisions of that settlement, or 
provisions similar to it, requires federal legislation.
  As we all know, several committees had jurisdiction over different 
provisions in the June 20th Agreement. Judiciary obviously had its 
role; the Labor Committee had its expertise in the public health 
programs and the FDA authority; Finance had jurisdiction over 
international trade aspects; Commerce, the liability and interstate 
commerce expertise; and the Agriculture Committee had a keen interest 
in the effects this type of unprecedented legislation will have on 
farmers--the one group not invited to the bargaining table during 
settlement negotiations.
  After months of work, it became clear that it was impossible for all 
of these committees to put together their respective pieces of a 
comprehensive package in a vacuum. The Majority Leader asked Chairman 
McCain to take on the herculean task of crafting comprehensive 
legislation to address underage smoking through the Commerce Committee.
  The bipartisan bill produced by Senator McCain and the Commerce 
Committee is by no means perfect. Even Senator McCain admits that. But 
it is important that we not lose sight of the Commerce bill's virtue: 
it is a comprehensive approach. It is vital that the United States 
Senate address children smoking in a timely, thoughtful manner--the 
Commerce bill gives us the structure for doing this.
  I return, then, to our central legislative focus: preventing youth 
smoking. After 6 hearings in the Labor Committee, 11 hearings in the 
Commerce Committee, and chairing a hearing on October 27, 1997 in my 
subcommittee on Public Health and Safety, I am convinced that the goal 
of cutting underage smoking in half over the next 10 years can be 
achieved only by a three-component comprehensive strategy. All three 
parts are necessary. No single part will accomplish this goal.
  1. First, we must address advertising targeted to children. An 
article in the Journal of the American Medical Association reported on 
February 17 that advertising is more influential than peer pressure in 
enticing our children to try smoking, and it estimated approximately 
700,000 kids a year are affected by advertising. The industry cannot 
continue to target kids, our society must stop glamorizing smoking on 
television and in the movies, and we must restrict advertising at 
sporting events and near our schools.
  We tell our kids not to smoke, but then we look the other way when 
retailers sell to kids. We tell our kids that tobacco will shorten 
their lives, but clever advertising drowns out our message. So, we must 
restrict tobacco marketing that appeals to kids, but I know that the 
industry, like all industries marketing legal products, has substantial 
First Amendments rights that must be respected.
  2. The second element of a comprehensive program is that there must 
be strong, effective public health initiatives, including tobacco-
related research, treatment and surveillance. A bold effort is 
necessary to keep people from starting to smoke and to help people stop 
smoking. A strong commitment to basic science and behavioral research 
is critical. We need the very best scientific research on the 
physiology of nicotine addiction.
  Such focused research made possible by this bill might even uncover a 
pill that eliminates the addictive nature of nicotine. Such a discovery 
alone would solve the destructive aspects of youth (and adult) smoking. 
This type of research might have benefits beyond tobacco; it also could 
be vital in our fight against substance abuse more generally.
  3. Access is the third element. We must attack how easy it is for 
kids to get their hands on tobacco products. States must enforce the 
laws against youth smoking. Retail outlets must be a partner in our 
efforts to stop youth smoking. We must make vending machines far less 
accessible to kids. The price of cigarettes must go up--enough to 
discourage a teenager from purchasing, but not enough to create a black 
market--and there must be consequences for the underage teenagers who 
are caught with tobacco products.
  As Chairman of the Public Health and Safety subcommittee, I heard 
chilling testimony from teens about how easily they purchased tobacco 
products. Nickita from Baltimore, now 18 years old, started smoking 
when she was 14. She testified that she would normally get her 
cigarettes from the store. She testified that she never had a problem 
buying cigarettes in the store, in fact, ``people in my community as 
young as 9 years old go to the store and get cigarettes. They do not 
ask for I.D.s.''
  The lesson I learned from this testimony: We must enforce youth 
access laws. We must make it impossible for children to buy cigarettes 
in any neighborhood in this country. It is shameful that in America in 
1998, a teenager can purchase tobacco in any of our neighborhoods.
  Price is also a factor in access. While it is obviously only one of 
many factors, price does affect the level of a product's consumption. 
Consumption had been decreasing in the 1970s; however, between 1980-
1993 the downward trend accelerated, with consumption falling by 3% a 
year at the same time that the inflation adjusted price of cigarettes 
increased by 80%. In addition, the early 1990s saw price cuts, and 
consumption leveled off with only modest decreases in price until 1996. 
Then, in 1997, prices rose by 2.3%, and consumption fell again by 3%.
  Expert testimony, based on data from this country and others, clearly 
demonstrates that the price of cigarettes affects consumption. But a 
higher price alone won't solve this problem; a comprehensive solution 
is necessary.
  Mr. President, I believe the Commerce Committee's bill is a good 
start toward addressing all three aspects of a comprehensive package: 
advertising, public health, and access. It also addresses an issue 
ignored by the June 20th settlement: tobacco farmers. These farmers 
were not at the table during the negotiation of the June 20th 
agreement. The industry ignored them. The attorneys general ignored 
them. Yet these hardworking men and women bear absolutely no 
responsibility for ads targeting kids or for underage sales. These men 
and women work hard for modest incomes, and we cannot ignore the impact 
that this legislation will have on their circumstances. The Commerce 
bill tries to rectify this oversight.
  So, the Commerce bill addresses the three areas a comprehensive 
approach must include, and it protects tobacco farmers. That does not 
make the bill ideal. It is by no means perfect; however, it is not 
necessarily guilty of all the charges lodged against it.
  Some urge that the bill is merely an attempt to destroy an industry 
that is producing a legal product, by raising the price too much. This 
is a legitimate concern. Are the numbers in the Commerce bill too high? 
We have had countless numbers of financial experts come before several 
of the committees of jurisdiction, and no one agrees on the answer to 
this question. Wall Street, the Treasury Department, and public health 
groups all have different levels.
  We do know one thing: the industry agreed to $368.5 billion in 
exchange for some assurances that they were immune from future cost of 
unpredictable

[[Page S5284]]

lawsuits. Maybe the Commerce bill's figure of $516 billion is too high 
without similar assurances of protection. The industry obviously feels 
it is. But we know we cannot always trust the industry. I hope that, 
through our debate here, we can find common ground on the issue of the 
tobacco industry's payments.

  I do not believe that those who support a comprehensive solution to 
teen smoking are trying to destroy the industry. Tobacco products are 
legal to manufacture and consume. We are engaged, however, in the 
tricky exercise of finding a price level that will help diminish teen 
consumption without bankrupting the industry or creating a black 
market. I am confident that we can work together in good faith to find 
that price.
  I am gratified that the Senate rejected Senator Kennedy's amendment, 
which would have treated industry payments as an excise tax of $1.50 
per pack. This $1.50 tax was too much. The proponents were no longer as 
concerned with a comprehensive program targeted at preventing children 
from smoking as they were with enacting an excessively punitive excise 
tax, which would have punished smokers--who we need to be helping--and 
hit the working poor the hardest.
  There is a temptation, especially among those who are always 
searching for revenue streams, to seize upon the opportunity of an 
excise tax to raise vast amounts of funds for other initiatives. We 
should be guided by health objectives and not by the search for revenue 
streams. The funds generated by the agreement should be used for 
tobacco related and health related activities--not the creation of new 
entitlements.
  Mr. President, let me also address a related issue the tobacco 
industry is raising: Is the Commerce bill just a big tax bill? I find 
the industry's complaint that it is somewhat ironic. As I already 
noted, the industry volunteered to make over $368 billion in payments--
all passed on to the consumer--as part of the July 20th payment. The 
industry called that payment a ``voluntary payment.'' That level was 
simply not enough; for one thing, it did nothing for the tobacco 
farmer, who was abandoned by the industry. Something more than $368 
billion was necessary.
  Yet now the industry complains that the entire amount of the payments 
included in the Commerce bill is a ``tax.'' Maybe, as I said, the 
Commerce bill's payments are too much. But it is disingenuous for the 
tobacco industry to now contend that the payments are all a tax; they 
came to us and sought our legislation, and they volunteered over $368 
billion. We upped the ante a bit--in large part to protect farmers--and 
now it's suddenly a giant tax. We cannot treat this argument too 
seriously.
  I want to emphasize how much more effective we can be with a 
settlement. We must have an industry that doesn't market to kids--a 
settlement gets us that--a price increase alone does not. Without the 
cooperation of the industry, there is no doubt that this bill will be 
held up in the courts--putting us years behind in our effort to reduce 
smoking. The industry does have First Amendment rights, and it can 
exercise them.
  I invite the industry to come back to us and provide us with credible 
information about the level of payments they can afford. The industry 
can work with us to prevent youth smoking--or it can distort the record 
and continue to be vilified in the public eye. For the sake of stopping 
children smoking, I prefer that the industry rise above causing the 
problem of youth smoking and be part of the solution.
  Some have charged that the Commerce bill is too bureaucratic. I 
believe that our families, communities and states should be empowered 
to fight teen smoking in the manner most suitable for the concerns of 
that state or community. We don't need big federal government 
structures to achieve our goal. The Manager's Amendment to the Commerce 
bill has done a good job of streamlining the bureaucracy it originally 
created. I am especially supportive of the increased empowerment and 
flexibility given to the States for the use of funds and for control 
over the public health initiatives.
  Having said that, a comprehensive approach to prevent youth smoking 
isn't a simple undertaking. If we are after results, there must be a 
structure in place. I believe that we can effectively and efficiently 
use existing structures, in conjunction with the States, to have a 
comprehensive approach. Indeed, I played a crucial role in helping 
draft those portions of the Commerce bill dealing with the Food & Drug 
Administration. These provisions have earned widespread support, and I 
spoke on the floor Monday to explain them. They prove that we can use 
an existing agency to implement common-sense regulations to reduce 
youth smoking.
  Another criticism of the Commerce bill concerns the possibility that 
it may create a black market. We should be realistic about the 
possibility of a black market. If we create a black market by raising 
the price too high--as was done in Canada--then we will lose all 
control over youth access. Again, this is one reason I voted against 
Senator Kennedy's $1.50 per pack tax. Instinctively, and based on 
testimony to the Commerce Committee, I believe that price level is too 
high.
  In short, Mr. President, I do have concerns with some parts of the 
Commerce bill. For this reason, I will be open-minded in considering 
amendments to it. The Commerce bill is a good starting point, but it is 
only a starting point. We can and should improve on it--as long as we 
do not lose sight of our ultimate objective: a comprehensive approach 
to prevent teen smoking.
  The single criterion I will employ in assessing the amendments that 
come before the Senate is this: Is the amendment likely to complement a 
comprehensive strategy to prevent teen smoking? In other words, does it 
help restrict advertising targeted at children, promote public health, 
and address access to tobacco? If so, I will consider it; if not, I 
will reject it.
  I respectfully suggest, Mr. President, that my colleagues keep the 
same focus. Rather than attempting to treat the tobacco bill as a new 
revenue stream--like my colleagues who want a $1.50 per pack excise 
tax--and rather than treating the bill as a chance to create many new 
federal programs, I urge my colleagues to focus on the children who 
will start to smoke during this debate. One-third of those children 
will die prematurely because they started to smoke. We must focus on 
stopping them from smoking.
  Four years ago, I was saving lives as a heart and lung surgeon. I saw 
the ravages of tobacco in the operating room. The people of Tennessee 
elected me to use common sense to advance the public good. I submit 
that crafting a comprehensive approach to keep children from smoking is 
a chance for the Senate to save lives through the exercise of common 
sense. I urge my colleagues not to stray from that goal.
  Mrs. MURRAY. Mr. President, we are engaging in one of the most 
important public health debates of this generation. We have a historic 
opportunity to enact a comprehensive, national antitobacco strategy to 
end the plague of death caused by smoking. As I listen to the debate 
here in the Senate I am discouraged by much of what I hear. This is not 
about taxes, or tax cuts. This is not about what the tobacco companies 
get or don't get in the deal. This is not about First Amendment rights 
or increased litigation. This is about one thing and one thing only. 
Will we stand up to the tobacco companies for our children?
  Will the U.S. Senate say enough is enough. Will we fight to prevent 
the deaths of five million children under age 18 who will eventually 
die from smoking-related disease? Or will we allow the tobacco 
companies to shape the debate and beat back our efforts to protect 
children. Today, 4.1 million children age 12 to 17 are current smokers. 
Isn't this enough for the tobacco industry? Are we going to sacrifice 
more of our children?
  I have listened very carefully to all sides on these issues. I have 
been told that a tax that is too high will bankrupt the industry. I 
have been lobbied by many claiming that without special deals, the 
tobacco companies will not agree to restrict advertising or will 
litigate this legislation to death. But, I have also heard from 
pediatricians; public health officials; former Surgeon General C. 
Everett Koop; and many Washington State members of the American Cancer 
Society, who have expressed their concerns by illustrating

[[Page S5285]]

the human costs of the lies and deceit utilized by the tobacco 
companies.
  Tobacco kills more than 400,000 Americans every year. More people die 
in this country from smoking related illness than from AIDS, alcohol, 
car accidents, murders, suicides, drugs and fires. Twenty seven percent 
of Americans who die between the ages of 35 and 64 die from tobacco-
related diseases. Isn't this enough? Why has it taken us so long to get 
to this point of the debate? 400,000 Americans die each year while we 
do nothing.
  We owe our children more. I owe the children of Washington State 
more. I have an obligation to push for the toughest tobacco bill 
possible. I can promise you that on my watch the tobacco companies get 
no special deal and that protecting our children is what controls the 
debate. It is not what can the tobacco companies live with, but is 
right for our children.
  The tobacco bill that I support will have economic sanctions that 
will force corporate culture changes by the industry. I will support 
efforts that penalize the companies if they continue to prey on our 
children. And I will not support anything that forgives an industry 
that sold a product that could potentially kill five million children 
alive today.
  I have made some difficult decisions and votes throughout this 
process. But, I am proud of my votes to increase economic barriers to 
prevent children from purchasing cigarettes. I know the tobacco 
companies hate these kind of barriers. As we discovered in an internal 
Philip Morris document from 1981, ``In any event, and for whatever 
reason, it is clear that price has a pronounced effect on the smoking 
prevalence of teenagers.'' There is no dispute on the sensitiveness of 
children to price increases. Both public health advocates and the 
tobacco companies agree. The public health community supports these 
barriers and the tobacco industry fears them. But some in the U.S. 
Senate disagree that price matters. I stood up and said no you will not 
addict 3,000 children a day with cheap cigarettes.

  Some of us argue on the floor that without special immunity 
protection or predictability, the tobacco companies will never accept 
tough advertising restrictions or consent to FDA regulation. To this I 
would respond simply by saying if we make the look-back surcharges so 
tough that without major cultural changes companies will see profits 
evaporate, we will get our advertising restrictions. If we show that 
these advertising strategies are aimed at our children we will get 
these restrictions. We do not need to give special deals that allow 
tobacco companies to walk away from their responsibilities.
  The tobacco companies have lied to Congress and the American people 
now they want to negotiate in good faith. In the 1980's, there was 
legislation in the House of Representatives regarding safe cigarettes. 
There is technology that would allow tobacco companies to manufacture a 
cigarette that was almost fire safe. The Safe Cigarette Act, introduced 
by Representative Moakley was fought at every level by the industry. 
They claimed that it was not cost effective to make a cigarette that 
would prevent the tragic death of children in fires caused by a 
carelessly discarded cigarette. Saving children from a horrific death 
from fire was not enough of an incentive for the manufacturers to 
sacrifice some of their billions of dollars in profits. Instead they 
sacrificed children.
  Now the industry wants immunity. We are supposed to give them caps on 
their liability and responsibility in exchange they will become 
responsible corporate citizens. This claim simply has no merit. They do 
not deserve any special deals.
  Will the tobacco companies challenge these provisions in court? It is 
hard to imagine an industry that has patented their own brand of 
litigation and used legal maneuvers to hide their deceit and lies, 
walking away from another opportunity to challenge restrictions in 
court. If this industry wants to tie this up in court for years to 
come, I would say we need to make the look-back surcharges so tough 
that their own stock holders will not allow this kind of irresponsible 
behavior. I caution the tobacco industry--if you want to spend the next 
few years litigating instead of cleaning up your practices you may very 
well become extinct in the next Century. What would the world be like 
without the plague of tobacco? Maybe this is what the industry should 
ask the American people?
  I urge my Colleagues to think long and hard about this debate. We 
will never get another chance like this one to really make the world a 
safer and healthier place for our children. Let's side with our 
children today instead of the tobacco companies.
  Mr. WYDEN. Mr. President, the international provisions of the tobacco 
legislation have been the subject of many hours of discussion and 
negotiation. The current provisions serve as a strong platform that I 
hope this body will continue to build upon in the years to come as we 
seek to protect all children from the diseases and the economic costs 
brought about by tobacco use. I received letters which demonstrate the 
breadth of support and the importance the public health community 
places on maintaining the international tobacco control provisions in 
the tobacco legislation.
  I ask unanimous consent to have these letters printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                         Effective National Action


                                            to Control tobacco

                                                     May 20, 1998.
     Hon. Ron Wyden,
     Hart Senate Office Building,
     U.S. Senate, Washington, DC.
       Senator Wyden: Last summer's agreement between the tobacco 
     industry and the Attorneys General was flawed because of its 
     failure to consider international tobacco and health issues. 
     We commend you for your strong leadership on this issue and 
     support your efforts to ensure the greatest level of 
     protection possible from tobacco for all children.
       The international provisions in S. 1415 represent a good 
     start. It is vital, however, that they not be weakened at all 
     and that serious consideration be given to strengthening 
     them.
       Thank you for your tremendous leadership in protecting 
     people from tobacco. We look forward to working with you on 
     this issue.
           Sincerely,
         American Association of Physicians of Indian Origin; 
           American Cancer Society; American College of Preventive 
           Medicine; American Heart Association; Association of 
           Teachers of Preventive Medicine; Campaign for Tobacco-
           Free Kids; Interreligious Coalition on Smoking OR 
           Health; Latino Council on Alcohol and Tobacco; National 
           Association of County and City Officials; Partnership 
           for Prevention; Summit Health Coalition.
                                  ____

                                                 Latino Council on


                                          Alcohol and Tobacco,

                                     Washington, DC, May 19, 1998.
     Hon. Ron Wyden,
     U.S. Senate, Senate Hart Office Building, Washington, DC.
       Dear Senator Wyden: The Latino Council on Alcohol and 
     Tobacco (LCAT), members of the Hispanic Health and Education 
     Working Group and other Latino professionals want to thank 
     you and your staff for your hard work in supporting 
     international provisions for tobacco control. You and your 
     colleagues are putting forth a signal, a good beginning, a 
     starting point for assuring that the children of the world 
     will be protected from the unacceptable practices of the 
     tobacco giants.
       Latino parents, educators and public health experts believe 
     that US standards should be upheld worldwide. Federal workers 
     should not support tobacco companies or their subsidiaries 
     abroad. International agencies such as the World Health 
     Organization and the Pan American Health Organizations and 
     non-profit organization should receive funding for their 
     efforts to prevent, treat and stop the spread of smoking 
     related diseases. Anti-smuggling provisions should be 
     strengthened. The US should be a leader in the fight against 
     the spread of tobacco related diseases. You have made it 
     clear through your efforts that public health has no 
     boundaries.
       We trust that you will continue to work on international 
     tobacco control. We thank you for your leadership and 
     commitment to these issues.
           Sincerely,
     Jeannette Noltenius.
                                  ____



                                    American Lung Association,

                                                     May 19, 1998.
     Hon. Ron Wyden,
     U.S. Senate, Washington, DC.
       Dear Senator Wyden: Thank you for your commitment to 
     protect the world's children from tobacco. The American Lung 
     Association shares your concern that children around the 
     world are prime targets for the tobacco industry. The 
     international provisions of S. 1415, as amended, represent a 
     strong first step toward curbing the worldwide tobacco 
     problem that the World Health Organization calls a global 
     epidemic.
       The result of tobacco legislation should not be to redirect 
     the tobacco industry's focus from America's children to 
     children elsewhere around the world. Because of your efforts, 
     the bill's international measures will

[[Page S5286]]

     fund a public health effort around the world, require 
     cigarette labeling and permanently stop the U.S. government 
     from marketing and promoting the export of cigarettes. We 
     cannot allow this progress to be rolled back by weakening 
     amendments on the Senate floor.
       Strong international tobacco control measures are part of 
     the sound tobacco control policy outlined by the public 
     health community and leaders like Dr. Koop and Dr. Kessler. 
     This approach also includes a significant increase in the 
     cigarette excise tax, full authority for the Food and Drug 
     Administration, complete document disclosure, strict 
     penalties on the industry for marketing to children, 
     protection from environmental tobacco smoke, potent public 
     health programs and, of course, no special protections, like 
     immunity or caps, for the tobacco industry.
           Sincerely,
                                                 John R. Garrison,
                                        CEO and Managing Director.

