[Congressional Record Volume 144, Number 71 (Thursday, June 4, 1998)]
[Senate]
[Pages S5584-S5601]
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 
resume consideration of S. 1415, which the clerk will report.
  The assistant 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. 2433), in 
     the nature of a substitute.
       Gramm motion to recommit the bill to the Committee on 
     Finance and 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. FRIST. Mr. President, over the course of today we will continue 
our discussions and debate on the pending tobacco legislation, a topic 
that has been the focus of much of our activity over the past several 
weeks, a focus which I hope will become increasingly addressed over 
this week. I ask that amendments that are talked about being introduced 
are actually brought

[[Page S5585]]

to the floor so that they can be debated. We have legislation in the 
Chamber that has a fascinating history, legislation that continues to 
evolve, legislation that I believe is very important as we stay focused 
on that goal of decreasing, and maybe even someday eliminating, youth 
smoking.
  I am concerned that we have gotten off track in our consideration of 
what I believe has to be comprehensive tobacco legislation. There are 
some people who would just like to establish a tax and have funds to go 
possibly to public health, but also to many other issues totally 
unrelated to what our focus should be, and that is youth smoking. There 
are others who say we need to address just the advertising aspects of 
this particular bill. There are others who say that we look at just 
vending machines; and there are others who say we can solve this whole 
problem by looking at just the public health initiatives of behavioral 
change, of figuring out what causes addiction.
  I for one believe we need to address all of these issues, and we run 
the danger, maybe for political reasons, maybe for selfish reasons, of 
taking a bill that did start as a comprehensive bill and stripping away 
certain things so that we will end up with just a tax or just a public 
health initiative or just an issue of access itself, and I think we 
need to do all of that.
  As to youth smoking, we have talked again and again over the last 2 
weeks about the alarming statistics of youth smoking. The one statistic 
that seems to stick with people is one that is real, and that is that 
over the course of today, between now and tomorrow morning, 3,000 kids, 
underaged children, will start smoking for all sorts of reasons.
  We know it is peer pressure, we know it is advertising, we know it is 
access, we know that it is looking cool; but regardless, the bottom 
line is that 3,000 kids who were not smoking yesterday by the end of 
today will be smoking.
  What has become increasingly clear and possibly covered up by the 
industry, in part--confused by politics--is that 1,000 of those 3,000 
will become addicted to smoking, and by being addicted, it means your 
body becomes dependent on that, it is out of your control, to a large 
extent because of physiological responses. But, regardless, the bottom 
line is that one out of every three of those children, the age of my 
children, 15, 12, 11, 10 years of age, who start smoking today, one out 
of three will die prematurely; that is, die earlier than they would--of 
lung disease, of cancer, of emphysema--earlier than they would have if 
they hadn't started smoking.
  So, the problem is very, very clear today, much clearer than it was 
even 5 years ago or 10 years ago. Therefore, I think it is useful to 
stick with that statistic. You can argue the statistic, but the bottom 
line is that 1,000 children who start smoking today will die 
prematurely.
  The other two out of three children may or may not continue smoking. 
They may not be affected, because it is not crystal clear that smoking 
100 percent of the time causes cancer. But we know that it has a very, 
very strong influence on whatever our genetic predisposition is to 
cancer, all sorts of cancer, and to heart disease which--as a heart 
surgeon and heart specialist, I have operated on thousands and 
thousands and thousands of people whose heart disease I would 
attribute--to genetics? yes, but also in large part to smoking.
  Focus on the health of our children and their children. Many of us in 
this Chamber do have children who are in those teenage years. A 
fascinating statistic is that about half of the people who start 
smoking, half of all people who start smoking today, are 8 years old, 
9, 10, 11, 12, 13, and 14 years of age. Half of all people who start 
smoking today in this country are 14 years of age and younger. That is 
very different from in the past. I think in large part that does come 
from the fact that that group of people have been targeted in recent 
years, over the last 5 or 10 years--unlike 20 years ago--because if you 
can addict people at that age, they will not only purchase more 
cigarettes as youths but, because of their addiction, over their entire 
lifetimes.
  This whole passage through adolescence is something which really 
confuses the issue. It would be much easier if we said let's stop 
everybody from smoking, because then you could really engage in huge, 
huge policy. But if you really stay focused on the youth, it introduces 
all sorts of factors that may not apply later: Advertising, how we 
advertise to youth--is it just Joe Camel, or is it other seductive 
types of advertising? And then, how you separate that advertising from 
broader-scale advertising, something that we cannot do in the U.S. 
Senate or the U.S. Congress. I believe it does almost demand 
participation by the industry, to agree that somebody 8 years of age or 
10 years of age or 12 years of age should not be targeted by such 
advertising, which clearly results in a crippling addiction which will 
ultimately kill that child later in life.
  For many years, individuals, if we look at the history, have not been 
successful in suing the tobacco industry because of a doctrine called 
assumption of risk doctrine. No jury would side with a plaintiff, 
because the smoker had assumed the risk associated with smoking.
  However, if we review very briefly this recent history, over the last 
several months a group of State attorneys general got together and 
starting suing the industry to recover Medicaid costs, Medicaid costs 
being principally incurred by a State, because two-thirds of Medicaid 
funds are paid for by the State and about a third from the Federal 
Government. And therefore it was the State attorneys general. The 
Medicaid Program is our joint State-Federal partnership program that is 
directed at health care for our indigent population, a population that 
falls below the poverty level. That is why this grassroots effort, now 
elevated to this body, started at the State level. The State attorneys 
general got together to recover the Medicaid--predominantly State--
costs for smoking-related illnesses, thus avoiding this whole doctrine 
called the assumption of risk doctrine.
  It has been fascinating, because in the course of these lawsuits, and 
in large part because of the lawsuits--and we have seen it unfold 
before committees here in the U.S. Congress as well--internal industry 
documents have been made public. They have been made public for the 
first time and are now on the Internet, accessible to the media, to 
committees here in the U.S. Senate, as well as to people who are, on 
their own, on the Internet; they have access to these documents today.
  It is very clear the industry knew a lot more about the science--that 
is, the addictive nature of nicotine--than they had let on, that they 
knew a lot more about the destructive effects of smoking tobacco than 
was ever previously thought.
  The focus of the discussion today, which really demands that we 
address the issue, is that the debate no longer is that smoking may be 
harmful to your health, as it was 20 years ago--we know that it is 
harmful to your health--the debate that we need to address in the U.S. 
Senate, however, is the youth smoking, where one really doesn't engage 
in free choice to start smoking at 10 or 11 or 12 years of age. That 
free choice can be targeted, can be shifted by very aggressive 
marketing. And that is what has been done today.

  If we look back again a few months, some of these States began to 
settle for huge sums from the tobacco industry. Mississippi, as we 
know, just 2 years ago settled for $3 billion; Florida and Texas were 
the next to settle, for $11.5 billion and $15.3 billion, respectively. 
And then just last month, Minnesota, the most recent to settle, settled 
for about $6.6 billion. Look a few months later and how all of this 
evolved. In the Spring of 1997, interested parties came to the 
bargaining table. I say ``interested parties,'' because you really did 
have the public health advocates at the table: You had the State 
attorneys general representing the Medicaid population, representing 
the expense of the States at the table; you had the industry--something 
which we don't have today in the U.S. Congress and the U.S. Senate--we 
had the industry actually at the table, coming to certain agreements.
  Let me add very quickly, it was fascinating, because I am from a 
tobacco State; we have 23,000 hard-working women and men and farming 
families who work very hard, get up every morning to produce a legal 
product in this country. It is interesting, in this

[[Page S5586]]

great agreement--I guess I should qualify ``great''--in this historic 
agreement, the tobacco farmers and the agricultural community were not 
represented at that table.
  Regardless, the other three groups--the public health group, the 
industry itself, the attorneys general--sat down, and the basic 
elements of that, and I would say historic, June 20 settlement included 
a number of things: No. 1, industry payments of $368.5 billion, agreed 
to by industry, members of the plaintiffs' bar, the attorneys general, 
and the public health groups. That $368.5 billion was to be paid over 
about 25 years. It would be funded by what calculated out to be raising 
the price of cigarettes by 70 cents per pack over a 10-year period.
  Second, an important component, I believe, is the advertising 
restrictions. The industry came forward and said that, we will 
voluntarily limit our first amendment rights by refocusing advertising, 
if the remaining aspects of that agreement would go into effect.
  Third, there were youth access provisions and really some pretty 
tough licensing requirements for retailers who sell tobacco. All of us 
know the problem we have with access today. If you go into any 
community and ask a young 16-year-old or 15-year-old, ``Could you get a 
pack of cigarettes?'' they would say, ``Yes, without a problem.''
  Fourth, that June 20, 1997, settlement had $2.5 billion per year for 
smoking cessation programs, public education campaigns, and State 
enforcement. It gave FDA authority to regulate tobacco and smoking. It 
had no class action suits or suits by any government entity. It had 
immunity for the industry from all punitive damages for past actions. 
Individuals were allowed to bring suits to cover compensatory damages 
for past conduct and compensatory and punitive damages for future 
conduct.
  Because that settlement required the enactment of Federal law, it 
came before the U.S. Congress. We are here today in large part because 
that June 20 settlement requires us to be here or it just doesn't 
occur. Implementing the provisions of that settlement or implementing 
provisions similar to it does require Federal legislation.

