[Congressional Record Volume 144, Number 68 (Monday, June 1, 1998)]
[Senate]
[Pages S5494-S5511]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of S. 1415, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 1415) to reform and restructure the processes by 
     which tobacco products are manufactured, marketed, and 
     distributed, to prevent the use of tobacco products by 
     minors, to redress the adverse health effects of tobacco use, 
     and for other purposes.

  The Senate resumed consideration of the bill.
  Pending:
       Gregg/Leahy amendment No. 2433 (to amendment No. 2420), to 
     modify the provisions relating to civil liability for tobacco 
     manufacturers.
       Gregg/Leahy amendment No. 2434 (to amendment No. 2420), in 
     the nature of a substitute.
       Gramm motion to recommit the bill to the Committee on 
     Finance with instructions to report back forthwith, with 
     amendment No. 2436, to modify the provisions relating to 
     civil liability for tobacco manufacturers, and to eliminate 
     the marriage penalty reflected in the standard deduction and 
     to ensure the earned income credit takes into account the 
     elimination of such penalty.
       Daschle (for Durbin) amendment No. 2437 (to amendment No. 
     2436), relating to reductions in underaged tobacco usage.
       Daschle (for Durbin) amendment No. 2438 (to amendment No. 
     2437), of a perfecting nature.
  Mr. GRAMS addressed the Chair.
  The PRESIDING OFFICER (Mr. Hagel). The Senator from Minnesota.
  Mr. GRAMS. Mr. President, I rise this afternoon to express some of my 
concerns dealing with the tobacco tax increase legislation that we are 
close to considering, including how we deal with this country's tobacco 
farmers.
  I believe we should do what we can to assist tobacco farmers and 
their communities' transition for a supposed decrease in demand for 
tobacco products that will result from this bill's passage.
  However, I would like to share this cartoon by Mr. Ed Fischer which 
illustrates a very important point: Do we value tobacco farming and 
tobacco-dependent communities more than other producers and their 
communities? ``Guess which farmers in trouble will get a huge 
government bailout?'' I have serious doubts this legislation will 
actually reduce tobacco growth and consumption in this country as much 
as proponents claim. As such, I question whether the type of support we 
are willing to rush in and throw at tobacco producers and tobacco-
dependent communities is warranted.

  My understanding is, under both proposals, there is no requirement 
that tobacco farmers actually stop producing tobacco; they will just 
have to assume all the risk, like other farmers under the freedom to 
farm bill which was signed into law in April of 1996. The freedom to 
farm bill contained transition payments, but those payments pale in 
comparison to what we are talking about here. All crops combined under 
the transition to Freedom to Farm--corn, wheat, soybeans, et cetera--
amounted to less than $1,500 per acre over 7 years. This bill would 
amount to about $18,000 per acre over 3 years. Yes, it is a phase-out 
of the tobacco program, but let us be fair to the farmers, but also let 
us be fair to the taxpayers.
  Mr. President, I am very sympathetic to the plight of tobacco 
farmers, their families and their communities, who suffer as a direct 
result of Federal policy. The tobacco farmers are certainly not alone 
in facing unfavorable--even crushing--circumstances at the hands of the 
Congress.
  The point I now propose is that we cannot hope to maintain any 
semblance of consistency if we favor one agriculture product over all 
others. Let us not get caught up in the hype of this tobacco 
legislation today to forge a plan that will cost taxpayers more than 
necessary. Let us be fair, but let us be reasonable. How can we explain 
why we favor one product over another?
  My colleagues and I from the Upper Midwest have been fighting a 
constant battle against Federal dairy policy for years.
  And again just look at this cartoon: ``Guess which farmers in trouble 
will get a huge government bailout * * *''
  The dairy producers of the Upper Midwest have long been disadvantaged 
by having to bear the burden of unjustifiable dairy policy which does 
not reflect the realities of modern dairy economics. This current 
Federal policy--specifically, Class I milk price differentials--is 
widely recognized as antiquated, unjustifiable, and patently unfair.
  In fact, USDA's current Federal marketing order system was deemed 
``arbitrary and capricious'' by a Federal district court judge late 
last year. The case brought against USDA has been in the courts for 7 
years, and the judge's ruling was no less than the fourth such 
proceeding in the history of the case.
  The courts have ruled four separate times the Federal dairy program 
is arbitrary and capricious. Bottom line, it is unfair. And what has 
been the response of the USDA? Not to accept the decision but to 
appeal. The Government should not be in the business of picking winners 
and losers in agriculture, but it is doing so in this case.
  I hate to be arguing the dairy issue during the debate on a tobacco 
bill today, but I believe it supports my argument that: if we are to go 
about bailouts in a reasonable manner, we should address the Upper 
Midwest dairy farmers as well. Would anyone in this Senate vote to pay 
our dairy farmers $18,000 an acre? I doubt it.
  Dairy farmers have endured inequities for decades. We in Minnesota in 
fact are losing an average of three dairy farms every single day. The 
irony is that milk is a health product. It is a product we encourage 
our children to consume. How can we possibly suggest that Minnesota's 
dairy industry does not deserve equal protection from this Congress?
  Mr. President, I would also like to express my opposition to S. 1415 
in its entirety.
  I have listened to a number of my colleagues come to the floor and 
claim many things and cite many statistics. One of those statistics was 
that 75 percent of regular smokers could not quit if they wanted to. 
While I will not take issue with this figure, I do have a problem with 
the fact that proponents of this bill are so willing to take advantage 
of these smokers' inability to quit.

[[Page S5495]]

  Let us forget about the figures and rhetoric for a moment and ask the 
more important question: Why are we persecuting these people because of 
their addiction?
  If someone is addicted to alcohol, are we going to increase taxes on 
them? If someone is addicted to drugs, are we going to increase taxes 
on them? Of course not, because we give them all sorts of Government 
benefits amounting to thousands of dollars a year.
  So if you are addicted to one type of drug, the Government is going 
to give you thousands of dollars a year in assistance, but if you are 
addicted to another type of drug--in this case nicotine--we are going 
to tax you more money every year.
  Congress wants to tax you, in fact, at a rate of about $1,400 a year. 
And it simply does not make sense. It does not make sense for us to be 
discussing this legislation as if it were a tobacco settlement.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, what is the parliamentary status at this 
point with respect to the bill?
  The PRESIDING OFFICER. Currently, we are on the consideration of S. 
1415, and there is a motion to recommit pending with amendments pending 
thereto.
  Mr. KERRY. That is the pending business?
  The PRESIDING OFFICER. As well as amendments pending to the 
underlying measure.
  Mr. KERRY. Mr. President, at this point in time I believe I have the 
floor; is that correct?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. KERRY. Mr. President, I ask my colleague from Minnesota how long 
it would be his intention to speak, if he did wish to continue to 
speak?
  Mr. GRAMS. It would be for only about another 5 to 7 minutes--less 
than 10 minutes.
  Mr. KERRY. Mr. President, I ask unanimous consent that the Senator 
from Minnesota be recognized to complete his comments without my losing 
the right to the floor at that point.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. I thank the Chair.
  Mr. GRAMS. I thank the Senator for allowing me to finish this 
statement.
  Just to finish, Mr. President, we are talking about the tobacco bill 
and addiction. And I just say, let us forget about the figures and 
rhetoric for a moment that is surrounding this bill and ask the more 
important question: Why are we persecuting these people because of an 
addiction?

  Now again, if someone is addicted to alcohol, are we going to 
increase taxes on them? If someone is addicted to drugs, are we going 
to go out and increases taxes on them? Of course not, because we give 
them all sorts of Government benefits amounting to thousands of dollars 
a year if they are addicted to alcohol or other illegal drugs. But if 
you are addicted to nicotine, Congress wants to tax you as much as 
$1,400 a year. And I believe it simply does not make sense.
  It also does not make sense for us to be discussing this legislation 
as if it were a tobacco settlement. This is not a tobacco settlement. 
It is a tax increase to pay for increased Government spending programs. 
Supporters of this tax increase assert that if you vote against this 
bill, you are for big tobacco--if you vote against this bill, you are 
for big tobacco--if you vote for it, you are compassionate and you are 
taking a stand for the health of our children. But this isn't really 
about our children, is it? It is about lining Washington's coffers with 
more taxpayer dollars.
  Let us talk about the statistic that 3,000 kids start smoking every 
day. That statistic has been thrown around the floor of the Senate and 
the White House with complete disregard for the facts. In his 
editorial, entitled ``Child's Ploy,'' Jacob Sullum points out--and I 
quote--

       This estimate comes from an article published in the 
     Journal of the American Medical Association in January of 
     1989. Based on data from a National Health Interview Survey, 
     the authors estimated that one million ``young persons'' 
     became regular smokers each year during the 1980s [again, 
     that one million ``young persons'' became regular smokers 
     each year during the 1980s], which amounts to about three 
     thousand a day.

  That figure refers to 20-year-olds. And since the study did not 
include data for anyone younger than that, somehow these now ``young 
persons'' have metamorphosed into kids. At least one commentator on 
CNBC referred to them as ``babies.''
  It started out as people 20 years old, ``young persons,'' and somehow 
it got transformed into ``kids.'' And even one commentator referred to 
them as ``babies.'' I think this demonstrates how far the crusaders are 
willing to go to punish and tax adult smokers in order to fund 
Washington's wish list for more Government spending.
  There was another point Mr. Sullum made which I think deserves to be 
voiced on the floor. He wrote:

       While it may be true that the young are especially 
     attracted to smoking, it is probably also true that people 
     who are especially attracted to smoking tend to start young.

  Mr. President, I agree, we should be doing more to reduce and 
discourage our children from smoking. I do not believe the legislation 
before us is truly about reducing teen smoking or recovering the 
Government's cost of providing health care to smokers. It is about 
money.
  When I ran for the Senate 4 years ago, I made a very simple promise 
during my campaign. I said I would never vote to increase taxes. The 
bill before us does just that--increases taxes on those who use tobacco 
products, who largely are the ones who can least afford a $1,400-a-year 
tax increase. The lion's share of the hundreds of billions of dollars 
collected under this bill will come from families and individuals who 
earn $30,000 a year or less. That is simply wrong.

  During debate on this bill, there have been some who have questioned 
the sincerity of our concern for the well-being of America's working 
people. They go on and on to say, if we are so concerned about their 
well-being, we should vote for an increase in the minimum wage later 
this year. I guess that will be great for the teenagers who, by the 
way, hold most of the minimum wage jobs in America, because they then 
will be able to afford the cigarettes on which we are just about to 
hike the taxes.
  It has been said by proponents that everyone and anyone who votes 
against this legislation has been bought off by big tobacco and we 
don't care about our children. Of course, nothing could be further from 
the truth. Frankly, I resent that type of accusation.
  During the Budget Committee's consideration of the budget resolution, 
I voted for what I thought was the most appropriate use of any tobacco 
settlement funds--dedicate them to Medicare. After all, isn't that 
where most of the smoking-related illness costs are?
  There was another important provision from the budget resolution as 
well. We increased funding for youth smoking cessation programs. The 
budget assumed $825 million would be spent on trying to prevent teens 
from smoking and helping those who are trying to quit. The States are 
increasing their efforts in this regard as well. This is a positive 
approach and addresses the underlying problems that we face.
  It should be noted that our budget this year more than doubled the 
amount of money spent on preventing teen smoking than President Clinton 
had even requested in his budget, and he assumed at that time that 
there would be a tobacco tax. So we included twice as much in our 
budget, not assuming that.
  This legislation before the Senate today is not about protecting kids 
from tobacco. It is not about punishing big tobacco. It is not about 
health care either. This is just one more way for Washington to take 
and spend more of the taxpayers' money.
  Mr. President, if and when this legislation is fully phased in, 
Federal and State Governments will be profiting more by the sale of 
tobacco products than the manufacturer. Again, Mr. President, if this 
bill is phased in, State and Federal Governments will be profiting more 
by the sale of tobacco products than the manufacturer. Something is 
horribly wrong when tax rates reach that proportion.
  Mr. President, in 1997, a man in Kentucky pleaded guilty to one of 
the largest cigarette smuggling cases in our Nation's history. Over the 
period of just 1 year, this individual made nearly $30 million--$30 
million transporting contraband cigarettes.

[[Page S5496]]

  I learned of this story from the National Association of Police 
Organizations, which sent me a letter also opposing S. 1415, again, 
because of the threat of increased black market activity, which is 
clearly already occurring. Those of us with border States know how 
prevalent and easy smuggling already is. Will we just shut down our 
borders, or will we search every person crossing them?
  Other law enforcement organizations have weighed in, sharing 
basically the same concerns about a potential black market: The 
Fraternal Order of Police, the Federal Law Enforcement Officers 
Association, the International Union of the Police Associations, and 
the International Association of Chiefs of Police. All of these 
organizations, whose primary duty is to enforce the law of our Nation, 
recognize this legislation will be the catalyst for a huge black market 
in cigarettes. As a result, teen smoking will probably increase, not 
decrease.

  Supporters of this legislation claim we need to increase taxes to get 
a shock value from it. I want to remind my colleagues of what four very 
bright teenagers had to say at a House Commerce Committee hearing on 
youth smoking when asked if price were really a factor in whether teens 
buy cigarettes. One of the teens said if money were a huge issue, then 
kids wouldn't be buying marijuana as much.
  I believe this teen has it right and also brings up another important 
issue. When asked what they believed to be the most pressing problem 
for our Nation's high schools, all agreed that alcohol and marijuana 
were much more serious. If the same commitment this administration and 
this Congress have shown to fighting tobacco had been applied to the 
drug problem, I think we would be hearing a very different answer. 
Under this legislation, we will fund massive new Government programs 
for tobacco but we will remain silent about the drug problem in our 
Nation. I question whether this is the wisest course for us to take.
  In closing, I cannot in good conscience support the Washington money 
grab, masquerading here as the National Tobacco Policy and Youth 
Smoking Act. If we were being honest with the American people, the bill 
would be entitled ``the National Tobacco Tax and Spend Act.'' It is not 
about public health or protecting our kids or cutting big tobacco down 
to size; it is all about taxes, taxes, taxes. This Senator is not going 
to be bullied into raising taxes on America's hard-working men and 
women.
  I yield the floor.
  Mr. KERRY. Mr. President, I ask unanimous consent, for the duration 
of the afternoon until the Senate either goes out of legislative 
session or adjourns, that we would be confined to debate only and to no 
parliamentary procedures with respect to the tobacco bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Mr. President, I do want to make a few comments. I know my 
colleague from Texas wants to speak, and in keeping with the unanimous 
consent agreement that we have, I will not talk as long as I had 
intended to. I do want to try to make a few comments, if I may.
  First of all, I will make a couple of comments about where we find 
ourselves now as we return to the tobacco legislation. Just prior to 
the Memorial Day recess, the Senate had dealt with two of the most 
difficult issues with respect to tobacco of perhaps the four or five 
issues that people assume are the difficult hurdles we need to get 
over. Those two, obviously, were: The question of price--whether it 
would be a price of $1.10 or $1.50; and the second issue of the 
liability, as it was called, the question of the cap or amount of 
payments that would be made in any 1 year.
  The third of those difficult issues is now pending, the so-called 
look-back provisions, in the amendment by Senator Durbin and Senator 
DeWine, which seek to strengthen the ability to get individual 
companies to be able to take part in, to have an incentive to be part 
of, the process of trying to reduce teenage smoking.
  Obviously, the LEAF program hangs out there as a very critical issue. 
There are a couple of others, depending on what shape the debate takes 
over the course of the next days. Then there will be, no doubt, a few 
individual amendments here and there, but I don't think they present 
the Senate with the kind of larger issues that we need to face, that 
have been presented in the context of those amendments I have just 
talked about. It is possible, with a considerable amount of effort over 
the course of the week, to dispose of the most difficult issues 
regarding this legislation, if there is a good-faith effort to try to 
move forward.