  Several Senators addressed the Chair.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Utah is recognized at this time.
  Mr. KERRY. If I could just ask a parliamentary, procedural question.
  Mr. HATCH. I will be happy to yield without losing my right to the 
floor.
  Mr. KERRY. Mr. President, with the agreement of the Senator from 
Arizona, we want to try to structure the order for the next three 
speakers, if we could. I ask unanimous consent that after the Senator 
from Utah speaks----
  Mr. McCAIN. Senator Daschle.
  Mr. KERRY. The minority leader be recognized; and after the minority 
leader, the Senator from New Hampshire be recognized----
  Mr. McCAIN. Then do a tabling motion.
  Mr. KERRY. At which point, Senator McCain will move to table.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. KERRY. I thank the Chair. And I thank the Senator from Utah.
  Mr. HATCH. You are welcome.
  A critical component of our debate must be the issue of this bill's 
constitutionality. This is a matter of extreme seriousness.
  We are considering a bill that is fundamentally flawed with respect 
to its constitutionality. And that is despite the fact that each one of 
us swore to uphold the Constitution of the United States of America 
when we were elected and sworn into this office.
  Many skeptics, particularly in the media, contend that Congress will 
pass for political reasons any measure that gains any sort of 
consensus, even if it violates the Constitution.
  I reject that. I certainly hope they are wrong. I believe that the 
most important job that members of Congress have is to protect, 
preserve, and defend the Constitution of the United States. And, as 
Judiciary Committee chairman, I take this job very seriously.
  Why? The answer is, for over 2 centuries the Constitution has been 
the genesis of our liberty and a source of America's amazing growth and 
prosperity.
  The Constitution fosters liberty and prosperity by circumscribing 
Government's ability to interfere in the lives of the people. Thus, our 
Government is termed one of limited powers.
  In fact, I believe that the structure of the Constitution--the 
separation of powers, checks and balances, and federalism--and not the 
system of courts, is the best protection of our liberties.
  The salient fact is that the Constitution itself was designed to be, 
in the words of Alexander Hamilton in the Federalist No. 84, ``in every 
rational sense, and to every useful purpose, a bill of rights.''
  One such constitutional mechanism to protect liberty is limiting 
Congress' legislative authority to only those laws that are reasonably 
derived from its enumerated powers contained in Article I of the 
Constitution, which in practice means that such laws must be consistent 
with the meaning of the Constitution's provisions and the Bill of 
Rights. As such, Congress has a special role in defending the 
Constitution and safeguarding our liberty by policing itself and by 
controlling its own appetites.
  I wholeheartedly agree with the sentiment of Justice Oliver Wendell 
Holmes, who in 1904 gave the opinion that, ``It must be remembered that 
legislatures are the ultimate guardians of the liberties and welfare of 
the people in quite as great degree as the court[s].''
  So this is why we are having this debate--to exercise our authority 
to ensure that any legislation that is passed is, in fact, 
constitutional. Let us confound the cynics by doing the right thing.
  I pray that the Senate will consider the constitutionality of the 
floor vehicle and any other bill offered as a substitute. To skirt this 
issue would be to violate our very oaths of office.
  I believe that the bill now being considered in this chamber suffers 
from a number of serious constitutional problems.
  These problems permeate the bill.
  Besides jurisprudential concerns, there are significant practical 
considerations, because passage of the bill could result in 
constitutional challenges that, if successful, will nullify the key 
sections of the bill. This is true for the bill as reported, the bill 
as rewritten over the weekend, and the bill as modified on the floor on 
Monday. Removal of many ``consensual'' items to a new title XIV has not 
addressed these concerns.

  Mr. President, if key provisions in the bill are nullified, the 
efforts of Congress to enact an effective and truly comprehensive 
antismoking, antisnuff, plan will be severely impaired and virtually 
nothing will have been done to effectively reduce youth smoking.
  I want to stress that the constitutional problems primarily arise 
because the Commerce version and several other major bills have moved 
from being a codification of the June 20, 1997, proposed agreement--
which contemplated voluntary participation of the tobacco companies--to 
tax-and-spend and command-and-control legislation.
  Without the voluntary participation of the tobacco companies--and the 
State attorneys general--both the so-called ``look-back'' provisions 
and advertising restrictions contained in this Commerce bill become 
constitutionally problematic. These and other constitutional problems 
raise first amendment, bill of attainder, takings clause, and due 
process clause issues.
  More specifically, without the voluntary cooperation of the parties, 
the advertising ban contained in S. 1415 as amended will probably fall. 
This is a shame, because almost all health experts believe that 
restricting advertising is necessary in order to reduce teen smoking. 
The advertising restrictions in the Commerce bill are contained in both 
the protocol and in a section that codifies an FDA rule that also 
restricts otherwise lawful tobacco advertising.
  The Supreme Court, in the 1996 decision 44 Liquormart, Inc. v. Rhode 
Island, emphasized that any restrictions on truthful advertising must 
receive the highest scrutiny, and be narrowly tailored to meet the 
statutory goal. They required that other less restrictive alternatives 
be employed to resolve problems before speech is censored.
  The majority of scholars and lawyers who have looked at the issue 
agree that unless the tobacco companies voluntarily waive their 
constitutional rights, which is what they did in the June 20, 1997, 
agreement, most restrictions on the advertising of a lawful product, 
such as tobacco, would run afoul of the first amendment.
  Indeed, most conclude that the restrictions contained in the protocol 
and FDA rule are not narrowly tailored and that other alternatives 
exist to reduce teen smoking.
  Experts from the left to the right agree. Professor Laurence Tribe of 
Harvard Law School; Judge Robert Bork; Floyd Abrams, one of the most 
notable first amendment lawyers; the liberal ACLU and the conservative 
Washington Legal Foundation, all oppose these advertising restrictions 
as unconstitutional. It does not matter whether the restrictions arise 
from the codified FDA rule or in the settlement itself, both are 
unconstitutional. Let me just read to you some of their views.
  Let us take the testimony of Floyd Abrams before the Senate Judiciary 
Committee on February 10, 1998:

       Any legislation of Congress which would purport to do by 
     law what the proposed settlement would do by agreement in 
     terms of restricting constitutionally protected commercial 
     speech, is, in my estimation, destined to be held 
     unconstitutional. . . . It is unlikely that, at the end of 
     the day, the FDA's proposed regulations could survive First 
     Amendment scrutiny.

  That was given before the Senate Judiciary Committee on February 10, 
1998.

[[Page S5287]]

  Let me go to the next chart here. These are quotes by the American 
Civil Liberties Union to the Senate Judiciary Committee on February 20, 
1998.

       Both the legislation and proposed regulation by the Food 
     and Drug Administration. . .are wholly unprecedented and, if 
     enacted, will most likely fail to withstand constitutional 
     challenges.

  There are solid arguments.
  Let us go to the next one.
  The next chart is of Judge Robert Bork, dated January 16, 1996, when 
he said:

       The recent proposal of the FDA to restrict severely the 
     First Amendment rights of American companies and individuals 
     who, in one way or another, have any connection with tobacco 
     products [is]. . .patently unconstitutional under the Supreme 
     Court's current doctrine concerning commercial speech as well 
     as under the original understanding of the First Amendment.

  Those are very strong arguments from well-established constitutional 
authorities.
  I also have a letter, dated March 17, 1998, from Floyd Abrams, to 
Senator McCain, concluding that the FDA restrictions are as violative 
of the first amendment as the somewhat broader advertising restrictions 
contained in the protocol of the Commerce bill. I ask unanimous consent 
that letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                      Cahill Gordon & Reindel,

                                 New York, NY, March 17, 1998.

     Re proposed restrictions on cigarette advertising.

     Hon. John McCain,
     U.S. Senate,
     Washington, DC.
       Dear Senator McCain: I take the liberty of writing to you 
     with respect to the questions you posed to the Clinton 
     Administration concerning its views about and general support 
     of S. 1415. In my view, your questions were particularly well 
     taken given that any ban on truthful advertising of products 
     that may lawfully be sold to adults--whether of cigarettes or 
     any other product--raises very serious First Amendment 
     issues. Regrettably, the same cannot be said of the 
     Administration's response to you by letter dated February 27, 
     1998. In that letter and its attachment, the Administration 
     claims that the ``significant constitutional concerns'' and 
     ``difficulties'' it believes are raised by S. 1415 are not 
     presented by the proposed FDA regulations on tobacco product 
     advertisements. That is not the case, not in my view nor that 
     of many others who have studied the FDA rule and opined on 
     its constitutionality.
       The expansive sweep of the proposed FDA rule makes it no 
     less constitutionally infirm than the advertising 
     restrictions in S. 1415. The scope of the rule tells the 
     story. All cigarette advertising would be banned in any media 
     other than ``permissible outlets'' such as newspapers, 
     magazines, periodicals and billboards. Those outlets would, 
     in turn, be liable to criminal prosecution and the entry of 
     civil injunctions if they published any cigarette 
     advertisements other than ones in black and white text 
     containing a second warning statement in addition to the 
     current Surgeon General's warning. The only exception to the 
     text-only requirement would be for certain ``adult'' 
     publications, a category that apparently would exclude such 
     mass-circulation magazines as Better Homes and Gardens, Life, 
     National Enquirer, Newsweek, People, Popular Science, Sports 
     Illustrated, and TV Guide. Adults, of course, comprise the 
     vast majority of the readers of these publications.
       That the proposed FDA rule's extreme breadth and rigidity 
     would serve to all but ban cigarette advertising to adults 
     should be indisputable. What else can be said of a proposed 
     regulation which would ban all outdoor advertising within 
     1,000 feet--over three football fields in every direction--
     from any playground or school anywhere in the nation? The 
     1,000-foot rule seems particularly gratuitous in view of the 
     fact that it would ban advertising that FDA, by virtue of its 
     proposed text-only requirement, already has sought to strip 
     of the features FDA claims make it appealing to young people. 
     The unbridled sweep of these restrictions is in no manner 
     tailored to their supposed aim. This is particularly true 
     given the availability of far less speech-restrictive 
     alternatives to an ad ban, including stricter enforcement of 
     existing underage sales restrictions and enactment of tougher 
     new laws against sales of cigarettes to minors.
       The Administration cannot seriously quarrel with the 
     reality that by so severely limiting the placement and the 
     nature of ``informational messages'' that advertise tobacco 
     products to adults, those messages will no longer reach them. 
     That result, the Supreme Court repeatedly has held, is 
     unconstitutional--the government may not ``reduce the 
     population . . . to reading only what is fit for children.'' 
     Butler v. Michigan, 352 U.S. 380, 383 (1957), see also Reno 
     v. American Civil Liberties Union, 117 S. Ct. 2329, 2346 
     (1997); Sable Communications Inc. v. FCC, 492, U.S. 115 
     (1989); Bolgar v. Youngs Drug Products Corp., 463 U.S. 60, 
     71-72 (1983). In short, the FDA rule is no constitutional 
     panacea. It, too, suffers the same fatal flaws evident in any 
     scheme seeking broadly to ban truthful, nondeceptive 
     advertising for a legal product.
       In sum, I respectfully submit that the proposed FDA 
     regulation could not withstand judicial scrutiny under the 
     First Amendment.
           Sincerely,
                                                     Floyd Abrams.

  Mr. HATCH. There are other provisions of the bill that are 
constitutionally infirm.
  The look-back penalties in the Commerce bill, which are imposed on 
the tobacco companies if teen smoking does not meet certain goals for 
reduction, are subject to constitutional challenge unless they are 
voluntarily agreed to by the tobacco companies.
  I must add that the Commerce bill now terms the penalties 
``surcharges,'' but this simply is an attempt to elevate form over 
substance. No matter how it is termed, these payments are the 
functional equivalent of fines.
  Chief among the grounds for challenging this provision is due 
process.
  The Supreme Court has held that imposed penalties must be related to 
the objective of the legislation. Penalties should not be imposed 
without a showing of fault. I refer you to the Vlandis v. Kline case 
(412 U.S. 441) in 1973 which held that penalties without fault create 
an ``irrebuttable presumption.''
  Given what we know--or do not know--about how teens react to 
advertising, it is possible that even if the tobacco industry does all 
that it can to prevent teen smoking, the target will not be met.
  Moreover, besides the look-back penalties, the Commerce bill contains 
an additional provision that companies lose their liability cap 
protection if underage smoking exceeds the targets by a set amount. 
This is also done without a showing of fault.
  Thus, it is clear that a court would interpret the Commerce bill's 
penalties as punitive. It is possible, then, that the look-back 
provisions could fall under the provision in the Constitution that 
prohibits Congress from passing a bill of attainder.
  I refer my colleagues to the Cummings v. Missouri case (71 U.S. 277) 
in 1867. George III and the Parliament had used bills of attainder to 
punish their political enemies, and the framers of the Constitution 
wisely forbade Congress from doing the same.
  Certain payments made by the industry raise fifth amendment takings 
clause issues. For instance, it could be argued that some of the 
payments made by the industry constitute a forced seizure of money. The 
initial $10 billion up-front payment and the first six annual payments 
are owed regardless of whether there are any tobacco-related incomes 
and regardless of whether there are any tobacco sales.
  I might also direct my colleagues attention to a new provision which 
extends liability to the parent companies of tobacco subsidiaries, such 
as R.J. Reynolds and Philip Morris, just to mention two. The effect of 
that provision would be to extend the penalties to the conglomerates' 
food business, for example, even though they have independent 
operations and no fault on their part has been shown.
  These payments can neither be characterized as a tax or a licensing 
fee and would constitute uncompensated takings under the fifth 
amendment. I refer, for example, to Webb's Fabulous Pharmacies, Inc. v. 
Beckwith (499 U.S. 155, 162-163), a 1980 case where cash and bank 
account seizures were held to be uncompensated takings under the fifth 
amendment.
  The current version of the Commerce bill requires all tobacco 
manufacturers to release attorney-client and work product documents to 
the FDA and establish, finance, and run a document depository. Now, 
while this is a worthwhile goal,
  I believe that the wrongdoings of the tobacco companies have been 
hidden for far too long and this information should be brought to the 
light of day to help the FDA in regulating tobacco and assuring the 
public health.
  What some of my colleagues fail to appreciate is that it must be done 
in a constitutional manner, or it is all for naught.
  We must remember that the June 20 settlement agreement presupposed 
voluntarily participation by the tobacco companies in releasing 
proprietary documents and in establishing and financing the document 
depository.

[[Page S5288]]

 While litigation documents already made public can be forwarded to the 
FDA, it is problematic that the industry could be required to release 
additional documents, especially work product, confidential, or 
privileged documents. Such documents are properly defined by the fifth 
amendment. I refer you, for example, to the Nika Corp. v. City of 
Kansas City (582 F.Supp. 343 (W.D.Mo.)), a 1983 case, where the 
corporation's documents were held to constitute property under the 
fifth amendment.

  Moreover, pursuant to the same theory, the forced funding by the 
industry of the depository--the leasing of the building, the salaries 
of the personnel--indeed as for any confiscation of cash or other 
valuable assets, would constitute a taking under the fifth amendment 
requiring compensation. I refer you to Webb's Fabulous Pharmacies, Inc.
  Let me conclude my remarks by saying unless we have the voluntarily 
participation of the tobacco industry, I doubt that a comprehensive 
bill like the present Commerce bill could be implemented. Such a bill 
will undoubtedly be successfully challenged in the courts, and I 
believe the litigation and the inevitable appeals could take years to 
resolve.
  In other words, I make the case that if this bill passes in its 
current form, without the cooperation of the tobacco companies, which 
will be the case, then it will be litigated for at least 10 years.
  And in the end, I believe, it is likely to be overturned because it 
will be found unconstitutional. If that is so, then we are risking the 
lives of 10 million more kids who will become addicted to tobacco and 
die prematurely as a result of our failure to do the right thing, right 
now, on the floor of the Senate and in the House of Representatives.
  It is important that these constitutional issues be addressed. It is 
important we not ignore the Constitution. It is important that we 
uphold the Constitution.
  I know that the health of our children is of paramount concern to all 
of my colleagues. So let us at least do the right thing and pass a bill 
that is constitutional. The protection of the Constitution and the 
promotion of public health are not inconsistent goals. The American 
people demand both and we should give it to them.
  I hope all who are here today will pause a moment to consider this.
  This total cost of this bill has been estimated by some to be $516 
billion, although I believe it is far higher.
  It is estimated that the bill will result in a price per pack cost 
increase of $1.10 per pack, although this is at the manufacturers' 
level and I believe it will go higher.
  There are a whole raft of other add-on costs not included in the 
$1.10 figure: the wholesaler and retailer markups; the impact of 
growing contraband sales which divert revenues; possible triggering of 
the look-back provisions; and new state excise taxes. That is why 
several analysts who have done detailed economic models have concluded 
that the cost will be over $5 per pack, or over $50 per carton, of 
cigarettes.
  These are important considerations.
  If we do not rectify the situation and approve a constitutional 
measure, then I think everybody who votes for this bill would deserve a 
great deal of criticism for what has happened. What really bothers me, 
to be honest with you, is how some who represent the public health 
community choose to ignore these issues. Their motives seem to be 
directed more at punishing the tobacco companies than at securing a 
tough, workable bill.
  Nobody dislikes the tobacco companies more than I do, and nobody has 
fought harder to try to get the tobacco companies put in line.
  But frankly, unless they come on board, unless we can bring them to 
the table, this whole thing could amount to an exercise in futility. 
The constitutionality issue is key here, and I just don't see how we 
can continue to ignore it.
  Mr. DASCHLE addressed the Chair.
  The PRESIDING OFFICER (Mr. Smith of Oregon). The Democratic leader.
  Mr. DASCHLE. Mr. President, I know we are about to come to a vote on 
this amendment. I begin simply by complimenting the sponsors of the 
amendment for what I know is a well-intended effort to address one of 
the most consequential of all the issues we must face. I certainly 
don't deny a very strong case can be made for following through with 
what is described as the intent of this amendment. I happen to come 
down on the other side, and I am going to try to explain the reasons 
why I believe this amendment ought to be defeated. But it is not 
without high regard for the sponsors, both Senator Gregg and Senator 
Leahy, and the effort they are making.
  Let me just say, as to the question of immunity, one thing that I 
think needs to be said is that there is no immunity in this bill, 
period. There is none. No one should be misled. There is no immunity in 
this legislation. There are ways with which we deal with the tobacco 
companies and their legal standing, but no one should say that the bill 
provides immunity for the tobacco companies. On the issue of immunity, 
I think the managers of the bill have made great progress over the 
course of the last week. Working with the administration, they have 
improved dramatically what was done initially in the Commerce 
Committee. What the Commerce Committee itself did, in my view, is raise 
serious concerns that I, frankly, felt had to be addressed if, indeed, 
we were going to resolve the overall issue of how we approach tobacco 
policy in the future.
  There were special protections for the tobacco industry that were 
written into the committee bill originally, which I believe were very, 
very seriously in error as a matter of public policy. For example, 
allowing parent companies of tobacco companies total immunity would 
have been wrong. To say that we are going to ban all claims based on 
addiction would have been wrong. To say that we were going to prevent 
State courts from hearing all claims would have been wrong.
  Mr. President, I want to make sure that all of our colleagues 
understand that every one of those special provisions has now been 
eliminated. All of those special provisions no longer exist. The 
managers' amendment, which is now part of the bill, has eliminated all 
of them. The only remaining provision is a cap on yearly payments, and 
that cap has been raised from $6.5 billion to $8 billion. So before any 
Senator is called upon to make their vote, I hope they understand that 
simple fact--perhaps I should say those simple facts. There is no 
immunity in this bill; there are no special protections, unlike what 
was reported out of the Commerce Committee. What is left is a cap that 
has been raised by $1.5 billion annually.
  Let me emphasize something else about that cap. The cap is available 
only to those companies that agree to additional advertising 
restrictions beyond what is contained in the FDA rule. They have to 
commit never to challenge the entire bill to be eligible to come under 
that cap. They can't advertise and they can't challenge the provisions 
of this legislation just to be eligible. And then there is one more 
thing. Everybody needs to understand that in order just to be able to 
do that, they have to pay out an upfront payment of $10 billion. So 
here is what we are offering the tobacco companies: You pay the country 
$10 billion; you agree to limit your advertising way beyond what the 
FDA rule will provide. You also agree not to challenge the provisions 
within this bill, and then we will fit you under an $8 billion 
liability cap. And only those companies which make those commitments 
are eligible. Only those companies that make those commitments will 
have State suits settled.
  Any company that says, ``Wait a minute, that is too high a price. You 
are asking me to limit my advertising way beyond what FDA is going to 
tell me. You are telling me that I have to accept every provision in 
this legislation. You are telling me I have to pay forth $10 billion, 
and if I don't do that, you are saying I still have to face all those 
court suits in the States''--well, companies that refuse to sign the 
provisions under this bill get absolutely nothing. So a tobacco company 
is faced with the prospect of coming under an $8 billion liability cap 
by agreeing to all these additional provisions or getting nothing, 
under this legislation. They will continue to face lawsuits in the 
States if they don't sign onto the provisions that we have laid out in 
this legislation.

[[Page S5289]]

  But it even gets more complicated for tobacco companies. We are not 
giving anything away by putting in an $8 billion cap. We are getting 
something we can't get through our own legislation. We can't legislate 
the advertising restrictions that go beyond the FDA rule without 
raising first amendment questions. And we could not prevent the tobacco 
industry from challenging other provisions of the bill. That is a 
problem. The cap is our way of addressing that particular, very serious 
problem.
  Let me remind my colleagues of what the tobacco companies have to do 
to come under that $8 billion yearly cap, beyond what I have already 
mentioned. Of course, I have mentioned the advertising restrictions. I 
have mentioned the upfront payment. I have mentioned that they have to 
agree not to challenge the terms of the legislation, not to challenge 
the FDA authority. They cannot challenge the look-back surcharges. That 
is, they can't challenge the provisions that hold them accountable for 
reducing youth and teenage smoking. They can't challenge those look-
back provisions or any of the payments, for if they challenge any of 
that, it is all over and they are back right where they started. They 
fall outside the cap and they are subject to every single state lawsuit 
and the unlimited liability that they are facing right now.
  Let me also remind my colleagues that the tobacco companies will lose 
the protection of the cap if they fail to comply with any one of the 
terms--not all of them; all they have to do is miss on one of them.
  So, Mr. President, I don't know how you get any tougher than that. 
Even if the companies comply with all of those provisions, they could 
lose the cap for other reasons: If they miss the youth smoking targets 
by 20 percent or more, if they are caught smuggling or aiding and 
abetting smuggling, and if they fail to make an annual payment within 
the year that it is owed. All of those additional criteria are locked 
in with this bill.
  So I don't know, Mr. President. It sounds to me like that is about as 
tough as it gets. First of all, they have more restrictions than they 
have ever had in any other set of circumstances. They are required to 
pay more money. They are subject to discipline each and every year with 
regard to an array of very tight provisions. And what they get in 
return is an $8 billion cap on liability.
  Mr. President, I will oppose the Gregg amendment because I believe 
the managers' amendment approaches the issue in the right way.
  It gives protection only to those tobacco companies that go further 
than we legislate, that acknowledge the need to limit advertising in a 
way that we can't legislate in this bill. The other tobacco companies, 
those that do not sign up, will have no cap and will continue to fight 
it out in the courts in all of the States where these cases are being 
contested.
  I think we have to do all we can to reduce teen smoking. Additional 
advertising restrictions and a commitment made by tobacco companies not 
to challenge the law will increase our likelihood of success--not 
decrease it, increase it.
  Mr. President, for all those reasons, as well-intended as this 
amendment is, I hope my colleagues will think very carefully and very 
conscientiously about how important this question before the Senate 
truly is. We must do what we can to ensure passage of this legislation, 
to ensure that we stay tough on these companies, that we make them to 
do what we know they must do to reduce teen smoking, and to comply with 
the intent and the spirit of our objectives in this law.
  I yield the floor.
  Mr. GREGG addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mr. GREGG. Mr. President, I understand the regular order is that I am 
recognized, and then the Senator from Arizona is to be recognized for a 
tabling motion.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GREGG. Mr. President, a lot of folks have spoken today, and I 
reserved commenting on each speech until this time. I recognize that we 
want to get on with a vote--I don't want to delay that process--but I 
believe a few points need to be made to clarify the ground, to blow the 
smoke away, if I may use that metaphor, from the issue.
  Let's begin with the question of immunity and whether or not immunity 
is granted in this bill.
  Immunity for the purposes of this debate has become a term of art. 
Like so many terms that we use here in the Senate, it may not be the 
most precise term but it is the term that accurately from the political 
standpoint defines the event here.
  The fact is that under this bill the tobacco industry is going to be 
given a special preferential position in the order of American 
commerce, a position which no other industry will have, a position 
which is totally outside of the traditional manner in which we have 
managed our marketplace under our capitalist system.
  The limitations in this bill on the ability of individuals who have 
been harmed by the tobacco companies are considerable. They are 
significant and they will impact people. Pure logic tells you this, 
because, obviously, if the argument is being made that the only way you 
can get the tobacco company to come back to the table is if you give 
them these protections, there must be something pretty darned 
substantive to these protections.
  So very obviously the limitations which are being placed on the 
capacity of the American consumer to recover for the damage that has 
been caused to him or her by the tobacco companies are significant, if 
this bill passes. Let me list a few of them.
  There will be limitations on the amount of recovery on punitive 
damages because there is a cap. There will be limitations on the amount 
of damages recovered from compensation damages because there is a cap. 
There will be a preemption of actions by States, municipalities, and 
counties for future claims. There will be immunity for wholesalers, 
retailers, insurers, and the ingredient suppliers for past and future 
claims. There will be, most importantly, a structure set up where the 
tobacco companies will pick who is going to be the winner and who is 
going to be the loser on the issue of lawsuits brought against them.