  We had committees that had jurisdiction over several provisions in 
this June 20 agreement. Judiciary had a role, the Labor Committee had 
its expertise in the FDA, the Finance Committee had jurisdiction over 
international trade aspects, the Commerce Committee had jurisdiction 
over the liability and interstate commerce expertise, the Agriculture 
Committee had a keen interest in the effect of this type of really 
unprecedented legislation on farmers, all of which ultimately were 
pulled together--at least that expertise was pulled together--through 
the Commerce Committee and bringing it to the floor to be amended 
accordingly.
  We are right now in the middle of that amendment process. A number of 
people are talking about amendments to make the bill better, and the 
bill was brought to the floor recognizing it was not a perfect bill, 
that it was important for that amendment process to take place to 
modify it, to improve it, to make sure that it does achieve the 
objectives of decreasing youth smoking over time. I encourage my 
colleagues to come forward to participate with their amendments so we 
can achieve that objective and, sometime within the next several days 
or next several weeks, bring this to some resolution.
  I do believe, as I said, it takes a comprehensive approach. I think 
we do have to address, first, the advertising targeted at children. An 
article in the Journal of the American Medical Association of February 
17 stated very clearly that advertising is more influential than peer 
pressure in enticing our children to try smoking, and it estimated--and 
I recognize these estimates are really all over the board--but it 
estimated that about 700,000 kids a year are affected by advertising. 
Big debate. We have talked about it a lot over the last several weeks. 
Is it advertising? Is it peer pressure? How do you control peer 
pressure at that very tricky age of walking through adolescence? They 
are inextricably tied together. If you have very effective advertising 
that makes smoking look cool and makes you part of a group and makes 
you feel good at 12 years of age, then peer pressure builds. If 
somebody asks is it peer pressure or advertising, it is very confusing.
  In our business, in the political business, in public service, we 
know the effects of marketing. We know that kids are targeted, and we 
know that builds and establishes peer pressure which does affect 
somebody at that age, in adolescence, when they are reaching out for 
identity and for security and for acceptance. Therefore, either dealing 
directly with the industry or indirectly, we have to have the industry 
agree not to target kids. Our society simply must stop glamorizing 
smoking in the way that it does today, which increases the peer 
pressure. This applies to television; it applies to movies; it applies 
to 30-second spots; it applies to billboards. We have to stop that 
marketing directly to children, and I believe the industry has to take 
the lead in that regard.
  Secondly, to have a truly comprehensive program, we do have to have a 
strong public health initiative, including tobacco-related research, 
including tobacco-related treatment, and including tobacco-related 
surveillance. It is fascinating in terms of how we would use certain 
moneys, because a number of people want to use certain moneys for 
programs totally unrelated to public health initiatives, totally 
unrelated to research.

  If we just step back and imagine what could be done if moneys were 
spent effectively and if there were appropriate moneys available for 
research, we might--we just might--in 5 years, in 10 years, maybe 3 
years, eliminate the problem. For example, if we knew where in the 
brain addiction to nicotine actually occurs--and let me say that there 
are ways to detect that through PET scanning, positron-emission 
tomography, today--we know roughly in the brain where the addictive 
center to nicotine actually occurs.
  With the rapid advances made in science, with the appropriate focus 
and the appropriate resources, it is not far-fetched that we will 
identify not only the location, where we have taken the first steps, 
but the actual receptors, and design a drug, a chemical, a hormone to 
go to that particular site and turn off the addictive potential, the 
addictive connections that cause that 8-year-old or that 10-year-old 
who starts to smoke to smoke forever out of their control.
  That one little bit of research could solve this whole problem. We 
can't give any statistic probability that that research will result in 
that sort of effect, but the potential is there. It takes that emphasis 
on that particular dimension, moving there and saying we do need to put 
the appropriate funds there, that some effort in this comprehensive 
approach must be directed to research. A strong commitment to basic 
science and behavioral research is critical.
  Such focused research made possible by this bill might even uncover a 
pill. I can almost see a day where people will smoke for 6 months or 
smoke for a year. If we can kill that addictive potential, that 6 
months to a year might not have the same impact on one's coronary 
arteries in the development of atherosclerotic plaques--hardening of 
the arteries--which cause heart attacks and ultimately death.
  Will we get there? We don't know unless we focus research in that 
area, and right now we do not have sufficient research there. We do 
need to look at certain behavioral research: How can we stop people 
from smoking who are addicted to smoking? We just don't know very much 
about that.
  Later today, I think we will be talking a lot about drugs, other 
drugs--not just nicotine, not just cigarettes--and the importance of 
developing a more comprehensive policy. I welcome that opportunity, 
again, because I have youngsters. I have three boys, who are going 
through this period of adolescence, who are going to be tempted and 
exposed to all of the seductive advertising, peer pressure, wanting to 
be accepted, that we have all gone through and most of our children go 
through.
  A comprehensive approach: The research, the scientific research, 
smoking cessation programs, behavioral research, the addictive 
potential, the advertising that I spoke to.
  The third component is that of access. It is too easy today. We held 
hearings in our Subcommittee on Public Health and Safety, which I 
chair, in the Labor Committee and had some really powerful, powerful 
testimony come forward by the users, by those

[[Page S5587]]

young adolescents who have started to smoke. We heard chilling 
testimony about how easy it was to purchase tobacco products.
  We can do a great job in a small community. If there are 12 places 
where one can buy tobacco, we can have 5 of those really enforce the 
access laws. Just imagine 12 convenient stores in a community. You can 
have five that really stick to the law. You can have another five that 
do pretty well. But if there is just one in that community that 
continues to sell cigarettes, for whatever reason, the access programs 
don't work at all. We need to have more effective access.
  Nickita from Baltimore, who is now 18 years old, started smoking when 
she was 14 years of age. She testified that she would normally get her 
cigarettes from the store. She testified that she never had a problem 
buying cigarettes in the store. In fact, ``People in my community, as 
young as 9 years old, go to the store and get cigarettes. They simply 
do not ask for IDs,'' she said.
  The lesson I learned from this testimony is that we must enforce 
youth access laws. We must make it impossible for children to buy 
cigarettes in any neighborhood in this country. It is really shameful 
that in America in 1998 a teenager can purchase tobacco in any 
neighborhood in the United States of America.
  There are three elements--access, advertising, public health and 
basic science initiatives. In this whole arena of access, price is an 
issue. I voted against the tax of $1.50 that was proposed on this floor 
2 weeks ago very simply because price addresses one aspect of the three 
aspects that I think are important to decrease youth smoking. Price 
does affect purchasing. While it is one of the levels, one of the 
factors, it is not the only factor.
  Consumption, though, had been decreasing in the 1970s. However, 
between 1980 and 1993, the downward trend really accelerated, with 
consumption falling by 3 percent a year at the same time that the 
inflation-adjusted price of cigarettes increased by 80 percent.
  In addition, in the early 1990s, we saw price cuts, and consumption 
leveled off with only modest decreases in the price until 1996. Then in 
1997, prices rose by 2.3 percent, and consumption fell again by 3 
percent.
  Expert testimony provided in hearings before us, based on data from 
both this country and others, clearly demonstrates that the price of 
cigarettes does affect consumption. But price alone simply will not 
solve the problem; that a comprehensive approach is necessary.
  Mr. President, I think the bill on the floor is a good start in 
addressing, in a comprehensive way, this issue of decreasing youth 
smoking. It also addresses an issue that was ignored by the June 20 
settlement, an issue that I mentioned--that of the agricultural 
community and that of tobacco farmers.
  We have two competing amendments or proposals right now that are 
being considered. I am very hopeful that an agreement can be reached 
between those two. They have very different concepts. On the other 
hand, both have as their goal to do what is in the best interest of 
those hard-working men and women who are in the farming community, who, 
through no fault of their own, we have this targeting of the youth by 
the industry, who, through no fault of their own, affect this idea of 
easy access. They are literally getting up every morning, going out, 
working hard in the fields to produce a legal product. I am very 
pleased that this group is being addressed. I look forward to having 
some resolution of the two competing groups.
  Mr. President, I will wrap up my comments shortly because other 
people are on the floor. I think this bill is not perfect yet. I think 
we need to look very closely at how we have designated whatever funds 
are generated by this particular bill and to look at what programs they 
create.
  The version of the bill on the floor now, unlike the original 
Commerce version of the bill, is much, much better in that most of the 
huge bureaucracies that came out of the Commerce Committee bill have 
been eliminated, have been reduced. I think there are still a number of 
those programs that we need to go back and address.
  Some people have come to the floor and have basically said that the 
bill on the floor is merely an attempt to destroy an industry that is 
producing a legal product by raising the price too much. I think this 
is a legitimate concern. We have had a countless number of financial 
experts present data; some have had a vested interest, some have not. A 
number of them have come before the several committees who have held 
hearings on this jurisdiction, and it really seems nobody can answer 
the question of the appropriate price and what a price increase of 50 
cents or 70 cents or $1 or $1.50 will do on the industry itself.
  We do know one thing; and that is that the industry at one time 
agreed, back in June, to a $368.5 billion exchange for some assurances 
that they would have some predictability in future lawsuits. Now that 
has been radically changed at the end of 2 weeks ago. We need to all 
get together to see what that next step should be, what further 
amendments need to be applied. Again, personally, I believe that the 
industry has to be at the table, has to agree not to target the youth 
today.
  Black market--something that is very, very real. If the price is 
raised too high, at least based on the testimony that has come before 
our committees, a black market would most certainly occur, and then we 
would ultimately end up destroying exactly what we are trying to 
achieve--that is a reduction in youth smoking.
  Mr. President, I guess in closing my remarks I just want to emphasize 
how effective and responsible we can be if we have a comprehensive 
settlement. And that is what it is going to take --public health 
initiatives, appropriate research, addressing the issue of access, and 
addressing the issue of advertising. We must have an industry that does 
not market to kids. We have to have the cooperation of the industry.