  I will make a couple of comments about a few of the points that have 
been made both as we closed debate a week ago and also in the early 
hours of the debate, the comments that have been made today.
  First of all, with respect to smuggling, the smuggling that has taken 
place so far with respect to American cigarettes has been a one-way 
smuggling out of the United States. Our brands, which are popular 
internationally and known to be among the best cigarettes, are those 
that have been smuggled into Europe, where the prices are higher than 
those that were smuggled temporarily, for a brief period of time, 
across the border into Canada. We currently don't foresee that kind of 
problem, according to most people within the law enforcement community 
who have been asked about it in a series of hearings where the Treasury 
Department, Customs, and others were also inquired of with respect to 
the difficulties regarding smuggling.
  I underscore the testimony of Deputy Treasury Secretary Larry 
Summers, before the Senate Judiciary Committee on April 30, where he 
said: ``The Treasury Department believes that the creation of a sound 
regulatory system, one that will close the distribution chain for 
tobacco products, will ensure that the diversion and smuggling of 
tobacco can be effectively controlled and will not defeat the purposes 
of comprehensive tobacco legislation.'' And most people would agree 
with that because most people who smoke want to smoke the brands they 
are accustomed to and that they like and are known to be the best. So 
depending on whether you are smoking Newport, or Marlboro, or whatever 
among the most popular brands, those brands are going to be 
manufactured here, not elsewhere. They are going to be marked in a way 
and designated in such a way as to be exceedingly difficult to 
replicate or bring in. The bulk makes them difficult to replicate and 
bring in. It is far more profitable to continue to smoke even, as 
people do, heroin, cocaine and other illegal substances.

  Most people in the law enforcement community who are tracking these 
kinds of things do not believe that raising our cost of a pack of 
cigarettes to the level of almost an equivalency to Europe will, in 
fact, increase smuggling. It will reduce smuggling because there will 
be less incentive for our cigarettes to be smuggled to these other 
countries since our prices will be commensurate with theirs.
  There is another reason why that smuggling would be difficult. This 
is not a fee which is paid, or an assessment which is paid exclusively 
at the retail establishment so that you have a huge differential 
between the price of a carton of cigarettes at the manufacturing 
location, and then it rises very significantly at the retailer so that 
there is a huge grab in between. The assessment is a manufacturing 
assessment; it is a fee that is placed by the manufacturer. It is not 
unlike a value-added concept so that it is passed on, and as a 
consequence of that, there is no differential that creates an incentive 
between manufacturer and retailer. The result of that is you have a 
tracking system in place where the incentive is obviously for the 
manufacturer to recoup what the manufacturer already has paid out-of-
pocket, and that recoupment comes by having a very strict system in 
place for the tracking.
  So as the Treasury Department said, you need to have all entities in 
the distribution chain for tobacco products--the manufacturers, the 
wholesalers, the exporters, the importers, the distributors and the 
retailers, holding a license or permit. That is precisely what will be 
existing. The licensing will be done at the State level. Licensing can 
be revoked or suspended for any kind of specific violations, and those 
conducting business without it obviously would be subject to the same 
kind of penalties.
  Secondly, there would be a marking, branding and identification of 
these

[[Page S5497]]

packages for domestic distribution and for export so that it is very 
difficult to divert. And the sales structure from the manufacturer to a 
specifically identifiable person for whom they are accountable also 
makes it exceedingly difficult for this kind of diversion to take 
place.
  But I think the more important thing is to focus on the most critical 
issue here. We have heard a lot of talk about the cost of this bill. A 
number of opponents of the bill--people who seem to be out here 
prepared to allow the tobacco companies to continue to do what they are 
doing because they offer no alternative for what they are doing--are 
arguing that there is a regressive cost here to Americans, that this is 
somehow too costly. And suddenly, the same people who have proposed tax 
cut after tax cut after tax cut for the wealthiest Americans, at the 
expense, most often, of those who pay the most regressive taxes, are 
becoming the champions of the poor. I wonder if these crocodile tears 
that we are hearing for those people who smoke in the country--which I 
remind everybody is a voluntary act; no one is taxed who doesn't decide 
to go smoke. Nobody has to pay something who isn't actually smoking. 
Given the number of addicts that we have in the country and the amount 
that those addictions cost every American, the real regression here is 
the regression that falls onto the average American who is paying the 
health care costs of people who are addicted, the health care costs of 
people who get diseases for which they are either not covered or can't 
pay.

  There are countless, countless costs associated with smoking. None of 
my colleagues on the other side want to come and talk about that. They 
don't want to talk about the billions of dollars that Americans are 
assessed because of the cost of a substance being sold that is 
addictive and is a killer substance. That is the bottom line here. 
Everybody says, oh, yes, we have to stop our teenagers from smoking. 
Yes, we have to have preventive programs. But then there is no talk 
about how you put them in place; there is no talk about what preventive 
programs are going to be put in place, or how are you going to fund 
them. No discussion whatsoever. It is just a generic, flat opposition 
to this particular piece of legislation which seeks to do something 
real about the problems of smoking.
  The fact is that 98.5 million American households, families of 
smokers, and most importantly, nonsmokers, pay about $1,320 a year to 
cover the damage that smoking does to our society. Every single working 
family in America, including those who live on the minimum wage, and 
those struggling to send their kids to college, or to pay for parochial 
school, or just to make ends meet, are paying for America's deadly 
smoking habit today.
  The reality is that the overall smoking cost to our society is about 
$130 billion a year, and that cost measures the medical costs of 
smoking--the cost of smoking during pregnancy, the cost of lost output 
from early death, and even the lost work days, lost productivity that 
we get as a consequence of this. This taxes every single American, and 
the question is whether we are going to reduce taxes on Americans by 
finally stepping up to tackle the problem of smoking.
  A lot of people argue this is about family economics. They come to 
the floor and suggest that family economics dictate that in fairness we 
not somehow tax a person at the minimum wage who is going out and 
smoking. Well, they are right; it is about family economics. The 
problem is they are not on the side of families, because those of us 
who are fighting to pass this legislation are looking for a way to 
provide some kind of relief to working families by passing this 
legislation.
  The fact is that if you are not willing to put in place a tough 
regimen for reducing teenage smoking, you are in fact augmenting the 
burden that American families are already paying. The fact is there is 
a $60 billion-a-year cost in medical costs alone related to smoking. 
Over 40 percent of those costs--fully $25 billion--are covered by 
Medicare and Medicaid. Medicare and Medicaid are paying for $25 billion 
a year of the cost. That is a tax. That is a tax on Americans of $25 
billion a year that is paid by all Americans, even those who don't 
choose to smoke, even those who hate smoking, even those who make every 
effort possible to avoid secondary smoke in public places. They wind up 
paying the tax on the medical costs for those who choose to smoke, or 
those who are addicted and have little choice as a consequence of a 
habit they picked up as teenagers.
  The important thing to remember here is this: For all those adults 
who are smoking today, 86 percent of them got hooked on smoking when 
they were teenagers. All of the analyses show if you can make it 
through your teenage years without getting hooked on the habit, without 
smoking, the likelihood of your having the development of character and 
a sort of health consciousness that would then keep you from smoking is 
significant. Most of these people who start smoking in their teenage 
years start at the ages of 13 and 14 years old. In fact, a very 
significant proportion are hooked by the time they are 14.
  Now, we know to a certainty that price affects the availability of 
any commodity to anyone. Clearly, for young kids the amount of cash 
which they have in their pockets is going to be spent according to the 
cost and what particular benefit they deem they are getting for that 
cost. If you raise the price, it is clear there will be less 
availability.
  But that is not all we are doing, Mr. President. This legislation 
doesn't just raise the price and say, OK, we have done the job, let's 
go home. This legislation sets up a whole set of efforts to reach out 
to young people, to increase the awareness regarding addiction, to 
increase prevention programs, to increase our research efforts within 
the NIH and the medical community in order to understand addiction 
better. It increases our capacity to learn whether we can reduce 
addiction among adults in significant ways.

  There are a host of other benefits that come with this legislation 
that are critical. But equally as critical is what the Senator from 
Illinois is trying to do, Senator Durbin, in the so-called look-back 
amendment. It doesn't do you a lot of good to simply pass a piece of 
legislation that somehow leaves the tobacco companies out there in a 
way that they are not going to be part of the solution of trying to 
reduce the access of kids to smoking. If the tobacco companies have a 
strong incentive to be part of that process, then we have a much better 
chance of reducing smoking and meeting our goals.
  So the look-back provisions are a way of giving the tobacco companies 
a grace period in order to be able to make the adjustments in their 
advertising and their distribution process in order to help in the 
education of young people and, through that process, significantly 
reduce the desire of young people to smoke, because it somehow makes 
them look older and makes them look cool as a response to peer pressure 
and a whole lot of other reasons that young people do choose to smoke.
  I might add that we have come to understand very well what those 
reasons are. Over the course of the last years, while the struggle has 
been going on between the tobacco industry and people who want kids to 
be able to lead healthier lives, during the course of that time there 
have been many, many, many analyses, many surveys, many focus groups, 
many discussions, many polls, all of which have indicated the degree to 
which young people smoke as a consequence of either peer pressure or a 
desire to kind of fit the role model that they may have seen in a 
movie, or somehow to be older, to look older, at a time in life when 
some of those choices are important.
  We were at a tobacco forum in Boston, MA, about a month or two ago 
with Vice President Gore. We had testimony there from an adult who 
today has great difficulty breathing, who today is confined to a 
wheelchair, who testified personally to how the lung problems she has 
today and the diseases that she is now suffering from came directly 
from smoking, which came directly from her desire to look older. As she 
said to those kids who were assembled at this forum, ``Boy, I sure 
succeeded in my goal. I look a lot older now.''
  Those kinds of testimonials are the most important kinds of ways in 
which we can, hopefully, reach our young before they fall prey to this 
addiction.
  What we need to remember as we think about the ``cost'' of this bill 
is

[[Page S5498]]

that the cost of this bill is minimal compared to the cost to society 
of people whose lives are literally ruined as a consequence of the 
cancers, or liver disease, or heart disease, emphysema, that some 
members of their family suffer. There are kids in this country whose 
parents are unable to send them to college, or to buy them books, 
because of their $13,700-a-year habit to buy cigarettes. That is what 
you are talking about.
  So if you want to talk about the real costs to America, the real 
costs to America are not contained in the first ever comprehensive 
effort to try to do something about our narcotic killer substance that 
is being sold across the counter to anyone who wants to buy it. The 
real costs to our society are costs as a consequence of that happening 
without the Senate of the United States or the Congress being willing 
to take action to respond to it. Again and again this week, Mr. 
President, I hope we are going to be reminded about those costs to the 
United States.

  We have people who have been addicted to cigarettes in this country 
since they were kids. And, literally, there are cases where I have 
heard people say that they had to tell their kids that they couldn't do 
X, Y, or Z for their children because of their addiction. The cost of 
smoking in that regard is enormous.
  Consider the cost of smoking while pregnant. The truth is that a 
pregnant woman who smokes daily and suffers complications will spend 
$8,000 more than a nonsmoker in trying to deliver a healthy baby. That 
is a cost you do not hear our colleagues on the other side of the aisle 
talking about. That is a cost that the tobacco companies don't offer up 
as one they ought to be responsible for. That is a cost to society and 
a long-term cost to the future of that child. Smoking while pregnant 
doubles the risk of having a low-birth-weight baby. And that, as we all 
know, significantly complicates the postnatal period, raising the costs 
by thousands upon thousands of dollars in hospitals.
  If that doesn't communicate how serious the problem is, look at the 
impact. Forty-eight thousand low-birth-rate births are caused by 
smoking each year--48,000 children who may suffer medical problems 
their whole lives because of smoking that took place during pregnancy. 
These are 48,000 kids whose lives will be affected for the rest of 
their lives. I am not sure how you measure that financially.
  So as our colleagues come to the floor lamenting the fact that we are 
asking that people who buy these as a matter of course, on their own 
decision, on a voluntary basis, would have to pay a little more for 
their substance that costs all of us a lot more, that is not too much 
to ask. It is certainly, when you balance it more appropriately, not to 
protect the tobacco companies; it is to protect the rest of America 
against those costs. That is the choice that I think most Americans see 
exist in this legislation.
  The reality that has been lost in some of the debate about the costs 
of this legislation is the reason that the Senate is now presented with 
this vital legislation. It is my hope that over the course of the next 
days we will be able to move forward on it.
  A quick word about the look-back provision, and then I will yield to 
my colleague.
  The look-back provision is a provision that seeks to try to create a 
sensible balance in how you invite the cigarette companies to really 
act more responsibly. Unfortunately, there is a long, long track record 
of the cigarette companies acting irresponsibly. That is a smoking 
record in the final analysis. Everybody remembers the times that 
cigarette executives came up here and raised their hands and swore to 
tell the truth and nothing but the truth. The truth is, they did not 
tell the truth, and now all of America knows that.
  Now, as a result of some courageous attorneys general around the 
United States taking suit against the cigarette companies, we have 
received documents that show the degree of the deception, the degree to 
which there was literally a predatory attack on the young people of our 
country. That is the choice the U.S. Senate faces here--whether we are 
going to just talk about protecting our kids from that kind of 
predatory attack, or whether we are going to actually do something 
about it. It is a choice that will be very clear to the American people 
who are going to watch what the Senate of the United States does here.