  What an ironic situation, as I have said before on this floor.
  The way this cap works, it is the first person to the courthouse to 
get a settlement who gets the money. And the tobacco companies, since 
they are the ones being sued, can pick who is going to win. If they are 
sued by three different groups--a group of schoolteachers from New 
Hampshire, a group of kids from Pennsylvania, a group of friends from 
Ohio, and another group of friends from Illinois--they can settle with 
the friend from Ohio, and the friends from Illinois. If the cap is used 
up, the schoolteachers and the kids are out of it. They are out of it 
for that year, and they well may be out of it forever depending on how 
much the cap is used up, and in the next year, also.
  So the people who are injured who have brought the lawsuit find 
themselves in the impossible position, or the ironic position, at a 
minimum, of having to go to the tobacco companies on bent knees and 
say, ``Please settle with me first so I can get into the fund before 
somebody else,'' which means that you inevitably create not an 
adversarial relationship but a supplicant relationship between those 
who are suing and those who are being sued, which is not in the 
tradition of the American jurisprudence system, to say the least.
  Equally important, the concept that an industry will have protection 
from lawsuits in the marketplace is antithetic to the American concept 
of a free market. The protection that consumers have today, no matter 
what product they buy, is they can go into the courtroom, if they are 
harmed by that product, and get redress. There are a lot of other ways 
they can get redress, too. But the primary redress is that they can go 
into that courtroom or one of the primary redresses, if they have been 
physically damaged, or if somebody in their family has been killed, and 
they can get a recovery, if they can make their case. That is called 
the free market system. It is called the capitalist system. Under this 
proposal, that doesn't work.
  Mr. KERRY. Mr. President, will the Senator yield for a question?
  Mr. GREGG. No, I am going to make my statement. I know the Senator 
from Massachusetts has made his on a

[[Page S5290]]

series of occasions, and then we are going to go to a vote. I am not 
going back and forth carrying this on any further. I am going to make 
my statement. I have maintained a fair amount of reservation. So I 
didn't extend this debate for a lengthy period. I would like to get us 
to a vote.
  Mr. KERRY. Fair enough. Might I ask, Mr. President, if the Senator 
would give me some idea of the length of time he expects to speak?
  Mr. GREGG. I expect to speak for about another 10 minutes.
  Mr. KERRY. I thank the Senator.
  Mr. GREGG. So the marketplace is being fundamentally changed for one 
industry alone, the tobacco industry. That, in my opinion, is obviously 
a mistake.
  Why is this being done? Representation as to why it is being done was 
made by a number of Senators, and I think they are accurate to their 
theories as to why it is being done. It is being done, to quote the 
Senator from Rhode Island, because they hope to bring the tobacco 
companies back to the table by putting in this significant benefit, 
which is protection from liability, immunity, or a form of immunity at 
a minimum.

  It was interesting that the Senator from Utah, who is very familiar 
with this issue, said that even the caps, as it is presently 
structured, aren't strong enough to bring--they aren't enough 
protection to the tobacco industries to bring them back to the table, 
that they don't do enough, that they don't go far enough. That is an 
interesting comment, because what we do know is that the tobacco 
companies are not at the table right now. In fact, we know from the 
statement of the chairman of one of the tobacco companies that they 
have walked away from the table, and to quote him, ``There is no 
process which is even remotely likely to lead to an acceptable 
comprehensive solution this year.''
  So they are not planning to come back to the table. Yet, here we have 
this deal which has been made, as I mentioned earlier, a deal with the 
devil, the producers of this product, which kills people and addicts 
people, and the devil walked away from the table. And now we have the 
unseemly situation of the U.S. Congress chasing after the devil saying, 
``Please take my plan. Please take it. Take it, please. Please, please 
take this protection that we are offering.'' It really is unseemly. It 
is inappropriate. More importantly, it doesn't make any sense.
  Why, if they are no longer participants in this process, would we 
want to give them a protection which no other industry in this country 
has today--it makes no sense--on the wish and the prayer that they are 
going to come back to the table someday in the future? I don't think 
so. I think it makes absolutely no sense that we should be making such 
a fundamental change in the way we manage our market, such a 
fundamental way in the way we manage our jurisprudence system, on a 
wish and a hope and a prayer that an industry, which has shown itself 
to be so endemically irresponsible, will for some reason suddenly 
become responsible and return to the table. I find that to be a concept 
which holds very little validity.
  But the most substantive reason to support the amendment which has 
been offered by myself and the Senator from Vermont and to change the 
language in this bill--remember the language which we are offering here 
was the original language of the healthy kid amendment, which was 
supported by the President. I must say somebody should ask the 
President why he has changed his position on this because he did 
support this language initially. He formally and bluntly supported it.
  But the primary concern here for supporting this language is this. We 
have an industry which produced a product that they knew killed people, 
and the evidence is conclusive on that. We have an industry which 
produced a product that they knew was addictive. Not only did they know 
it was addictive, but they increased the contents of that addictive 
part of the process, the nicotine, in order to increase the 
addictiveness of the product. They produced a product that was 
addictive, and they knew it was addictive. And then they took this 
product which killed people, which they knew killed people, which was 
addictive and which they knew was addictive, and they targeted the 
sales of it on our kids.
  This is not an industry which deserves special protection from the 
U.S. Congress. Call it immunity, call it limited liability, use 
whatever term of art you want to use, but the fact is, this is an 
extraordinary step of special protection for an industry which has 
produced a product which is fundamentally bad, which they knew was bad, 
and which they targeted on kids.
  While this Congress refuses to give that type of protection to other 
industries which are producing products which save lives--we do not 
give protection to medical devices which save lives; we do not give 
protections to automobile manufacturers that improve the style of life; 
we do not give protections to the computer manufacturer that improves 
the style of life; we don't give protections to the drug manufacturers 
that improve the style of life--we are going to give protection to the 
cigarette manufacturer, the tobacco producer that produced a product 
that kills you, that is addictive, and that was targeted on kids.
  The choice I think here is pretty clear. We can stick with a system 
that has worked for 200 years, called the marketplace, where the 
consumer has the right to go into the court system and defend 
themselves and get a reasonable recovery, or we can structure a brand 
new system to protect an industry which has proven itself beyond any 
test to be a dishonorable industry, which has tried to destroy the 
lives of many Americans in order to sell its product.
  From my standpoint, the choice should be simple. I hope the Members 
of the Senate will join with me and a fair number of other folks and 
Senator Leahy, who has been a strong advocate--and I very much 
appreciate his participation as a cosponsor of this amendment--in 
passing our amendment to eliminate this liability limitation by 
defeating the motion to table which is going to be made by the Senator 
from Arizona.
  I would like to say at this point before we go to the motion, I thank 
the Senator from Arizona for his courtesy and the Senator from 
Massachusetts for his courtesy in moving this amendment to a vote. I 
appreciate their courtesy. They have been more than fair in allowing us 
the opportunity to bring this forward and do it in a timely manner. I 
thank them for that.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. McCAIN. Mr. President, I move to table the Gregg amendment.
  Mr. KERRY. Mr. President, before the Senator so moves, I would just 
ask him if he might answer one question.
  Mr. McCAIN. I will be glad to yield for a question from the Senator 
from Massachusetts.
  Mr. KERRY. Mr. President, without prolonging this, I would ask the 
Senator from Arizona if he would agree--since there is no immunity and 
no liability limitation but only a cap on how much liability--that 
voting to sustain the cap and against the Gregg amendment is, in fact, 
completely consistent with the budget amendment vote?

  Mr. McCAIN. That is a very articulate and enlightening question. The 
answer is, the Senator is exactly right. Actually, it is a very 
important point.
  I move to table the Gregg amendment and ask for the yeas and nays on 
amendment No. 2433.
  The PRESIDING OFFICER. Is there a sufficient second? There appears to 
be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
table the underlying Gregg amendment No. 2433. The yeas and nays have 
been ordered. The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. LOTT (when his name was called). Present.
  Mrs. BOXER (when her named was called). Present.
  The result was announced--yeas 37, nays 71, as follows:

                      [Rollcall Vote No. 145 Leg.]

                                YEAS--37

     Akaka
     Bennett
     Biden
     Breaux
     Byrd
     Chafee
     Daschle
     DeWine
     Dodd
     Faircloth
     Feinstein
     Ford
     Frist
     Glenn
     Gorton
     Graham
     Harkin
     Hatch

[[Page S5291]]


     Helms
     Hollings
     Hutchison
     Inouye
     Jeffords
     Kerry
     Kohl
     Landrieu
     Levin
     Lieberman
     Mack
     McCain
     McConnell
     Murkowski
     Robb
     Rockefeller
     Sessions
     Stevens
     Thurmond

                                NAYS--61

     Abraham
     Allard
     Ashcroft
     Baucus
     Bingaman
     Bond
     Brownback
     Bryan
     Bumpers
     Burns
     Campbell
     Cleland
     Coats
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     D'Amato
     Domenici
     Dorgan
     Durbin
     Enzi
     Feingold
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hutchinson
     Inhofe
     Johnson
     Kempthorne
     Kennedy
     Kerrey
     Kyl
     Lautenberg
     Leahy
     Lugar
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Nickles
     Reed
     Reid
     Roberts
     Roth
     Santorum
     Sarbanes
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Thomas
     Thompson
     Torricelli
     Warner
     Wellstone
     Wyden

                        ANSWERED ``PRESENT''--2

     Lott
     Boxer
       
  The motion to lay on the table the amendment (No. 2433) was rejected.
  Mrs. BOXER. Mr. President, I wish to inform the Senate of the reason 
I voted ``present'' on the Gregg amendment related to liability limits 
for tobacco companies.
  I abstained on this vote because my husband's law firm is co-counsel 
in several lawsuits against tobacco companies filed in California state 
court by health and welfare trust funds.
  The Ethics Committee has advised me that voting on an amendment such 
as this ``would not pose an actual conflict of interest'' under the 
Senate Code of Conduct.
  However, I decided that this vote could create the appearance of a 
conflict of interest and therefore I abstained by voting ``present.''
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. GRAMM. Could we have order, Mr. President? I can't hear.
  The PRESIDING OFFICER. The Senate will come to order.
  Mr. McCAIN addressed the Chair.
  Mr. LEAHY. Mr. President, the Senate is still not in order.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. The Senator from Massachusetts seeks recognition.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. I send an amendment to the desk.
  Mr. GRAMM. Parliamentary inquiry, Mr. President.
  No amendment is in order.
  The PRESIDING OFFICER. An amendment to the bill is in order. Is this 
an amendment to the bill?
  Mr. McCAIN. It is a second degree amendment.
  Mr. LEAHY. I suggest the absence of a quorum. Mr. President, I 
suggest the absence of a quorum.
  Mr. McCAIN. Mr. President, I am recognized, I believe.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.
  Mr. McCAIN. No one else can suggest the absence of a quorum.
  Mr. President, is it in order to send a second-degree amendment?
  The PRESIDING OFFICER. A second-degree amendment is already pending.
  Mr. McCAIN. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCAIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senate is not in order.
  The Senator from Arizona.
  Mr. McCAIN. Mr. President, I know of no further debate on the Gregg 
second-degree amendment.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.


               Motion to Recommit with Amendment No. 2436

  Mr. GRAMM. I send a motion to the desk and ask for its immediate 
consideration.
  The PRESIDING OFFICER. The clerk will report the motion.
  The legislative clerk read as follows:

       The Senator from Texas, [Mr. Gramm] moves----

  Mr. McCAIN. I ask unanimous consent that reading of the amendment be 
dispensed with.
  Mr. LEAHY. I object.
  The PRESIDING OFFICER. Objection is heard.
  The clerk will read the amendment.
  The legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm] moves to recommit the 
     bill, S. 1415, to the Committee on Finance with instructions 
     to report back forthwith with all amendments agreed to in 
     status quo and with the following amendment No. 2436 for [Mr. 
     Gramm], for himself and Mr. Domenici.

     SEC. 1406. RESOLUTION OF AND LIMITATIONS ON CIVIL ACTIONS.

       (a) State Attorney General Actions.--
       (1) Pending claims.--With respect to a State, to be 
     eligible to receive payments from the State Litigation 
     Settlement Account, the attorney general for such State shall 
     resolve any civil action seeking recovery for expenditures 
     attributable to the treatment of tobacco related illnesses 
     and conditions that have been commenced by the State against 
     a tobacco product manufacturer, distributor, or retailer that 
     is pending on the date of enactment of this Act.
       (2) Future actions based on prior conduct.--With respect to 
     a State, to be eligible to receive payments from the State 
     Litigation Settlement Account, the attorney general for such 
     State shall agree that the State will not commence any new 
     tobacco claim after the date of enactment of this Act (other 
     than to enforce the terms of a previous judgment) that is 
     based on the conduct of a participating tobacco product 
     manufacturer, distributor, or retailer that occurred prior to 
     the date of enactment of this Act, seeking recovery for 
     expenditures attributable to the treatment of tobacco induced 
     illnesses and conditions against such a participating tobacco 
     product manufacturer, distributor, or retailer.
       (3) Application to local governmental entities.--The 
     requirements described in paragraphs (1) and (2) shall apply 
     to civil actions commenced by or on behalf of local 
     governmental entities for the recovery of costs attributable 
     to tobacco-related illnesses if such localities are within a 
     State whose attorney general has elected to resolve claims 
     under paragraph (1) and enter into the agreement described in 
     paragraph (2). Such provisions shall not apply to those local 
     governmental entities that are within a State whose attorney 
     general has not resolved such claims or entered into such 
     agreements.
       (b) State and Local Option for One-Time Opt Out.--
       (1) In general.--The Secretary shall establish procedures 
     under which the attorney general of a State may, not later 
     than 1 year after the date of enactment of this Act, elect 
     not to resolve an action described in subsection (a)(1) or 
     not to enter into an agreement under subsection (a)(2). A 
     State whose attorney general makes such an election shall not 
     be eligible to receive payments from the State Litigation 
     Settlement Account. Procedures under this paragraph shall 
     permit such a State to make such an election on a one-time 
     basis.
       (2) Extension.--In the case of a State that has secured a 
     judgment against a participating tobacco product 
     manufacturer, distributor, or retailer in an action described 
     in subsection (a)(1) prior to or during the period described 
     in paragraph (1), and such judgment has been appealed by such 
     manufacturer, distributor, or retailer, such period shall be 
     extended during the pendency of the appeal and for an 
     additional period as determined appropriate by the Secretary, 
     not to exceed one year.
       (3) Application to certain states.--A State that has 
     resolved a tobacco claim described in subsection (a)(1) with 
     a participating tobacco product manufacturer, distributor, or 
     retailer prior to the date of enactment of this Act may not 
     make an election described in paragraph (1) if, as part of 
     the resolution of such claim, the State agreed that the 
     enactment of any national tobacco settlement legislation 
     would supersede the provisions of the resolution.
       (4) Local governmental entity option for one-time opt 
     out.--
       (A) In general.--The Secretary shall establish procedures 
     under which the attorney for a local governmental entity 
     which commenced a civil action prior to June 20, 1997, 
     against a participating tobacco product manufacturer, 
     distributor, or retailer seeking recovery for expenditures 
     attributable to the treatment of tobacco related illnesses 
     and conditions, not later that 1 year after the date of 
     enactment of this Act, may elect not to resolve any action 
     described in subsection (a)(3). A local governmental entity 
     whose attorney makes such an election shall not be eligible 
     to receive payments from the State Litigation Settlement 
     Account. Procedures under this paragraph shall permit such a 
     local governmental entity to make such an election on a one-
     time basis.
       (B) Extension.--In the case of a local governmental entity 
     that has secured a judgment against a participating tobacco 
     product manufacturer, distributor, or retailer in a claim 
     described in subsection (a)(3) prior to or during the period 
     described in subparagraph (A), and such judgment has been 
     appealed by such manufacturer, distributor, or retailer, such 
     period shall be extended during the pendency of the appeal 
     and for an additional period as determined appropriate by the 
     Secretary, not to exceed one year.

[[Page S5292]]

       (C) Application to certain local governmental entities.--A 
     local governmental entity that has resolved a claim described 
     in subsection (a)(3) with a participating tobacco product 
     manufacturer, distributor, or retailer prior to the date of 
     enactment of this Act may not make an election described in 
     subparagraph (A) if, as part of the resolution of such claim, 
     the local governmental entity agreed that the enactment of 
     any national tobacco settlement legislation would supersede 
     the provisions of the resolution.
       (c) Addiction and Dependency Claims; Castano Civil 
     Actions.--
       (1) Addiction and dependence claims barred.--In any civil 
     action to which this title applies, no addiction claim or 
     dependence claim may be filed or maintained against a 
     participating tobacco product manufacturer.
       (2) Castano civil actions.--
       (A) In general.--The rights and benefits afforded in 
     section 221 of this Act, and the various research activities 
     envisioned by this Act, are provided in settlement of, and 
     shall constitute a remedy for the purpose of determining 
     civil liability as to those addiction or dependence claims 
     asserted in the Castano Civil Actions. The Castano Civil 
     Actions shall be dismissed to the extent that they seek 
     relief in the nature of public programs to assist addicted 
     smokers to overcome their addiction or other publicly 
     available health programs with full reservation of the rights 
     of individual class members to pursue claims not based on 
     addiction or dependency in civil actions in accordance with 
     this Act.
       (B) Arbitration.--For purposes of awarding attorneys fees 
     and expenses for those actions subject to this subsection, 
     the matter at issue shall be submitted to arbitration before 
     one panel of arbitrators. In any such arbitration, the 
     arbitration panel shall consist of 3 persons, one of whom 
     shall be chosen by the attorneys of the Castano Plaintiffs' 
     Litigation Committee who were signatories to the Memorandum 
     of Understanding dated June 20, 1997, by and between tobacco 
     product manufacturers, the Attorneys General, and private 
     attorneys, one of whom shall be chosen by the participating 
     tobacco product manufacturers, and one of whom shall be 
     chosen jointly by those 2 arbitrators.
       (C) Payment of awards.--The participating tobacco product 
     manufacturers shall pay the arbitration award.
       (d) Rules of Construction.--
       (1) Post enactment claims.--Nothing in this title shall be 
     construed to limit the ability of a government or person to 
     commence an action against a participating tobacco product 
     manufacturer, distributor, or retailer with respect to a 
     claim that is based on the conduct of such manufacturer, 
     distributor, or retailer that occurred after the date of 
     enactment of this Act.
       (2) No limitation on person.--Nothing in this title shall 
     be construed to limit the right of a government (other than a 
     State or local government as provided for under subsection 
     (a) and (b)) or person to commence any civil claim for past, 
     present, or future conduct by participating tobacco product 
     manufacturers, distributors, or retailers.
       (3) Criminal liability.--Nothing in this title shall be 
     construed to limit the criminal liability of a participating 
     tobacco product manufacturer, distributor or retailer or its 
     officers, directors, employees, successors, or assigns.
       (e) Definitions.--In this section:
       (1) Person.--The term ``person'' means an individual, 
     partnership, corporation, parent corporation or any other 
     business or legal entity or successor in interest of any such 
     person.
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. ____. ELIMINATION OF MARRIAGE PENALTY.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following new section:

     ``SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMINATE THE 
                   MARRIAGE PENALTY.