  Mr. President, let me just make one final comment that is on the Food 
and Drug Administration. I have been very active in working to see that 
the Food and Drug Administration is the agency that would oversee 
whatever regulation we pass on the floor of the U.S. Senate and through 
the U.S. Congress. The approach was to set up a separate chapter within 
the Food and Drug Administration rather than try to regulate tobacco or 
cigarettes through a three or four sentence clause that is existing in 
the device aspects of the Food and Drug Administration legislation 
today.
  We did this for a number of reasons. I have outlined those reasons on 
the floor today. I am very pleased where we stand with that today, in 
terms of setting up a new chapter that recognizes that tobacco really 
is a unique product. It is not a device to be regulated like a 
pacemaker or like an artificial heart device or like a laser. And that 
is where an attempt was made by the administration to regulate tobacco.
  Are there parts of that that might be improved? I think we can 
consider that as we go through the amendment process. I still have some 
concerns with some parts of the Commerce bill. I look forward to seeing 
them modified.
  I think as a heart surgeon, as a lung surgeon, I have a real 
obligation to point out that smoking does kill people-- there is no 
question--No. 2, that tobacco is a legal product in this country--and I 
think it should stay a legal product in this country where adults who 
have the maturity, have the education to make choices for themselves 
should have that opportunity--but, thirdly, I feel very strongly that 
we need to address youth smoking and do our very best as a nation for 
our children and for that next generation through a comprehensive 
strategy to work to reduce youth smoking.
  Mr. President, we have two colleagues on the floor, and I would 
simply ask unanimous consent if they could limit their comments or let 
me inquire in terms of, from each of them, how long they would require? 
I would like to have some limitation because we want to get to other 
amendments early this morning.
  Mr. DURBIN. I thank the Senator. I would be happy to limit my remarks 
to no more than 30 minutes.
  Mr. ASHCROFT. The same.
  Mr. FRIST. I will yield 30 minutes to both of my colleagues on the 
floor. At that time, I reserve coming back and regaining the floor at 
that time.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.

[[Page S5588]]

  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, I rise today to discuss the tobacco 
bill. And I wish to address the massive tax increase that is in this 
bill--tax increases that are targeted against the lowest income 
individuals in America: hard-working citizens who earn primarily less 
than $30,000 a year. It is a massive tax increase that is going to be 
used to expand the Federal Government, just when the American people 
continue to make it clear that they are tired of Government imposing 
its decisions on our daily lives.
  Just last week there was an announcement of a $39 billion surplus in 
1998 and a $54 billion surplus in 1999. Congress should be debating how 
to return this money to the taxpayers. We should not be debating how to 
siphon more out of the pockets of working Americans.
  It is also possible to discuss the inevitable black market that would 
result from the policies in this bill, even though my colleagues and 
the administration continue to ignore this threat to American 
neighborhoods of creating a black market with the high taxes in this 
bill. I will also discuss the effect of a price increase on teenage 
smoking rates.
  Mr. President, along with my colleagues, I am truly concerned about 
teen smoking. However, I do not believe that teen smoking is the focus 
of this legislation. Under the guise of reducing teen smoking, 
proponents of this bill are willing to increase taxes on hard-working 
Americans by well over $800 billion. That is well over three-quarters 
of a trillion dollars.
  Under the guise of reducing teen smoking, proponents of this bill 
support a massive increase in the size of the Federal Government--17 
new boards and commissions, which is a modest estimate. And then in 
response to the identification of those boards and commissions, some in 
support of this bill have decided to say they would take out those 
boards and commissions and just leave authority for agencies to create 
within themselves the capacity to do what the boards and commissions 
were designed to do. Instead of having boards and commissions that are 
accountable and identifiable, you have stealth boards and commissions 
that are hidden in the agencies. I don't think making them 
indistinguishable is a way to say that government isn't growing.

  Proponents of this bill claim it is necessary to curb teen smoking. 
What this bill is necessary for is to feed the tax-and-spend habit of 
individuals in Washington.
  Although Congress has the authority, we do not even make it illegal 
for minors to possess or use tobacco in the District of Columbia in 
this bill. We only have rules regarding the point of sale. Even then, 
we only make retailers responsible for the transaction. There is no 
disincentive for teenagers to try and purchase cigarettes in this bill. 
Two percent of retail cigarette sales are made to minors. Adults 
purchase 98 percent of all cigarettes sold in retail stores. Under this 
bill, we are creating a massive tax increase on 98 percent of smokers 
in order to try and discourage 2 percent of all the retail sales. There 
is sound evidence that the 2 percent will not be discouraged. In 
Washington, taxes and spending are the only things more addictive than 
nicotine.
  Preliminary reports estimated this legislation would increase taxes 
$868 billion. We now know that this legislation would raise taxes $885 
billion and create new government programs with funding locked in for 
25 years. It creates a huge government regulatory scheme the likes of 
which we have not seen since the Clinton proposal to perpetrate a 
national health care system from the Federal Government.
  This bill is a tax bill, pure and simple. It is a tax bill on 
Americans who are already overburdened with taxes. Americans today are 
working longer and harder than ever before to pay their taxes. Tax 
Freedom Day this year was less than a month ago, on May the 10th. It 
was a record year. Americans worked longer into the year this year to 
pay their taxes than ever before. The hard work of the American people, 
let me say again, the hard work of the American people allowed the 
President just last week to announce a $39 billion projected surplus in 
1998 and a $54 billion surplus projected for 1999. Yet here we are a 
week later continuing to talk not about how to return the surplus to 
the people, but how to siphon more out of their pockets. As currently 
drafted, the proposed tobacco bill is nothing more than an excuse for 
Washington to raise taxes and spend more money.
  In the 15 years prior to 1995, Congress passed 13 major tax 
increases. In fact, last year's Taxpayer Relief Act was the first 
meaningful tax cut since 1981. As currently drafted, the tobacco bill 
erases that relief. We must stop that from happening. We must not undo 
the modest gains we gave to the American people just last year. We 
certainly cannot relieve them by imposing another $885 billion in taxes 
on them. To paraphrase President Reagan, the whole controversy comes 
down to this: Are you entitled to the fruits of your own labor or does 
government have some presumptive right to tax and tax and tax? Who will 
pay the $800-plus billion in taxes contained in this proposed 
legislation?
  The tobacco legislation is a massive tax increase that would be 
levied against those least capable of paying. About 60 percent of the 
tax increase would fall on families earning $30,000 a year or less. 
That is a shocking figure. What it basically says is these families 
with less than $30,000, struggling to put clothing on the backs of 
their children, food on the table, to pay the rent, to have the money 
for transportation, to keep the car repaired, occasionally scraping 
together enough for a modest day off or a vacation, would suddenly be 
subject to a massive new tax, 60 percent of which would fall on them. 
Some households would see their taxes increase by more than $1,000. 
Moreover, this new tax would be levied on money that has already been 
subject to the income tax. If you are buying cigarettes and you have an 
additional $1.10 to pay, it is a tax on money you have already paid tax 
on. Households earning less than $50,000 would pay seven times as much 
in new tobacco taxes than households earning $75,000 or more.

  According to the Congressional Research Service, tobacco taxes are 
perhaps the most regressive taxes currently levied. In the United 
States of America where, we already have the highest taxes in history, 
we are now projecting a massive tax increase on individuals least 
capable of paying. While those earning less than $10,000 make up only 
10 percent of the population, 32 percent of those people smoke. The 
current tobacco tax represents 5 percent of the smokers' income in this 
category. Those making between $10,000 and $20,000 a year make up 18 
percent of the population. However, 30 percent smoke. The current 
tobacco tax makes up 2 percent of a smokers income in this category. 
Therefore, this bill amounts to a tax increase on 31 percent of 
Americans who earn under $20,000 a year. Households earning less than 
$10,000 a year would feel the bite of this tax increase most of all. 
These households, it is estimated, would see their Federal taxes rise 
35.1 percent.
  In most areas of the country, someone earning $10,000 a year is well 
below the poverty line. We spend much of our time in this body trying 
to find solutions for those in this income bracket--we have tax 
credits, welfare programs, educational grants, job-training programs. 
They cost billions of dollars a year. We try to lift people out of 
their poverty, out of that income bracket. However, today, Members of 
this body are enthusiastically saddling them with a huge tax burden of 
over $800 billion focused on those least capable of paying. Washington 
politicians and bureaucrats are saying they know better how to spend 
the resources of the American people.
  Let me share the impact this tax increase will have on the 
constituents of the people in Missouri. Using data provided by the 
Centers for Disease Control, it is clear the tobacco legislation would 
be an annual $382 million tax on people in Missouri. Of that amount, 
$227 million would be paid by households earning $30,000 or less. This 
is a conservative estimate. This assumes that each smoker in Missouri 
smokes only one pack a day. For someone who smokes two packs daily, the 
$1.10 per pack tax increase contained in the tobacco legislation would 
amount to a tax increase of $803 annually.
  Let's look at how this will impact other States. Arizona, 22.9 
percent of