  But the question is, How do we get the cigarette companies to take 
actions that do not try to subvert what we do here? How do we guarantee 
or at least provide the best structure that we can to invite them to 
become part of a solution? The way to do that, Mr. President, in my 
judgment, is to strengthen the look-back provision so that there will 
be a stronger incentive on the individual companies to participate. 
Currently, there is a $4 billion cap industry-wide that suggests that a 
company that decided, ``Well, we are going to just ride the wave of the 
industry, we will not take part that much, and if we don't happen to 
meet the goal, then this is not going to cost us as much because the 
rest of the industry is going to pick up the cost,'' there is a sense, 
even though there is a penalty of $1,000 per child per percentage 
point, that they don't meet the goal, which we feel may not be a 
sufficient goal.
  So the Durbin-DeWine amendment seeks to shift the remainder of that 
so that there is less of a cap, less of a requirement on the industry-
wide payment and more of an individualized, company-specific payment in 
order to provide a stronger incentive for that company to become part 
of the solution here.
  I think above all the American people have reached a point where they 
understand that they want these cigarette companies to act responsibly. 
They want them to be part of the process of helping to protect their 
kids from exposure to this narcotic substance.
  On that basis, Mr. President, that is where we find ourselves today. 
We will debate through the afternoon. And at some point tomorrow there 
will be some resolution--I guess late tomorrow--with respect to the 
parliamentary status that we are in.
  The PRESIDING OFFICER (Ms. Collins). The Senator from Texas.
  Mr. GRAMM. Madam President, I wish we could pass a resolution or a 
bill that would stop every child from starting to smoke and that would 
stop every adult from smoking.
  I begin with a little personal experience. I have been alive for 55 
years. I have spent much of that time trying to get my mother, who is 
now 85, to quit smoking, and I have had no success, nor do I believe 
that by raising the price of cigarettes we will achieve that result, 
either.
  But the point I want to make, to begin with, is that if we could have 
a resolution that would, in fact, keep people from starting to smoke 
and stopping people from smoking, I can't imagine that anybody would 
vote against that resolution. Also, contrary to the rhetoric of much of 
this debate, I don't find any love anywhere for tobacco companies. I 
think if there is a problem in the debate, it is that we create the 
impression we are punishing tobacco companies with this bill, when this 
bill has, in fact, extraordinary provisions to guarantee that tobacco 
companies will not be punished. We talk about tax increases as if the 
tobacco companies were paying those tax increases, but in reality not 
only do they not pay them, but we have written into the bill provisions 
that make it illegal for them to not pass the tax through to the 
consumer and therefore the tobacco company is held harmless for the 
general increase in taxes on cigarettes.
  The cold reality is that we have before us a bill that raises taxes 
by $700 billion--one of the largest tax increases in history. This tax 
is not randomly distributed among the population. Those who make less 
than $15,000 a year will pay 34 percent of these taxes, those who make 
less than $22,000 a year will pay 47 percent of these taxes, and those 
who make less than $30,000 a year will pay 59.1 percent of these taxes. 
The cigarette companies will pay none of these taxes.
  Over the recess, I examined carefully data about cigarette smoking in 
my State. What I would like to do is talk a little bit about this data 
and the tax and describe what I am trying to do with an amendment that 
is now pending but that has other amendments piled on top of it in such 
a way as to prevent me from getting a vote on it. I want to talk about 
why that amendment is important. I want to say a little bit about the 
substitute that Senator Domenici and I will offer with Senator 
Coverdell and others, and then I

[[Page S5499]]

want to talk about how we have lost control of this legislation.
  I have spent the last 8 days back in Texas and I have listened to 
people all over my State and have thought about what we could do to fix 
this bill so that we could actually move ahead. I want to share those 
thoughts with my colleagues, not so much thinking that anybody might be 
swayed by those thoughts but at least to perhaps encourage others to 
think that, well, maybe other people are thinking about this problem 
the way I am and maybe we ought to try to get together and work out 
some of these things.
  In my State, 23.7 percent of the adults smoke. That is 3,130,723 
Texans. If I could snap my fingers or do anything other than using 
police powers, I would like to induce these people to stop smoking. But 
the first thing I have to be aware of is the fact that these are the 
victims. The whole logic of this tobacco bill is that the tobacco 
companies have conspired to get young people to smoke. To use the 
language of our colleague, the chief proponent of the bill, they have 
gotten people addicted to smoking, and so that is what I mean when I 
say that there are 3,130,723 Texans who smoke, who are the victims. 
These are the people who the tobacco companies, through advertising and 
through encouraging some of them when they were young to smoke, have 
gotten addicted or at least attached to the product to the extent that 
they continue to buy the product.
  Now, here is one of the things that concerns me greatly about this 
bill. We all agree that the smokers are the victims. We all agree that 
the tobacco companies are the villains. And yet we have a bill that 
holds tobacco companies harmless, that requires by law that they pass 
the tax through, doesn't allow them to pay a penny of it in terms of 
the initial tax that is imposed. And yet if, in fact, as most people 
who are knowledgeable about the marketing of this product say, this 
bill will have the effect of raising the price of a pack of cigarettes 
by $2.78 a pack, it will mean that the annual cost of buying one pack 
of cigarettes a day for the people in my State who smoke will rise by 
$3,176,744,628 which means nothing, but let me give you a number that 
does mean something.

  For every person in my State who is addicted to cigarettes, who has 
been victimized by a process that we are trying to fix in this bill, 
the people who are the sole purpose of this bill, we are imposing a tax 
on them of $1,015 a year in the process of helping them. As my 85-year-
old mother said the other day, ``Why aren't you taxing the tobacco 
companies instead of taxing me? If I am the victim, why am I paying?''
  Well, the point I want to make sure my colleagues understand is that 
while we may love pounding our chest and vilifying the tobacco 
companies, with good reason, we have before us a bill that is punitive 
not to the tobacco companies but to the people who are their victims. 
And the level of punishment is a level that is virtually without 
precedent as far as I am aware. In fact----
  Mr. KERRY. Madam President, will the Senator yield so I can answer 
the question?
  Mr. GRAMM. No. I let the Senator go on for some time. I would like to 
do the same. When we get through, I have to go back to the Medicare 
Commission meeting, but I will yield for a moment at that point.
  So one of the concerns I have had in trying to see what we might do 
to fix this problem is that we are looking at the potential of 
3,130,000 people in my State, if they smoke one pack of cigarettes a 
day, having a tax increase of $1,015 each year.
  Now, I thought, looking at the figures that were put out by the Joint 
Committee on Taxation, that there must be something wrong with these 
figures, but when you look at that $1,015 Federal tax for a Texan or an 
American who smokes one pack of cigarettes a day, it makes the number 
believable that the Joint Tax Committee put out, and that number was, 
for Americans who make less than $10,000 a year--some smoke, some don't 
smoke--but for all Americans who make less than $10,000 a year, this 
bill will drive up their Federal taxes by 41.2 percent.
  So one thing that has worried me from the very beginning, and one 
thing that I do not find to be trivial, is that we are talking about a 
massive, $700 billion tax increase that is being imposed not on the 
companies that have inspired teens and others to smoke but it is being 
imposed on the very people who are the victims, and in my State it has 
the potential of imposing a $1,015 new Federal tax on a blue-collar 
worker making less than $30,000 a year who is addicted to smoking. And 
if you have a blue-collar couple who may have two jobs, a lady who 
works in a restaurant, and a man who drives a semi, and they both smoke 
a pack of cigarettes a day, you are talking about imposing a $2,030 
increase in Federal taxes on them.

  It may be that this increase in taxes would induce some of them not 
to smoke. Over and over our colleagues who support this massive tax 
increase have said this is not about money, that they don't want the 
money, they want to get people not to smoke. So before we left on the 
recess--having listened to this debate and having heard over and over 
and over again that this was not about money, that they just wanted to 
drive up the price of cigarettes, that they weren't trying to decimate 
blue-collar workers financially, that they just wanted to get them not 
to smoke--I sent an amendment to the desk. My amendment said: If the 
purpose of this is to get people not to smoke by driving up the price 
of cigarettes, let's raise the price of cigarettes, but let's take that 
money and instead of giving it to the Government to spend, let's give 
at least some of it back to blue-collar workers by changing the Tax 
Code. And the proposal that I made was let's eliminate the so-called 
marriage penalty where two workers, both of whom work outside the home, 
fall in love, get married, and end up paying $1,400 more in taxes being 
married than if they stayed single.
  I focused it on moderate-income Americans. The idea being, raise the 
price of cigarettes to discourage smoking, but because we are not 
raising the price of cigarettes to impoverish blue-collar workers, why 
not raise the price of cigarettes to discourage smoking, but return the 
money through new tax cuts to the same people? So you raise the price 
of smoking but so that people who are really addicted and who either 
can't or don't quit smoking--that we simply don't pound them into the 
ground economically.
  I was somewhat taken aback that when I offered this amendment, it 
shut down the Senate, and that we clearly have Members of the Senate 
who do not want to vote on giving some of this money back to blue-
collar workers. I am somewhat at a loss to explain that. If the tax is 
not about money, why wouldn't we want to give some of it back in tax 
cuts to the very blue-collar workers who have been victimized by the 
tobacco companies?
  Also, I would have to say for those who want to talk about the health 
care cost of smoking, when Senator Domenici and I, in the budget, 
dedicated the money to Medicare, many of the same people who were for 
this bill opposed that amendment.
  The point I am making is, first of all, I am going to get a vote on 
my amendment. I had to write my amendment as a motion to recommit with 
instructions. Some people have gotten confused in the media and believe 
that somehow my amendment delays the bill or kills the bill. It does 
not. My amendment simply directs that the bill notionally be taken back 
to committee and be brought back immediately with this tax cut attached 
to it. If it were adopted, it wouldn't delay the Senate for a second, 
nor would it pull the bill down.
  I believe if this issue is about smoking instead of about money that 
the Senate will adopt my amendment, and hopefully another amendment 
which would give blue-collar workers the same tax treatment General 
Motors has in buying health insurance. But we will get an opportunity 
to vote on those issues.
  Let me also say that in traveling around my State for 8 days and 
meeting with editorial boards, holding public meetings, and on several 
occasions raising the tobacco issue, I received not a question about 
the tobacco bill. We are debating this issue as if this is the all-
consuming issue on the planet, and yet all over the State, in meeting 
after meeting, in editorial boards where I raised the issue, I don't 
recall a single question anyone asked me

[[Page S5500]]

about it. In fact, we have had two polls come out since we have been 
considering this bill. One, published in USA Today asked people, ``Do 
you believe higher cigarette taxes will reduce teen smoking?'' Seventy 
percent say ``no;'' 29.9 percent say ``yes.'' When you ask parents what 
they are most concerned about with their teenagers, 39 percent say 
using illegal drugs--something that has doubled since 1992, something 
that this bill doesn't deal with, something the substitute that 
Senators Domenici and Coverdell and I will offer does deal with, with 
the toughest antismoking, antidrug program that will be considered in 
the Senate during this debate--16 percent say joining a gang, 9 percent 
say drinking alcohol, 7 percent say having sex, 7 percent say driving 
recklessly, and 3 percent say smoking or chewing tobacco.

  I would like to explain what I believe has gone wrong on this bill 
and why it is going to be so hard for us to fix it. I have given this a 
lot of prayerful thought. Let me just share with you the results of 
this thought.
  First of all, why are we dealing with this issue to begin with? Why 
is this issue on the floor of the Senate? We had settlements between 
tobacco companies and States. Why are we considering it? I will tell 
you why we are considering it. It is completely lost in this debate, 
but we are considering it because the attorneys general came to us and 
said, in essence, this whole thing has gotten out of control and the 
only way we can enforce these settlements is for the Federal Government 
to step in and impose some reason and responsibility on the process. In 
fact, presumably, the attorneys general recognized something--some 
people may be offended by the analogy but it is a good analogy--that a 
parasite can live only if the host animal does not die. What the 
attorneys general recognized was that the way this whole thing was 
going, the tobacco companies were all going broke and they weren't 
going to collect this money. They weren't going to be able to pay for 
Medicaid with it. As a result, they would have won a big victory in 
court, but it would not mean anything to their States, to their 
constituencies.
  So they came to Congress and said look, this thing has gotten 
completely out of control. It is unlikely that the kind of money, in 
essence, that we are talking about can never be paid. What we want 
Congress to do is step in and set levels that will make it possible for 
us to actually collect these settlements.
  What has happened in the process? Sadly, the settlements started out 
at roughly half the cost of the bill that is before us. Quite far from 
the objective of the attorneys general in asking us to get involved in 
this issue to begin with, we have roughly doubled the cost of the bill 
and every concern that drove this issue to the Congress has now been 
multiplied by a factor of two. How did it happen? How did the cost of 
this bill get so high? This is what I think is the most revealing part 
of this whole process. I could go through 100 examples, but I am only 
going to go through a couple.
  One of the things that happened when the bill got to Congress was 
that, as normally happens in these situations, everybody wanted some of 
the money. So we start dozens of new agencies. We have programs for 
community action. Nobody knows what they are. We set up international 
programs. We have programs to buy out vending machine owners. We have 
programs to subsidize tobacco farmers.
  But we don't just have programs, we have spending programs that are 
completely out of any realm of reason and responsibility. A perfect 
example of it is the tobacco program. It was perfectly reasonable that 
those who represent tobacco States, when we were getting ready to 
collect a lot of money from the tobacco companies, would want some of 
it. You would think in going about trying to get some of it that we 
would have ended up with a figure that would be somewhat similar to the 
transition payments we paid in the legislation we call freedom to farm.
  Under the Freedom to Farm bill we, in essence, provide transition 
payments to wheat producers, corn producers, grain sorghum producers, 
barley producers, oat producers, upland cotton producers and rice 
producers within a 7-year period. You might have thought that what we 
would have done was set up a program for tobacco similar to those other 
programs. Such a proposal might not have been an unreasonable addition 
to this bill. But reason has nothing to do with this bill, because 
since we could, in essence, act as if the tobacco companies were paying 
these costs when, in fact, the consumer was paying the cost, the sky 
was the limit in terms of the amount of money spent.
  Let me tell you what we have done in tobacco. We have two proposals 
now before us. We are going to be asked to choose between one of the 
two on the floor of the Senate. The Ford proposal costs $28.5 billion. 
The Lugar proposal costs $18 billion. The Ford proposal will pay 
tobacco producers $21,351.35 per acre. It will also continue the 
tobacco program. Nobody will have to stop growing tobacco. No one will 
have to give up their land, but we will give them a payment of 
$21,351.35 an acre.
  The Lugar bill will make a similar payment while ending the tobacco 
program at $22,297 an acre.
  Who knows what a billion dollars is, but let me put it in English. 
That is almost 20 times the amount we pay every other commodity 
combined to end their program. We have before us a bill that will pay 
tobacco brokers 20 times more than we paid, on a per-acre basis, wheat 
growers, corn growers, grain sorghum growers, barley growers, oat 
growers, upland cotton growers and rice growers combined--nearly 20 
times as much per acre as we paid all those programs combined.
  Let me explain a little bit about the program. In 1938, we set up 
this program. It was aimed to do one thing and that was to raise the 
income level of tobacco farmers. We set out a quota system where you 
can't grow tobacco unless you have a quota. What happened almost 
immediately is people with quotas in many cases quit growing tobacco 
and they rented their quota to other people so that now 63 percent of 
the people who own the quotas don't even grow tobacco. What we are 
going to do under these two proposals is pay them roughly $20,000 an 
acre, and allow them to continue to grow tobacco and keep the acreage.
  Madam President, 1997 is the last figure I have, but in 1997, you 
could have bought the quota to grow an acre of tobacco for $3,564. I 
ask the following question, and it can't be answered: If I could go out 
today and buy a quota to produce an acre of tobacco for $3,564, why in 
the world would the Government want to pay me six times that amount in 
this tobacco bill, six times the amount that I just paid yesterday for 
the quota? They are going to pay me six times that amount of money, and 
I can go right on producing tobacco. How could such a provision 
possibly get into a bill about which Members of the Senate would not 
blush? How can we let a person go out today and buy a quota to produce 
an acre of tobacco and sell it to the Government next month for six 
times what they paid for it and still grow tobacco and not give up the 
land? Whoever heard of paying people $20,000 an acre because we are 
going to pass a tobacco bill, but they can go right on growing tobacco, 
or six times what you can buy the right to grow it for? How did it 
happen?
  It happened because of the feeding frenzy of spending money that was 
coming from tobacco consumers, basically blue-collar workers--59.1 
percent of them earning below $30,000 a year. By making it look like 
the tobacco companies were paying the bill, we could, in essence, pay 
people $20,000 an acre who are growing tobacco and let them keep on 
growing. There is no logic to that happening, except that this has 
become a giant piggy bank, or as a candidate for comptroller in my 
State has said about the tobacco settlement in Texas, ``We won the 
lottery.'' This is the kind of consumption people do when they win the 
lottery.