       ``(a) In General.--In the case of a joint return under 
     section 6013 for the taxable year, there shall be allowed as 
     a deduction an amount equal to the excess (if any) of--
       ``(1) the sum of the amounts determined under subparagraphs 
     (B) and (C) of section 63(c)(2) for such taxable year 
     (relating to the basic standard deduction for a head of a 
     household and a single individual, respectively), over
       ``(2) the amount determined under section 63(c)(2)(A) for 
     such taxable year (relating to the basic standard deduction 
     for a joint return).
       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--No deduction shall be allowed under 
     subsection (a) if the modified adjusted gross income of the 
     taxpayer for the taxable year exceeds $50,000.
       ``(2) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income determined--
       ``(A) after application of sections 86, 219, and 469, and
       ``(B) without regard to sections 135, 137, and 911 or the 
     deduction allowable under this section.
       ``(3) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 1999, the 
     $50,000 amount under paragraph (1) shall be increased by an 
     amount equal to such dollar amount multiplied by the cost-of-
     living adjustment determined under section 1(f)(3) for the 
     calendar year in which the taxable year begins, except that 
     subparagraph (B) thereof shall be applied by substituting 
     `calendar year 1998' for `calendar year 1992'. If any amount 
     as adjusted under this paragraph is not a multiple of $5,000, 
     such amount shall be rounded to the next lowest multiple of 
     $5,000.''
       (b) Deduction To Be Above-the-Line.--Section 62(a) of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by adding after paragraph (17) the 
     following new paragraph:
       ``(18) Deduction for married couples.--The deduction 
     allowed by section 222.''
       (c) Earned Income Credit Phaseout To Reflect Deduction.--
     Section 32(c)(2) of the Internal Revenue Code of 1986 
     (defining earned income) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Marriage penalty reduction.--Solely for purposes of 
     applying subsection (a)(2)(B), earned income for any taxable 
     year shall be reduced by an amount equal to the amount of the 
     deduction allowed to the taxpayer for such taxable year under 
     section 222.''
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 222 and inserting the 
     following new items:

``Sec. 222. Deduction for married couples to eliminate the marriage 
              penalty.
``Sec. 223. Cross reference.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

  Mr. DASCHLE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DOMENICI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Gorton). Without objection, it is so 
ordered.
  Mr. DASCHLE. I object.
  The PRESIDING OFFICER. Objection is heard.
  The clerk will continue calling the roll.
  The assistant legislative clerk continued calling the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 2437 to Amendment No. 2436

(Purpose: To provide a substitute for provisions relating to reductions 
                       in underage tobacco usage)

  Mr. DASCHLE. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from South Dakota [Mr. Daschle], for Mr. 
     Durbin, for himself, Mr. DeWine, Mr. Wyden, Mr. Chafee, Mr. 
     Harkin, Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, Mr. 
     Conrad, and Mr. Reed proposes an amendment numbered 2437 to 
     amendment No. 2436.

  Mr. DASCHLE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. DASCHLE. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                Amendment No. 2438 to Amendment No. 2437

(Purpose: To provide a substitute for provisions relating to reductions 
                       in underage tobacco usage)

  Mr. DASCHLE. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from South Dakota [Mr. Daschle] for Mr. Durbin, 
     for himself, Mr. DeWine, Mr. Wyden, Mr. Chaffee, Mr. Harkin, 
     Ms. Collins, Mr. Kennedy, Ms. Snowe, Mr. Daschle, Mr. Conrad, 
     and Mr. Reed proposes an amendment numbered 2438 to amendment 
     No. 2437.

  Mr. DASCHLE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')

[[Page S5293]]

  Mr. DASCHLE. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Mr. President, I thank my colleagues for a very 
enlightening and informative debate. It has been an important 
discussion, not on the amendment just voted on, but on the bill itself. 
Obviously, we attempted to table the Gregg amendment, and it is 
something that is unfortunate, in my view, for the entire bill. At the 
same time, just like with the attorneys' fees and other aspects of this 
issue, we will revisit this issue again. I believe it is important for 
us to continue to work through the bill and get it through the U.S. 
Senate.
  I think the American people expect us to do that, and I think it is 
important that we continue to work on the many amendments of 
significant importance to the bill. I believe this aspect of it not 
only will be revisited, but it is another chapter in a very long saga. 
Yesterday, we had two very significant victories. Today, we had a 
defeat. There will be more victories and more defeats as we go through 
this very difficult process.
  But at the end of the day, I am totally confident that this body and 
the Congress will act in a responsible manner and adopt a comprehensive 
piece of legislation that will attack the nationwide problem of 3,000 
children beginning to smoke every day and 1,000 of them being caused to 
die early as a result of tobacco-related illnesses. I thank all those 
who voted in favor of the amendment. And for those who opposed it, I 
respect the opposition. But I believe we will move forward with a 
comprehensive piece of legislation.
  I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I will be very brief. I join my colleague 
in saying that I think what Senator McCain and I and others hoped for 
was the opportunity to be able to come to the floor and fight these 
tough issues. That is what we did. We just had a tough vote. Clearly, 
some of us had hoped that the outcome would be different, because we 
had a different view of where the bill might travel. But this by no 
means prevents us in any way from continuing forward in the process of 
molding this legislation. This is precisely what the Senate ought to be 
doing. It ought to be fighting hard over these votes. We ought to be 
able to come to an understanding of where the 51 votes lie. And then, 
ultimately, we all know that hopefully we can come together with a 
piece of legislation that finds a conference committee and, ultimately, 
both Houses of Congress.
  So I thank my colleagues for this spirited debate and for the fact 
that we have voted on two of the most critical issues with respect to 
this legislation. I thank Senator Durbin for now bringing to the floor, 
through the leadership, an amendment on the issues of the look-back, 
one of the other very important issues that needs to be resolved. I am 
confident that we will have another healthy round of debate on that. I 
look forward to continuing to proceed.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Mr. President, I think we have had a defining moment in 
this debate. Throughout this debate, our colleagues, who have brought 
to the floor of the Senate a bill that will raise $700 billion in 
taxes, have said that they are not interested in the money, that the 
money is incidental, that what they want to do is raise the price of 
cigarettes.
  We have made the point that this increase in the price of cigarettes, 
this tax, will fall very heavily on blue-collar workers. Those making 
$15,000 or less will pay 34 percent of the cost, the taxes that are 
built into this bill. Those making $22,000 or less will pay 47 percent 
of the cost. Those making $30,000 or less will pay 59.1 percent of the 
cost of the taxes embodied in this bill.
  Even if this bill only raised the price of a pack of cigarettes by 
$1.50--and most estimates are that it will raise it by $2.50 at a 
minimum--it would mean that an average smoker in America would pay $356 
of additional taxes as a result of this bill, and a blue-collar family 
where both the husband and wife smoke, would pay $712 a year more in 
Federal taxes. In fact, the table put out by the Joint Committee on 
Taxation shows something that, over and over, those who support the 
bill have tried to deny or neglect, which is that for those Americans 
who make $10,000 or less, their Federal taxes will rise by 41.2 percent 
as a result of the taxes embodied in this bill.
  Now, what Senator Domenici and I did earlier was send an amendment to 
the desk that tried to give some of this money back to blue-collar 
workers in the form of a tax cut. Our colleagues say, it is not the 
money we want; they say, we just want to raise the price of cigarettes. 
So Senator Domenici and I took them at their word, sent an amendment to 
the desk that said raise the price of cigarettes; but since this is 
going to impose a bone-crushing tax on moderate-income Americans, let's 
take at least $1 out of every $3 that will be collected in this tax 
increase and let's give it back to working families by repealing the 
marriage penalty for families that make $50,000 or less. In other 
words, it gets the impact on smoking that may come from a higher price 
as a result of the taxes in this bill but with our tax cut we avoid 
lowering the real income or living standards of blue-collar Americans 
who, after all, are the victims here. The whole objective of the bill 
is to basically say people who smoke have been induced to smoke by the 
tobacco companies, and yet, paradoxically, the tax we are imposing is 
being imposed on the very people who have been exploited. In fact, the 
bill before us has an incredible provision which says every penny of 
the tax has to be passed through, and it is illegal if a tobacco 
company absorbs any of this tax increase. Every penny of it, 59.1 
percent of the tax increase, is on families that make less than $30,000 
a year. The victims of the smoking campaign by the tobacco companies 
are the people who are paying the taxes.

  What Senator Domenici, Senator Faircloth, and I have said in our 
amendment is this: Raise the tax, but give a third of the money back to 
working families by repealing the marriage penalty for couples who make 
less than $50,000 a year. So you get the price impact on smoking, but 
you don't end up brutalizing economically moderate-income people.
  I think it is very instructive that after 3 days of debate where our 
colleagues have said don't accuse us of wanting this money, we just 
want to raise the price of cigarettes, that we sent an amendment to the 
desk asking that $1 out of every $3 we are collecting in taxes be given 
back to moderate-income working families, and the Senate reacts in a 
convulsion, and the leadership uses right of privileged recognition to 
amend our amendment and to deny us the ability to offer a tax cut for 
the very people who are going to find themselves crippled economically 
as a result of this tax.
  So let me just suggest two points:
  No. 1, I think this is further evidence this bill is about money. Our 
amendment is hardly a far reaching amendment. We are just simply asking 
that roughly one out of every three dollars of the tax be given back.
  Second, it also suggests, it seems to me, the objective here is to 
prevent us from having an opportunity to vote on a tax cut.
  I want to assure my colleagues--and I know Senator Domenici feels 
exactly the same way--that there is no way we are going to be denied 
the right to offer this amendment. This won't be the last tax cut 
amendment that we are going to have. Quite frankly, I don't understand 
if those who are for the bill are saying what they really mean, why 
there isn't overwhelming support in both parties for giving a third of 
this tax increase back to working families.
  Let me say very briefly what the amendment does and then yield the 
floor so that Senator Domenici, the cosponsor of the amendment, will 
have an opportunity to speak.
  Under current law if two individuals, a man and a woman, both of whom 
are working in the economy outside of the home, fall in love and get 
married, under current law they pay on average an additional $1,400 a 
year in income taxes. So that, for example, if you had

[[Page S5294]]

two single people, and they didn't get married, and they filed an 
income tax return jointly, they don't pay taxes on any income of less 
than $10,200 a year. But if they fall in love and get married, even if 
they file separately, they have to pay taxes on income of above $6,900 
a year. So we have an incredible provision of law that, in terms of 
deductions, penalizes working people who fall in love and get married 
by taking away $3,300 of deductions from them.
  Mr. President, I think it would be a general bipartisan consensus 
that the family is the most powerful institution for progress and human 
happiness in history. Yet our Tax Code penalizes people who get 
married. If you want to state it in a dramatic way, you can say that 
the tax code provides an additional $3,300 of deduction by simply 
living in sin rather than getting married.
  This has been much discussed. There is a strong basis of support for 
repealing it.

  What we could do is simply this: Eliminate the marriage penalty 
imposed by the tax code for all families that make less than $50,000 a 
year--and those families will pay about 75 percent of this tobacco tax. 
Smoking is primarily a blue-collar, moderate-income phenomenon in 
America today. What we will do for couples that earn less than $50,000 
a year is give them the additional $3,300 deduction so that there will 
be no economic penalty for people getting married. We will also allow 
those who get an earned income tax credit to take the deduction before 
they figure their eligibility for the earned income tax credit. So that 
even people who make very modest incomes will benefit from this tax 
cut.
  This tax cut will take roughly $1 out of every $3 raised in taxes by 
the tobacco tax and give it back to working families. So those who want 
the higher price for tobacco to discourage consumption will get it, but 
we will not crush economically moderate income people who have become 
addicted to nicotine and who smoke. We will not have the terrible 
paradox that while talking about firing bullets at these big tobacco 
companies our bullets are actually hitting the victims who have become 
addicted to nicotine.
  So on that basis, Mr. President, I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I have not but for a few minutes spoken 
about the issue before the Senate.
  I want to make it very clear that I understand the difficulty in 
managing a bill of this size. It is an enormous and contentious issue, 
and Senator McCain should be commended for taking on such a difficult 
task. I have nothing but admiration for those who are attempting to 
develop this legislation.
  But I can say to the Senate that I cannot imagine that the rules of 
this Senate are going to preclude Senators like Gramm and Domenici from 
offering amendments to this bill. We want to vote on whether we want to 
have a tax cut as part of this new tax increase. Sooner or later we 
will vote. I don't know what the two amendments offered by Senator 
Daschle are. Whatever they are, in due course we will vote on them. If 
by chance one of them wipes out ours, we will be back to offer other 
amendments.
  Let me talk about the history of imposing taxes on cigarette and 
related tobacco products. I am sure that I am not as good of a 
historian as my friend from Texas is, but is he aware the first 
reported effort to put a tax on tobacco was done by King James I in 
1604.
  King James just didn't like the odor of tobacco. He wasn't a U.S. 
Senator and he wasn't part of a democracy. He simply issued a 
proclamation. ``Smoking is a custom loathsome to the eye, hateful to 
the nose, harmful to the brain, and dangerous to the lungs.''
  In 1604, King James said that. Now I used to be a smoker and I 
enjoyed it. I am just reporting on what King James said so I don't want 
the smokers listening to this debate to get mad at me.
  Then he proceeded to put a 4,000 percent increase on imported 
tobacco.
  He didn't pretend that he wanted to accomplish some worthy public 
purpose. He just wanted to raise revenue--and a lot of it. He was a 
dictator, king, benevolent, whatever they call them. But he didn't have 
to worry about what we have to worry about. And that is the impact on 
our citizens of this huge tax and the size of government. Frankly, 
there is not a word in history about this which said he was concerned 
about kids. He just said what I had described to you, and put the tax 
on and spent the money.
  Frankly, people were no better off in those days. Even with a 4,000-
percent increase people continued to smoke.
  It is most interesting that without all of our science--I really 
think our science is great to find cures for cancer--King James I said 
that smoking was harmful to the brain and dangerous to the lungs. 
Having said that, he wasn't concerned about teenagers or about cancer 
because he didn't know about cancer.
  But as we proceed to work on this bill, I want to ask myself and ask 
those who are working on this bill:
  What do we really want to accomplish?
  First, we contend that too many young people are starting to smoke. 
And we want to stop that. Make no bones about it. When we offer our 
substitute bill, we have done the best we can with a reasonable amount 
of money to try to stop teenagers from smoking. Too many young people 
are using drugs, and we want to try to stop that. And we want more 
research on serious illnesses, including cancer, so that someday we 
will stop them in their tracks.

  Now, that is the kind of substitute amendment we are going to offer. 
But nowhere can anybody tell the Senate or the people of the United 
States that you need over the next 25 years $868 billion in new revenue 
from cigarette-related products.
  Where do I get that number?
  I don't think it has been said this way, but I want to make it 
simple.
  The current Federal excise tax on tobacco is 24 cents a pack. It is 
scheduled to go to 39 cents a pack under current law. This bill 
includes an increase equal to $1.10 cents. That is 1.49 in straight 
arithmetic. And then the $1.10 is indexed for inflation or 3 percent, 
whichever is greater.
  Frankly, we are not really sure how much this bill raises, but an 
acceptable number is $868 billion, I say to my friend from Texas.
  Now, I want to try to put that in perspective. The biggest program we 
have taking care of the most people committed to monthly checks is the 
Social Security Program. $868 billion would pay for Social Security for 
2 full years. $868 billion would pay for the entire Defense Department 
of America for 3 years.
  This proposed tax increase in the McCain bill is bigger--when you put 
it into one basket, it is bigger than the gross domestic product of any 
of the following countries: Belgium, Austria, Canada, Denmark, Finland, 
Switzerland, et cetera.
  Now, where did anybody come up with the idea that we needed every 
single penny of that to be spent on programs related to reimbursement 
to the States, to research, or to whatever? Where did the miraculous 
relationship of $868 billion, the total receipts, to the need for 
programs come from? There is no reason to it. There is no magic. I can 
assure you of that, if you only had a $300 billion tax increase, 
everyone would get by with $300 billion for this anti-smoking program.
  But now we have gotten so grandiose about it that it is going to 
raise, over 25 years, over $868 billion under this bill.
  Now, frankly, I believe it is only reasonable that part of this tax 
increase be given back to the American people, and I am going to have a 
lot more to say about that.
  But a tax is a tax. This tax has a good motive: to stop kids from 
smoking. It may work--raise the price of cigarettes, and certain parts 
of the population may not buy them as much or may stop buying them. 
There is not conclusive evidence as to what price point you have to 
raise the price to, to have the most effect. But I can tell you, in our 
substitute we are going to propose 75 cents, period--no increases, just 
75 cents. We believe that will keep the black market from going rampant 
and has as good a chance as any other number, by way of a tax, of 
deterring young people from starting smoking or encouraging them to 
quit smoking from the economic standpoint.
  Having said that, I want to tell you that there is nothing more 
onerous in the United States than the marriage

[[Page S5295]]

penalty. Every once in a while, you will hear about a couple--it is not 
very frequent, but it gives you the dimension of this penalty--who will 
go to Mexico and get divorced the day before Christmas, and then they 
will go to Las Vegas and get married after New Year's. And guess what. 
They don't have to pay the marriage tax penalty. I am not sure if 500 
do that, but we know some used to. I am not sure if it is 5,000. But 
imagine that you have a law on the books of America that invites that 
kind of conduct.
  In the extreme, the marriage penalty is punitive. And it is just 
wonderful to hear Senators and political leaders say, ``We are for the 
family.'' I assume that when you say, ``We are for the family,'' 
without regard to one's philosophy, I guess you would have to say 
marriage is pretty important, too, because I think in some way it is 
related to the families. It used to be 100 percent related, but it is 
still very important.
  Now, why would you impose a tax that would say to those two people 
who are married, ``You pay more if you are both working than if you are 
both working and living together and not married''? Frankly, I will 
tell you that I have heard, personally, in my own ear somebody say, 
``We are not getting married because, after all, we love each other, 
but we would have to pay $2,800 more in taxes, and it is just crazy, so 
we are not going to get married.''
  Now, I don't like to say that, but that is the case. And there are 
worse examples because they are much broader in terms of impact. The 
average marriage penalty in this country is $1,400. In some cases, it 
is much higher; in other cases, it is somewhat lower.
  In fact, if you look at comparable countries, Mr. President, 27 of 
the OECD countries--they are tied together in terms of economic 
evaluations and assumptions and the like--19 countries tax husbands and 
wives separately, so there is no marriage penalty. What keeps the 
United States from doing that? Frankly, what has kept us in the past is 
that we had too big a deficit, and if we cut taxes, then we figured we 
were losing money and we would take it easy and careful and not fix 
everything in the Tax Code.
  We have balanced the budget. Senator Gramm and I do not intend to 
change a bit that approach to more and more surpluses. But when you 
impose a brand new tax--and it is inconceivable that you would need 
every penny of that tax for a program that deals with tobacco--frankly, 
there are organizations running around that have never seen so much 
money. I have stopped some in the hall with buttons saying, ``Cigarette 
Tax Now,'' and have asked them, ``Which one?'' Well, they said, ``We 
like Senator McCain's improved.'' I said, ``Oh, but what's the goal?'' 
``Well, the goal is the highest tax we can get and the biggest program 
we can get to spend money on teenagers and all kinds of health 
programs.''
  Growing a big government is not why we are raising the cigarette tax. 
I thought our big goal was to try to stop our young people from 
smoking. Increasing the price of cigarettes plus a pro-active 
advertising campaign against smoking and drugs could be effective. We 
also need an attitude change at the cigarette companies. We also need a 
little more research. We need new penalties against those who sell to 
teenagers when they should not, and even to teenagers who smoke three 
or four times and they should not and know they are wrong. That is 
provided for in the Gramm Domenici substitute. We would like to 
increase the budget DEA, FBI, Customs, and DOD drug interdiction 
programs.
  But beyond that, what do we need all this money for? It is absolutely 
logical--I have been here a long time. I have worked on appropriations. 
Every year the chairman of the appropriations subcommittee comes to the 
floor. I will say, ``You can't imagine, fellow Senators, how many 
requests I had for money from my bill that I could not comply with.'' 
In fact, I have seen some where you take out a batch of letters and 
say, ``This is what I was asked to do that I can't do.'' But there is 
no relationship between the country prospering and being a great 
country and that pack of letters.
  But now, look, here we have concluded--some have--that we would be 
remiss if we didn't dream up an expenditure for every penny of these 
tax dollars. Right? Now, why is that rational? Why should those of us 
say, how about one-third of it going back to the taxpayers and going 
back to fix the most onerous, discriminatory tax against an institution 
that we cherish and respect, one-third of the money.
  I have not heard anybody say--and I hope, when we finally vote on the 
marriage penalty, and that is not going to be the only tax cut 
amendment offered, because if this one does not pass, there will be an 
amendment to cut 1 percent from the lower brackets. There will be a tax 
cut amendment to expand child care credits. There will be a number of 
tax cut amendments that should be considered.
  But how can anybody stand up in the Senate and say, if you take a 
third of this huge tax increase the tobacco program for kids is not 
going to work?
  I defy anybody to come up here and say, out of this pot of money and 
all these programs, if you don't keep them all, if you take one-third 
of the money and say, look, let's give it back to the taxpayers so we 
begin to get rid of this marriage penalty, at least for those families 
with $50,000 of income and under, I cannot imagine somebody will stand 
up and say:
  ``But we won't be doing what we must do for our kids.'' I mean, if it 
is $868 billion, and you have $650 billion instead of $868 billion, can 
you not put an effective anti-smoking and anti-drug program together?
  Mr. FORD. Mr. President, will the Senator yield for a question, and I 
am on your side. I am on your side.
  Mr. DOMENICI. I am just about finished and then I will be glad to 
yield.
  Mr. FORD. I apologize.
  Mr. DOMENICI. So, from my standpoint, as I told some of my friends to 
whom I said I was not in a hurry to pass this legislation, I said, why 
don't we continue to work on this bill until we get back. I said that 
because it is very contentious and Senators ought to have a chance to 
vent their positions and let the American people try to understand.
  I have not been able to come to the floor because I been trying to 
help finish the ISTEA bill. I have noticed that the Senate floor time 
has been filled with Senators talking about this bill. There have been 
no long quorum calls. I do not think there has been anything dilatory.
  But, frankly, I have a number of amendments that I believe should be 
offered. This is our best opportunity to consider tax cuts. I intend to 
talk about this bill.
  I have dedicated 20 years of my career in the Senate getting our 
Government's size under control. I have had Senators congratulate me, 
saying we are finally getting Government down a reasonable in size; it 
is not going to be so big. And then all of a sudden I see this bill 
that will supersize Government--and I will gather more information for 
you so I can do more comparisons--but this bill will add probably as 
much in new programs to this Government as we have been able to cut 
from this Government in our deficit reduction programs of the last 4 or 
5 years combined.
  Government is government. Taxes are taxes. And, in our system, there 
is a relationship between the two. The higher the taxes, the bigger the 
government. And the higher the taxes, the less free are people.
  I will commit that we ought to tax cigarettes to discourage kids from 
buying and smoking cigarettes. Senator Gramm and I will propose taxing 
cigarettes at 75 cents a pack in our substitute. But I do not believe 
there is any magic formula as to how much you have to spend to try to 
dissuade kids from smoking.
  If $600 billion is not enough, and we need $886 billion over 25 
years, then you cannot give anything back to the taxpayers.
  But what if $500 billion is enough?
  Or $400 billion is enough?
  Then I believe that some of the money should be given back to the 
people? That is essentially the issue.
  It is as big an issue as any issue before us, because we do not need 
all the money called for in the McCain bill I have just told you 
about--a dollar and a dime plus 49 cents plus 3 percent added on every 
year. We do not need all that money for a cigarette program so we ought 
to not use it all.
  Senator Gramm and I are going to offer the Senate an opportunity to 
give some of the money back to people in the form of a tax cut.