[[Page S5589]]

the adults smoke; $227.3 million tax increase on Arizona, $164.7 
million on those with incomes of $30,000 or less. In Texas, 23.7 
percent of adults smoke; $1.2 billion tax increase on Texas, $1.2 
billion tax increase on the people of Texas, with three quarters of a 
billion being levied against those who earn $30,000 or less.
  This bill contains massive tax increases that are going to be used to 
expand the Federal Government just when the American people continue to 
make it clear that they need relief. Some people ask, where is all this 
money coming from when we talk about our surpluses? I can tell you 
where the money comes from--it comes from the hard work, the sacrifice, 
the ingenuity, the efforts of Americans. It is not our money. It is 
their money. It is not Washington's. We should be discussing how to 
leave the money where it belongs. Instead, we are discussing how to 
take more money.
  I have an amendment that I plan on introducing later in this debate 
that will accomplish the goal of leaving money in the pockets of the 
taxpayers. It will give much-needed tax relief to Americans in a way 
which will provide the greatest relief to those who will be hardest hit 
under the bill. I believe, as many do in this body, that if this bill 
is allowed to increase taxes, that revenue should be used to relieve 
married couples of what might possibly be the most indefensible and 
immoral tax of our Tax Code. This is a perfect example of Washington's 
values being imposed on America instead of America's values being 
imposed on Washington. Americans value marriage; Washington taxes 
marriage.

  The marriage penalty tax creates a situation in which 21 million 
couples pay $29 billion more than they would have paid had they been 
single. The marriage penalty, on the average, is about $1,400 per 
family. This is grossly unfair and is an assault on the values of the 
American people. Consider a typical couple in which each person earns 
an annual income of $35,000. Under current law, if the couple were to 
wed in 1998, they would pay $10,595 in Federal income taxes, assuming 
they were childless and they take the standard deduction. If, instead, 
they chose to remain single, their combined tax bill would amount to 
$9,117. In other words, they would pay $1,478, a 16-percent penalty for 
being married.
  As you might expect, people often modify their behavior to avoid 
paying taxes. In fact, it is one of the assumptions of the tobacco 
legislation that people would modify their behavior--quit smoking--if 
we raise taxes on cigarettes. Does the Tax Code really influence moral 
decisions and prevent couples from getting married? Tragically, yes. 
Some couples simply cannot afford to bear the extra burden of the 
marriage penalty. Just ask Sharon Mallory and Darryl Pierce of 
Connersville, IN. They were planning to get married when they learned 
that their annual tax liability would balloon $3,700 as a result. The 
marriage penalty led them to rethink their decision to get married.
  A marriage penalty exists today because Congress legislated ill-
advised changes to the Tax Code in the 1960s. This is an example of 
Washington's values being imposed on America instead of America's 
values being imposed on Washington.
  Over the next 5 years, the Federal Government is expected to collect 
$9.3 trillion in taxes from hard-working Americans. Completely 
eliminating the marriage penalty would reduce that total by only $150 
billion, or only 1.6 percent.
  Now that taxpayers have provided the Federal Government with a 
surplus that may be as much as $60 billion this year alone, Congress 
has no excuse for withholding tax relief from American families.
  The power to tax is the power to destroy. The average dual-income 
household spends a far larger share of its income on taxes than it does 
on food, shelter, clothing, and transportation combined.
  With taxes at these levels, no wonder families are finding it 
necessary to send both spouses into the workplace. One of the ways in 
which the marriage penalty manifests itself is that the standard 
deduction for a married couple is less than that for two singles. That 
means if you are married and you file a joint return, the standard 
deduction is not double what it was when you were single. Again, let me 
repeat this staggering fact. Last year, 21 million married couples 
collectively paid a $29 billion tax. They paid $29 billion more than 
they would have paid had they been single.
  I will offer an amendment that will substantially reduce the marriage 
penalty. It will do so by making the standard deduction for married 
couples twice what the standard deduction is for single people.
  Members of this body have been arguing that there is no tax in this 
bill, only an increase in tobacco prices to deter smoking. In fact, the 
Finance Committee, in its mark, at least tried to level with the 
American people by reporting out a bill that called it a tax. Webster's 
Dictionary defines a tax as a ``compulsory payment, usually a 
percentage, levied on income, property values, sales prices, etc., for 
the support of government.''
  In this bill we have a compulsory payment. The bill then requires 
that the cost of these payments be passed on in the form of price 
increases to consumers. It even penalizes companies if they fail to do 
so. These payments are then used to fund massive programs for Federal 
and State governments.
  Well, if it walks like a duck, talks like a duck, and sounds like a 
duck, it is a duck. So if it ``walks'' like a tax and acts like a tax, 
it is probably a tax. This is a tax and in law provides that those 
payments--taxes--are to be passed through to consumers--under a penalty 
if it is not done.

  It has been said that industry is the group that is convincing people 
that this is a tax bill. But we all know that industry can't make it a 
tax bill, and Senators can't say it is not a tax bill if it is a tax 
bill. It is a tax bill. It requires consumers to spend additional sums 
of money and to send them to Washington so that government programs can 
be extended.
  Those who support this bill would like for the American people to 
believe that this is tough on tobacco. The American people are 
beginning to find out that tobacco companies won't bear the costs of 
these payments. Consumers will. This bill requires that consumers will 
be those who are required to put up the money--the $800 billion-plus 
that comes in the mandatory payments, the taxes that are occasioned by 
this bill.
  What will be the impact on tobacco companies? In September of 1997, 
the Federal Trade Commission issued a report entitled ``Competition and 
the Financial Impact of the Proposed Tobacco Industry Settlement.'' The 
report was done at the request of the Congressional Task Force on 
Tobacco and Health. This report analyzed the economic impact of the 
proposed settlement on cigarette prices, industry profits, and 
Government revenues.
  This tobacco legislation was built upon the proposed settlement, but 
it is not exactly the same. But this report was based upon the annual 
payment, look-back provisions, and tax deductibility of the payments 
made by the tobacco companies.
  There are several important conclusions in this report:
  First: ``The major cigarette manufacturers may profit from the 
proposed settlement by increasing the price of cigarettes substantially 
above the amount of the . . . payments that are to be paid to the 
public sector.''
  It could be profitable for the tobacco companies. This bill that is 
so hard on the tobacco companies may result in increased profits for 
the very tobacco companies we are supposed to be hurting.
  Second, the report concludes: ``Even assuming that prices increase by 
no more than the annual payments, the major cigarette firms may profit 
substantially . . . through limitations on liability and reductions in 
advertising and litigation costs.''
  Well, that is a very serious suggestion. And that comes from the 
Federal Trade Commission of the United States.
  Again, the actual elements of this bill that are supposed to show 
that Congress is ``tough on tobacco'' may, according to the Federal 
Trade Commission, actually enable tobacco companies to profit 
substantially by reducing litigation costs and by reducing the costs of 
advertising.
  The report then mentions the affect of price increases on smokers. It 
says:


[[Page S5590]]


       The overall demand by adults for cigarettes is inelastic, 
     or relatively insensitive to changes in price. Most adult 
     consumers will continue to smoke notwithstanding a 
     significant increase in price.
       As a result, an industry-wide price increase would be 
     profitable for the companies, even though some smokers would 
     react to the higher prices by smoking less or quitting 
     altogether.

  Now, the evidence is not clear that raising prices reduces teen 
smoking rates. Mr. President, this bill is being considered on the 
Senate floor. It is being considered and being sold to the American 
people as the only way to reduce youth smoking. They are being told 
that we can justify an $800 billion tax increase that is necessary to 
get rid of the disease of addiction. However, after looking at the 
evidence, there is no reason to believe that such a tax increase is the 
answer to eliminating teen smoking.
  Mr. President, I inquire as to the time remaining in my opportunity 
to speak?
  The PRESIDING OFFICER. Nine minutes.
  Mr. ASHCROFT. I thank the Chair.
  Food and Drug Administration regulations, which were designed to 
curtail teen smoking and which were suggested by a Cabinet Secretary 
who helped promote these regulations, did not contain price increases. 
The most striking evidence that significant price increases are not 
necessary to reduce smoking is a very recent attempt by this 
administration to address the youth smoking issue. In 1996, regulations 
promulgated by the FDA were touted as being historic. It was estimated 
to reduce youth smoking by 50 percent over 7 years, and they didn't 
include price increases.
  The important aspect of these regulations is that they contain no 
price increase on smokers in the general population. As you know, this 
legislation is raising the prices on 100 percent of the smokers to try 
to discourage the utilization of cigarettes by 2 percent of those who 
purchase. There was no discussion in the regulations of a huge price 
increase--a massive tax increase. And about this regulation, the 
Secretary of Health and Human Services, Donna Shalala, stated:

       This is the most important public health initiative in a 
     generation. It ranks with everything from polio to 
     penicillin. I mean, this is huge in terms of its impact. Our 
     goal is very straightforward: to reduce the amount of teenage 
     smoking in the United States by half over the next 7 years.