  We have had an extensive debate on this subject, but those who have 
studied the settlement in Texas have concluded that lawyers in Texas 
will make about $100,000 an hour under that bill --$100,000 an hour. 
Why would we have a bill that allows that to happen? Can you imagine if 
we were appropriating the money to hire lawyers to do work for the 
Government, allowing a situation where attorneys' fees could range 
between $88,000 and $100,000 an hour? Can anybody imagine that 
happening? How did it happen in this bill? How could it have happened?
  What happened is the attorneys general came to us and said, ``Look, 
we

[[Page S5501]]

have these settlements that have gotten out of control, and people 
aren't going to be able to collect money because the judgments 
cumulatively are going to be so big that they are going to drive the 
tobacco companies out of business, and we're not going to be able to 
collect our money. Congress needs to do something about it.''
  So what did Congress do about it? Congress doubled the amount of 
money that we are taking and, in the process, set off a spending spree 
the likes of which we have not seen since Lyndon Johnson became 
President. There has been no period of time in American history since 
the first year of Lyndon Johnson's Presidency where we will have an 
explosion of new programs and new discretionary spending.
  Many of these programs have absolutely nothing to do with smoking, 
and the list goes on and on from child care to international programs 
to you name it.
  How did asbestos settlement get into this bill? How did we end up 
with billions of dollars going to asbestos settlements in this bill? 
Where did that come from? How did that happen?
  My guess is that there was this lottery that we won, and so somebody 
said, ``Well, look, you have all this money, why don't we give some of 
it to people who have asbestos-induced health problems.'' And they then 
said, ``Well, many people were around asbestos in World War II. Since 
most people in World War II smoked, they were around asbestos, why 
don't we take money out of this and give it to them?''
  Here is my point. How do we get back to something that would be 
reasonable and, quite frankly, try to figure out how we might put 
together something that would actually achieve what we want?
  I wanted to share with my colleagues why I despair, why it is going 
to be very difficult to fix this bill. Let us say we decided we were 
going to go back to the tobacco farmers issue, and we said, ``OK, now 
look, we want to be generous. We'll pay tobacco farmers the cumulative 
amount that we paid every other farmer per acre combined.'' And that 
would be $1,496 per acre. We will give them that amount of money 
because they might be affected by this tobacco bill. We do not know 
they will be because we do not know for certain what else will happen, 
whether demand will go down or not. Other things being the same, it 
should.
  So you might say, ``Well, look, why don't we offer them the amount we 
pay every other crop combined?'' Well, how can our colleagues from 
tobacco States--when they have been debating giving people $20,000 an 
acre or $21,000 an acre--how can they go back and say, ``We're actually 
only going to get one-twentieth of that amount''?
  They can't go back, because once you let the feeding frenzy start, 
and once you get expectations built up--anyone who went to tobacco 
farmers a year ago and said, ``I, as your Senator, have arranged for 
you to get the amount of money equal to the per-acre payment of all the 
other seven major crops combined,'' you would have gotten a standing 
ovation. But today, when we are talking about paying 20 times that 
amount, you would get stoned. So we are not going to be able to break 
that impasse as long as people believe this bloated bill is at all 
possible.
  How are you going to go back to people who have suffered from 
asbestos poisoning and say, ``We're not going to give you anything''? 
The bill never had anything to do with them, but nevertheless, now 
there is a big constituency there.
  We contemplated in the bill that we would set some limits on 
attorneys' fees. We are going to have a vote on $1,000 an hour. That is 
not a minuscule amount. But even if we could be successful on that--and 
I am not sure we could--you have expectations so high that I do not 
know how you ultimately put this together.
  Let me tell you what I think the final solution would look like if 
you could get there. You have to throw all of these add-on spending 
programs overboard. They never should have been here to begin with. 
This is an obscene feeding frenzy. All of these X, Y, Z bureaucracies, 
all of these community action programs, all of these international 
smoking alliances, all of these payments for other purposes--all that 
has to go.
  Secondly, if we are going to raise prices, and we are not going to 
beat blue-collar workers into pulp economically, some of the money that 
comes in has to be given back to them in other taxes where we 
discourage them from smoking but we do not impoverish the people who 
are addicted to cigarettes and either will not be able to quit or at 
least will take an extended time to quit.
  Senator Domenici and I fund in our bill, through Medicaid, Medicare, 
and through tax deductibility, smoking cessation programs. Those are 
the kinds of things it seems to me that we ought to be focusing on 
here. But a bill is going to have to be back within the range that we 
could ever hope to collect.
  Secondly, we are going to have to be aware of the fact--and I heard 
my colleague talking about black markets, but, you know, the Canadians 
raised the price of cigarettes by about the price increase we are 
talking about. They have highly educated people. They have law 
enforcement. But what happened is, after their experiment had failed, 
the Health Minister, Diane Marleau, said the following: ``The 
government decision to cut taxes would actually reduce consumption 
among youngsters because it will end the smuggling trade and force 
children to rely on regular stores for cigarettes where they are 
forbidden to buy them until they are 19.''
  Maybe we are so much smarter than the Canadians that we will be able 
to prevent black market activity. Smuggling among the Canadian 
provinces is still a problem. The British have 50 percent of their 
market for cigarettes now in the black market.

  We have been independent of Britain for over 200 years and maybe we 
now are so smart that we can solve the problem. But I would just like 
to point out to my colleagues that maybe we are that smart but that our 
friends and our kin folks--if you go back a few generations in places 
like Britain and Spain and Italy, Eastern Europe--they are all plagued 
with the massive black marketing of cigarettes.
  So if there is a solution to this problem, it seems to me that the 
solution lies in the following: That, No. 1, we have to throw all this 
feeding frenzy overboard. We have to cut back the reimbursement for 
tobacco farmers and to lawyers to reasonable levels; we have to throw 
out all of this extraneous material where we are spending hundreds of 
billions of dollars on programs that have nothing to do with smoking; 
we have to raise the price of tobacco and give the money basically to 
two things--smokers' cessation programs and attendant health-related 
matters, such as the health provisions that Senator Domenici and I have 
proposed where Medicaid and Medicare will be able to fund smokers' 
cessation programs and where taxpayers can get a tax credit if they 
participate in the programs designed to try to help people break their 
addiction.
  Mr. KERRY. Will my colleague yield?
  Mr. GRAMM. But beyond those modest programs, we have to give the 
money back if our purpose is not to impoverish people but in turn to 
get them to quit smoking.
  It is not clear to me how we are going to get everybody--from lawyers 
to tobacco farmers to asbestos beneficiaries to whoever these 
thousands, hundreds of thousands of people who hope to man these 
agencies for massive community action, for these world organizations, 
and all the people who hope that this could be the winning of the 
lottery for everything from child care to you name it--how do we get 
everybody to back off those things so that we might really have a bill 
here to do something about reducing teen smoking?
  We often, it seems to me, overstate our ability to really make people 
do things or get them to do things. But I simply despair at figuring 
out how we are going to get a bill that is focused on smoking, that 
discourages smoking but at the same time does not impoverish blue-
collar workers, and that does not set off a massive wave of hundreds of 
billions of dollars of new spending. If we could do that, and combine 
it with an effort to do something about illegal drug use, along with 
illegal cigarette use by children, then I think we would have served 
the public well. But I am not sure how we do it.
  There is a lot of dead weight in this bill that has to be gotten out. 
I hope

[[Page S5502]]

that as we go through the debate that reason and responsibility will 
prevail on everything from the tobacco farmers to the lawyers' fees to 
asbestos, to all of these X, Y, Z bureaucracies.
  But today, in my State, the people that have any awareness of this 
issue basically have concluded two things: that, No. 1, we are probably 
not going to get children not to smoke by raising this tax and that, 
No. 2, the tax is about revenue to fund a whole bunch of new Government 
programs, that the tax is not about getting people not to smoke.
  If we are going to convince people--I have always found that telling 
the truth does not always convince people, but it is easier when you 
tell them the truth. And if this is really not about money, then let us 
not create all these spending programs that are not directly related to 
smokers' cessation, let us take the money, the tax, and give it back to 
the workers by cutting their taxes, let us throw all this subsidiary 
stuff overboard and write a real bill. If we don't do that, I don't see 
how in the end we will convince people that raising taxes by $700 
billion and creating literally dozens and dozens of new programs that 
have virtually nothing to do with smoking--I don't see how we convince 
people that we are doing anything other than the old-fashioned tax and 
spend.

  But we have found a new wrinkle, and the new wrinkle is to find an 
industry that deserves vilification, vilify them, then tax their 
victims, and then tax and spend. If that is not our objective, then we 
are going to have to change this bill dramatically to actually achieve 
the goals we sought.
  I have covered a lot of things here. I thought about this a lot over 
the recess, trying to figure out how we could get from where we are to 
having a real bill. I have concluded that it is going to be hard, very 
difficult, because when you have convinced all these special interest 
groups that we are going to give them $700 billion, and you start 
taking the money back--because, in reality, we can't impose a tax that 
big--people are going to be disappointed and you are going to have 
problems.
  Now, the Senator from Massachusetts wanted me to yield. I know it has 
been a long time; that is part of the problem with our procedure. I am 
happy to yield for a minute. Then I have to go back over to the 
Medicare Commission.
  Mr. KERRY. I thank the Senator from Texas. I just had a couple of 
questions, one that came up momentarily, that I wanted to understand.
  The Senator suggested three ways we could solve the whole problem, 
and they were: ``Throwing the feeding frenzy overboard;'' throwing out 
the ``extraneous programs;'' and, third, to raise the price of tobacco.
  I just wanted to ask the Senator, first of all, how he intends to 
raise the price of tobacco.
  Mr. GRAMM. What I was saying was, if we believe that by raising the 
price of tobacco we can discourage consumption--and, being a person who 
used to be an economist, I believe that demand curves are downward 
sloping--and other things being the same, that we could produce some 
results there.
  What I am saying is that I think we might put together a bill that 
raises the price of tobacco products either with a hidden excise tax or 
one out front. But where I disagree is, since almost 60 percent of the 
people paying the tax make less than $30,000 a year, rather than using 
this as a piggy bank to fund massive new programs, I think we need to 
raise the price of tobacco as part of a coordinated effort, and I would 
like to include an antidrug effort with it, but I would like to give 
most of the money we raise back to low-income people so that we don't 
end up punishing the victims, which is what I see happening.
  Mr. KERRY. Let me come back to the Senator again. I understand where 
he wants to put the money, but he didn't answer my question. I ask him 
again to answer the question, How does he propose to raise the price of 
tobacco?
  Mr. GRAMM. I just said it may well be that in some compromise I can 
support the method in your bill. It is not so much the tax that I 
object to; it is what we are doing with the money and what the tax is 
doing to moderate-income people.
  If we take your revenue figure and we throw out all these spending 
programs and we give the bulk of the money back to moderate-income 
people, for example, by repealing the marriage penalty for moderate-
income Americans, make health insurance tax deductible for moderate-
income Americans and make that subject to the earned-income tax credit, 
so that we are raising the price of tobacco but we are not brutalizing 
moderate-income people, blue-collar people, economically, it may be 
that you can get more people to support that.
  Mr. KERRY. Madam President, I ask the Senator further, having 
acknowledged, then, that to raise the price of tobacco you basically 
wind up essentially where we are in this legislation, or somewhere near 
it, because any time you raise the price of tobacco--and, being an 
economist, the Senator from Texas, I know, will agree--there is no way 
a tobacco company is simply going to absorb that price, they are going 
to pass it on. Ultimately, whatever raising of the price of tobacco 
takes place will be passed on to the tobacco consumer in one form or 
another. I know the Senator would agree with that.

  Mr. GRAMM. If I could reclaim my time, I don't necessarily agree with 
that.
  First of all, we could impose a windfall profits tax on tobacco 
companies. We could make tobacco companies pay part of the tax. But the 
important thing is that--I would like to just try speaking like an 
economist for just a minute--I am perfectly willing to raise the 
relative price of cigarettes; that is not what I object to. What I 
object to is that 3\1/2\ million people in my State, 60 percent of them 
making less than $30,000 a year, those who are really addicted, who are 
really the victims, are going to pay $1,015 a year in new Federal 
taxes. So if they are making $30,000 a year, you are taking a 30th of 
their income in this new tax.
  All I am saying is, raise the tax to get them not to smoke, but take 
the money and cut other taxes they pay so you don't impoverish them. 
That is what I am saying.
  Mr. KERRY. I hear the Senator from Texas, but if that were true, then 
he would come to the floor with an amendment that would somehow give 
the rebate to the actual smoker. By coming to the floor with a marriage 
penalty tax that costs some $52 billion, he is actually going to take 
all these people out there, whatever income level they may be at, who 
happen to pay this, into the upper-income levels. They will wind up 
getting the benefit for the marriage penalty, and you aren't solving 
the problem that he is here on the floor complaining about.
  Mr. GRAMM. Reclaiming my time--and then I will yield the floor--my 
amendment is targeted to moderate-income families. No family making 
more than $50,000 would get a penny of benefits out of it. My amendment 
would eliminate the marriage penalty where moderate-income Americans 
who fall in love and get married wouldn't pay the Government $1,400 a 
year for the privilege. My wife is worth $1,400 a year, but I think she 
ought to get the money, and not the Government.
  I am not apologizing for that proposal. I want to get a vote on it at 
some point. I would like to follow it with another one that would say 
moderate-income people get the same tax treatment when buying health 
insurance as General Motors does by being able to deduct the cost of 
their health insurance premiums from their taxable income.
  What I am saying is, I could support a bill that gave the money back 
through these kinds of tax cuts and kept just enough money to fund our 
smoking cessation and whatever we did on drug prevention for teenagers. 
I could support a bill like that. But what I can't support is a $700 
billion tax increase that pays tobacco farmers $21,000 an acre and 
allows them to go on growing tobacco; that gives money to people for 
problems that have nothing to do with smoking and that creates all 
kinds of new agencies.
  I hear my colleague say over and over again, ``This is not about 
taxes. This is not about money. We don't want the money.'' But all I 
know is, I have an amendment that is pending that gives some of the 
money back to working families, the very people who smoke in the 
highest proportions, and yet I can't get a vote on it because my 
colleagues have covered it up with other amendments.