[[Page S5296]]

  I will be glad to yield for a question.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. FORD. Mr. President, I appreciate the Senator from New Mexico 
yielding to me. I have a piece of legislation in to eliminate the 
marriage penalty, already having been introduced. I found, to my 
surprise, that 52 percent of married couples get a marriage bonus. Not 
many people know that. There is a marriage bonus for 52 percent. I 
forget how many million couples get a marriage bonus of about $1,300-
plus. The marriage penalty is about $1,400-plus. If you wipe out the 
penalty and the bonus, we have a surplus of about $4 billion. If you 
take the marriage bonus away and wipe out the marriage penalty, it is 
almost a $4 billion surplus.
  In the Senator's proposal here, what does the Senator propose, to 
make up the difference in the marriage penalty and you leave the 
marriage bonus in place?
  Mr. DOMENICI. I am not aware. Maybe Senator Gramm can help me. I am 
not aware we changed the marriage bonus if there is one on this.
  Mr. BRYAN. Parliamentary inquiry, who has the floor?
  Mrs. HUTCHISON. I have the answer to that question.
  Mr. GRAMM. No, we did not change the marriage bonus.
  The PRESIDING OFFICER. The Senator from New Mexico has the floor.
  Mr. FORD. What was the answer?
  Mr. GRAMM. The answer was ``no.''
  Mr. DOMENICI. We don't change the marriage bonus.
  Mr. FORD. The marriage bonus still stays there at $32 billion? The 
bonus is $32 billion?
  Several Senators addressed the Chair.
  Mrs. HUTCHISON. If the Senator will yield, the marriage bonus was put 
in place for single-income-earning families years ago. At that time, 
under 50 percent of the families in this country had two incomes. But 
today, 69 percent of the families in this country have two incomes. So 
the bonus became a penalty, because people were not able to get married 
remain in the same tax bracket as two singles earning the same combined 
amount. My colleague from Texas and the Senator from New Mexico are 
doing here what I have done in another bill, which I introduced with 
Senator Faircloth of North Carolina. Our bill allows married persons to 
choose to file as they do now or to file as single persons. That way, 
marriage versus single status will not have any tax consequences 
whatsoever. What we want in this country is fairness and equity in our 
Tax Code.
  Mr. FORD. I am trying to find out an answer here. I understand the 
marriage penalty. I am opposed to it, and I am trying to find an answer 
to it and the unfairness of it.
  In 1986, we repealed the two-earner deduction, but increased the 
standard deduction for married couples, and reduced the number of tax 
brackets from 15 to 2. The combination of these changes reduced the 
marriage penalty considerably.
  Now it appears the EITC gets involved here, and I understand the 
distinguished senior Senator from Texas is eliminating that, or is he 
keeping that in?
  Mr. GRAMM. Will the Senator yield?
  Mr. DOMENICI. I will be glad to yield.
  Mr. GRAMM. First of all, I want to make it clear--and I assume both 
the Senator from Texas and the Senator from New Mexico agree with me--I 
am sure not ashamed of trying to let working families, moderate-income 
families, keep more of what they earn. What we are doing here on the 
EITC is saying--let's say that you have two very low-income people, 
both of whom work. They fall in love. They get married. What we are 
saying is, to see whether they are eligible for the earned-income tax 
credit, which they will be. In another example, a single mother with 
two children----

  Mr. BRYAN. Mr. President, parliamentary inquiry, who has the floor? 
As I understand the rules, no Senator can yield to another Senator.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GRAMM. Will the Senator yield for a question?
  Mr. DOMENICI. I still have the floor, Mr. President. I yield for a 
question.
  Mr. GRAMM. Is the Senator aware that a waitress who had three 
children, and made $9,000 a year, and her prayers were answered and she 
met a janitor who made $12,000 a year and his prayers were answered and 
they got married, not only would she lose a $3,000 tax deduction, but 
she would lose her earned-income tax credit?
  Mr. DOMENICI. That is correct. I understand that.
  Mr. GRAMM. Is the Senator aware that under the amendment that we have 
offered, that same couple would be able to lower their income by 
$3,300, before they measured whether they qualified for the earned-
income tax credit, so that the net result would be that moderate--
people who make such a low income that they don't pay any income taxes, 
potentially, would still benefit from the provision in our amendment, 
so that people who are paying as much as $712 as a couple in these 
tobacco taxes would get some of that money back through lower income 
taxes?
  Mr. DOMENICI. That is exactly right. I yield the floor.
  The PRESIDING OFFICER (Mr. Coats). The Senator from Nevada.
  Mr. BRYAN. Mr. President, I ask unanimous consent that upon my 
yielding the floor--it is my understanding the junior Senator from 
Texas requests 10 minutes, and I request that she be recognized. 
Following that, the junior Senator from Illinois? I propound that in 
the form of a unanimous consent request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BRYAN. I thank the Chair for his courtesy, as well as his 
parliamentary ruling.
  Mr. President, as we debate this historic tobacco legislation today, 
3,000 children across the country will try smoking for the first time. 
Of those 3,000 children, one-third, or 1,000, will become addicted is 
the only way to describe it, addicted to nicotine and will face a 
future of diminished health. The health consequences of the use of 
tobacco products is our country's most preventable public health 
problem, and our goal in this legislation is to stop underage smoking.
  Our debate on this tobacco legislation is, indeed, a historic event. 
Less than a year ago, with the announcement of the June 1997 settlement 
reached between the States' attorneys general and the tobacco industry, 
few would have foreseen that we would have comprehensive legislation to 
address the national problem of underage use of tobacco products on the 
floor of the U.S. Senate. I give particular commendation to the 
Nation's attorneys general who deserve much credit for putting this 
issue in the forefront of public debate.
  A year ago, the conventional wisdom may very well have been that the 
Senate would be incapable of debating comprehensive tobacco 
legislation. It was then said the tobacco industry was too strong, its 
grip upon the Congress too powerful. Mr. President, a different force 
arose.
  The sustained efforts of the public health community, and in 
particular the former Surgeon General of the United States, Dr. C. 
Everett Koop, and the former FDA Commissioner, Dr. David Kessler, these 
two, as well as other public health advocates, have kept the focus on a 
common goal: a major reduction and hopefully the eventual elimination 
of underage smoking.
  This legislation may not be perfect, but it does represent an 
extraordinary accomplishment. The initial Commerce Committee bill 
offered by Senator McCain was a crucial step in ensuring that the 
tobacco industry would not be allowed to stop the effort to protect our 
Nation's children. After the Commerce Committee reported out its bill--
and I am proud to say as a member of that committee I joined with a 
great majority of my colleagues in voting to report that bill out of 
committee--the tobacco industry walked away from the legislative 
process and then began an orchestration by the industry to end our 
efforts to protect our children.
  The tobacco industry badly miscalculated again. Instead, our resolve 
to protect our children's future has been strengthened. This effort is 
of vital importance for the children of our Nation and for their future 
health.
  In the 11 months since the proposed 1997 settlement, 990,000 underage 
children have become smokers. One-third,

[[Page S5297]]

or approximately 330,000, of those children will eventually die 
prematurely because of tobacco-related illnesses. This is a tragic 
statistic. This undermining of our children's future health must end.
  If a child begins smoking before he or she reaches the age of their 
18th birthday, there is an 80 percent likelihood that child will 
continue to smoke into adulthood. For these young children, the 
decision to try smoking has ramifications far beyond their 
understanding at such a tender age. These young people view themselves 
as I suppose all generations of young people have--as being 
indestructible. They do not realize, nor fully comprehend, the 
significance of their decision. That is a condemnation to a possible 
future of lifetime addiction to tobacco and a possible lifetime 
threatening health condition.

  I keep using that word ``addiction'' because that is what we are 
talking about, Mr. President, addiction. How urgent our efforts are to 
reinforce these efforts have been highlighted by the recent report from 
the Centers for Disease Control, a report which indicates that the 
increase of tobacco usage by underage youth has increased by alarming 
proportions.
  Just 7 years ago, 27.5 percent of all high school students in America 
smoked. In 1997, that number had risen to 36.4 percent. At the same 
time, the number of adult smoking was declining. Young African-
Americans historically have been able to resist the tobacco industry's 
advertising reach and had relatively low levels of underage tobacco 
use. Unfortunately, that is no longer the case. Smoking by African-
American students has almost doubled in the past 7 years, the fastest 
growth rate of any youth group over the past 6 years. White youth 
smoking has increased by 28 percent, and Hispanics have increased by 34 
percent over the same time period.
  Overall, 5.5 million of our Nation's 15 million high-school-age 
children are smokers. This report's findings are most distressing. 
Rather than gaining, we are losing ground in our effort to protect our 
children's health.
  The decision to smoke or not to smoke is, we are told, an adult 
choice, and I share that perspective. But we have learned that the 
tobacco industry has systematically focused its marketing strategies on 
underage smokers and then lied about it. They lied to the American 
people. They lied to the Congress.
  To get middle-school-age children--these are youngsters who are not 
yet in high school--to try smoking and then to get them hooked on 
nicotine is the key to the tobacco industry's future markets and 
profits. To hook these children at this early age means these young 
people will have been smoking for 3 to 5 years before they have reached 
the legal age to make that decision, the age of majority or adulthood 
at 18. What the tobacco industry has done is tantamount to a crime.
  Let me be clear I strongly believe underage children also bear 
responsibility when they attempt to use, purchase or possess tobacco 
products, and they need to be held accountable for their illegal 
activity. I am pleased that at my request this legislation includes 
provisions to require States to have penalties so that underage youth 
who do try to purchase a tobacco product will know it is illegal and 
that it carries consequences. These penalties can include community 
service, fines and suspension of driver's license privileges. But 
holding young people responsible for illegal smoking or possessing 
tobacco products in no way excuses the tobacco industry for its 
shameless efforts to encourage underage smoking.
  Our underage children have been the premeditated focus of the tobacco 
industry's effort to ensure there is a future, and I use their 
terminology, ``replacement market'' for their products. This industry 
has for years strategized as to the methodology to entice our youngest 
children to identify tobacco product brands with the sole purpose of 
getting them to try smoking as early as possible. This industry knew 
the earlier a child tries smoking, the greater the likelihood will be 
that child will continue to smoke and become addicted to nicotine. Once 
addicted to nicotine, that child will very likely continue smoking into 
adulthood, and then the industry will have accomplished its goal: the 
creation of a future replacement market for its products.
  In the tobacco industry documents recently made public, this is 
manifestly clear. An R.J. Reynolds document states:

       This young adult market, the 14 to 24 group. . . 
     represent[s] tomorrow's cigarette business. As this 14 to 24 
     age group matures, they will account for a key share of the 
     total cigarette volume--for at least the next 25 years.

  Yesterday, Mr. President, I was privileged to attend the White House 
Campaign for Tobacco-Free Kids. I was impressed with the more than 
1,400 youngsters who gathered, representing America's youth, who made a 
determination not to be fooled by the tobacco industry. These young 
people have already made a choice, and that choice is to say ``no'' to 
the tobacco industry's attempt to take their future health away from 
them.
  The tobacco industry has tried to manipulate the legislative process 
by intimidation. But the industry's saber rattling about its ability to 
win trials has been seriously undermined by its own actions.
  The tobacco industry, among other criticisms of this bill, has 
consistently maintained that any legislation not limited to the $386.5 
billion originally negotiated amount by the attorneys general and the 
tobacco industry in their June 1997 settlement would result in the 
bankruptcy of the industry.
  The legislation we debate today is estimated to cost over $516 
billion over 25 years, and the tobacco industry is asserting that such 
an amount would result in their bankruptcy.
  However, I think it is noteworthy to point out that during the course 
of the congressional deliberations on the attorneys general-industry 
settlement, the tobacco industry itself has settled that it has 
voluntarily entered into an agreement with the State of Mississippi for 
$3.4 billion, the State of Florida for $11.3 billion, the State of 
Texas for $15.3 billion, and, most recently, the State of Minnesota for 
$6.6 billion.
  Now, the tobacco industry's willingness to pay these multibillion-
dollar judgments in just 4 of the 41 States makes two very important 
points. First, the industry's contention with respect to bankruptcy has 
been proven to be specious. These four settlements extrapolated to the 
remaining State lawsuits would cost the industry approximately $500 
billion, nearly the same amount as the cost of the McCain legislation.
  A further note. This industry was prepared, as a consequence of the 
June 1997 settlement that it voluntarily entered into, to decrease 
youth smoking by approximately 40 percent. The industry did not seem 
too concerned in June of 1997 that a loss of 40 percent of their market 
would bring about bankruptcy. And it does seem logical to believe that 
the industry would not have voluntarily negotiated a settlement if they 
believed that settlement would put them out of business.
  A second point, if I may, Mr. President. The magnitude of these 
settlements only served to verify the industry's determination not to 
allow any lawsuit to go to a jury because they are fearful of the 
outcome--just what a jury might do once a jury fully understands the 
egregious misconduct of this industry and the impact it has had upon 
our Nation's children.
  So the tobacco industry has also pulled out another old scare tactic, 
that this legislation creates a monster, convoluted, massive new 
bureaucracy. Quite to the contrary, this legislation does not. All 
administrative efforts need to assure that the proper implementation of 
this historic legislation will be done by currently existing agencies.
  This legislation does provide for a very strong Food and Drug 
Administration role in the efforts to stop underage tobacco use and to 
assure the public of our Nation that its safety and the safety of our 
young people will be its paramount concern.
  Now, I have consistently supported the FDA's efforts to reduce 
underage smoking. I am pleased that this bill will reinforce and, 
indeed, strengthen the ability of the FDA to continue to protect the 
public health of our citizens. The legitimate concerns raised by 
convenience store retailers who had feared they could, as a retail 
group or class, be prevented from selling tobacco products under the 
proposed

[[Page S5298]]

FDA regulations have been addressed. These retailers have now expressed 
their support for the proposed State licensing of business entities 
selling tobacco products as a means of further controlling access of 
these products to underage children. Under the revised FDA regulation 
section, the FDA will be able to revoke a retailer's license, on an 
individual basis, to control those retailers who do not abide by sale 
restrictions. This will protect those responsible retailers who are 
committed to preventing underage access to tobacco products, and to 
punish those who irresponsibly do not do all they can to prevent young 
people from illegally purchasing tobacco products.
  Mr. President, equally ridiculous to the bureaucracy ``scare'' is the 
assertion that a massive black market will emerge. On the floor, we 
have heard over and over again the black-market warnings of Jim Pasco, 
the executive director of the Fraternal Order of Police. What tobacco 
supporters fail to tell us is that this same gentleman is on the 
payroll of Philip Morris, this country's largest tobacco company.

  So I conclude, Mr. President, by observing that the arguments made by 
the opponents of this legislation are pure smokescreens. The issue is 
really simple: Will Congress have the courage to vote on the side of 
America's youngsters and to protect our youngsters from the possible 
lifetime health-crippling afflictions that are attributed to the use of 
tobacco that cause the premature death of hundreds of thousands of 
people each year or will it support the tobacco industry?
  I hope my colleagues will take the courageous and historic step to 
vote for this legislation and to protect the young people in America.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Texas is recognized to speak for 10 minutes.
  Mrs. HUTCHISON. Thank you, Mr. President.
  Mr. DeWINE. Will the Senator yield?
  Mr. President, I ask unanimous consent that I be allowed to speak 
after Senator Durbin. We have an amendment that we are offering 
together, and I would like to be able to speak right after his speech.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. GRAMM. Would the Senator yield before she starts for a unanimous 
consent request?
  Mr. President, I ask unanimous consent that the Senator might yield 
to me for 1 minute.
  Mr. FORD. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mrs. HUTCHISON. Mr. President, everyone agrees that children should 
not smoke. They do not have the maturity or judgment to understand the 
risks of their decision.
  Mr. FORD. May we have order?
  The PRESIDING OFFICER. The Senate will be in order.
  Mrs. HUTCHISON. Where we differ is, how do we achieve this result? 
Forty States have now filed lawsuits to engage the tobacco industry in 
accepting the responsibility for its actions. Recent evidence 
demonstrates tobacco companies targeted children in their advertising, 
and the industry may have manipulated scientific research in its favor. 
This, obviously, is outrageous.
  We have a historic opportunity to limit youth smoking and to disclose 
all the information concerning the health risks of adult tobacco use.
  Four States have moved forward and reached settlements. My State is 
one of those. As a member of the Commerce Committee, which drafted the 
first version of the legislation before us, my principal concern was to 
ensure that nothing we did at the Federal level would undermine the 
agreements that have been reached by the individual States.
  I appreciate Senator McCain for his support of my amendments in the 
committee, most of which are in the bill before us, that would hold 
those States harmless.
  In my view, the most critical aspect of the Texas settlement and of 
the State attorneys general agreement that was reached with the 
industry was the restrictions on advertising and marketing that the 
industry accepted. These restrictions were tacit admission by the 
industry that its practice of marketing to teens was unacceptable.
  These restrictions are critical to our cause of reducing teen 
smoking. According to the Congressional Budget Office, if the tobacco 
industry did reduce its advertising, the greatest effect would probably 
be among teens. This report notes that studies show that teens are more 
sensitive than adults to brand-specific advertising.

  I voted for the original version of this bill in the Commerce 
Committee in large part because of the testimony of the attorneys 
general. They said the industry acquiescence in a ban on advertising, 
combined with a limit on industry liability, was the critical policy 
mix needed to attack the problem of teen smoking. That is why I voted 
against the Gregg amendment that was just before the Senate. That 
amendment will remove the liability limits.
  The reason a limit on liability was deemed important by the attorneys 
general was that the tobacco companies are the source of funds for the 
smoking cessation programs in this bill. If tobacco companies are sued 
out of business, new ones that aren t held to the standards of this 
bill will replace them and we will have the worst of all worlds. We 
will have new tobacco companies that do not have liabilities because 
they haven't advertised to teens and committed the other misdeeds of 
the present ones. They will not be bound by the restrictions on 
advertising. I am afraid we will do more damage if we pass a bill that 
has no limitations on liability and no restrictions on advertising. 
This balance between advertising restrictions and liability limitations 
is what the attorneys general put forward, and I think we must 
recapture it.
  In the Texas agreement and in the State attorneys general agreement, 
the tobacco companies are partners in the effort to stop teen smoking. 
Largely through the voluntary advertising and marketing restrictions in 
the legislation that was before the Commerce Committee, we would be 
able to achieve our result to stop teen smoking. The tobacco companies 
have now walked, and I am afraid this is not a good development. I hope 
we can restore the balance and, in our zeal to punish the tobacco 
companies, that we do not destroy the very companies we expect to pay 
for the programs in our bill that can end teen smoking.
  Without the advertising restrictions, I believe what we have before 
the Senate is a tax bill. We have to decide if raising the price of 
cigarettes would have the effect of stopping teens from buying them.
  Now, most parents would be experts in answering the question: Will 
the demand for cigarettes by teenagers go down if we raise the price? 
They know, for example, that a $200 pair of tennis shoes or a $75 pair 
of sunglasses sound perfectly reasonable to a teenager. To those teens, 
there probably isn't much difference between a pack of cigarettes that 
costs $2.25 or $3.75. Unfortunately, the Congressional Budget Office 
study tends to support this common sense observation. According to the 
CBO study that said teens are sensitive to advertising, teens are not 
very responsive to tobacco price changes. In fact, studies show that, 
under some circumstances, there is no impact on teen demand when 
cigarette prices rise.
  I have spoken to teens about this. I have asked them, Will raising 
the price from $2.25 to $3.75 make a difference? What I have found is 
that teens do think this is a pocketbook issue. But it is not the one 
you think. It is not the money in their pocketbooks that will make the 
difference to teens; it is their driver's license. Teens say that what 
will really deter them from smoking is the threat of losing their 
driving privileges. In fact, a study by the Texas Department of Health 
found that 64 percent of teenagers said they would not smoke if they 
thought they would lose their driver's licenses. This was compared to 
48 percent who said a $250 fine would deter them. My State legislature 
passed legislation that imposed tough penalties on tobacco use for 
underage Texans, including suspension of their driver's licenses.
  I am very concerned about what I consider to be essentially a tax 
bill, because we have lost the balance that we had in the attorneys 
general agreement. If it is going to be a tax bill, let's be honest; it 
is a tax bill on lower- and middle-income people. It may also lead to a 
black market problem.

[[Page S5299]]

  Before I came to the U.S. Senate, I was the treasurer of the State of 
Texas. In Texas, the treasurer was the tobacco tax collector. I have 
dealt with the black market. I have seen how differences in tobacco 
taxes between states affect the black market. My agency did raids on 
flea markets and roadside sales of illegal cigarettes that didn't have 
stamps on them, and I can tell you something: We stopped truckloads 
coming from Louisiana into Texas and into the flea markets because 
there was a significant difference in taxes between Louisiana and 
Texas--it s a 21 cent a pack difference today. In fact, the estimates 
of the nonpartisan Tax Foundation show that my State of Texas loses 
$172 million in revenue annually due to the black market in tobacco. 
That is because we live next to a State that has a 21-cent lower tax 
and next to a country, Mexico, where cheaper cigarettes are available.