  It is a laudable objective, and apparently it is believed to be 
attainable by the Secretary of Health and Human Services without a 
massive tax increase or price increase.
  David Kessler, one of the strongest proponents of this bill, was the 
Director of the Food and Drug Administration when these regulations 
were promulgated. He stated:

       Don't let the simplicity of these proposals fool you. If 
     all elements of the anti-smoking package come into play 
     together, change could be felt within a single generation, 
     and we could see nicotine addiction go the way of smallpox 
     and polio. without a price increase.

  These statements were made about regulations that contained 
absolutely no price increase--no massive tax on the working people of 
America; no massive taking by the government of over three-quarters of 
a trillion dollars; no extension of 17 new boards, commissions, and 
agencies for the government.
  Also, remember that these regulations were supposed to reduce youth 
smoking by 50 percent over 7 years, while it has been claimed, that 
this bill--containing massive tax increases--will reduce teen smoking 
by 60 percent over 10 years.
  Dr. Kessler was widely cited as a supporter of the amendment offered 
on this floor last week that would have increased the tax on cigarettes 
by $1.50 rather than the $1.10 already contained in the bill as 
necessary to reduce teen smoking, which is substantial.
  Yet, when those regulations were enacted he never complained that 
this regulation would not have been effective in reducing teen smoking 
because it did not contain such a massive tax increase.
  About these regulations, President Clinton stated:

       That's why a year ago I worked with the FDA, and . . . a 
     nationwide effort to protect our children from the dangers of 
     tobacco by reducing access to tobacco products, by preventing 
     companies from advertising to our children. The purpose of 
     the FDA rule was to reduce youth smoking by 50 percent within 
     7 years.

  There was no complaint by the President that these regulations were 
insufficient because they did not contain a price increase.
  What has changed in just 2 short years?
  Policymakers in Washington have found a cash cow to pay for their pet 
programs that the President said he wanted, but which he would find 
incapable of moving through the ordinary budget process.

  The evidence as to whether price increases reduce youth smoking is 
tentative--at best.
  The second issue I want to address concerning the need to increase 
taxes on the American people by $868 billion is whether price increases 
actually reduce teen smoking.
  My colleagues have been arguing that the studies show conclusively 
that price increases reduce youth smoking.
  However, that simply is not the case.
  At best, the studies are inconclusive. At worst, they show little 
correlation between price increase and a reduction in youth smoking.
  The debate on this floor has assumed that for every 10 percent 
increase in price reduces youth smoking by 7 percent.
  Frankly, I think the average citizen knows that young people who are 
willing to pay $150 a pair for sneakers are probably not very price 
sensitive when it comes to other factors that relate to status and the 
like and making a statement, which smoking frequently is for young 
people.
  The debate on this floor has assumed--a dangerous assumption, 
reckless, and irresponsible intellectually--that for every 10-percent 
increase in price you get a 7-percent reduction in youth smoking.
  Studies conducted by economists at Cornell University and the 
University of Maryland, and funded by the National Cancer Institute, 
question the connection between youth smoking, prices, and tax rates.


                           The Cornell Study

  After following 13,000 kids for 4 years, Dr. Philip DeCicca of 
Cornell University, in a National Cancer Institute funded study--a 
public health study--found ``Little evidence that taxes reduce smoking 
onset between 8th and 12th grade.''
  The economists that conducted this study presented their results 
between the relationship between higher tobacco taxes and youth smoking 
to the American Economics Association annual meeting in January 1998. 
This is not a dated study.
  The study concluded that higher taxes have little effect on whether 
young people start to smoke.
  They concluded that ``[T]axes are not as salient to youth smoking 
decisions as are individual characteristics and family background.''
  ``[W]e find little evidence that taxes reduce smoking onset between 
8th and 12th grades,'' and estimated that a $1.50 tax increase would 
decrease the rate of smoking onset by only about 2 percentage points--
from 21.6% of 12th graders who start smoking currently to 19.6% of 12th 
graders.
  ``Our data allow us to directly examine the impact of changes in tax 
rates on youth smoking behavior, and our preliminary results indicate 
this impact is small or nonexistent.''
  Here is the best data we have. The most recent studies indicate that 
a massive increase of three-quarters of a trillion dollars plus on the 
taxes of the American people will have little impact or a nonexistent 
impact in reducing youth smoking.
  In conclusion, the economists stated that the study ``raises doubt 
about the claim that tax or price increases can substantially reduce 
youth smoking.''


                             maryland study

  Economists at the University of Maryland and the University of 
Chicago conducted a similar study that analyzed data concerning more 
than 250,000 high school seniors for the period 1977-1992--the largest 
such sample ever used for a study on this subject.
  They found that the relationship between price and youth consumption 
is ``substantially smaller'' than suggested by previous studies.
  In addition, real world experience confirms the uncertain 
relationship between higher tobacco taxes, prices and youth smoking.

[[Page S5591]]

                               california

  In 1989, California increased its cigarette excise tax by 25 cents 
per pack, but there is no evidence that youth smoking declined. This 
was an 11 percent increase. Therefore, under the analysis that 
elasticity of teenage smokers is .07, there should have been a decrease 
of at least 7 percent.
  We are operating under the assumption that 25 cents a pack would have 
resulted in a 16-percent or more decrease in the number of youth 
smokers.
  The truth of the matter is there was an 11-percent increase. 
Therefore, under the analysis that the elasticity of smokers is .07, 
there should have been a decrease of substantial proportions.
  However, as of 1994, researchers were ``unable to identify a decline 
in prevalence [among 16 to 18 year olds] associated with the imposition 
of the excise tax.''


                                 canada

  The most commonly cited real world situation is our neighbor to the 
North--Canada.
  In Canada, the federal government increased cigarette taxes in 
several stages in the late 1980s and early 1990s--from $10.75 per 1,000 
cigarettes to $24.34 in 1986, then to $38.77 in 1989, and to $62.90 in 
1991.
  Although it has been stated on this floor, by proponents of this 
legislation, that smoking decreased during that period, they fail to 
talk about the years 1991 to 1994 when the tax rates were the highest 
in that nation's history.
  During that period, smoking rates among 15-19-year-olds rose from 21 
to 27 percent. That is a 25-percent increase.
  If the argument that rising prices will reduce teen smoking, it 
stands to reason that youth smoking should increase as prices fall. 
However, a year and a half after reducing--significantly--tobacco taxes 
in Canada, according to the ``Survey on Smoking in Canada,'' teen 
smoking ``remained stable.''
  The fact that is ignored by those who argue teen smoking declined in 
Canada due to the significant tax increases is that youth smoking 
declined in the United States by 30 percent during the same period--
1977 to 1990--without a price increase.


                                  u.k.

  Between 1988 and 1996 the per pack price of cigarettes increased by 
26 percent. Although cigarette volumes fell by 17 percent, the 
percentage of weekly smokers aged 11-16 went from 8 percent in 1988 to 
13 percent in 1996.


                              common sense

  Common sense also suggests that youth are less responsive to tax and 
price increases. In an era of $15 compact discs, $100 video games, and 
$150 sneakers, is it realistic to believe that a few extra dollars on 
cigarettes a month will cause youth to stop experimenting with smoking 
or not to start in the first place? Young people may have less 
``disposable income'' than adults, but their spending is almost 
entirely discretionary.
  The CDC has compiled data on brand-preference that supports the 
conclusion that young people are not particularly price sensitive.
  The ``price value'' or discount, segment of the cigarette market 
comprised 39 percent of the overall cigarette market in 1993. Yet, 
according to the CDC, less than 14 percent of adolescent smokers 
purchased generic or other ``value-priced'' brands--just one-third the 
percentage.
  The point was echoed by the government's lawyer defending the FDA 
tobacco rule, who told the U.S. District Court, ``[P]rice, apparently 
has very little meaning to children and smoking, and therefore, they 
don't smoke generic cigarettes, they go for those three big advertised 
brands.''
  In Canada, in Great Britain, the Cornell study, Maryland University, 
the Chicago study, the situation in California, we don't have a clear 
understanding that a rise or an increase in taxes would in fact result 
in a decrease in youth smoking.
  It is with that in mind that I feel we should reject this bill as a 
massive tax increase, and if there is a massive tax increase in this 
bill, that tax increase should be sent back to those who are most hurt 
by it--low-income individuals--by eliminating a marriage penalty by 
raising the standard deduction for married couples to exactly double 
that enjoyed by single taxpayers.
  I thank the Chair for the time. I yield the floor.
  Mr. DURBIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Illinois is recognized for 30 
minutes.