[[Page S5503]]

  Now we will get a vote at some point, so I think really what I was 
trying to do today, for those who are for this bill and want to see 
something passed--and I will conclude on this--I was simply trying to 
point out how we might find a middle ground here. I don't object to 
making tobacco products more expensive. But I do object to 
impoverishing 3.5 million Texans. I do object to taking money we are 
taking from people, 60 percent of whom make less than $30,000 a year. I 
do object to taking that money and spending it on programs that make 
people millionaires many times over, that pay people $88,000 to 
$100,000 an hour for legal services, that pay tobacco farmers $21,000 a 
acre and they can keep right on growing tobacco and that create all of 
these Government programs and nobody knows what they do. Nobody knows 
what this big community action program does, other than put a lot of 
political activists on the payroll.

  So if the goal is to stop people from smoking, and we can do it by 
raising tobacco prices, I would like us to be sure we don't start a big 
black market and have it so that some hood is running around saying to 
our children, ``Do you want to buy a cigarette, or some dope?'' or 
whatever. I don't want that to happen. Within those constraints, I 
could support higher prices for tobacco if you gave the money back to 
blue-collar workers in tax cuts and if you didn't spend it on all these 
other programs.
  But in the end, I am fearful that we will not reach a general 
consensus, because I am afraid that along the way, with the best 
intentions, this bill has become a tax and spend bill. I don't know how 
we get away from it. I don't know how we now go to all of these groups 
that hope to get tens of billions of dollars from this bill and say, 
well, you know, it was in that original bill, but we could not get that 
bill passed, and we have had to throw it in the trash can where it 
belongs, and we have to start over, and now we are not going to have a 
big community action program, we are not going to have a big 
international program, we are not going to pay money to people who have 
asbestos poisoning, we are not going to pay for child care; we are 
going to focus on smoking, raising the relative price of tobacco, and 
then we are going to give the money back to the blue-collar workers who 
are going to bear the burden, because we are not taxing tobacco 
companies, we are taxing blue-collar workers who smoke.
  That is what I hope we can do, but I am not optimistic that we are 
going to, because this thing has taken on a life of its own as the 
largest taxing and spending bill of my political career.
  I am afraid that the only alternative we are going to have is to 
defeat this bill. Hopefully, if it is defeated, we can come back and 
try to do it right, and maybe at some point we can do that in the first 
place. But having spent the recess thinking about it, I wanted to 
simply come over and outline what I, as one Member, saw as a potential 
compromise--raise the price, keep a little of the money for smoking 
cessation, and spend some of the money on drug enforcement. As long as 
we are trying to keep the children from smoking, we should try to get 
them away from drugs. We can give the rest back in tax cuts, so nobody 
can say you are taxing and spending, you are just raising the price of 
tobacco. Maybe we can make that happen, but I don't see any motion in 
that direction.
  I yield the floor.
  Mr. KERRY. Madam President, I know the Senator from Texas needs to 
leave the floor. Not all my comments will be directed to him, but I ask 
him this. He asked a question at the outset of his comments. The 
question he asked was, sort of: I don't know why we are raising all 
this money; why is there a raising of the tax? Now he has come to a 
point where he has agreed he is willing to raise the tax. But there is 
one very simple, straightforward reason. It is not in order to raise 
the money. The money is raised because it is a consequence of taking an 
action that is deemed imperative by most people who have been involved 
in trying to get kids to reduce smoking. I simply say this to my friend 
from Texas. Let me read him a quote:

       It is clear that price has a pronounced effect on the 
     smoking prevalence of teenagers and that the goals of 
     reducing youth smoking and balancing the budget would both be 
     served by increasing the Federal excise tax on cigarettes.

  That is a Philip Morris document from 1981.
  Mr. GRAMM. Will the Senator yield for one question, since I yielded 
to him four times?

  Mr. KERRY. I will in a minute. A key finding is that:

       Younger adult males are highly sensitive to price. This 
     suggests that the steep rise in prices expected in the coming 
     months could threaten the long-term vitality of the industry 
     by drying up the supply of new, younger adult smokers 
     entering the market.

  That is from an R.J. Reynolds document. The smoking industry--the 
tobacco sellers--are saying don't raise the price because it will 
reduce the young kids that we can get addicted to cigarettes. That is 
the reason we are here raising the price. The Senator can say he 
doesn't want to vote to stop young kids from smoking.
  Mr. GRAMM. Now wait a minute. Will the Senator yield?
  Mr. KERRY. I will yield for a question in a moment. I want to point 
out something else to the Senator. He spent a lot of time out here 
saying, ``I am willing to support a drug program and to support an 
opportunity for kids to be able to be part of smoker cessation 
programs.'' Well, that is precisely what this money goes to do, Madam 
President; that is precisely what it does. It goes to public health, it 
goes to research into addiction, it goes to State money, and the 
Senator ought to love this. We are giving the money back to the States 
and saying, ``You can do what you want with this amount of money in the 
following areas.'' And every single one of those areas is to prevent 
kids from smoking. There are safe and drug-free schools. There is a 
drug plan. There is a safe school plan. There is child care, child 
welfare, and children's health maternal block grants. There is the 
professional training of teachers to be able to help kids to understand 
why they should not smoke. Every single one of those is a cessation 
program; it is a drug program. It is precisely what the Senator from 
Texas is saying.
  So the Senator from Texas can come here filled with all of the 
traditions of rhetoric and say this is ``tax and spend,'' et cetera, 
but the fundamental purpose is to raise the price, just as the tobacco 
companies feared and said, ``We know it will cut down on teenage 
smoking,'' and to take the money that comes from raising the price and 
put it into cessation programs, put it into programs for safe and drug-
free schools.
  That is the program. That is what is on the floor of the Senate. It 
is done in a responsible way that does not tie up the States in a host 
of Washington bureaucracy and Washington mandates. It allows the States 
to choose to do what they think works best.
  Let me just share with my colleague a final thing, and then I will 
yield for a question. Here is a report that says that the California 
and Massachusetts programs, both large-scale community-based 
components, have been effective in reducing tobacco use. For example, 3 
years after Massachusetts began its public education and tobacco 
control campaign, an independent evaluation found that tobacco 
consumption in Massachusetts declined at a rate three times that of the 
rate for the rest of the Nation. So we are talking about programs that 
work, that are demonstrable.
  Experts--far more expert than the Senator from Texas or I --have all 
suggested that you have to raise the price of a pack of cigarettes and 
you have to put these programs in place. In fact, Dr. Koop and Dr. 
Kessler suggested that we raise the price $2. The Senate voted that it 
was unwilling to even raise the price $1.50. So we are stuck at $1.10. 
It seems to me what we are offering is precisely the kind of 
reasonableness the Senator articulated.
  I will agree with the Senator that there is a fight here over the 
issue of the farmers and how that ought to be approached. The Senate, I 
am confident, in the next week has a chance to work its will 
intelligently and try to find a common ground there. But I think our 
colleagues on the other side of the aisle should stop coming here and 
condemning the bill as a whole. I suggest that we are really talking 
the same language fundamentally. Unless we are out here trying to find 
some way to stop it--I am against the marriage penalty. I would like to 
vote to

[[Page S5504]]

eliminate the marriage penalty. Most of my colleagues on this side want 
to eliminate the marriage penalty. Nobody feels, at this point in time, 
that the marriage penalty is sensible public policy. It is bad tax 
policy, bad social policy, bad moral policy. But the question is, Is 
this the place to do it? Is the formulation of the Senator from Texas 
the formulation that is going to fairly distribute the income that you 
take from raising money on cigarettes, which you ought to be putting 
into the cessation and drug programs the Senator has talked about?

  So the fight here ought to be understood for what it is. If we are 
really going to try to get rid of the marriage penalty, there are a 
host of opportunities in the budgeting process to do that fairly. This 
is not the place to do it. I will vote to get rid of the marriage 
penalty in the right manner and in the right place. But I think the 
Senator may indeed have some other motive here than passing the tobacco 
bill, because this is not the place to take $52 billion of $60 billion 
and say we are still going to have meaningful cessation programs and 
meaningful research and meaningful efforts to reduce teenage smoking.
  I yield for the question without yielding my right to the floor.
  Mr. GRAMM. A point of information. My amendment, as it is now drafted 
and pending before the Senate, would take about half the money and give 
it back. So in terms of the numbers, those are the circumstances.
  Here is where we differ. I would agree that we can have an impact on 
smoking by raising prices. But what I don't agree on is that we ought 
to take $700 billion, basically from Americans who make $30,000 or 
less, and set out on a massive spending spree. So I am saying if you 
want to raise the price of cigarettes, why don't you support an effort 
to give at least half of the money back to the people from the same 
income group, rather than setting out programs to pay tobacco farmers 
$21,000 an acre or plaintiff attorneys $100,000 an hour, or starting 
massive new programs that have virtually nothing to do with smoking. I 
think that is where we differ. I think until we come to an agreement 
there that we are not going to have a resolution.

  Mr. KERRY. Madam President, again I will reclaim my right, and I will 
answer the Senator. He keeps coming back with this notion that what we 
are spending the money on again has nothing to do with the purpose of 
stopping kids from smoking, even after I have just particularly cited 
two States that are engaged in those very efforts. When you look at the 
legislation and read it, here is what they go to. They go to State and 
community-based prevention efforts. They go to counteradvertising, 
which is specifically targeted to stop kids from smoking. They go to 
cessation programs, specifically targeted to stop kids from smoking, 
and they go to research on youth smoking.
  That is it. That is all. The Senator from Texas comes and says----
  Mr. GRAMM. What about the tobacco farmers?
  Mr. KERRY. The tobacco farmers are a component of the Federal 
expenditure.
  But, Madam President, let me answer the Senator. The fact is that 
because a lot of tobacco farmers are going to be injured here, just as 
we have helped fishermen in New England, just as we have helped people 
in the Midwest in the wheat or other crops such as soybeans, just as we 
have helped people who have been impacted negatively by a decision 
beyond their control, the Government is coming in and saying what you 
have been doing for your livelihood for years we have discovered merits 
our taking action that is going to impact your livelihood. Maybe the 
Senator from Texas thinks it is OK to abandon a lot of farmers and let 
them go down the drain. I don't think that is the American way. I think 
most of us in the U.S. Senate believe if the Government is going to 
make some kind of decision that actively impacts people's lives as 
significantly as this could conceivably, then we have an obligation to 
try to help those people transition into a new livelihood, or into a 
place of safety and economic security. To do less than that would, 
indeed, be irresponsible.
  If the Senator thinks that is a big spending program or some kind of 
bad giveaway, then let him vote that way. I think the majority of 
people in the U.S. Senate are going to vote for some kind of a 
responsible measure to assist the farmers. I think that is an 
appropriate thing to do for an appropriate period of time. The question 
is how much, and what is the appropriate period of time?
  So there is a difference of opinion here. But let us not forget that 
for years the tobacco industry has been fighting this legislation. For 
years the tobacco industry fought anything anywhere. It took the 
attorneys general of this country from 44 States to be willing to go to 
court to put us in the position to be able to even contemplate some 
kind of comprehensive settlement. That is where we are, finally--
contemplating it--because we have learned that even the tobacco 
companies 20 years ago or 18 years ago understood that raising the 
price of cigarettes would impact their sales. They were unwilling to do 
that. So they would fight it. They have fought every step of the way.
  It is time for the U.S. Senate to come together to have the votes, 
cast the votes that are important, come to closure on this, and decide 
we are going to pass a bill. Let the majority will of the Senate work 
its way and move forward.
  I will just add not just the tobacco companies are those who believe 
we should be raising this price. We ought to stop debating this issue 
of price. We really ought to stop debating it. The issue here is not 
whether or not we ought to be doing that, because there is no evidence 
to the contrary. The economist Senator from Texas has accepted the 
notion. ``I am willing to accept the price,'' he says. So the fight is 
over what we are going to do with it. That is a fight worth having.
  I believe when we have that fight the Senate will resolve that it is 
important to keep our focus on what this bill is doing. If we are 
raising the price, we are doing it for one principal reason, because 
that will reduce kids from smoking. That is the purpose of this bill. 
We shouldn't be diverting that purpose to relieve the marriage penalty, 
worthy as that is, at least to the tune of almost half of the revenue 
that comes in. We ought to be guaranteeing that that revenue is 
adequately spent on the cessation programs, the counseling programs, 
the teaching development programs necessary to help teachers be able to 
teach the peer group and other kinds of things necessary to lead kids 
to make wise decisions.