  In Canada, they had the exact same experience when they increased the 
cigarette tax in 1991. Smuggling became such a problem that many 
provinces cut their own taxes to make it less lucrative. What did that 
lead to? Instead of smuggling, there was a black market between the 
Provinces. The government of British Columbia estimates losses of as 
much as $100 million a year.
  This is the reason that the National Association of Police 
Organizations has asked us to be very cautious with the legislation 
before the Senate. According to the executive director, Mr. Robert 
Scully, this bill could lead to an increase in cigarette smuggling 
beyond the control of organized law enforcement.
  All of us are struggling to try to do the right thing. I believe that 
I can truthfully say every Member of the U.S. Senate has the same goal: 
To stop teen smoking. However, how we get there is the question, and I 
don't think we are close to agreement on what is the right path to that 
goal.
  I am not going to vote for taxes that will run out of business the 
tobacco companies that can pay for the health and smoking cessation 
programs. This would result in the emergence into the market of new 
companies not bound by our restrictions because they would have no 
history of wrong-doing. Then we would have no funding for the health 
programs, no voluntary restriction on the advertising, and we will 
never reach the goal of stopping teen smoking.
  I am not going to vote for a tax increase that is so high that it 
causes a black market in my State of Texas as well as Arizona, New 
Mexico, and California, that borders Mexico, or where the price of 
cigarettes is very cheap. I am not going to vote for a bill that does 
not have a reasonable chance of a balance that will achieve the goal of 
stopping teen smoking.
  We are going to have a lot of votes. I hope we can come up with a 
bill that I believe will reach that reasonable balance. I have not seen 
it yet. I hope that in the end we will not pass a bill that will create 
a black market, that will create more crime, that will take away the 
source of revenue that could help us pay for ads to stop teen smoking. 
And I hope we will not, in our zeal to punish the tobacco companies, 
have them walk away from the restrictions on advertising which they can 
only do voluntarily because it is their first amendment right to do so.
  I hope I can vote for a responsible bill, Mr. President. I hope 
everyone in the Senate will come together to try to achieve an 
agreement that will produce the result of stopping teen smoking.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Illinois is recognized.
  Mr. DURBIN. Mr. President, I believe the Senator from Oregon has a 
unanimous consent request. Would he be able to make that request 
without jeopardizing my time?
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WYDEN. Mr. President, I ask unanimous consent at this time--I 
have offered an important look-back amendment in the Commerce Committee 
and worked with Senators Durbin and DeWine--that I be allowed to 
address this amendment after Senators Durbin and DeWine this afternoon.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Illinois.
  Mr. DURBIN. Thank you, Mr. President.
  Mr. President, for those who are following this debate, I hope they 
will understand that we are genuinely trying to move this bill to final 
passage. This bipartisan bill is the product of the Commerce Committee, 
crafted by Senators McCain, Kerry, Hollings, and others in an effort to 
do something historic to reduce the number of teenagers and children in 
America who are lured into the addiction of smoking.
  We have tried to establish a procedure on the floor, which 
occasionally we have been able to hold to, and occasionally we fail. 
But that procedure was to allow each side to offer an amendment. Of 
course, Senator Gregg had offered his amendment, and, after some 
motions, then Senator Gramm of Texas offered his amendment. At that 
point, I was supposed to have been next. But as it stands, now I am 
coming up with this look-back amendment in this fashion. It is an 
amendment which I am happy to sponsor with Senator DeWine of Ohio, as 
well as Senator Wyden of Oregon, Senator Chafee of Rhode Island, 
Senators Harkin, Collins, Kennedy, Snowe, Daschle, Conrad, and Reed. 
This is truly a bipartisan amendment. I hope that those who are 
following this debate will understand the significance of this 
amendment.
  The look-back provisions in the bill are really important in terms of 
enforcement. This term look-back is a relatively new term. It is not 
one created by the Congress. It is, in fact, a term of art which came 
about as a result of negotiation after the State attorneys general sat 
down with the tobacco companies. This is really an effort to make 
certain that the tobacco companies keep their word and reduce the 
number of young people in America who are smoking.
  We have talked about imposing a new tax, or fee, on tobacco products 
with the belief that it will reduce teen smoking. But we are not 
certain. We don't know how much we will be able to achieve by 
increasing the tobacco fee by $1.10 a pack. We believe it could be 
significant. But it may not be enough.
  That is why we have what is called a look-back provision. This is how 
it works. In years to come, we will do a survey of teenagers across 
America, and we will take a look particularly at children who are 
smoking. We will try to determine how many are smoking. We will also be 
able to determine what brands of tobacco they are using. With that 
information, we will be able to measure the effectiveness of the goal 
of this bill. We will look back on a periodic basis to determine how 
many children have been taken from the ranks of smokers or have not 
been recruited in the first place, and we will take a look at what they 
are smoking.

  The look-back provisions are an important part of the agreement with 
the States' attorneys general. The tobacco companies knew this had to 
be part of the bargain. They couldn't walk away from the table with all 
of the things they hoped for, walk away from liability in a State suit, 
for example, without some assurance that they were in fact going to be 
genuine in their efforts to reduce teen smoking. The look-back language 
that is included in the McCain bill which came from the Commerce 
Committee is a very good start, but only a start.
  That is the reason I am offering this amendment with Senator DeWine 
and others. We want to construct an effective look-back provision that 
will change companies' behavior and give them incentives to stop 
marketing to children.
  Our look-back amendment does two very important things. First, it 
shifts the emphasis on any look-back assessment so that it will fall 
primarily onto tobacco companies that are the worst offenders rather 
than primarily on the industry as a whole. That is a major element in 
this debate.
  If you were to ask what is the difference between the Durbin and 
DeWine amendment as opposed to the Commerce Committee bill, it is the 
fact that when we look back and determine whether or not the tobacco 
companies are keeping their word, whether in fact they are no longer 
marketing and selling to children, we believe at least in this 
amendment that we should hold individual companies responsible. The 
McCain bill, the Commerce bill, as good as it is--I think it

[[Page S5300]]

is a good bill--looks at it primarily from an industry viewpoint. I 
will try to spell out here in more detail why I think that is not the 
way to go.
  The second thing we do that is very important is, we restore the 
smoking reduction targets that were originally agreed to by the tobacco 
industry in their proposed settlement with the States' attorneys 
general last June. On both scores, this amendment is about 
accountability. Will these companies change their behavior? Will they 
stop their insidious marketing practices? Will they get honest in terms 
of the retailing of their product? We can find out. We can measure it. 
We can hold them accountable. If they don't live up to the reduction 
levels proposed in the legislation, they will face financial incentives 
to create the right climate and the right results.
  Why do we need look-backs? Effective look-back provisions can help 
achieve the goal of reducing youth tobacco use and change the current 
incentives that drive tobacco companies to market to children. Make no 
mistake. We have gone through this debate over and over. You will 
recall that for years the tobacco companies used to say, ``This isn't 
fair. We are not trying to sell to kids.'' Then, of course, lawsuits 
were filed across the Nation. We required them to disclose the 
documents they were using. Along come these documents. It turns out 
that these tobacco company executives were not as honest as they should 
have been.
  You all may recall this great scene that occurred about 4 years ago 
in the U.S. House of Representatives when the eight tobacco company 
executives came before the Commerce Committee in the House of 
Representatives. This ``gang of eight'' raised their hands and solemnly 
said under oath that nicotine is not addictive. America laughed, 
because they knew that once again the tobacco companies had made an 
incredible statement, literally one that had no credence whatsoever. 
When the tobacco companies told us nicotine wasn't addictive, that they 
were not adding nicotine or manipulating it in cigarettes, that they 
were not trying to sell to kids, it turns out they were wrong on all 
counts. So much for the credibility of the ``gang of eight.'' 
Incidentally, they are no longer the managers of these companies. But, 
nevertheless, their successors still have to be held accountable.
  Today, each new child who starts to smoke represents a new profit 
opportunity for tobacco companies. Tobacco companies have a tough go of 
it. Think about it. If you were running their business--every year they 
lose 2 million of their best customers. But a half a million people 
will die from tobacco-related diseases. Another 1.5 million will 
finally be able to quit and break the habit, or will die of other 
causes.
  If you are running a company losing 2 million customers a year, you 
need new ones. Where will you turn? You know adults are not your most 
likely market. They are usually smarter, a little more mature, and they 
know the danger of tobacco. They are not easily lured into the 
addiction. You have to go after the kids, and get the kids in their 
rebellious youth when they are willing to try anything and think they 
are going to live forever, and get them started on tobacco. If you can 
get a kid to start smoking cigarettes or chewing tobacco, it will 
develop into an addiction. The drug in that tobacco will go into that 
child's system and create a craving for this product that is very tough 
to stop. For those children who think that it is an easy thing to quit 
this addiction, it is not. The earlier they try to stop, the better. 
But the tobacco companies know that.
  Since most smokers start as children, children are the only available 
replacement smokers to take the place of these 2 million lost 
customers. In addition, we know that smokers are generally very loyal 
to the first brand that they smoke. We all know people who will only 
smoke certain brands--Marlboros, the cancer cowboy's cigarette, or 
Kools, Camels, whatever it happens to be. Many people who started with 
the brand when they were kids stay with it for a lifetime, albeit a 
shortened lifetime.
  These facts and the desire to give their shareholders steady profits 
lead the tobacco companies to market to children to ensure their future 
markets. The strong look-back provisions will totally reverse the 
economic incentives for marketing to children. It will say to the 
industry and to each company that they have an incentive to prevent 
their products from appealing to children. Manufacturers will start 
using what they have learned about teenage tobacco use to avoid having 
children use their products because every new child who picks up a 
cigarette or pockets a can of snuff will be an economic loss to the 
company.
  Our goal is not to punish the companies or gain revenues. If this 
never generates a cent, that would be fine. But basically what we are 
trying to do is meet the smoking reduction targets. Our goal is to 
create the incentives which help achieve actual reductions in underage 
tobacco use so companies might never have to pay a penny of these look-
back assessments. We are going to do our part. We are going to have 
youth access restrictions, counteradvertising, public education, and 
other governmental efforts to reduce youth smoking. We expect the 
tobacco manufacturers to do their part as well. And that is what this 
amendment is all about--accountability.
  Why focus on company-specific assessments? In the bill that is 
pending, a much greater share of the look-back assessments are imposed 
on the whole industry rather than on specific companies. There is a $4 
billion annual cap on industry-wide payments that is much greater than 
the company-specific assessment. Although the company-specific charges 
could be as much as $3 to $4 billion in extreme cases, it is more 
likely they are going to be a lot smaller. If all the companies miss 
their target by 10 percentage points, the company-specific surcharges 
would only equal $640 million. If they miss by 20 percent, it would be 
$1.3 billion compared to nearly $4 billion for the industry as a whole.
  Let me show a chart here which gives you an idea of the difference 
between the look-back provisions that we are discussing.
  Consider the fact that we are setting these targets to reduce youth 
smoking, and these targets say that over a 10-year period of time we 
are going to bring down smoking among kids by a certain percentage.
  What happens, let's say, in the fifth year after this legislation 
passes when the tobacco companies as an industry are supposed to reduce 
the number of kids smoking by 40 percent? What happens if the largest 
company misses it by 20 percent, if instead of having a 40-percent 
reduction, they only have a 20-percent reduction?
  Look at what occurs. Under this comparison of the Commerce Committee 
bill, and this amendment by Senator DeWine and myself, the industry as 
a whole would face a penalty of 10 cents a pack and the individual 
company 9 cents a pack if they miss it by 20 percent under the Commerce 
Committee bill.
  But look at the other side now if our amendment prevails--6 cents for 
the industry per pack, but 29 cents for the offending company. Doesn't 
that make more sense? If we know as a result of our surveys that the 
kids are smoking Camels, for example, shouldn't R.J. Reynolds be held 
accountable? They are the company that makes the brand. They market the 
brand. They retail the brand. They have an obligation under this law to 
reduce teen usage of their brand of cigarettes.
  If you don't do that, think of the perverse situation where one 
company is trying its best to reduce teen usage and youth usage and 
another company ignores it. Under this bill, the penalty is spread 
across the industry by and large, and there is not that much of a 
forfeiture of funds for the individual company as would occur under the 
DeWine and Durbin amendment. We want to make this more company-
specific.

  This approach, which currently is in the bill, risks creating 
incentives for some company to keep building future market share. There 
is money to be made here. As long as these kids are smoking, these 
companies are making money. We want to make sure the profit is taken 
out of this. Our amendment increases the company-specific payments, 
reduces the industry-wide payments.
  This amendment will not necessarily increase the price of cigarettes. 
I want to really pause for a moment on this point because I think it is 
so important. We have had a lengthy debate

[[Page S5301]]

over the last several days about whether or not we are imposing, at 
least indirectly, new taxes on lower income individuals, whether by 
raising the price of a package of cigarettes we are passing along to 
lower income and middle-income individuals more of a tax burden.
  Think about this for a moment. Assume we have two companies and the 
Durbin-DeWine amendment is enacted. One of the companies is doing a 
good job; it is reducing its sales to minors--very happy with the 
results. The other company has made a calculation. The other company 
says we are not going to be so tough or restrictive. We will, frankly, 
look the other way. We are going to continue to do some marketing that 
we know appeals to kids. We are going to kind of tell our retailers we 
are not going to enforce the law that stringently, and so look what 
happens. If that occurs under the existing bill, they are both going to 
be treated equally in the industry-wide assessments; both will be 
facing these additional costs per pack equally.
  Under our approach, it will be significantly different and the 
company that is a bad actor, the company that is not trying to reduce 
sales to kids is a company that will face a much, much larger charge 
per pack. Now, what do you do? If you are the company that has been 
selling to kids, it turns out kids are smoking your brand, you are 
facing this kind of payment. You can't add this price to the package of 
cigarettes because your competitor isn't doing the same. You have to 
absorb this cost in your bottom line. So the consumers are protected 
from the price increase, and basically the company really pays a price 
for what they have done.
  This bill presently before us also reduces youth smoking reduction 
targets relative to what the industry agreed to last year. This second 
and very important element in the bill is one I would like us to pause 
and reflect on. Just last year, these tobacco companies came together, 
and with the State attorneys general said we agree to the following 
targets to reduce the number of smokers each year.
  Well, a year has passed. The issue has come to Capitol Hill. We 
debated it back and forth and now we have a chance to enact this 
legislation. What has happened during the course of that year? The 
tobacco companies have done very well. They have done very well in 
luring more children into this addiction. In fact, since 1991, we have 
seen a dramatic increase in the percentage of kids who are smoking. 
That is a sad commentary. It is a sad fact of life.
  What Senator DeWine and I are doing in our amendment is going back to 
the original targets the tobacco companies set in their agreement with 
the attorneys general. So instead of the McCain or Commerce Committee 
bill reducing smoking by 60 percent of kids over 10 years, we hit a 
target of 67 percent in the equivalent course of time, getting them to 
quit or sparing more kids from the possibility of becoming smokers and 
of facing disease and premature death. Four-hundred and fifty thousand 
more children will be protected with the Durbin-DeWine amendment by the 
year 2008 than in the underlying bill. There will be 450,000 fewer 
smokers if the tobacco companies continue to meet their reduction 
targets of 67 percent instead of 60 percent; 150,000 fewer premature 
deaths--we know that about a third of smokers are going to die young as 
a result of this habit; $2.8 billion in lifetime social costs are 
avoided; and we have the same real target as the original proposed 
settlement. I think that makes sense.
  The next question is the constitutionality question. The tobacco 
companies claim that these look-back provisions are unconstitutional. 
But both the Department of Justice and the Congressional Research 
Service have studied the issue and concluded they are wrong. Just as we 
hold companies responsible for clean air attainment standards, we can 
hold them responsible to help reduce youth smoking rates.
  The courts have required that there be a rational basis for this type 
of program, and this amendment is based on a very rational 
consideration. If companies' assessments or surcharges raise their cost 
of doing business as usual, they will consider it an incentive to 
change their behavior and use the knowledge they have gained over the 
years in terms of selling to kids, to stop selling to kids.
  With regard to the argument that this might violate due process, the 
purpose of the look-back assessments is to supplement the other 
measures in the bill designed to reduce youth smoking rates, including 
the bill's price increases, and to encourage the industry, which is 
uniquely able to develop innovative strategies, to take the action to 
minimize youth smoking.
  The look-back provisions don't violate the Constitution's bill of 
attainder. All of us who studied the Constitution over the years 
wondered if we would ever run into a case where somebody would start 
talking about a bill of attainder. I didn't think I would ever face 
that in my life on Earth, and here we are on the floor of the Senate 
talking about a bill of attainder.
  The bill of attainder in the Constitution prohibits singling out 
particular individuals or entities for legislatively mandated 
punishments. The tobacco companies have said: Oh, this look-back 
provision is a bill of attainder. The Department of Justice states the 
look-back provisions apply to all manufacturers of tobacco products, 
not a single company, and would operate as one component of a 
comprehensive industry-wide reform. Additionally, look-back provisions 
are not penalties for industry misconduct so much as an affirmative 
step to reduce youth smoking.
  I think the tobacco industry's constitutional argument is a weak one, 
designed to shift away the attention from their marketing to kids.
  Let me respond quickly to a few other items, and then I will be happy 
to defer to my colleague and cosponsor, Senator DeWine.
  Mr. FORD. Will the Senator yield for a question?
  Mr. DURBIN. I will be happy to yield for a question.
  Mr. FORD. I understand where you are going with this, and it is 
beginning to take hold. But in this piece of legislation, does HHS have 
the ability to put on the educational programs that would reduce youth 
smoking and the tobacco industry would have no control over that?
  Mr. DURBIN. Yes. I thank the Senator for raising that.
  Mr. FORD. But the point here, then, is that I am putting out all this 
information, and it doesn't work; then you get fined. I am a little bit 
concerned about that. I understand where the Senator is coming from. 
But I think we need to cover one more base, that if the tobacco 
industry is going to be responsible for the percentage reduction, and, 
if it isn't, then they pay, they ought to be able to be charged with 
advertising, or something, rather than letting HHS do it. And if it 
doesn't work, they get penalized.
  As we say down home, ``Something about that ain't right,'' and I hope 
the Senator, with all his knowledge of this area, would look somehow to 
be sure that, if you are going to be charged with a penalty here, 
somehow you ought to have some input on how it is completed. You might 
be able to clear me up on that.
  Mr. DURBIN. The Senator from Kentucky raises a dilemma, and that is: 
How much could we trust the tobacco industry coming up with the goal?
  Mr. FORD. They can't.
  Mr. DURBIN. I think it is more likely a public health agency will try 
to reduce those numbers. I can recall a few years ago the tobacco 
companies said, ``We are going to stop marketing to kids, and we are 
going to tell these kids we don't want their business.'' And they 
delivered their message by buying full-page ads in the Wall Street 
Journal. There may be some kids who read the Wall Street Journal, but 
not a lot of them. It is far better to take that information and 
message and put it on a television show the kids are likely to watch.
  Mr. FORD. I say to my friend, I take this as if they were doing it to 
me as an individual and saying that you are going to be penalized--I am 
going to be penalized if your program doesn't work. And some companies, 
a brand only has about 1 percent of youth. They don't like it, and they 
don't use it. But if you reduce it down, if it is 1 percent, which one 
brand is, then you have to reduce that to six-tenths of 1 percent. That 
becomes very difficult when it is all adults.
  I agree with what you are trying to do. I hope somehow or another we 
can make it fair rather than unfair.

[[Page S5302]]

  Mr. DURBIN. I thank the Senator for his question, and I hope what we 
are doing is a coordinated effort. It is an effort which increases the 
fee on a package of cigarettes, which we have been told by economists, 
in and of itself, will reduce youth usage. It is an effort to change 
the advertising so that, by and large, children are not affected by the 
lure of that advertising. It is an effort by the Government--and the 
Senator is right--through HHS and others, to deliver this message 
effectively. But finally it comes down to the tobacco companies 
themselves who make the product and market the product and sell the 
product. And they bear a responsibility, too, a responsibility which, 
if they don't live up to it, is going to result in a charge against 
each package of cigarettes.
  Let me just conclude with two or three points before deferring to the 
Senator from Ohio. Some say the 67 percent reduction figure over 10 
years is too high. I don't believe it is. Marijuana use by 12- to 17-
year-olds declined 76 percent from the late 1970s to the early 1990s. 
The smoking rate among black 12th graders in the late 1970s was the 
same as the rate for all teenagers today. It declined by 76 percent 
from the late 1970s to the early 1990s, without advertising 
restrictions, education, and counteradvertising envisioned in the 
current legislation.
  Mr. President, 80 percent of adult smokers and 70 percent of 
adolescent smokers regret ever starting to smoke. I think we have a 
situation here where 67 percent is a figure that can be reached, and 
the actual number of young people who would then stop smoking is one 
that was agreed to by the tobacco companies when they met with the 
attorneys general just last year.
  Why do we want to strengthen this bill? Because, frankly, we believe 
that unless the industry is held to this standard on a specific company 
basis, the results will not be what we hope they will be. Some people 
say the amount of the payment here is more than the lifetime profit 
from each new young smoker.
  First, let's not get caught up in the debate of what is a lifetime 
profit from a new smoker. Is it only $500 or $1,000 or $1,500? I am not 
sure we accept these claims.
  Second, these companies are not just profit maximizers; they want 
volume. Why? Why would the tobacco industry want volume over profit? 
Because they are dealing with people who are addicted to nicotine, who 
will have to follow them up the track as the price increases. So they 
do not focus just on profits but also on volume. And we have to find a 
way to reduce the volume when it comes to children.
  Third, even this calculation does not get to the true cost of 
addicting a child on tobacco. The American Medical Association has 
estimated we would have to increase the surcharges to $400 million per 
percentage point--more than 6 times what the bill does in its company-
specific look-back--to cover the societal cost of each additional 
smoker. It is about more than tobacco company profits; it is about the 
cost to America and American families as a result.
  I think what we are setting out to do here is create a payment 
structure that is reasonable. Under the bill, companies will pay an 
industry-wide payment of $80 million for each of the first 5 percentage 
points by which they missed the targets, $160 million for each of the 
next 5 points, $240 million for the next 12, maxing out at $4 billion. 
Each company that misses the target will pay a company-specific 
surcharge of $1,000 multiplied by the number of children by which a 
company falls short of in its target. There is no maximum for the 
company-specific surcharge, which could reach as much as 3 to 4 billion 
dollars in an extreme case.