                           Amendment No. 2438

  Mr. DURBIN. I thank the President. I am happy to stand this morning 
in support of the pending amendment before the U.S. Senate to this 
tobacco legislation. It is an amendment offered by Senator DeWine, 
Republican of Ohio, and myself, a bipartisan effort to make this 
important bill more effective.
  I would like to pause for a moment before addressing the amendment 
and speak to the historical significance of this debate.
  About 11 years ago I was involved in a struggle as a Member of the 
House of Representatives to pass one of the first tobacco-controlled 
bills ever considered by the House of Representatives. In comparison to 
this bill, ours was a very modest measure. We were setting out to 
achieve something which on its face appeared very simple, but turned 
out to be politically very difficult. What we wanted to achieve 11 
years ago was to ban smoking on airplanes. You would have thought that 
we were proposing a second American revolution. The tobacco lobby 
organized its efforts, found all of its friends, both Democrat and 
Republican, and marshaled forces to beat our effort.
  They predicted that what we were setting out to do would create chaos 
in public transportation; it was totally unnecessary; it discriminated 
against the rights of smokers, and on and on and on.
  Well, Mr. President, it was our good fortune in the House of 
Representatives to have a number of Members of Congress, both Democrats 
and Republicans, who, for the first time in modern memory, rejected 
these pleas from the tobacco lobby and enacted legislation a little 
over 10 years ago that banned smoking on airplane flights of 2 hours or 
less. It was a breakthrough. It was the first time the tobacco lobby 
lost. Those who joined me in that effort stuck their necks out 
politically. It wasn't considered to be very smart politics to oppose 
tobacco. This, in fact, was the largest, most powerful, most well 
funded lobby in Washington. Fortunately for us, Senator Frank 
Lautenberg of New Jersey and his friends in the Senate joined us in the 
battle and together we successfully achieved our goal. Today, virtually 
all domestic airline flights--in fact, I think all of them--are smoke 
free. It is now becoming a trend worldwide.
  That battle and that victory, I think, set the stage for where we are 
today, albeit a small victory in comparison to our goal in this debate. 
But it would have been unimaginable 10 or 11 years ago to think that 
today in the Senate we are debating a bill involving tobacco and health 
of the magnitude of the McCain bill which comes before us. John McCain 
is our Republican colleague from the State of Arizona. I admire his 
grit and determination in bringing this bill to the floor despite a lot 
of opposition, primarily but not exclusively, from his own side of the 
aisle.
  When you think in terms of what we are setting out to achieve, it is 
substantial. It is revolutionary. It is long overdue. Our goals are 
simple: reduce teen smoking, invest in public health research and 
programs to help smokers quit, and protect tobacco farmers and their 
communities.
  The focus on children is a good one and an important one because 
tobacco companies have needed these children desperately. Each year, 
they have to recruit millions of children to replace those who are 
breaking the habit and those who have passed away. They set out their 
net and stretch it out for millions and bring in thousands, but they 
keep replenishing the ranks; 89 percent of all people who ever tried a 
cigarette tried by the age of 18. Of people who have ever smoked daily, 
71 percent were smoking daily by age 18. Virtually no one starts 
smoking during adulthood. It is a childish decision. It becomes a 
childish habit, and it condemns those who fall into the lure of this 
nicotine addiction to the likelihood of a shortened life and more 
exposure to disease.
  This McCain bill not only sets out to reduce the number of teen 
smokers, but it also sets out to invest more in medical research. When 
I heard my colleague from Missouri decrying this bill

[[Page S5592]]

and talking about this waste of tax dollars being brought into our 
Treasury, I paused and thought that we could argue--and I will during 
the course of my remarks--that raising the price of the product is 
going to discourage children from using it as well as others, but also 
the money that is coming in as a part of this bill is going to be 
invested back in America.
  I would stand by the results of a national referendum on the 
following question: Should we increase the Federal tax on a package of 
cigarettes, and then take a substantial portion of the money raised and 
put it in medical research--send it to the National Institutes of 
Health for research to find cures for cancer, heart disease, AIDS, 
juvenile diabetes, Alzheimer's, and the myriad of medical problems that 
we face in this country? I will bet the results would be overwhelmingly 
positive because Americans believe in this investment. Americans 
believe that this bill, in providing money for medical research 
investment, is money well spent.
  Smoking cessation programs are part of it, too. I think that is 
sensible. My father, who was a lifelong smoker, was a victim of lung 
cancer and died in his early 50s. I saw, even after his diagnosis, the 
situation that he faced, the craving that he had for this deadly 
cigarette that had caused him so many health problems. I have always 
had a sensitivity and a sympathy for smokers who are trying to quit. 
For some, they can just literally walk away from it, decide in a minute 
that tomorrow they will never smoke another cigarette. But for others 
it is virtually a lifelong struggle.

  The McCain bill puts money into smoking cessation programs so that 
smokers nationwide will have the means to turn to, to reduce their 
addiction to nicotine. My colleague from Tennessee, Senator Frist, 
spoke earlier about the need for medical research in this area, for 
breakthroughs to stop this addiction. I fully support him, and I think 
it should be part of this effort. We are hopeful these breakthroughs 
will make it easier for people to stop this addiction to nicotine. That 
is part of this bill.
  Another provision of the bill protects tobacco farmers and their 
families. I have never had any crusade against the tobacco farmers. I 
understand the devastation in health that their crop can cause, but I 
have always felt they deserve a chance to find another livelihood. This 
bill gives them that chance. That is why I support it.
  Let me speak to the amendment before us, the Durbin and DeWine 
amendment. It is a look-back provision.
  Now, we could give all the speeches we want to give on the floor of 
the Senate and in the Chamber of the House decrying teen addiction to 
tobacco products, addiction to nicotine. We can pass all the bills we 
want saying that as a Nation we are going to come to grips with this, 
and I am afraid we will not achieve our goal unless we are very serious 
and very specific. In fact, in every State in the Nation it is against 
the law for minors under the age of 18 to purchase tobacco products, 
and yet clearly they do on a daily and overwhelming basis. So the mere 
enactment of a law has not achieved our goal.
  Why is the McCain bill any different? It is different because one 
important facet of this bill is included. It is the so-called look-back 
provision. The look-back provision is accountability; it is honesty. It 
says that as the years go by we will measure the number of teen smokers 
in America, and if that percentage does not come down, the tobacco 
companies and tobacco industry will be held accountable in terms of 
fees that need to be paid as they miss these targets.
  That accountability brings reality to this debate. We can have the 
highest flying speeches, the most voluminous rhetoric, and yet we will 
not achieve our goal unless we are specific. Is this a matter that 
should concern us? Consider this chart for a minute. It is a troubling 
commentary on what is happening in America.
  This chart shows the percentage of high school students who currently 
smoke cigarettes. Look at from 1991 to 1997. In every grade, 9th, 10th, 
11th and 12th, across America, there has been an increase in the 
percentage of students who are smoking. In fact, the increase over the 
six years has been 30 percent. While we have given all these speeches, 
while we have talked about this problem, while the President, the Vice 
President, the Secretary of Health and Human Services, and so many 
others have addressed it, we have, in fact, seen the children of 
America ignoring it. They have taken up this habit, and as they take it 
up more and more kids are vulnerable.
  For those who do not think this is a real American family issue, I 
pose one question which I always pose in this debate: Have you ever met 
a mother or father who came to you at work one morning and with great 
pride and a smile on their face said, ``We have great news at home. Our 
daughter came home last night and she started smoking.'' I have never 
heard that. In fact, just the opposite is true. Parents who suspect 
their kids have started smoking are worried. They understand the 
danger. They understand the addiction. And they understand better than 
most why this debate is so critically important.
  Some argument is made as to whether or not the increase in the price 
of tobacco products will reduce usage by children. The Senator from 
Missouri, who spoke before me, talked about all sorts of surveys that 
came to an opposite conclusion. I would point to two that confirm the 
belief in this bill that if you raise the price of the product, 
children are less likely to use it.
  In Canada, just to the north, when they imposed a substantial 
increase in the Federal tax on tobacco products, they had a 60-percent 
reduction in children who were smoking. Kids are price sensitive; they 
don't have all the money in the world, and when the price of the 
product goes up too high, they stop using it or reduce their usage. 
Canada is a perfect example.
  On the academic front, at the University of Illinois, Dr. Frank 
Chaloupka has performed a study in which he has surveyed cigarette 
prices and whether or not they have any impact on the percentage of 
youth smoking. He says:

       Based on this research, I estimate that a $1.50 increase in 
     the federal cigarette tax, implemented over three years and 
     maintained in real, inflation adjusted terms, will cut the 
     prevalence of youth smoking in half.