  We need to be able to guarantee that there is counteradvertising. We 
need to be able to guarantee that there is research into addiction in 
order to help us understand better how we are going to end this 
terrible scourge for a whole bunch of adults who are stuck smoking--40 
to 50 million Americans who are addicted and who are going to go out 
and buy no matter what. We ought to be trying to help them, too.
  The choice for the Senate is whether we are going to take this 
revenue that reduces smoking and help these folks to be able to make 
the choices that are a matter of good health and good public policy. 
That is what this debate is about.
  I know there are other colleagues here who wish to speak. I yield the 
floor at this time.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KENNEDY. Madam President, I thank my friend and colleague from 
Massachusetts for initiating these responses to our colleague and 
friend from Texas giving the strong emphasis in terms of the real make-
up of this legislation, because he, like I, believes the single purpose 
of this legislation should be to halt the young people in this country 
from starting smoking, and then also to do it by the best means that 
are available to us from a public health point of view; that as a 
result of a good deal of practical study, we know there are some 
measures that are effective and will work. We have seen the inclusion 
of those measures in the legislation. Some, I believe, should be 
strengthened. But the Senate has made a judgment on this. That was in 
the earlier debate about the increase in price to bring it up to the 
recommendations which have been made by our friends and colleagues in 
the public health community that universally, based upon their 
experience, believe that we should raise the price to $1.50 a

[[Page S5505]]

pack and to do that in a more dramatic way than was included in the 
legislation that is before us; then also to have the effective programs 
in counteradvertising and the cessation programs; and strengthen the 
Food and Drug Administration with the help and assistance to 
programming in schools and local communities and many programs which 
have been touched on this afternoon included in the legislation.
  One of the ways that we have is a very important opportunity to also 
strengthen the general thrust of this legislation and make it more 
relevant to the reduction of teenage smoking is to provide the 
disincentives to the major tobacco companies for advertising and 
targeting the children in this country.
  I am always interested in listening to my friend and colleague from 
Texas crying crocodile tears for working families. We will have an 
opportunity to address those needs of working families as we have in 
the past in terms of their income, in terms of their health care, in 
terms of their safety on the job, and in a variety of terms for 
families with numbers of children, which he has always unfortunately 
voted in opposition to.
  But nonetheless part of the whole tragedy that we as a nation have 
experienced has been the viciousness of the tobacco industry in 
targeting the children of working families and of the neediest families 
in this country and those have been primarily the children of the 
minorities and working families in this country.
  All we have to do is look again at what has happened in the past 
years and see what the results of that targeting of more than $5 
billion a year have been on the teenagers in this country. We find out 
the actual explosion in the use of tobacco by those who are black and 
non-Hispanic was some 80 percent over the period of the last 6 years, 
34 percent by Hispanic, 28 percent by white and non-Hispanic, a general 
rise of some 32 percent. And that has been primarily the children of 
working families.
  To suggest out on the floor of the Senate that somehow the primary 
concern of these workers is going to be the cost of the pack of 
cigarettes over the interest of having their children stop smoking I 
think is a real failure to understand what is happening out among 
working families in this country. To think that they are more concerned 
about the increase in the cost than they are about making sure that 
their children are not going to get cancer in the community or that 
they are going to be free from these absolutely devastating health 
impacts which, by starting smoking at an early age or any age, are 
going to occur I think really fails to consider what is happening out 
among working families in this country and also what this legislation 
is attempting to do.
  I want to speak just briefly this afternoon on the Durbin-DeWine 
provision because I do think it has a very important impact in terms of 
discouraging the major tobacco companies from the targeting of 
children. Once again, we are primarily concerned with the targeting of 
children--the significant and dramatic increase in costs which 
discourage children, the preventive programs that are included in this 
legislation devised to discourage children, and to help and assist 
those children who develop the addiction to free themselves from that 
addiction, resources available to help communities to free themselves 
from this targeting of children. And now this very important and 
significant amendment that is before the Senate, which it will 
hopefully adopt, that reflects a bipartisan approach, I think is one of 
the major kinds of improvements and strengthening amendments that can 
be achieved.
  Now, Madam President, the amendment which is before the Senate will 
assess increased sums for noncompliance with the youth reduction 
smoking targets. In addition, the emphasis will be shifted from the 
industry-wide assessments to the company-by-company assessments in 
order to more effectively deter the individual tobacco companies from 
marketing their products to children.
  For years, big tobacco has appealed to children through its 
advertising and promotional campaigns. Before tobacco advertising was 
banned from television in 1970, cigarette advertising included cartoon 
characters Fred Flintstone and Barney Rubble promoting Winston 
cigarettes from their Bedrock neighborhood.
  So the tobacco companies have been targeting kids as young as 12, 
because they know once the children are hooked on cigarettes, they 
become customers for life. Prior to the introduction of the Joe Camel 
advertising campaign, fewer than one-half of 1 percent of youth smokers 
chose Camel. After a few years of intensive Joe Camel advertising, the 
Camel share of the youth market rose to 33 percent.
  The tobacco company pricing decisions also have a dramatic impact on 
the level of youth smoking. When Philip Morris made a decision to 
dramatically cut the prices of Marlboro Friday and other companies 
followed its lead, the industry precipitated a substantial increase in 
youth smoking. The historical record is irrefutable. The tobacco 
industry, through its marketing and pricing decisions, has an enormous 
impact on the level of youth smoking.

  Madam President, we see in this chart exactly what happened with 
Marlboro Friday. This chart, as we have seen in the course of the 
debate, is so compelling, so convincing, so overwhelming in its 
conclusion that as the price of cigarettes goes up, teenage smoking has 
gone down. The dramatic increase in the price in the 1980s we 
demonstrated last week to show the sharp decline in youth smoking. And 
then we presented what we call Marlboro Friday, where we showed the 
significant reduction in the real price and then the dramatic spike up 
in the consumption of youth smoking that we have seen over the period 
of time.
  The fact is that as they have maintained their price, this number of 
young people going up to 32, 33 percent a year is reflected with the 
dramatic increase in advertising. Take price and advertising, and you 
can tell the story in terms of teenage smoking. And so we know 
advertising is a key element in this whole debate as well. Price is a 
key element in this debate.
  The Senate has gone on record now that it is holding at the $1.10 
price. I still believe that a significant increase in price would have 
a much more dramatic effect. The public health community believes that 
as well. The Senate has made that decision on price. But we have now 
the opportunity to make a decision on another feature of youth smoking, 
and that is on the degree of advertising that the tobacco industry is 
going to involve itself in in order to continue to hook children in 
this country. And that is what this amendment is really all about. It 
is going to say to the tobacco industry: All right, we are passing this 
legislation. If you are going to continue to rifle-shot children, if 
you are going to continue to rifle-shot the children of working 
families, of minorities, and they are going to exceed a certain 
standard, you are going to end up paying an additional penalty for 
that. If you are going to make the effort, that you have stated that 
you will make, to try not to target children in this country, then you 
will not have the additional penalty.
  That is really what this amendment is all about. What the amendment 
from Senator Durbin and Senator DeWine does is to make sure there is 
going to be compliance. I think all of us understand that a right 
around here is not very effective unless you are going to have an 
enforcement mechanism for that right.
  What we are basically saying is, if the tobacco industry is going to 
live up to its commitment and not target children, all fine and well; 
but if they are not, they are going to find a penalty. It is as simple 
as that. If they are going to stand by their word, they have nothing to 
fear from this amendment.
  Given what we have heard from our good friend from Texas, it is going 
to be interesting to see how he will vote on this amendment. I wish he 
had had an opportunity to address it a bit this afternoon and indicated 
support, because I think it would help to establish a good deal of 
credibility to the other aspects of his argument.
  So, Madam President, as we have seen, in fact, 90 percent of current 
adult smokers began to smoke before they reached the age of 18. If 
young men and women reach that age without beginning to smoke, it is 
very unlikely they will ever take up the habit in later years. And so 
the industry has conducted its advertising accordingly. For at least a 
generation, big tobacco

[[Page S5506]]

has targeted children with billions of dollars in advertising and 
promotional giveaways that promise popularity, maturity, and success 
for those who begin this deadly habit.
  In fact, the Centers for Disease Control and Prevention have found 
that the average 14-year-old is exposed to $20 billion in tobacco 
advertising--$20 billion--at the age of 6--beginning at the age of 6. 
We wonder why children as young as 12 years old, 14 years old, 16 years 
old--62 percent of those who have started by the time they are 16 years 
old have been subject to these billions of dollars of advertising, 
starting at the age of 6.
  We are saying now, OK, if you are not going to target the children, 
you have nothing to worry about. But if you are and your brands are 
going to be accepted and taken and paid for, even with this increase, 
you are going to pay a price at the back end. That sounds pretty fair 
to me. It is just holding them at their word.
  It is no coincidence that the three most heavily advertised brands 
are preferred by 80 percent of children: Marlboro, Camel and Newport--
the three most heavily advertised, the three most heavily used. So, 
once again, we know what is going to happen, I believe, unless we have 
the Durbin-DeWine amendment.
  A study published in the February 8, 1998, Journal of the American 
Medical Association also reported a correlation between the cigarette 
advertising and youth smoking. It analyzed tobacco advertising in 34 
popular U.S. magazines and found that as youth readership increased, 
the likelihood of youth-targeted advertising increased as well. So 
these weekly--daily surveys that are taking place by the tobacco 
industry to find out what children are reading in magazines are then 
sent on back to the advertisers of the major tobacco industry. And, 
sure enough, up they come with that appealing kind of advertising to 
hook those children into addiction. That is happening.
  That is the issue we are attempting to address in this legislation. 
We deal with it on some of the restrictions, in terms of advertising, 
that have been constitutionally upheld in the Baltimore decision, some 
of the protections that are there, provided under the FDA, but there is 
an opportunity for us to go far beyond that with this legislation, and 
that is what we are doing.
  Two recently disclosed industry documents reveal that big tobacco has 
a deliberate strategy to market its products to youth. In a 1981 Philip 
Morris memo entitled ``Young Smokers--Prevalence, Implications, and 
Related Demographic Trends,'' the author wrote that:

       It is important to know as much as possible about teenage 
     smoking patterns and attitudes. Today's teenager is 
     tomorrow's regular customer, and the overwhelming majority of 
     smokers first begin to smoke while still in their teens. . ..
       Because of our high share of the market among the youngest 
     smokers, Philip Morris will suffer more than other companies 
     from the decline in the number of teenage smokers.

  There is the cigarette company looking at the teenager, not as a 
teenager but as part of the profit in the years ahead, over a 
lifetime--a shorter life, albeit--but over a lifetime of smoking.
  A 1976 R.J. Reynolds Tobacco Company memorandum stated that:

       Young people will continue to become smokers at or above 
     the present rates during the projection period. The brands 
     which these beginning smokers accept and use will become the 
     dominant brands in future years. Evidence is now available to 
     indicate that the 14 to 18 year old group is an increasing 
     segment of the smoking population. [RJR-T] must soon 
     establish a successful new brand in this market if our 
     position in the industry is to be maintained over the long-
     term.

  We cannot have it any clearer--that this is the group that is being 
targeted. We know they have done so. We know that is how they have 
increased their market. They have indicated they will not do so in the 
future. We are saying: If you are not going to do so in the future, you 
have nothing to fear from this amendment. But we are going to recognize 
what your track record has been over the historic past, and how you 
have targeted youth, and we are going to say the least you are going to 
do is to pay an important penalty if you are going to violate your 
commitment. That is what this Durbin-DeWine amendment will accomplish. 
It will accomplish that goal much more effectively than the current 
look-back provisions in the managers' amendment. It will substantially 
increase the total amount of the surcharges which companies must pay if 
smoking levels do not decline in accordance with the reduction targets. 
It also shifts the payment obligations from a predominantly industry-
wide system to a predominantly company-specific system. This will 
dramatically increase the deterrent influence of the look-back on 
company policy.

  In this chart, you see what the relative effect would be with regard 
to the ``real incentives'' surcharge in the millions under the current 
McCain legislation and what would happen with regard to the Durbin-
DeWine program. Here we find, with regard to the industry-specific, how 
much more effective this amendment would be in targeting those who 
really have abused the system most in the past, and to make sure that 
is not going to happen, to protect our children in the future.
  The current McCain provisions provide for a maximum industry-wide 
penalty of $4 billion, or about 20 cents a pack. The company-specific 
portion is extremely small, amounting to only a few pennies per pack. 
The Durbin-DeWine amendment provides for substantial company-specific 
penalties which, in the aggregate, could reach $5 billion per year if 
the companies continue to flout the law and blatantly target children. 
The amendment also provides for an industry-wide surcharge of up to $2 
billion a year.
  Through this important amendment we are speaking to the tobacco 
companies in the only language they understand--money. If they are 
going to continue to target children, these companies will pay a 
financial price far in excess of the profits raised from addicting 
children.
  But, if they are willing to cooperate in efforts to prevent teenage 
smoking, the companies may never have to pay a dollar in look-back 
surcharges. A strong company-specific look-back, such as the one we are 
proposing, will give the tobacco companies a powerful financial 
incentive to use their skill in market manipulation to further rather 
than undermine the public interest in reducing youth smoking. Each 
tobacco company must be held accountable for its actions on teenage 
smoking. The stakes involved are nothing less than the health of the 
Nation's children. For each percentage point that the tobacco industry 
misses the target, 55,000 children will begin to smoke. One-third of 
these children will die prematurely from smoking-induced diseases. We 
are talking about the difference of hundreds of thousands of children 
between the two approaches that are before the Senate now--one under 
the proposed legislation and one under the Durbin-DeWine proposal. 
This, I believe, is just absolutely an essential amendment that will 
really strengthen the legislation to carry forward its very sound and 
important public health provisions to protect America's children.
  Finally, I did want to also mention briefly the very substantial 
provisions, as my friend and colleague, Senator Kerry, pointed out 
before, with regard to the preventive aspects of this legislation, the 
very important smoking cessation programs, the prevention programs in 
school and the prevention programs in communities. We have a number of 
teenage volunteers in our State, down in New Bedford, MA, and in 
classrooms around our Commonwealth now, who are going out to various 
shopping malls to get the owners of the various shopping malls and the 
various shops to make these shopping malls smoke free. These are young 
people. These are teenagers who we are asking to participate, to make a 
difference in their communities, and they are prepared to do so.
  Counteradvertising--we have seen, even in a State like our own State 
of Massachusetts, where the tobacco industry was spending 10 times as 
much as counteradvertising, still, the counteradvertising, talking 
about the importance of the health implications and the dangers of 
smoking, had a very important and significant impact in reducing the 
incidence of addiction--very, very important.
  The medical research into addiction prevention and cure--as someone 
who sits on the Health Committee, I know the work that is being done, 
in terms of addiction and substance abuse and also in nicotine. We 
know--we have been listening--about how we ought to

[[Page S5507]]

be concerned about the problems of substance abuse as well. We are 
concerned about the problems of substance abuse.
  There are two gateway drugs and smoking is No. 1. The second one is 
drinking beer. This is a gateway drug. When I listen to our friends who 
have indicated opposition to this legislation say this isn't the 
problem that we ought to be dealing with, substance abuse, if you talk 
to anyone who has seriously worked on the problems of addiction and 
substance abuse, they will tell you that nicotine is right out there 
with any of the other kind of addictions that are afflicting the young 
children in this country, and we can do something about it.
  The various medical research into the tobacco-related diseases, and 
there are many--emphysema and the whole complexities in terms of the 
lungs--there are many, we have resources to try and deal with those 
issues as well.
  Madam President, I see my friend and colleague from Ohio on the 
floor. I pay tribute to him for his leadership on this amendment. I 
commend him for his work in this area. He has been an important leader 
in protecting the interests of children in our country and society on 
many different matters. It is just a pleasure to join with him, and I 
urge the Senate to accept his wisdom and judgment about public policy 
on this issue.
  Mr. DeWINE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Ohio is recognized.
  Mr. DeWINE. I thank the Chair.
  Madam President, first, I thank my colleague from Massachusetts for 
his very kind comments. I think the charts of the Senator from 
Massachusetts tell a great story, actually a sad story, but it is a 
very effective story and really illustrates the need for this bill.
  I also thank my other colleague from Massachusetts for his kind words 
about this amendment a few moments ago.
  The amendment that Senator Durbin and I have offered really will make 
a few, but very necessary, improvements to the so-called look-back 
provision of the underlying McCain bill. Let me start my remarks this 
afternoon by talking a little bit about the look-back concept, and then 
the specific look-back provisions in the McCain bill, because I think 
an understanding of the broad concept of look-back is essential to 
understanding what the McCain bill tries to do in this area, and is 
also essential to understanding what Senator Durbin and I are trying to 
do with our amendment.
  Conceptually, the purpose of look-back--whether in the original 
tobacco settlement, the McCain bill, or in the Durbin-DeWine 
amendment--is to change the incentives for tobacco companies. Until 
now, tobacco companies have always had an incentive--potential 
profits--to convince children to use their products. The look-back 
approach simply flips this incentive--it turns it around by giving 
tobacco companies incentives to help reduce the number of minors using 
their products. This incentive structure, through which tobacco 
companies will work with us rather than against us in our goal to 
reduce youth tobacco use, is created by imposing assessments on tobacco 
companies if they do not meet targets reducing youth tobacco use.
  It is simple: If the targets are not met, the companies will have to 
pay. If the targets are not met to reduce teenage smoking--and these 
are targets that the tobacco companies all said they could do, all made 
a commitment to do in the settlement they reached with the attorneys 
general--if those targets are not made and are not met, then the 
tobacco companies will have to pay.
  Before I get into the specifics of the McCain look-back provision and 
our amendment, I would like to reiterate what I have said several times 
on the floor of the Senate before, and that is that the Chairman of the 
Commerce Committee, Senator McCain, has done a great job in bringing 
this tobacco bill to the Senate floor against some very, very difficult 
odds. This is a comprehensive bill. Something like this, frankly, has 
never been tried before, so I commend my colleague from Arizona for his 
great work.
  This bill includes many different parts, each of which is important 
if we are really going to reduce youth use of tobacco. The look-back 
provision that our amendment deals with is an important and integral 
part of this campaign to reduce youth use, but is only one of several 
things the bill does, all of which are important, to have a real impact 
on youth smoking. Again, I congratulate Senator McCain, as well as his 
colleagues on the Commerce Committee, for facing this difficult issue 
and meeting it head on with a very sound piece of legislation.