  Under our agreement, companies will pay an industry-wide payment of 
$40 million for each of the first 5 percentage points by which the 
industry as a whole misses the targets, plus $120 million for each of 
the next 15 points, with a maximum of $2 billion. Each company that 
misses the targets will also pay a company-specific surcharge equal to 
the company's share of youth smokers multiplied by $80 million for each 
of the first 5 percentage points, $240 million for each of the next 19 
points, with a maximum of $5 billion.
  The potential maximum surcharges are similar in the aggregate. Ours 
is weighted towards companies as opposed to towards the industry as a 
whole.
  Let me close by saying that I am happy that this is, in fact, a 
bipartisan amendment. For those who have argued on the floor over the 
last 2 days that they want to make certain that we don't increase the 
price of the product too much for lower-income groups, the Durbin-
DeWine amendment addresses that directly. When you go company-specific, 
the money comes off the bottom line. For those who say that the targets 
that the State attorneys general agreed on to reduce the number of kids 
smoking were reasonable, as those tobacco companies said then, this 
bill returns to those targets. We think this is sensible. Let us reward 
those companies which are engaged in good conduct, reducing youth 
usage. Let us make those pay who do not engage in good conduct.
  I am happy to have this amendment offered today in the Senate, and I 
am proud to have as my cosponsor the Senator who will be speaking next, 
my friend who served in the other body with me and now is the Senator 
from Ohio, Senator Mike DeWine.
  At this point, I yield back the remainder of my time.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Ohio is recognized.
  Mr. DeWINE. I thank the Chair.
  Mr. President, I am pleased to join with my friend and colleague from 
Illinois, Senator Durbin, to offer this amendment, an amendment to make 
the tobacco companies more accountable in our collective effort to 
reduce youth smoking.
  Specifically, our amendment would make a few improvements--a few 
improvements, but significant ones--to the so-called look-back 
provisions of this current legislation. The look-back provision in the 
current bill sets targets for the reduction of teen tobacco use. And, 
then, it imposes assessments, or surcharges, on individual tobacco 
companies and the entire tobacco industry if these reduction targets 
are not met.
  Our amendment would make two simple modifications to Chairman 
McCain's look-back provision.
  No. 1, our amendment, like the McCain bill, would impose a surcharge 
on specific companies as well as the entire industry, if reduction 
targets are not met. Both our amendment and the McCain amendment are 
blends of those two formulas. They are different, a different blend, as 
I will talk about in a moment.
  Our amendment puts a larger emphasis, though, on the company-specific 
surcharge. We do this because we believe the threat of a surcharge 
against specific companies will give them a much stronger incentive to 
limit teen tobacco use. In a sense, it is sort of the American way. We 
hold people accountable. We hold them accountable--we give them the 
benefit of what they do as well as the detriment if they do something 
wrong.
  (Mr. BENNETT assumed the Chair.)
  Mr. DeWINE. Second, Mr. President, our amendment will increase the 
targets for reduction of youth tobacco use over what is in the McCain 
bill. But actually with our amendment, we are restoring, as Senator 
Durbin has pointed out, the original reduction targets that were agreed 
to by the industry last year in the global settlement. The net effect 
of our amendment is to restore what the tobacco companies said and 
agreed to last year and said that they could do.
  Let me repeat, we are not increasing the final reduction targets. 
Rather, we are simply restoring the original targets that were agreed 
to in last year's settlement.
  Before getting into the specifics of this amendment, I first 
congratulate my good friend, John McCain, who has put together a very 
credible, a comprehensive, a good bill. He has faced a very difficult 
challenge and has crafted an excellent piece of legislation. This is a 
comprehensive package that attacks teen smoking in a variety of ways. I 
believe this thorough approach, when all the pieces of the puzzle are 
finally put together, will significantly reduce teen smoking. Let's 
make no mistake about it, that is our objective--to reduce teen 
smoking; to reduce the number of young people every day in this country 
who start smoking.
  I have followed the policy evolution of the look-back provisions 
since they

[[Page S5303]]

were first proposed in that global tobacco settlement announced last 
June, announced by the attorneys general and by the leading tobacco 
companies' executives. That settlement contained a look-back provision. 
That settlement contained this brand new and innovative idea--the idea 
that we could enlist the tobacco industry in our fight to reduce teen 
smoking by simply giving them a disincentive to hook young people on 
tobacco.
  The look-back provision in the original settlement called on the 
companies to work with us to reduce youth smoking by 60 percent after 
the passage of 10 years. That 60 percent was to be phased in at several 
intermediate levels. The settlement negotiators, including the tobacco 
industry, all agreed to these reduction targets. They obviously 
believed that they were achievable.
  The settlement then gave the tobacco industry a big shove, a big 
shove to meet these targets by calling for an industry-wide surcharge 
in any year the targets were missed. The amount of the surcharge was to 
be based on how much the industry missed the reduction targets, up to a 
maximum or limit, a cap of $2 billion.
  While I look at this, I recognize really from the beginning, the 
look-back could be a tremendously useful tool in reducing youth 
smoking. The tobacco industry, driven by a profit motive, has been 
incredibly effective in convincing our children to start smoking. If 
the financial disincentive was strong enough, we would have a way to 
put the industry's expertise to prevent youth smoking and to turn this 
whole thing around.
  After studying the settlement's look-back proposal, I have two basic 
concerns: First, I was concerned that the proposed surcharges were not 
high enough to work as a significant deterrent to the tobacco 
companies. Second, I had some concerns about the settlement's way of 
distributing the surcharges across the entire industry; in other words, 
how they determined who was going to pay what. This was an issue I 
explored in several committee hearings, both in the Judiciary Committee 
and in our Labor and Human Resources Committee.
  This approach, frankly, if I can use the term, seems almost 
socialistic to me, the provision that was originally agreed to. The 
provision calls for looking back first at the end of 3 years and 
periodically after that to see how well the tobacco industry had done 
in reducing youth smoking, and then once we found that out, 
irrespective of how an individual brand did or individual company did 
in reducing youth smoking, to then say, ``OK, we're going to spread it 
out in the industry; in fact, we are going to spread it out, not based 
on the percentage of youth who were smoking a particular brand, we are 
going to take that penalty and spread it out among adult users.''
  So if a particular company had 20 percent, for example, of the youth 
market, but 60 percent of the adult market, then, in fact, that company 
would end up taking 60 percent of the burden of the look-back penalty. 
It is, in effect, socialism. It is something I think that should offend 
every Member of the Senate. It is not right, it is not fair, and that 
is why we are changing it in this amendment. Frankly, that is why 
Senator McCain put together an amendment, a compromise, that did, in 
fact, begin to go down this road. Our amendment simply goes a little 
further.
  Any company under the original settlement that did its job in 
reducing youth tobacco use would have to share the benefit of this good 
behavior with its fellow tobacco companies. Likewise, a company that 
failed to reduce youth smoking would not bear the brunt of the 
resulting surcharges because the payments would be spread across the 
industry.
  This approach would have the effect really of diluting the incentive 
for individual companies to work as hard as they can to prevent teens 
from using their products. After all, why would a company try to 
prevent kids from smoking its cigarettes, perhaps creating a 
competitive disadvantage for itself in the larger adult market when 
other companies would share in the reward for whatever success they had 
in reducing teen smoking? It just doesn't make sense.

  The way the payments are allocated to the specific companies in an 
industry-wide approach on the basis, as I pointed out, of the adult 
market share, would also dilute the incentive for companies to do a 
good job. Let's take a quick look at the example of Philip Morris, the 
maker of Marlboro.
  This company, through the use of the Marlboro Man and other marketing 
campaigns, has been unbelievably successful in selling cigarettes to 
our underage smokers, to our kids, to our children. In 1993, 60 
percent--60 percent--of all teen smokers used Marlboro, when in the 
overall market for adults, Marlboro only had 23.5 percent of the market 
share.
  Let's look at how the industry-wide look-back approach would affect 
Philip Morris. After all, Philip Morris is responsible for a majority 
of youth smoking. This is the main company at which look-back 
incentives should be aimed.
  Industry-wide look-backs allocate the industry-wide assessments to 
each company based on its adult market share. So if the company misses 
its reduction targets and is then required to pay, Philip Morris is 
only responsible for 23 percent of that total, because that is the 
total market they have, even though Philip Morris is responsible for 60 
percent of youth smoking.
  In the case of Philip Morris, under these statistics, if in a year 
the tobacco industry did not meet its targets and there was a penalty 
that had to be assessed under the law, the division clearly would not 
be equitable. Philip Morris is responsible for 60 percent of the 
problem, 60 percent of the kids smoking, and yet they would only pay 23 
percent under this straight provision.

  Let me again point out that Senator McCain has changed this and moved 
it in the right direction. Our amendment moves it even further towards 
more emphasis on company-specific penalties.
  Mr. President, what do we think Philip Morris will do under this 
industry-wide look-back? Will the look-back do what it is supposed to 
do, get Philip Morris to try to reduce the number of children who it 
sells to? Mr. President, to me it is pretty obvious what would happen. 
Because this industry-wide look-back forces other companies to pay for 
the sins of Philip Morris, I would expect Philip Morris would simply 
ignore the look-back. The industry-wide look-back in this particular 
case would fail to do what it is supposed to do. In the case of Philip 
Morris, it would fail to give the proper incentive to the very company 
with the most responsibility for stopping kids from using its products.
  That is why, Mr. President, I started calling for a tougher look-back 
than the original settlement and for one that would be imposed on 
individual companies that fail to reach the targets rather than on the 
entire industry. In other words, an effective look-back proposal is one 
that would commit each company, each tobacco company to feel the 
impact--whether good or bad--of its own behavior.
  And let us not kid ourselves, Mr. President. The tobacco companies 
will be able to, through marketing techniques, through their dealings 
with their dealers, through what advertising they will still be able to 
do, they will be able to have a substantial impact on youth smoking.
  Yes, the Government is going to come in under this bill and we will 
have some anticigarette campaigns. The Government will be involved in 
other things. This will not be brand specific. This will be across the 
industry. It will, we hope, have the effect we intend it to have. But 
the fate of each company will still remain in each company's hands. And 
they should be accountable for what they do. They should be given--sort 
of the American way, Mr. President--they should be given an incentive 
to do what is right and they should be, if I can use the term, 
``punished'' if they do not do what is right. It is the right way to 
approach the problem.
  Mr. President, I worked with the chairman of the Labor and Human 
Resources Committee, Senator Jeffords, to include a tough company-
specific look-back in this legislation. Prior to the Commerce 
Committee's markup of S. 1415, I wrote to Chairman McCain to request 
that his legislation's look-back surcharges be higher than the original 
settlement, and that they be assessed against individual companies.

[[Page S5304]]

  Mr. President, by the time this legislation reached the Senate floor, 
Chairman McCain and the Commerce Committee had improved the bill's 
look-back provisions, and they had done it in two very significant 
ways. I commend them for it. In the version of this bill that came out 
of the Commerce Committee, Senator McCain increased the level of the 
industry-wide surcharge and the overall cap in the look-back. This 
served to provide a stronger incentive for tobacco companies not to 
target youth.
  Further, the Senator from Arizona went even further in this regard in 
the managers' amendment he offered this week. Specifically, Senator 
McCain added a company-specific look-back surcharge in addition to the 
industry-wide surcharge.
  Mr. President, by including both a company-specific look-back and 
surcharges stronger than those in the settlement, Senator McCain's 
look-back provision represents a clear improvement from last year's 
settlement. It will be more effective. It will be fair.
  What the Senator from Illinois, Senator Durbin, and I are doing as we 
offer this amendment is to simply refine and improve the McCain look-
back provisions. And we do this in two fundamental but necessary ways.
  Mr. President, the most important modification included in the 
Durbin-DeWine amendment is a stronger company-specific look-back. The 
argument for this is simple. The higher the company-specific surcharge 
is, the more powerful an incentive each company has to prevent children 
from using its products. By putting more of the burden on individual 
companies, we can provide a much more powerful incentive for tobacco 
companies----
  Mr. BYRD. Mr. President, may we have order in the Senate?
  The PRESIDING OFFICER. The Senator's point is well taken. The Senate 
is not in order.
  The Senator from Ohio.
  Mr. DeWINE. I thank the Chair and my colleague from West Virginia.
  By putting more of the burden on individual companies, Mr. President, 
we can provide a more powerful incentive for tobacco companies to meet 
these reduction targets, especially among those companies that have 
gained the most from the youth market.
  Basically, the Durbin-DeWine amendment would direct more of the 
surcharge amounts to be paid on a company-specific basis. The initial 
assessments--ones that are charged if a company misses its reduction 
target by a few percentage points--in our amendment would be higher 
than in the McCain amendment. In addition, unlike the McCain bill, our 
amendment would also bump up the surcharge once a company misses its 
reduction target by more than 5 percentage points.

  Let us look at one specific example to demonstrate the differences of 
the two approaches. Suppose we had two cigarette manufacturers--company 
A and company B. Each controls, let us assume, half the market, 
including half of the youth market. Let us say company A has succeeded 
in meeting its reduction goals for reducing youth use, but company B 
failed to reduce its targets and failed, in fact, by 10 percentage 
points.
  Company A has done the job. Company B has not. Here is how the total 
surcharges, to take a specific example--including both the company-
specific and the industry-wide assessments--would break down under the 
McCain bill and the Durbin-DeWine amendment.
  Under McCain, company A, the good actor, the good company, is 
responsible to pay $200 million, but would only pay $100 million under 
the Durbin-DeWine amendment.
  Company B, on the other hand, the company that saw the increase, 
caused the increase in youth smoking, would be charged $750 million 
under McCain, but would pay $900 million under Durbin-DeWine. That is a 
20 percent higher payment under the Durbin-DeWine amendment for the 
company that failed. More equitable.
  So, as you can see, our amendment would shift the financial burden 
toward the company or companies that are responsible for the continued 
youth smoking, but also away from companies that do the right thing. 
Because companies will know that they are on the hook for how well they 
do, they have that much more incentive to prevent children from using 
their products.
  Another way to demonstrate this, Mr. President, and to demonstrate 
the shift we are asking for in our amendment is to look at the overall 
bottom line. The McCain bill would impose an industry-wide cap, a 
potential maximum of $4 billion. This cap represents the maximum amount 
which would be assessed against the entire industry under these 
provisions.
  Although there is no cap in McCain for company-specific surcharges, 
let us assume each and every company missed its target by, say, 25 
percentage points. In that case, the surcharges would all add to about 
$1.6 billion. So that is the bottom line for McCain--$4 billion imposed 
across the entire industry, shared among all the companies, and about 
$1.6 billion for the individual companies that had not met its goals.
  The Durbin-DeWine bottom line is as follows: The industry-wide cap is 
$2 billion, and the total amount of company-specific surcharges, under 
similar circumstances, would be $5 billion. That is only for that 
specific example.
  Mr. President, the real story I am trying to convey with these 
numbers is simple: Our amendment has a greater focus on the company-
specific look-back and thus provides a stronger incentive for tobacco 
companies to prevent children from using their products.
  Mr. President, our amendment makes one other fundamental change to 
the McCain bill. Our ultimate reduction target--10 years hence--is a 
67-percent drop in the number of teens who smoke. In the McCain bill, 
the end goal or target is 60 percent. On the surface, the McCain target 
appears to be the same as the 60-percent target in the original 
settlement the attorneys general reached last June.
  Again, I remind my colleagues, this is a settlement that everyone 
agreed to. And the tobacco companies said, ``Yes, we will be held 
accountable. And, yes, we can get these targets.'' So it seems as if it 
is the same under the current McCain language.
  But actually, on closer examination, the McCain target falls a little 
short of that original target in real terms. The reason why it falls 
short is the McCain and settlement reduction goals--although the same 
on the surface; appear the same--each use different starting points or 
different baselines.
  The McCain bill calls for a 60-percent reduction from a higher 
baseline figure than was used in last year's settlement. Because of 
this, the McCain youth reduction targets are easier to meet than the 
original settlement. Again, not a great deal of difference. But all our 
amendment does, very simply, is take us back effectively to that 
original settlement, which I think was our original intent of what we 
should do.
  What the Senator from Illinois and I are doing is restoring the 
original reduction goals from youth tobacco use from the settlement. 
The Durbin-DeWine amendment sets a reduction target of 67 percent, but 
after accounting for the different baselines--our reduction goal is 
equivalent to what is in the settlement. It is exactly what the tobacco 
industry last year agreed was reasonable and that they said they could 
reach.
  Again, I want to thank my friend from the land of Lincoln, Senator 
Durbin, and his staff for their work in putting this proposal together. 
Let me also thank Senator Wyden, who will speak in a moment, Senators 
Chafee, Wyden, Daschle, Snowe, and Collins for joining us as original 
cosponsors of this amendment. This is truly a bipartisan amendment. I 
also appreciate the work of the Campaign for Tobacco-Free Kids and 
others in the public health community for their assistance and support. 
This amendment also has had the active support of former Surgeon 
General C. Everett Koop--and I certainly appreciate that. Finally, I am 
pleased that the New York Times has expressed its support for the 
amendment in an editorial in yesterday's edition.
  Mr. President, the choice before us is simple--we have the 
opportunity here to vote on an amendment that will improve the one 
basic purpose of this legislation: to reduce youth smoking. By holding 
individual tobacco companies more accountable for failing to reduce 
youth smoking, and by restoring the original targets set by the tobacco

[[Page S5305]]

companies themselves, the Durbin-DeWine amendment will make a real 
difference in young lives. I urge my colleagues to join us on behalf of 
our young people and support the Durbin-DeWine lookback amendment. It 
is the right thing to do.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Thank you, Mr. President.
  Mr. President, I offered the amendment in the Senate Commerce 
Committee to toughen the look-back penalties for one reason. I believe 
that stronger look-back penalties provide a powerful tool to actually 
change the course of history and hold the tobacco companies accountable 
when they pursue youthful customers.
  A brief review of the history indicates that the tobacco companies 
won't change on their own. For example, if you look at every previous 
effort, every single previous effort on the part of the Congress to 
hold the tobacco companies accountable, the tobacco companies, in fact, 
have found a way to get around those efforts. That is what happened 
when the Congress sought to go forward with restrictions on 
advertising. That is what happened when the Congress legislated warning 
labels. And that is what happened when the Synar amendment was enacted.
  Many will remember our colleague who served in the other body. Mike 
Synar wrote very tough legislation that would, in effect, require that 
the States carry out the laws to protect our kids when they were 
targeted. The tobacco companies found a way around that.
  So the tobacco companies have found a way around every single 
previous legislative effort on the part of the Congress to hold them 
accountable. Those who would like to know more about this history can 
learn about it simply from the documents that have come out since the 
1994 hearings in the Health Subcommittee on the other side of the 
Capitol.
  Now, the tobacco companies would like us to believe that they will 
change the course of history and their behavior on their own. Many of 
the Senators will remember after the original attorneys general 
settlement the tobacco companies took out very large advertisements in 
both the Nation's newspapers and in the electronic media. The basic 
message of those ads that were taken out by the tobacco industry when 
they were encouraging support for the original settlement, was their 
message that it was a new day. Tobacco companies said it is a new day. 
There will be improved corporate citizenship on the part of the tobacco 
industry, and that the sordid history that came out after 1994 in those 
various documents was a part of the past.
  I think the inclination of every Member of the U.S. Senate is to say 
industry can change. Our colleague, Senator Durbin, made mention of the 
fact that many of the executives who testified in 1994 aren't alive 
today. So a number of us were very hopeful that it would be a new day 
in terms of tobacco industry behavior. But when the Senate Commerce 
Committee held hearings earlier this year under the leadership of 
Chairman McCain, we received powerful evidence that things really had 
not changed.
  I will cite one example in which I was personally involved. In 1994, 
when I was a member of the Health Subcommittee on the other side of the 
Capitol, Henry Waxman brought the Nation's tobacco executives before 
the Health Subcommittee. It came to light that the Brown & Williamson 
company at that time was genetically altering nicotine, genetically 
altering nicotine to give it a special punch and to hook their 
customers. This was, of course, a flagrant example of subverting the 
public interest. It was documented by the Food and Drug Administration. 
At that time, the Brown & Williamson company assured the country 
that they would not engage in that conduct again.

  During the course of our preparation for the hearings in the Senate 
Commerce Committee 4 years later, I and other members of the committee 
learned from news reports and others that there was evidence that, in 
fact, Brown & Williamson was again genetically altering nicotine and 
again engaging in this detrimental conduct that they pledged to the 
country they would never engage in again in 1994.
  So when the CEO of the Brown & Williamson company came to the Senate 
Commerce Committee with the other executives, I asked specifically 
about what kinds of practices the company was engaged in with respect 
to genetically altered nicotine. The CEO of that company said, in fact, 
that they were again selling this product, and in their words, in 
response to a question I asked that day, they admitted that they were 
working off ``a small stockpile of genetically altered nicotine,'' 
engaging in conduct that they pledged the country in 1994 that they 
would never engage in again.
  The reason I bring this example up is that if a tobacco company will 
engage in that kind of brazen conduct, in that kind of conduct when 
they are under the hot spotlight of the U.S. Congress, as they have 
been for many months, what are they going to do when the attention of 
the Congress and the country turns elsewhere? This isn't about conduct 
of 20, 30, 40 years ago. We know that took place in the past. A number 
of us were very interested in knowing whether the companies really did 
want to change of their own accord. Many of those who have opposed 
tough look-back penalties have used this argument in the past. 
Companies are changing. These kind of tools of big government are 
certainly unnecessary, at best.
  The Brown & Williamson example where they are working off a small 
stockpile of genetically altered nicotine at this time is certainly 
strong evidence that these companies have not really changed and it is 
not the new day that the Congress and the country were told about after 
the original settlement from the attorneys general.
  Given that past history, over 20, 30, 40 years, and the most current 
history, the Brown & Williamson example which, by the way, the Justice 
Department is now conducting a criminal inquiry into, there have 
already been pleas in this regard--given that past history and the 
history present, many of us are not willing to say that it is actually 
a new day in the tobacco industry.
  Mr. President, I want the Senate to know why I am particularly 
skeptical. I was a member of the Health Subcommittee of the other body 
in 1994, Chairman Waxman, the late Mike Synar, and others, did an 
extraordinarily good job of questioning the executives. But when it 
came to my turn during those hearings, I recognized that it had not yet 
been put on the public record whether these executives believed that 
nicotine was addictive.
  So, in 1994, at those hearings, I went down the row with each of the 
executives, one by one by one, each of them, and asked them whether 
nicotine was addictive. And each of them under oath at that time said 
that nicotine was not addictive.
  I like to think that moment contributed in some way to the important 
legislation we have before us, contributed to our positions for 
enacting strong legislation. But it seems to me that set of hearings 
and the documents that have come to light will only make a real 
difference over time if we now follow up on those early efforts and 
pass the strongest possible look-back legislation. That is why I 
offered a very tough set of additional penalties when companies don't 
meet their specific targets for reducing youth smoking under the 
Commerce Committee bill. That is why I am pleased to be able to join 
Senators Durbin, DeWine, Chafee, and others this afternoon.
  The bottom line, with respect to our amendment--many of the details 
have been addressed--but the bottom line is if you do not have 
aggressive look-back penalties, look-back penalties that really zero in 
on aggressively the companies in a specific way, you effectively 
penalize the companies that try to change their behavior twice. You 
penalize them once through the industry assessment and second through 
the loss of market while other companies continue to market to children 
and a future market share.
  This amendment represents a fairer approach. It does not allow the 
Congress, in effect, through loopholes in this look-back set of 
provisions, to place a company that does try to clean up its act, does 
try to change history, we make sure under our amendment that company 
wouldn't be placed at a competitive disadvantage when they said, now we 
are going to change and not seek out children.