  The bill sticks to $1.10, and the percentage decrease may not be as 
high or as dramatic, but clearly it will be a decrease. Increasing the 
cost of the product reduces its usage.
  I find it interesting that my colleague from Missouri talked about 
the so-called cash cow that this $1.10 creates, the billions of dollars 
brought into the Federal Treasury because of this increase in the 
Federal tobacco tax. I think this is money that is going to be raised 
for good purposes, to reduce teen smoking, to invest in medical 
research, to invest in smoking cessation, and to help tobacco farmers 
in transition.
  It is interesting that so many of the critics of this bill, who argue 
we need no tax whatsoever, are anxious to spend the proceeds from that 
tax. Reference is made to the marriage penalty, an interesting tax 
challenge which we should take up at some point. But the people who are 
opposed to this bill want to take the proceeds from the bill and spend 
them on correcting this tax anomaly, the so-called marriage tax 
penalty. They cannot have it both ways. You cannot decry this bill as a 
so-called cash cow, raising taxes that are unnecessary, and then make 
all sorts of proposals on how to spend it, and certainly proposals 
which have little or no relevance to the question of whether or not we 
are addressing the scourge of smoking addiction in this country.
  Let me also speak for a moment to the Food and Drug Administration. 
It is true that Dr. David Kessler, who is a friend and someone I worked 
with for many years, showed extraordinary courage, with President 
Clinton and Vice President Gore, in an initiative to reduce smoking in 
America. They took a lot of heat for it, because they took on the 
tobacco industry and they suggested they were going to get serious 
about it. They were going to try to view nicotine as the drug that it 
is. They were going to try to hold accountable retailers who were 
selling to children. And they were going to establish standards across 
America--for example, asking for identification for the purchase of 
tobacco products. When they proposed this, their critics went wild: 
``Oh, it is overreaching by the

[[Page S5593]]

Federal Government. It is just entirely too much.'' Yet they were on 
the right track, a track which we follow today.
  Let me try to zero in specifically on the Durbin-DeWine amendment. 
The fact that this amendment is being debated today has a lot to do 
with 40 State attorneys general who filed lawsuits against the tobacco 
companies, seeking to recover, for their States and taxpayers, money 
that was spent because of tobacco products. Last year, as a result of 
the aggregate effort of these attorneys general, a general agreement, 
or settlement, was reached. Part of that agreement included these so-
called look-back provisions. The agreement said that the tobacco 
industry was willing to be held accountable to reduce the percentage of 
young people smoking. If they did not reach the goals, they would be 
penalized. So the idea of a look-back provision is not something being 
foisted on the industry or something brand new on Capitol Hill; this is 
an idea that was endorsed by the tobacco companies as part of their 
agreement with the State attorneys general.
  The difference, of course, in the DeWine-Durbin approach, is that we 
take this from an industry assessment, from an industry fee, and say 
let's look, instead, to the specific tobacco companies. Senator McCain 
of Arizona, in his bill, says we should do that for roughly a third of 
the penalties involved. Senator DeWine and I think it should be a 
larger percentage. Let me explain to you why we think it should be 
larger.

  Consider this for a moment. Some of my critics come to the floor and 
say it is impossible for us to measure how many children smoke how many 
brands of cigarettes. In fact, my friend, the Senator from Texas, says 
it doesn't pass the laugh test, to think that we would be able to 
measure how many underage kids are smoking Camels or Marlboros or Kools 
or Virginia Slims.
  Let me suggest to him and others who criticize this amendment, the 
tobacco companies have extraordinary resources and ability to measure 
the use of their product. If you challenged Philip Morris to tell you 
how many left-handed Latvians smoke Marlboros, I bet they could come up 
with the number. If you challenged R.J. Reynolds to come up with how 
many tongue-tied Texans use Camels, I'll bet they could come up with 
the number. Because they market these products and these brands on a 
very specific basis. They want to know not only how many they are 
selling, but to whom they are selling them because they have billions 
of dollars of advertising that they are going to focus in, to try to 
win over new groups.
  So the suggestion that we cannot measure the number of young people 
using certain brands of cigarettes just defies common sense. The 
industry has this ability. It has this knowledge. It is a sampling 
technique that is used by businesses across America, and it can be 
applied here. Senator DeWine and I seek to apply this standard in this 
situation. We believe--and I hope my colleagues will join us in the 
belief--that it is eminently fair for us to hold each tobacco company 
accountable.
  Let us assume, for example, that R.J. Reynolds takes this bill very 
seriously and says they are going to stop marketing their product to 
children, that they are no longer going to be selling Camel cigarettes 
to kids. They tell their retailers: ``Don't let that pack go over the 
counter. Don't sell it to a child. We are very serious about it. Or we 
may cut off your access to our product.'' They say to the people who 
are doing the advertising and marketing: ``Get honest about this. Make 
sure that we don't advertise around schools. Make sure that we don't 
have all these promotions with Camel hats and shirts and all the rest 
of it.''
  And let's say they are successful. Should that conduct on their part, 
that positive conduct, be rewarded? Of course it should. In contrast, 
if Marlboro and Philip Morris, for example, decide they don't care, 
they just go on selling as usual, and in fact you see kids, more and 
more kids, turning to their brand, should they be held accountable for 
that decision? Why, of course they should. Company-by-company 
accountability makes sense. It says to the tobacco industry: This is 
not just an industry problem, this is a company challenge. Get serious 
about it.
  I was somewhat amused that the Richmond, VA, Times-Dispatch yesterday 
came out with a story from the Philip Morris company. For someone who 
has been battling this issue for a long time, it is hard to imagine, 
but Geoffrey Bible, chairman of the Nation's largest tobacco company, 
told employees in New York that he has recently appointed a senior 
executive to ``design more actions'' to back up the company's long-held 
claim that it does not try to appeal to youngsters.
  What a great epiphany it must have been in Richmond, VA, for Philip 
Morris to finally realize we are talking about them, we are talking 
about their marketing and advertising techniques, and we are talking 
about the possibility, if they do not get serious and start reducing 
sales to youth, that in fact they are going to have to pay for it.
  The Durbin-DeWine amendment says that payment should be directed at 
the companies based on their conduct. If they are positive and reduce 
sales to children, they will be rewarded. If they ignore this bill and 
they ignore these goals and end up selling more to children, they 
should pay a price for it. I don't think that is unreasonable.
  I want to salute, incidentally, the State attorneys general who 
started this ball rolling. Some have been critical of them. I have not. 
We would not be here today without their initiative and without the 
progress that they made. Particularly, I would like to salute Attorney 
General Skip Humphrey of Minnesota. He hung in there for a long time, 
and, literally before the jury retired to consider a verdict, he 
settled the case for over $6 billion for the taxpayers of Minnesota. 
That is great news for those taxpayers and Attorney General Humphrey. 
But equally important, during the course of his lawsuit he managed to 
draw out even more documents from the tobacco industry. It seems that 
the more and more documentation we bring out, the more obvious it is 
that these tobacco executives have been lying to us for decades. They 
have, in fact, been targeting kids.
  We have so many examples. I can't read them all to you here, but from 
a 1981 memo, a Philip Morris researcher said:

       Today's teenager is tomorrow's potential regular customer.

  A 1973 Brown & Williamson memo said:

       Kool has shown little or no growth in share of users in the 
     26-plus age group. Growth is from 16 to 25 year olds. . ..

  Remember, at the time, it was illegal to sell their product to 16-
year-olds in some States, and, yet, they were making it very clear it 
was part of their marketing strategy. The list just goes on and on of 
these companies that made conscious marketing decisions to sell to 
children. They knew they had to recruit these kids. If the kids turned 
18, it was unlikely they would become smokers. All of these documents 
and evidence have really made the case.
  Our look-back amendment says we are going to take this very seriously 
on a company-by-company basis. Let me address for a moment some of the 
criticisms that have been leveled against this amendment.
  First, if you support the McCain bill, which has a company-specific 
payment in it, then you must necessarily reject the argument that you 
cannot assess on a company-specific basis. McCain assumes that, I 
assume it, common sense dictates that, in fact, the companies market 
their brands to specific groups and can measure the success of their 
marketing and sales. The Durbin-DeWine amendment takes the McCain 
premise of the fee assessed on a company-wide basis and expands it. So 
for supporters of the McCain bill, the Durbin-DeWine amendment is 
consistent with the methodology that is used.
  Second, this will not lead to price increases. The Durbin-DeWine 
amendment is just the opposite. Some are arguing the look-back 
provision means the cost of the tobacco product is going to go up. 
Well, not necessarily. If, for example, in the case that I used, R.J. 
Reynolds is doing a good job and they are not assessed a surcharge, but 
Philip Morris is doing a bad job and they are assessed, then Philip 
Morris is going to have to find a way to absorb that payment in their 
cost on the bottom line, because to raise the price of their products 
puts them at a competitive disadvantage with the people at R.J. 
Reynolds.
  The Durbin-DeWine amendment is specific in saying any payment that is

[[Page S5594]]