  I will now turn to a quick overview of the Durbin-DeWine amendment. 
Madam President, the Durbin-DeWine amendment will make two changes to 
the look-back provision in the underlying McCain bill.
  First, our amendment will shift the emphasis from an industry-wide 
look-back to a company-specific look-back. Let me make it very clear, 
both the McCain bill and the Durbin-DeWine amendment blend the company 
look-back with the industry-wide look-back. Both are blends. The 
difference is the Durbin-DeWine amendment puts more emphasis on the 
responsibility of the individual tobacco company. We follow what I 
consider to be, frankly, a more conservative point of view, and that is 
accountability, that the tobacco companies should have to live with the 
consequences of their actions or even their inactions. That is the 
conservative way to look at it, but more important than that, it is the 
right way to look at it.
  The second provision of the Durbin-DeWine amendment provides for 
increasing the McCain bill's targets for the reduction of youth tobacco 
use. Yes, by setting a higher target of reduction, the goal is to have 
fewer kids smoking. But having said that, let me emphasize that our 
provision effectively takes us back to what the cigarette companies 
agreed to over a year ago when the cigarette companies and the 
attorneys general reached this agreement. Our provision takes us back 
to what the tobacco companies said they could do in June of last year.
  I'll repeat that: We are simply increasing these reduction targets to 
levels the tobacco industry and companies agreed was achievable just 
last year in the attorneys general agreement.
  Let me discuss in more detail these two specific changes in the look-
back provision that we are providing in the Durbin-DeWine amendment. I 
will first start with the company-specific emphasis and how we would 
require more accountability from the individual tobacco companies.
  The first important change that I mentioned our amendment makes is 
that it shifts the emphasis from an industry-wide look-back to a 
company-specific look-back. What does this really mean? Let me explain 
by using an example and by talking about my early concern of last 
year's settlement which only contained an industry-wide look-back and 
had no company-specific piece in it.
  Under a pure industry-wide look-back, the industry is measured and 
judged as a whole on how well it does in reducing youth tobacco use. 
What this does, in effect, is dilute the incentive for each company to 
do everything it can to make sure children are not using its products.
  Why do I say that? Simply because the effects of whatever that 
company does--positive or negative--is spread across the entire 
industry. In a sense, this is a form of socialism. Whatever they do, 
however well they do it, they only get a portion of the credit, and 
they only get a portion of the blame. The intent is to share--everybody 
is in this together. You can have one company that does everything it 
can to reduce teenage smoking, and you can have another company that 
completely ignores everything and goes about its business to continue 
to try to hook kids. It doesn't matter; each one is treated equally 
under a pure industry system. I think that is wrong.
  Let me raise a specific case that I brought up a few weeks ago when I 
talked about this issue on the floor--a case that involves the Philip 
Morris company, the maker of Marlboro. This company, Philip Morris, 
through the use of the Marlboro Man and other marketing campaigns, has 
been extremely successful in selling cigarettes to our young people.
  They know what they are doing. They are very, very good at marketing 
their product. They did such a good job that by 1993--if you can 
believe this--60 percent of all teen smokers in this country used 
Marlboro--60 percent. But

[[Page S5508]]

in the overall market of all cigarettes sold, the legal market, 
Marlboro only had 23.5 percent of the market. So 60 percent in illegal 
sales--60 percent to kids--and only 23.5 percent to legal, adult 
market. The Marlboro Man and other advertising did a fantastic job, 
tragically, in hooking young kids.
  How would an industry-wide look-back approach affect Philip Morris, 
the maker of Marlboro? After all, Philip Morris is responsible for a 
majority of youth smoking, meaning this is the main company the look-
back incentives should be aimed at.
  Madam President, the industry-wide look-backs in the original 
settlement and in the McCain bill would allocate the industry-wide 
assessments to each company based on its adult market share--not its 
share of the youth market. So if the cigarette industry as a whole 
misses its reduction targets, under the original settlement reached 
last year, Philip Morris would only be responsible for 23 percent of 
the total industry-wide look-back assessment, even though Philip Morris 
is responsible for 60 percent of all the youth smoking in the country.
  So once again, let me ask the question that I have asked previously: 
What do we think Philip Morris will do under this industry-wide look-
back if we had a pure industry-wide look-back provision? Will the look-
back succeed in getting Philip Morris to try to reduce the number of 
children who use its products? I do not think so. For the industry-wide 
look-back, it is pretty clear to me that the answer is no. Philip 
Morris will probably not try to reduce youth use of its products at 
all. Why? Well, it's simple: the incentive is not there. The industry-
wide look-back forces other companies to pay for the sins of Philip 
Morris. Philip Morris is simply smarter to simply ignore the look-back.
  So an industry-wide look-back in this 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.
  So, Madam President, what can we do to make sure the look-back 
provision is effective and really gives tobacco companies the right 
incentives? The answer is simple. We need to hold each company 
responsible individually for meeting the youth reduction targets, and 
allow each company to reap the rewards or face the consequences of its 
own behavior.
  Madam President, it is the American way. It is the right way. Let us 
hold them responsible. Let us hold them accountable. Let us measure 
their success or their failure.
  Right now about 3 million children, it is estimated, smoke Marlboro 
cigarettes which are made, as I mentioned, by Philip Morris. Instead of 
focusing a look-back provision on what the industry as a whole does, it 
is so much more powerful to simply say to Philip Morris--this is what 
we ought to say to them--``You have 3 million children who use Marlboro 
cigarettes--3 million in this country. You need to do everything you 
can to help us reduce that number. That's your responsibility.''
  That is what the look-back provision should hold them to. That is 
what the Durbin-DeWine amendment says. By focusing on a company-
specific rather than industry-wide look-back, we are simply telling 
each tobacco company that it is responsible for its own behavior. In 
this way we create a more powerful incentive for each company to help 
us achieve the ultimate goal of this legislation. Let us never forget 
that ultimate goal; that is, to reduce youth smoking in this country.
  Let me talk, if I could, Madam President, about the second part of 
our look-back change that we make in the Durbin-DeWine amendment. Part 
of our amendment, as I mentioned, was to set higher reduction targets 
for youth smoking than those set in the McCain bill. What this means is 
that tobacco companies are given an incentive to try to get even more 
children to stop smoking.
  Using the current level of youth smoking as the baseline, the Durbin-
DeWine amendment would aim for a 67-percent reduction in youth smoking 
in ten years. This compares to the 60-percent goal contained in the 
McCain bill. But this, I think, is the important thing: in real terms 
what this means is that 450,000 fewer children will smoke if the 
companies meet the reduction targets in our amendment. Since we know 
that one-third of smokers die young as a result of their habit, this 
means that 150,000 fewer children will die early as a result of 
smoking.
  These are real kids. These are real children that we are talking 
about, and they are quite possibly real deaths. So let me say it again. 
If tobacco companies meet their reduction targets in our amendment, it 
will mean 450,000 fewer youth smokers and 150,000 fewer early deaths 
due to smoking.
  What we need to remember is that the reduction targets in our 
amendment in real terms are actually equal to the targets from last 
year's settlement. Our amendment has the same targets to which the 
industry agreed to last year.
  To me, Madam President, this is an easy issue and it is an easy 
decision. In effect, the industry has already agreed that it is 
possible to prevent almost half a million more kids from smoking than 
the underlying bill calls for. Let us pass this amendment which stops 
these kids from ever becoming smokers at all.
  Again, I emphasize our amendment merely takes us back in real terms 
to what the industry, the tobacco companies and the attorneys general, 
agreed to last June. The 67 percent in our amendment is really equal to 
the 60 percent they agreed to last June because of the change in the 
baseline. The raw numbers are the same.
  Madam President, I would like to respond for a moment to some of the 
criticism that we have heard about this amendment. And let me just 
comment about a few things.
  Some Members have come to the floor and have argued that this might 
be too punitive. Some have said that the potential assessments under 
this amendment are just too high.
  First, I would like to say that my sincere hope is that we never see 
any assessments under a look-back, because this would mean we will have 
met our reduction goals for youth smoking. Once again, since the 
industry, the tobacco industry, has agreed that these reduction goals 
are achievable, I think it is likely we will never see any assessment 
under the look-back, at least that is what our goal is.
  But this will only be true if we create a strong incentive for each 
company to meet the reduction targets. This is what our amendment, the 
Durbin-DeWine amendment does. The company-specific payments in the 
Durbin-DeWine amendment are higher than the McCain bill. However, the 
industry-wide payments are lower. When you add the two types of look-
backs, company-wide and industry-wide together, you really will not 
find a huge difference between our amendment and the McCain bill. We 
have a different blend. We change the emphasis, but overall there isn't 
a great deal of difference.
  Let us take an example. Let us suppose that each and every company 
misses the reduction target in a given year by 10 percent. If this 
happens, the combination of industry-wide and company-specific payments 
in the McCain bill would add up to a total of $1.8 billion. In the 
Durbin-DeWine amendment, under those same set of facts, it would add up 
to $2.4 billion. There is a difference, but the difference is really 
not huge.
  Madam President, the real difference between our amendment and the 
McCain bill is not the size of payments, but rather the emphasis. The 
company-specific focus of the Durbin-DeWine amendment places more 
incentive on each tobacco company individually to change its behavior 
and to stop children from using its products.
  Madam President, others have argued to address another issue that has 
been raised, that company-specific look-backs are unfair because the 
company cannot really control whether kids use its products. Well, we 
know from experience and seeing what these tobacco companies have done 
in the past that that simply is not true. There are many things that 
tobacco companies can do to prevent kids from using their cigarettes. 
There have been many things that the tobacco companies have done to get 
kids to use their cigarettes. We know there are many things they can do 
to stop them as well or reduce it. Those who make that argument aren't 
giving the tobacco companies enough credit. The most basic

[[Page S5509]]

thing tobacco companies can do is make sure its advertising is not 
appealing to kids.