[[Page S5306]]

  Let me also say that because the number of teen smokers has actually 
grown since the original settlement was announced last summer, the 
changes that we offer today will essentially hold the industry to a 
reduction level to which they have already agreed. So, in fact, this 
amendment is stronger than what came out of the Senate Commerce 
Committee on the 19-to-1 basis. But given what we have seen with, 
again, the number of teen smokers actually increasing, this, in effect, 
simply ensures that the industry is held to a reduction level to which 
they have already agreed.
  Mr. President, and colleagues, Senators Durbin and DeWine went into a 
number of the details with respect to how the look-back legislation 
works. I don't think all of that needs to be belabored at this time. 
But I would like to say that to me what this amendment is all about is 
reversing the course of history. History shows that in the past when we 
would write these laws, the tobacco companies would bring their 
entrepreneurial and advertising talents to the task then of getting 
around them. And the tobacco companies have more of that kind of 
advertising and entrepreneurial talent than anybody else around. They 
would always find a way to evade the law.
  Learning from past history with respect to the warning labels, with 
respect to electronic ads, with respect to the way in which the 
industry got around the Synar amendment, we are making it clear that we 
are going to have the tools to rein in the scoff-law companies, those 
that do not clean up their acts as they have pledged to do. We do so in 
a realistic way. We do so in a fashion that makes sure that companies 
that really have changed won't be put at a competitive disadvantage.
  I would say, finally, Mr. President, and colleagues, to those of you 
who have talked to me personally about those 1994 hearings, and what 
happened during the course of those 7 hours where the executives said 
that cigarettes were like Hostess Twinkies, cigarettes weren't 
addictive, and they never preyed on children, if you really want to 
reverse the course of history, if you really want to hold the companies 
accountable, if you really want to rein in the conduct that we saw 
demonstrated again in the Senate Commerce Committee when Brown & 
Williamson admitted that they are now using genetically altered 
nicotine, if you want to change that behavior, vote for this bipartisan 
amendment, because this is something that is going to change the course 
of history and make sure that these companies don't prey on our 
youngsters in the years ahead.

  Mr. President, I yield the floor.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I want to respond to my colleagues who 
are proposing this amendment. But, first, I would like to make some 
general comments about the bill to complement some of the comments I 
made earlier today, some of which were related to a statement from the 
Joint Tax Committee which I inserted into the Record, the chart that 
they put together on the net cost of the bill. They have now added a 
line to their estimate. I want to include that in the Record as well. 
This is the price per pack of cigarettes under this bill with all these 
new taxes and surcharges and look-backs.
  I will tell my colleagues that for 1998, the year that we are in 
right now, before this bill goes into effect, Joint Tax assumes the 
price of cigarettes is $1.98. They assume for 1999--I want our 
colleagues to hear this--Joint Tax says the cost of a pack of 
cigarettes goes up to $2.88, a 90-cent increase. The next year, $3.24; 
the next year, $3.41; the next year, $3.66; the next year, $3.83; by 
the year 2004, it is over $4, $4.06 per pack. The next year it is 
$4.12; the next year, $4.78; by the year 2007, 9 years from now, the 
price per pack, $4.48. The price today is less than $2.
  This isn't coming from Don Nickles. This came from Joint Tax. I 
haven't agreed with everything that Joint Tax has done in estimating 
this bill. But in this estimate, they have added some of the other 
aspects of the bill, including the look-back.
  I ask unanimous consent to have this printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

  RECONCILIATION OF GENERAL TOBACCO INDUSTRY PAYMENTS UNDER S. 1415, AS AMENDED, AND NET FEDERAL REVENUE EFFECT OF SUCH PAYMENTS ESTIMATED BY THE JOINT 
                                         COMMITTEE ON TAXATION ON MAY 19, 1998, BEFORE THE LOOK-BACK PROVISIONS                                         
                                                                [In billions of dollars]                                                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Fiscal year--                                                
                Provision                ---------------------------------------------------------------------------------------------------------------
                                            1998     1999     2000     2001     2002     2003     2004     2005     2006     2007   1998-2003  1998-2007
--------------------------------------------------------------------------------------------------------------------------------------------------------
1. Calendar Years:                                                                                                                                      
    1. Federal revenues from S. 1415                                                                                                                    
     general tobacco indusry payments as                                                                                                                
     adjusted for inflation (by calendar                                                                                                                
     years as in S. 1415)...............    $10.0    $14.4    $15.4    $17.7    $21.0    $23.6    $24.3    $25.0    $25.8    $26.6    $102.1     $203.8 
    2. Calendar year volume adjustment..  .......  .......  .......  .......     -3.6     -5.0     -5.4     -5.8     -6.2     -606      -8.7      -32.7 
    3. Calendar year payments...........     10.0     14.4     15.4     17.7     17.4     18.6     18.9     19.2     19.6     20.0      93.4      117.1 
II Fiscal Years:                                                                                                                                        
    1. Adjustments:                                                                                                                                     
        a. Convert Federal revenues from                                                                                                                
         S. 1415 general tobacco                                                                                                                        
         industry payments to Federal                                                                                                                   
         fiscal years...................  .......    -20.8     15.2     17.1     17.5     18.3     18.8     19.1     19.5     19.9      88.9      166.2 
        b. Change in the net revenues                                                                                                                   
         from Fedeal income and payroll                                                                                                                 
         taxes (because of the impact of                                                                                                                
         S. 1415 general tobacco                                                                                                                        
         industry payments on aggregate                                                                                                                 
         taxable income.................        -     -5.2     -3.8     -4.3     -4.4     -4.6     -4.7     -4.8     -4.9     -5.0     -22.3      -41.7 
        c. Change in net revenues from                                                                                                                  
         present-law Federal tobacco                                                                                                                    
         excise taxes (because of price                                                                                                                 
         increases from S.1415 general                                                                                                                  
         tobacco industry payments).....        -     -0.8     -1.2     -1.5     -1.9     -2.1     -2.2     -2.2     -2.2     -2.2      -7.5      -16.3 
        d. Net revenue effect of                                                                                                                        
         replacing State by State                                                                                                                       
         tobacco settlements with S.                                                                                                                    
         1415 payments..................        -      0.5      0.9      1.1      1.4      1.6      1.9      2.2      2.4      2.7       5.5       14.7 
    2. Net Federal revenues from S. 1415                                                                                                                
     general tobacco industry payments                                                                                                                  
     (JCT May 19, 1998 estimate)........        -     15.4     18.0     12.5     12.7     13.2     13.8     14.3     14.8     15.4      64.6      122.9 
========================================================================================================================================================
Nominal Calendar Year Price Per Pack                                                                                                                    
 With Youth Look Back...................    $1.98    $2.88    $3.24    $3.41    $3.66    $3.83    $4.06    $4.12    $4.78    $4.84  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Note: Details may not add to totals due to rounding.                                                                                                   


  Mr. NICKLES. Mr. President, I wish to address the amendment by my 
friends and colleagues from Illinois, Ohio, and Oregon dealing with 
increasing the look-back penalties.
  I made a statement earlier today that I think the look-back provision 
in this bill is one of the most unworkable provisions that anybody 
could dream up. I say ``unworkable.'' I don't think it will work. But I 
would like to maybe bring to my colleagues' attention how they propose 
that it should work.
  To make the look-back penalties work, they say we are going to 
empower the Secretary of the Treasury to do a poll. It says to conduct 
a survey. The survey is on a national basis. They are going to measure 
the type of tobacco product used in the last 30 days. They are going to 
conduct this survey with methodology that he determines is appropriate. 
They are going to identify the name brand that the youngsters use. They 
are going to be surveying kids. They are going to be surveying people 
from ages 11 to 17. And they are going to ask them a question: ``Did 
you smoke, and what brand did you use?'' Then they are going to put all 
this information together. I don't think they are going to ask this of 
every teenager in America. So it is going to be a random survey.
  Then they are going to compare the results of this survey to the 
mandates in the bill. If we don't meet the targets, or if the 
consumption of tobacco by teenagers is higher than what this bill says 
they should be, the tobacco companies are going to be assessed 
penalties. And the penalties are very large. The penalties in the look-
back provision under the negotiated settlement with the attorneys 
general went up to $2 billion. The penalties that came out of the 
Commerce Committee were $4 billion--$3.96 billion.
  And then the penalties which were rewritten by the administration and 
introduced on Monday came out $4.4

[[Page S5307]]

billion maximum, and now the amendment that we have in the Chamber says 
take that to $7.7 billion, and also increase the target rate to 67 
percent.
  Why do rates make a difference? Well, for every point you are out of 
compliance, you are assessed a penalty, and the penalty is large. The 
penalty for not making the target under the attorneys general 
negotiated agreement was $80 million per point missed.
  Well, the penalty under this bill is $240 million per point missed. 
It is three times as large as that proposed under the original 
settlement. That is just the industry-wide look-back. There is also a 
segment that applies to the product, and it has a penalty that is $200 
million per point missed.
  If this sounds confusing, it is because it is, and it is in this 
bill. My point is it is not going to work very well. You are telling 
the Secretary of Treasury to take a poll, and then we are going to deem 
that this poll is correct.
  Now, all of us have used surveys. We have all had polls. But this 
bill has language that I guess people want to become law which says the 
survey using the methodology required by this subsection is deemed 
conclusively to be proper, correct, and accurate for the purposes of 
this act.
  So we are saying, whatever the Secretary says, it is accurate. It is 
a done deal. And then they are going to and ask the kids, did you 
smoke? Now, they don't ask them, did you smoke 10 times? Did you smoke 
a pack a day? They can smoke one cigarette during that 30-day period 
and they are counted. And if this thing worked just right, a tobacco 
company would have to pay $1,000 because a youngster smoked one 
cigarette. I find that to be pretty high. And I might mention, this is 
really supposed to go after young people who are smoking illegally. 
They are smoking illegally. Let's put the penalty on the young person 
for breaking the law. Instead, we are going to do a random survey, a 
random survey that has to determine every single percentage for every 
single tobacco product. There is a de minimis level. We are not going 
to hit the smallest companies, I guess. I don't know how many different 
tobacco products there are. I don't know them very well. I don't smoke. 
I can only think of three or four cigarette brands. I don't smoke. And 
my guess is there is probably a lot of teenagers who don't either, but 
they can remember maybe the biggest name brands. I can remember 
Marlboro and Winston and maybe Virginia Slims. So if somebody said, do 
you smoke? I might be able to remember those name brands.
  Mr. FORD. Mr. President, could I help the Senator with the names of 
some packs of cigarettes?
  Mr. NICKLES. In a minute. That youngster taking the survey, if they 
mention a name brand, whether that was the brand they smoked or not, it 
comes out in the calculation of this data which is deemed accurate, 
proper, and correct. Then, that company can be subjected to enormous 
fines.
  In the proposal, in the amendment that we have pending, the fines 
that are brand specific go up to $5 billion. They are also indexed for 
inflation. That is a pretty big penalty.
  Then there is a $2.2 billion look-back that applies industry-wide. 
The Secretary of Treasury takes this survey and tries to determine what 
percentage of young people are smoking each brand in the country, and 
if each one of them by brand product missed this target, then they are 
assessed penalties that can go up to $7.7 billion and even higher in 
the outyears.
  This is not a good plan. This is not a workable plan. I tell my 
colleagues, if you want to do something to reduce teenage smoking, come 
up with something else. If you want to come up with higher taxes, just 
increase the tax. I have heard some people say you don't need $1.50 
because we have a big look-back and it's really $1.50 anyway. If you 
want to make it a $1.50, make it a $1.50, but call it a tax. Make it 
clear. Make it honest. This is a scheme. We are going to deem a poll to 
be accurate, and authorize the Secretary to assess enormous penalties, 
in the billions of dollars.

  That doesn't make sense. Now, if you really want to reduce teen 
smoking, do something else. Say to teenagers, if you are caught 
smoking, we are going to slap your wrist. The second time we are going 
to make you clean up a park, the third time maybe a financial penalty. 
We don't have that in this bill. And I don't want the Federal 
Government to do it because I don't want to federalize these actions, 
but instead we should encourage the States to enforce the law.
  It is against the law for teenagers below the age of 18 to smoke in 
any State. If you don't want anybody to smoke that is 18 years old, try 
and increase the age to 20 or 21. You have that right. But to come in--
--
  Mr. FORD. Mr. President, may I correct the Senator?
  Mr. NICKLES. Yes.
  Mr. FORD. I don't believe it is unlawful to smoke. It is unlawful to 
purchase.
  Mr. NICKLES. I appreciate the correction. Let me make the comment, 
Mr. President. In every State in the Nation it is unlawful to purchase 
cigarettes.
  Mr. FORD. Now.
  Mr. NICKLES. And if we want to decrease teenage consumption, maybe we 
should encourage the States to pass laws it is against the law to 
consume and put some responsibility back on the individual. Instead, we 
are allowing this massive growth of government.
  It doesn't make sense. It is not workable. It is not fair. And I 
don't think it will be effective. I also don't think parts of it will 
be constitutional, and I don't think we have willing participants by 
the tobacco companies. So it is just not a good deal. For people who 
want to raise taxes, raise taxes. Be up front, be honest. If you want 
to do something else, do something else to get teen consumption down. 
But this bill is not going to work. It is just not a workable plan. 
Frankly, if it wouldn't work at $4.4 billion, it won't work at $7.7 
billion.
  I urge my colleagues examine this look-back provision, see how 
complicated it is, see how confusing it is to give the Secretary this 
power, and to decide this is not the right way to legislate. It is not 
the right way to tax, and let's come up with something better. I hope 
something better would include some personal responsibility and 
accountability for people who are breaking the law. If a teenager 
purchases, it is against the law if they are under the age of 18. And 
if you really don't want them to smoke, maybe we should encourage the 
States to have laws against the consumption as well.
  I appreciate my----
  Mr. DOMENICI. Will the Senator yield?
  Mr. NICKLES. I will be happy to yield.
  Mr. DOMENICI. I have a question. Is the Senator saying that tobacco 
companies do everything they are supposed to do and yet when we take 
the survey, we are not as successful as we hoped to be and so we are 
going to impose a fee on them?
  Mr. NICKLES. The Senator is exactly right. You know, I am sure if 
this survey was taken during the Fourth of July break, it would have a 
little higher incidence of teen smoking than it would at some other 
time in the year. But if they smoke a cigarette, they are counted in 
the affirmative and the penalty would be $1,000.
  Mr. McCAIN. Will the Senator yield for one more question?
  Mr. NICKLES. I will be happy to yield.
  Mr. McCAIN. Is the Senator aware that as part of the original 
agreement between the industry and the attorneys general, the industry 
itself was the one that agreed to this? All they are doing here is 
increasing it. Is the Senator aware of that? And is the Senator aware 
that this puts him in a position which is far different even from the 
industry by attacking a proposal that was agreed to by the tobacco 
industry itself, who would----
  Mr. NICKLES. I will be happy to answer the question.
  Mr. McCAIN. Have experienced these penalties, who would have been 
subject to them and obviously must have had some confidence in the 
survey the Senator is deriding; otherwise they never would have entered 
into the agreement because the penalties would have accrued to them. Is 
the Senator aware of that?
  Mr. NICKLES. I will be happy to tell my colleague from Arizona that 
he makes a good point but he is absolutely wrong. What the industry 
agreed to, according to the settlement, is that they would pay $80 
million per point of noncompliance, up to a total of $2 billion. What 
we have before us is two

[[Page S5308]]

surveys, penalties up to $4.4 billion, and an amendment to go to $7.7 
billion.
  Does my colleague from Arizona realize there is a difference between 
$7.7 billion and $2 billion? and that $5.5 of this new penalty is 
product-specific? and the industry did not agree to a product-specific 
penalty? These provisions were not in the industry settlement, as I am 
reading it right now.
  Mr. GRAMM. Will the Senator yield?
  Mr. McCAIN. Did you ask me a question?
  Mr. NICKLES. No.
  Mr. McCAIN. You didn't.
  Mr. GRAMM. Will the Senator not agree with me that whether the 
tobacco companies agreed to it or not, that article I of the 
Constitution gives the Congress the power to tax? and that we ought not 
to be delegating that power to a poll?
  Mr. NICKLES. I agree totally. And I also tell my colleague and friend 
from Texas, I wasn't part of the tobacco companies' deal. I am part of 
the Finance Committee. And I think if we are going to legislate on 
taxes, we ought to do it right. This is not the right way to tax.
  I will also tell my colleague from Texas, I have heard people say the 
tobacco industry is confident they can challenge these look-back 
assessments and win in court and have it thrown out as 
unconstitutional. Regardless of the constitutional argument, I say this 
is a crummy way to tax. I don't want to give the Secretary of the 
Treasury the authority to conduct a poll and then determine that the 
poll is accurate, proper, correct for purposes of this act, and be able 
to make assessments. Under the agreement the tobacco companies agreed 
to, it was up to $2 billion. Under the bill that came out of the 
Commerce Committee, it was $3.96 billion. Under the bill the 
administration wrote and introduced on Monday, it came up to $4.4 
billion. And on the amendment we have pending now, it is $7.7 billion, 
also indexed for inflation.
  The industry did not sign off on any $7.7 billion look-back.
  Mr. GRAMM. Will the Senator yield further?
  Mr. NICKLES. Yes.
  Mr. GRAMM. Just two questions. No. 1, you are not here to represent 
the industry, are you?
  Mr. NICKLES. No, sir. I could care less----
  Mr. GRAMM. Second, when you put your hand on the Bible and you swore 
to uphold the Constitution of the United States against all enemies, 
foreign and domestic, you were not saying, well, I'll uphold the 
Constitution and article I, the power of Congress to tax, only in those 
cases where the tobacco companies didn't agree to let a pollster raise 
taxes, did you?
  Mr. NICKLES. The Senator is absolutely right.
  Mr. McCAIN. A ``pollster"?
  Mr. NICKLES. I got on the Finance Committee because I did not like 
the way our tax system was structured. I want to work with our 
colleagues from Mississippi and Texas, to take the Tax Code and rewrite 
it and come up with something that is fair, flat, and simple. This is 
tobacco bill just the opposite. This is a mess. We could clean this 
bill up a lot if we went through the conventional process, if we had 
the Finance Committee mark up this bill on the tax side and call a tax 
a tax.
  Instead, we have this unbelievably complicated system, and the look-
back is maybe the most complicated. Delegating to the Secretary of the 
Treasury to take a poll, and then, if they don't meet the targets that 
we set, we are going to assess them billions of dollars, up to $7 
billion or $8 billion, I find to be ludicrous. It doesn't make sense. 
It is not a good way to legislate.
  That is the reason that the Commerce Committee doesn't have taxation 
power, in the Senate. In the Senate, the Finance Committee has the 
power to raise taxes.

  Mr. McCAIN. Will the Senator yield for a question?
  Mr. NICKLES. And not the attorneys general and not the Commerce 
Committee.
  I will be happy to yield.
  Mr. McCAIN. I thought the Finance Committee did take up this issue 
and ended up raising taxes, and doing all kinds of other havoc to it in 
24 hours. I wonder what they would have done in 72.
  Mr. NICKLES. I will tell my friend and colleague, the Finance 
Committee did consider this bill for 24 hours. I didn't support their 
$1.50 tax increase, but I think their $1.50 tax increase is a lot more 
honest, is a lot more plain, a lot more doable. We have excise taxes on 
tobacco today of 24 cents. Congress last year, when we passed the kid-
care bill, increased that another 15 cents. So, tobacco taxes are going 
to 39 cents already in present law.
  People say that the Commerce Committee bill, the administration bill, 
increases that another dollar and a dime. That takes the tax to $1.49. 
But they do not call it a tax, they call it a fee. So we are telling 
everybody who is in this industry--and we have wholesalers and 
distributors and so on--that the tax is $1.49 and it is increasing. But 
that bill, the bill that we have before us, doesn't saying anything 
about a dollar and a dime. It says put all these billions of dollars 
into a fund. That is not very workable. It is not very legitimate. I 
think we should have the committees of jurisdiction take this bill.
  The Finance Committee did take the bill, but unfortunately the 
Commerce Committee and the administration looked at our changes, and 
they just ignored them. They dropped the changes that the Finance 
Committee made.
  I resent having the Commerce Committee write the tax portions of this 
bill as well as I resent the Commerce Committee writing the ag portions 
of the bill. And I think those are two of the more contentious and two 
of the more difficult things that we have to deal with. The committee 
that marked it up didn't have, in my opinion, the taxation expertise, 
they didn't follow the same taxation procedures that we have on every 
other excise tax in history. And, frankly, I think the Agriculture 
Committee should have written that instead of the Commerce Committee as 
well.
  The PRESIDING OFFICER. The majority leader.
  Mr. LOTT. Is the Senator--has the Senator from Oklahoma completed his 
remarks? Were you through with your remarks?
  Mr. NICKLES. Yes.

                          ____________________