  Now, some of this is already taken care of and addressed in the 
McCain bill. We do this by placing marketing restrictions on tobacco 
companies, such as prohibiting the use of cartoon characters or human 
images. That is in the bill. But advertising is a subtle thing. The 
tobacco industry has proven a real expert at dealing with this. There 
is simply no way Congress can specifically prohibit every type of 
advertising that might appeal to children. We are not that good. We 
can't write legislation that specific.
  The advantage of a company-specific look-back provision is that each 
company is given the incentive to think about other ways its 
advertising may be attracting children and then to stop it. But even 
beyond the issue of advertising, companies can still have an impact on 
how many kids use their products. For example, they can initiate their 
own antismoking advertising campaigns or their own education programs 
that would build on efforts called for elsewhere in this bill. They 
could do it if they wanted to do it. Again, the buck stops with them 
under our provision.
  A company could also work with retailers to find ways to be 
absolutely sure that none of its products were being sold to minors. 
The relationship between retailers and tobacco companies is a very 
close one. They have used it over the years to build sales. They can 
certainly use it in the next few years to reduce illegal sales to 
minors.
  So I think those who say that, gee, the tobacco companies can't be 
held for liability on this, this is all beyond their control, I think 
that argument is absolutely absurd.
  As we can see, companies have any number of ways or tools to make it 
harder or less likely for children to use their products. We need to 
make sure they have a strong incentive to put that great genius to 
work. The only way to place a strong incentive on each company 
separately is with a strong company-specific look-back penalty like 
that contained in the Durbin-DeWine amendment.
  The choice before the Senate is simple. We have the opportunity when 
this amendment comes for a vote, the Durbin-DeWine amendment, to vote 
on an amendment that will prove the basic purpose of this legislation, 
and that is to reduce youth smoking by holding individual tobacco 
companies more accountable for failing to reduce youth smoking, and by 
restoring the original target set by the tobacco companies themselves 
and agreed to themselves. The Durbin-DeWine amendment will make a real 
difference in young lives. I, once again, urge my colleagues to join us 
on behalf of our young people and support the Durbin-DeWine look-back 
amendment.
  Some of my colleagues and friends have come to the floor, and I have 
heard legitimate talk about the problem of the illegal use of drugs. 
That is a major problem. It is a major problem in our country today. It 
is a major problem with our young people. If we had to tick off two of 
the major problems we have with our general population, but 
particularly with our young people, we certainly would include 
cigarettes and we certainly would include the illegal use of drugs.
  As I have listened to some of those debates, and I agree with what 
they have said and I do not disagree in any way--in fact, I am struck 
by the similarity between the two issues--cigarettes and drugs. I think 
as we approach, really for the first time in this Congress, the issue 
of trying to comprehensively deal with tobacco use, and as we for the 
first time try to structure a comprehensive program to reduce the 
number of young people who start smoking cigarettes, who start to use 
tobacco, that the lessons we have learned as a society over the last 
few decades in regard to the illegal use of drugs and how we deal with 
that and how we try to reduce that, I think are very apt. I think we 
ought to look at that effort in that war.
  What have we learned? We have had some success in the war against 
drugs and we have had an awful lot of failures, as well. We have seen 
the use go up and we have seen the use go down. There are times in our 
history where we have driven the use down and at times we have driven 
the use back up, particularly among our young people. I think we have 
learned a great deal.
  What have we learned that might be applicable to what we are trying 
to do in regard to cigarettes? A couple of things. One, price. Why do 
we spend so much time, effort, and money to try to keep drugs from 
coming into this country? Why do we go to the source countries? Why do 
we try to help Colombia? Why do we have Coast Guard cutters today off 
the coast of Haiti to try to interdict drugs? Why are we working in the 
Bahamas? Why are we working in Mexico? Why are we doing everything we 
can to try to stop drugs from coming into this country?
  The answer is not only do we want to keep drugs out of the hands of 
anybody who might buy them in this country, but at the same time we are 
trying to drive up the price of drugs. We know there is a direct 
relationship between the cost of drugs on the streets of Cleveland, OH, 
Los Angeles, Cincinnati and the cost on the drug traffickers to get 
them there; and we know there is an inverse relationship between the 
price of those drugs and the use of those drugs. So if it is true with 
illicit drugs, and I think it is true for just about any product, it 
certainly is true and the statistics have shown us that it can in many 
cases be true in regard to tobacco, as well.
  Now, I happen to think, and I have argued on this floor, that price 
alone is not enough, driving up the price of tobacco is in and of 
itself not enough. We have seen that the studies have been conflicting 
in regard to the price issue. But I am convinced that price is an 
important factor.
  What else have we learned about a war on drugs in general? We have 
learned that when we have come forward with very effective antidrug 
advertising campaigns that are focused in the media, that are focused 
on radio and television--we know when the genius of Madison Avenue is 
utilized, we know they can be effective, and they are effective. We 
know when we focus public attention on the issue that we can make a 
difference. Advertising does work. Counteradvertising works, as well. 
Again, another lesson from our war on drugs. We know what works and we 
know what doesn't.
  The same is true with education. We know that when you combine the 
increase in cost, the price on the street of a drug, you combine that 
with counteradvertising, you combine that with education sustained year 
after year after year in school, that it will make a difference. Part 
of the problem with our anti-education programs that are anti-illicit 
drugs, we only do them for 1 or 2 years. We might have a 5th or 6th 
grade DARE program, and then a young person might not get another dose 
of that until 11th or 12th grade in health class. We know that is a 
problem. Every study has shown the only way education is effective is 
starting in kindergarten, preferably before that, and start K through 
12, every single year.
  This is not rocket science. This is not difficult. It is the same way 
with tobacco. The lessons we have learned, sometimes the hard way, in 
regard to how you deal with illicit drugs in this country--sometimes we 
act like we haven't learned those lessons, but those lessons can be 
applied in regard to stopping young people from smoking cigarettes.
  What we are trying to do in this bill is to take the knowledge that 
we have and come up with a comprehensive package that will in the long 
run save tens of thousands of our young children's lives. That is what 
we are about. So as we debate this bill and we talk about different 
provisions, whether it is the look-back provision or other provisions, 
let us keep our eye on the ball. Let us keep our eye on what are the 
bare facts and what the goal is. The goal is to reduce teenage smoking.
  The only way that we can do that is to come up with a comprehensive 
approach that combines education, antismoking advertising, reduction in 
advertising aimed at children, good law enforcement, and an increase in 
price. When you put all of those things together you have a good, good, 
fighting chance to dramatically reduce teenage smoking in this country, 
which is what our goal is. That is why I continue to support this 
legislation and continue to urge my colleagues, no matter what their 
position is on individual amendments as they come up, to keep our eye

[[Page S5510]]

on the ball and keep pushing this bill forward. It is essential that we 
get it passed. We have a great responsibility to get that job done. I 
hope we will continue to do it.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. CHAFEE. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CHAFEE. Madam President, I would like to address the question of 
the National Tobacco Policy and Youth Smoking Reduction Act, S. 1415, 
this afternoon, which the Senate is resuming consideration of today. 
This is a very important bill, and I know the occupant of the Chair 
shares my concerns with this legislation and a concern that it be 
passed. This seeks to address a serious problem--tobacco use among our 
young people.
  Both conservatives and liberals fault this legislation. Some say it 
is not strong enough; some say it goes too far. I think it strikes an 
appropriate balance and merits our support. It is not a perfect bill, 
but I don't think we should let perfection be the enemy of the good. By 
striving constantly for what each of us wants in the perfect bill, we 
won't end up with anything. I am concerned about that.
  Madam President, if one counts the Mondays and Fridays as part of 
each working week, there are only 68 legislative days remaining in this 
congressional session before we adjourn for the midterm elections in 
the fall. Sixty-eight days is not very long. Time is of the essence if 
we are going to enact a comprehensive tobacco bill this year. I 
certainly believe Congress should enact such legislation. Thus, I am 
hopeful that, following a vigorous and healthy debate, the Senate will 
pass the McCain bill and send it along to the House.
  Given all the disinformation circulating about this legislation--most 
of it, I might say, initiated by the tobacco industry--I would like to 
take a few moments of the Senate's time to review the bidding as to why 
we are considering national tobacco legislation at this time.
  The opponents of S. 1415, the so-called McCain bill, would have us 
believe that this legislation is a case of tax and spend liberalism 
gone wild, that this bill is an excessive response to a relatively 
minor social problem--that of tobacco use among the young people--and 
that an antitobacco media campaign is all we need, that is an adequate 
response. Well, for years the tobacco industry sought to discredit 
studies which linked smoking to cancer and other diseases. Then the 
industry told us that nicotine was not addictive. Now the industry says 
it doesn't target kids with any advertising or marketing programs and 
that this legislation is just another opportunity--the McCain 
legislation--for Washington to increase taxes on the U.S. public.
  Let's look at the facts. There is indisputable consensus within the 
public health community that tobacco use constitutes the single most 
preventable cause of death in this country. In other words, of all the 
possibilities of reducing deaths in our country, including better 
exercise, reduction in fat consumption, conducting what we might call a 
healthful life, all of those things put together aren't as effective in 
improving the health of the United States of America as giving up 
smoking would be. In other words, it is the single most preventable 
cause of death. Who says that? Is it I, Senator Chafee from Rhode 
Island? Not at all. It is the Centers for Disease Control.
  Here is a chart. This chart says tobacco kills more Americans than 
alcohol, car accidents, suicides, AIDS, homicides, illegal drugs, and 
fires combined. In other words, all the effort we go to in this country 
to lecture people to use seat belts in order to reduce automobile 
accidents or fatalities and injuries from automobile accidents, and all 
we do about counseling in connection with suicides, and the money we 
pour into AIDS prevention and attempted cures, and homicides, and the 
battle against illegal drugs and fires, and all we do to prevent fires 
from occurring in households, and the lectures on alcohol--if you put 
all of those together, tobacco kills more Americans than alcohol, car 
accidents, suicides, AIDS, homicides, illegal drugs, and fires 
combined.
  So if we are serious about doing something about improving the health 
of Americans, we should try to make every effort to entice Americans 
not to take up smoking and, if they are smokers, to cease smoking.
  Here are the figures: Tobacco kills 418,000 Americans every year by 
tobacco-related diseases; alcohol is 105,000; about one-fourth of the 
deaths result from tobacco and fires, 4,300; illegal drugs, 9,000; and 
so forth. So you add them all together, and they don't amount to the 
figures that are causing the deaths resulting from tobacco-related 
diseases.
  Where is the problem? The problem lies in that every day it is 
estimated in the United States of America 3,000 children and young 
people start smoking in schoolyards, or wherever it might be, in our 
country. Every day, 3,000 youngsters take up smoking, and one-third of 
these will die prematurely as a result of that habit. In other words, 
if they smoke, the chances are that about 33 percent will die 
prematurely because of the habit of smoking. Each year, 1 million 
additional children--3,000 a day times 365 gets you very close to 1 
million--1 million additional children become smokers. What we are 
aiming for in this legislation is to prevent that and reduce the number 
of children who take up smoking.
  There are those who say, ``Oh, well, tobacco use is a matter of 
personal choice.'' But is this true when you are talking about young 
people, impressionable children, 14, 15, 16, 17, in their teens? Ninety 
percent of those who take up smoking do so before the age of 18. In 
other words, if you can get someone by the age of 18 without having 
taken up smoking, the chances are excellent that individual will not 
become a smoker. Ninety percent of smokers have taken it up before the 
age of 18.
  Children obviously don't possess the same level of maturity as 
adults. They can't be expected to make the most thoughtful decisions on 
this life-and-death matter of smoking. Sometimes it is the ``cool'' 
thing to do, apparently.
  But the tobacco industry itself, in its own words--here is the 
internal document from R.J. Reynolds. ``If a man''--or woman--``has 
never smoked by the age of 18, the odds are three-to-one he never 
will.'' If you haven't smoked by 18, the chances are pretty good that 
you won't smoke ever--``three-to-one.'' By the age of 24, if you can 
hold off and not smoke at the age of 24, the odds ``are 20-to-one'' 
that that individual you will not take up smoking.
  That is where we want to concentrate our efforts--on these young 
people in their early teens--and carry it up through the age of 24 when 
the chances are very, very good that an individual will not take up 
smoking. But the key group is 18 or younger.
  Is there an epidemic of smoking amongst young people? You bet your 
life there is. In my home State, where I never thought there was a 
particular abundance of smoking--it is not going like going to China, 
where everybody seems to be smoking. That doesn't seem to be true in my 
State. Yet the Centers for Disease Control say that 37 percent of high 
school children--I am not talking about high school seniors; I am 
talking about high school children; that would be the 12th, 11th, and 
10th, and in some instances the 9th grade--smoke. That is more than 
70,000 teen smokers in our State. We have 1 million people in our 
State, and 70,000 teen smokers, one-third of these high school 
students, will lose their lives prematurely because of this unhealthy 
habit.
  Here is a graph that shows the increase in the rates of smoking among 
high school seniors. Now we are talking seniors. It is remarkable. It 
went along pretty steadily at about 30 percent. Then in 1982 it even 
dipped down to about 27 percent. ] Then it shot up starting at about 
1991, up until the middle 30s nationally.

  What has caused all of this? One of the things, obviously, that has 
caused it is the action of advertising to these young people, whether 
it is the Marlboro man, or Joe Camel, or whatever it is. All the 
advertising from the tobacco companies has been oriented toward 
inducing the young people to take up smoking. It is the ``in thing.'' 
They want to make it the ``in thing.'' The tobacco companies clearly 
do.
  One of the ironies of the opposition of the tobacco companies to the 
McCain

[[Page S5511]]

bill is the suggestion that this bill was somehow dreamed up by a bunch 
of Washington bureaucrats. The fact of the matter is that most of the 
provisions in this bill have their origins in the global settlement the 
industry entered into with the 40 States' attorneys general last June. 
In other words, about a year ago the tobacco industry entered into a 
deal with 40 of the attorneys general from our 50 States. In that, they 
made a whole series of concessions. It had nothing to do with 
Washington, DC, or Washington bureaucrats, or tax-and-spend liberals in 
the U.S. Congress. It was all initiated and agreed to by the tobacco 
companies and the attorneys general.
  Let's tackle some of the things that came up in that agreement.
  What about the idea of a per-pack tax on cigarettes to discourage 
teenagers from smoking? In other words, what is the idea of increasing 
the tax, or fee, if you will, on each package of cigarettes that is 
sold in order to discourage teenagers from taking up smoking? Tobacco 
companies signed on to a 65-cents-per-pack increase during the 
settlement negotiations. Sixty-five cents they agreed to. That had 
nothing to do with Washington, DC. That was out in the hinterlands, out 
in the States, working with the tobacco companies and the attorneys 
general.
  What about financial penalties on the tobacco companies for failure 
to meet the annual youth smoking reduction target? This is the so-
called look-back provision. If there isn't a reduction of x percent--
this is written out in the contract, in the deal--if those reductions 
aren't achieved by 40 percent or 50 percent, whatever it might be, by 
such and such number of years, then the tobacco companies will have to 
pay an additional penalty. That is the so-called look-back provision at 
the end. At the end of 5 years of this deal, you look back and see if 
there has been this percentage reduction in teenage smoking.
  Where did that come from? Out of the bureaucrats in Washington? Not 
at all. The tobacco companies agreed to this during the settlement with 
the attorneys general.
  What about advertising and marketing restrictions? The industry 
signed off on that.
  What about receipts from those new taxes to fund public health 
programs such as counteradvertising, cessation of smoking efforts, 
community-based antismoking programs, and all of these things that we 
are now thinking are wise to reduce smoking in the United States--not 
just to get people to not take it up in the beginning, to help those 
who are smoking cease that very dangerous habit? Where did that come 
from? Did that come from Washington bureaucrats? Not at all. The 
industry agreed to it in their dealings with the attorneys general.
  The fact is, the McCain legislation is based largely on the 
negotiations which produced the so-called global settlement, 
comprehensive settlement, last June.
  Given the American public's distaste for new taxes, it is not 
surprising that the tobacco industry has seized upon the $1.10 increase 
in the price for a pack of cigarettes and has used this as a rallying 
cry of opposition.
  Let's understand this. Who is going to pay this tax? Only people who 
smoke. If they give up smoking, they won't pay the tax. Anybody who 
says they don't like the tax, quit smoking and they won't have to pay a 
nickel of it.
  Obviously, smokers are free to go on smoking. But I think we all 
ought to understand that all of us are paying when there are smokers in 
our society. Why are they paying? Because one-third of those smokers 
are going to suffer very severe sickness and illness as a result of 
their smoking. And the direct health care costs--in other words, 
whether Medicaid, Medicare, or other forms of assistance to those who 
smoke, or are suffering from smoking-related illnesses--are paid for by 
all of us in society. It costs $60 billion a year to care for those 
individuals. And when you take the lost productivity and the disability 
payments, it is estimated that smoking-related illnesses are causing 
American taxpayers over $100 billion a year. Now, even for somebody 
from Washington, $100 billion is a lot of money. That is what these 
tobacco-caused illnesses are costing the taxpayers in the United 
States.

  Madam President, I urge Members of this body and the public also to 
look closely at the facts I have enunciated here and not to be 
dissuaded from doing the right thing, not to be dissuaded by this blitz 
from the tobacco industry and the lobbying that is taking place. S. 
1415, the McCain bill, is a comprehensive bill, it is a good bill and 
addresses a very serious problem in our country. The time for action on 
it is now, and I hope my colleagues will support efforts to pass the 
legislation.
  Madam President, seeing no one else wishing to speak, I suggest the 
absence of a quorum.
  The PRESIDING OFFICER (Mrs. Hutchison). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. LOTT. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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