assessed is going to be absorbed by the company in their bottom line. 
Let me give you an example of the breadth of this payment.
  If a company misses the target by 20 percent--in other words, we are 
saying we are going to reduce teen smoking by so much percent--15 
percent, 20 percent, 30 percent--and it turns out they miss it by 20 
percent, by a large margin, under our amendment their payment would add 
up to about 29 cents a pack. It sounds like a lot of money. It is, but 
don't forget for a moment that the tobacco companies' profit on each 
package of cigarettes is 40 cents. So our amendment is not going to 
drive them out of business. It simply is going to tell them their 
profits are on the line unless they stop selling to children.
  Some have argued that our surcharge is too high and will increase 
costs to $7 billion instead of the underlying bill's $4 billion. That 
is not accurate, either. The underlying bill is kept at $4 billion in 
industry-wide payments, but it also has company-specific payments as 
well. The Durbin-DeWine amendment draws a line and puts an absolute cap 
at $7 billion in total.
  The two approaches--the bill and our amendment--have similar 
aggregates if the companies miss by large amounts.
  Third, it has been said that this amendment is punitive--punitive. 
Our approach is not punitive. It reduces the industry-wide payment that 
applies to companies that, in fact, reduce their youth smoking while 
other companies fail to do so. It increases the surcharges on companies 
that continue to market or sell to kids. That is not punishment, that 
is accountability.
  And fourth, as a sign we are not punitive, we have capped the amount 
that can be charged. It has been pointed out that we require payments 
of as much as $240 million per percentage point, but keep in mind, too, 
that the underlying bill also has provisions in there for payments by 
percentage point. The lifetime social cost of hooking each youth smoker 
is $400 million. We are still charging companies less than the social 
cost of their continued sales to youth.
  I will conclude my time that has been allotted under the unanimous 
consent agreement by showing on this chart what happens under the 
Durbin-DeWine amendment as opposed to the McCain bill.
  If companies miss by 5 percent, the amount they are charged is $240 
million under our amendment, and it is $190 million in the underlying 
bill. At 10 percent, you can see the numbers, and 20 percent as well.
  The Durbin-DeWine amendment sets out to achieve several goals on 
which I hope all Senators, regardless of party, will agree. We reduce 
the number of youth smokers by 450,000 over the McCain bill. We reduce 
the number of premature deaths by 150,000 with this amendment. We 
reduce by $2.8 billion the lifetime social costs that are attached to 
smoking addiction, diseases, and death. And we have the same target in 
reduction as the original proposed settlement with the States attorneys 
general.
  I hope those who have listened to this debate will understand what we 
are about here. This look-back amendment is more than just a technical 
approach. It is, in fact, an approach which requires honesty and 
accountability. The tobacco companies hate this amendment like the 
devil hates holy water, because this amendment holds them accountable 
and says, ``We don't want to hear anymore verbiage from you about 
reducing teen smoking. We want to put it in writing. We want to put it 
on the line. We want you to be held accountable, and you will be held 
accountable. And if the Durbin-DeWine amendment is adopted and you 
continue to push your product on children and this addiction rate among 
our kids continues to grow, you will pay through the nose.''
  That is hard talk, I know. This is a hard subject. We are talking 
about the No. 1 preventable cause of death in America today. That is 
why this historic debate is so important, and that is why no other 
political diversion that has been raised on the floor should be taken 
seriously. Let us get about the people's business. Let us do something 
to give our kids a chance to be spared the scourge of addiction to 
nicotine and tobacco products.
  Mr. President, I yield back the remainder of my time, and I suggest 
the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. WYDEN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WYDEN. Thank you, Mr. President.
  Mr. President, and colleagues, the single most important step this 
Congress can take to protect our youngsters from the tobacco companies 
that prey on them is to hold each of those companies individually 
accountable. And that is what the look-back legislation does that is 
now before the Senate.
  I would like to spend just a few minutes talking about why this is 
such a critically important amendment in terms of protecting our 
children.
  History shows, and shows very clearly, that each time the Congress 
tried to rein in the tobacco companies in the past, the tobacco 
companies would use their enormous marketing, entrepreneurial and 
public relations skills to get around those efforts. So this amendment 
offered by our colleagues, Senators Durbin, DeWine, myself, and others, 
provides an opportunity to literally reverse the course of history.
  Previous efforts were always evaded by the tobacco companies. They 
were able to get around efforts to restrict electronic advertising; 
they were able to get around the early warning labels that were passed 
by the Congress. When our colleague on the other side of the Congress, 
the late Mike Synar, passed legislation to ensure that the States would 
take strong action to enforce the antisales laws to minors, the tobacco 
companies got around that. And the reason is that past policies never 
provided a way to hold each individual company accountable.
  So that is why this legislation is so very important. I would submit 
to my colleagues--I argued this in the Senate Commerce Committee when, 
as the Presiding Officer knows because I offered a similar proposal 
there as well--that this is really the key, if you want to see tobacco 
companies clean up their act and do what they have long said they would 
do, and that is, stop targeting the youngsters of our country.
  If you really do not want to change business as usual, vote against 
this amendment. If you think that tobacco companies will do it on their 
own, then you ought to oppose this amendment. But if you want to change 
the course of history and make sure that we have the tools to hold the 
companies accountable when they again, as they have done throughout 
history, look for ways to get around this legislation, if you really 
want to get the job done right, then vote for this amendment offered by 
our colleague from Illinois.
  The tobacco companies have spent vast sums in recent months arguing 
that this sort of legislation really isn't needed, that they would take 
strong action on their own and that they have cleaned up their act from 
years past. In the Senate Commerce Committee, we heard that argument. 
As the Presiding Officer knows, we heard from all the CEOs at that 
time. Given the fact that many of the documents and the accounts of 
past industry misdeeds were pretty old, a number of us were inclined to 
say it is a new day. Let us see if the tobacco companies are going to 
be better corporate citizens. Let's see if they have cleaned up their 
act.
  As we prepared for those Commerce Committee hearings, Mr. President, 
I learned that the Brown & Williamson Company was again engaging in 
conduct that did not really reflect what they and other companies were 
saying in the ads that they were running at that time about how it is a 
new day and they have cleaned up their act.
  A brief bit of history for the Senate I think would be revealing.
  I participated, as a Member of the other body, in the hearings in 
1994 where the tobacco executives then under oath, told me that 
nicotine isn't addictive. Of course, they contradicted every Surgeon 
General for decades. But there was actually a revelation at that 
hearing that perhaps was equally remarkable. At that hearing, it was 
brought to light that the Brown & Williamson Company was genetically

[[Page S5595]]

altering tobacco plants to give it an added punch as a way to attract 
smokers--shocking evidence. And when brought to light, the Brown & 
Williamson Company pledged to the committee, to the country, that they 
wouldn't engage in that kind of conduct again.

  As we prepared for our hearings in the Senate Commerce Committee, we 
began to hear about news reports that the Brown & Williamson Company 
was using genetically altered tobacco, known as Y-1, in cigarettes and 
selling them both here and abroad. So when the executives came before 
the Senate Commerce Committee I asked them about this. In their words, 
the CEO of the Brown & Williamson Company said, ``We are working off a 
small stockpile of genetically-altered tobacco, and in fact that is 
being included in cigarettes in our country and around the world.''
  As many in the Senate know, there is now a criminal inquiry underway. 
There have already been those who have pleaded guilty in connection 
with this matter. The Justice Department continues its investigation.
  The reason I bring this up is this is a concrete, tangible reason why 
we need the amendment offered by the Senator from Illinois. The Senator 
from Illinois, our colleague, Senator Durbin, gives us a chance to 
reign in a company that engages in that kind of rogue action, action 
that is detrimental to the health of the American people, and action 
that, in fact, as recently as 4 years ago said they would never engage 
in again.
  It is one thing to talk about conduct that is 20 or 30 years old; it 
is another thing to talk about conduct that stems from the 1950s. But 
it is quite another to see a company that makes a pledge to the 
American people that they will stop engaging in a health practice which 
is obviously detrimental to children and to our citizens, and then 
start it again, even while the hot light of the Congress is examining 
their conduct in considering legislation.
  These companies are not going to change on their own, Mr. President. 
We are going to have to hold them accountable through legislation. That 
is why this amendment is so very important. I will tell my colleagues 
that I believe this amendment, in connection with the accountability 
requirements that the President knows we set up in the course of our 
Commerce Committee deliberations, is the single most important tool for 
reversing history and making sure that after this bill is passed and 
the tobacco companies try to get around it, that we will have some 
strong tools to rein them in.
  I know we want to move to a vote on this, but I simply wanted to take 
a few minutes of the Senate's time to say that I think this is a 
critically important amendment. It is critically important for each 
Senator who really is serious about changing business as usual with 
respect to tobacco policy. The single most important concept the 
tobacco companies fear is accountability. They have not been faced with 
company specific accountability when we have passed previous 
legislation--warning labels, advertising restrictions, or the Synar 
amendment. They never had to face an amendment like this that would 
say, look, we are actually going to require you to produce results.
  I hope our colleagues will, as reflected by the bipartisan authorship 
of this amendment--our colleagues, Senator Durbin and Senator DeWine--
will pass this legislation. It is critically important for the 
youngsters of this country. It is the one part of this bill that will 
make sure that the job actually gets done in protecting youngsters, and 
not allow another piece of legislation, once again, to be evaded by the 
tobacco companies' genius, their marketing skills, and the vast sums 
that they will continue to spend with respect to marketing their 
products.
  I yield the floor.
  Mr. KERRY. Mr. President, I thank my colleague from Oregon for his 
continued, persistent, passionate commitment to trying to pass this 
legislation.
  The Senator was referring to the extraordinary sums of money that the 
tobacco industry spends. Let me remind our fellow Americans that amount 
of money is $6.5 billion per year, $16.5 million per day, $700,000 
every hour to get people to smoke. What is most astonishing about this 
effort to get people to smoke is the degree to which it has been 
targeted at young people, targeted at children.

  It is an extraordinary story. Nine out of 10 kids who smoke use one 
of the three most advertised brands, and yet less than 30 percent of 
adults use those most advertised brands. A study of 6-year-olds showed 
that just as many 6-year-olds--91 percent of all the 6-year-olds in 
this country--could identify Joe Camel just as they could identify 
Mickey Mouse. That is an absolutely extraordinary statement.
  Now, there is a reverse side of how extraordinary these statistics 
really are, because for every American who smokes there is an American 
or two who are trying not to smoke. All of them will tell you--or 
almost all, 86 percent to 90 percent of them--they started smoking when 
they were teenagers. Most of them--again, many, many, analyses and 
polls have been done of this--most of those people who started smoking 
as teenagers will tell us if they could quit today, they would quit 
today and never start again. If they had the choice to make again, they 
wouldn't choose to smoke. But they smoke because they are addicted. 
They are hooked.
  The truth is, in the United States of America we have more people 
spending more money to try to get unhooked on an annual basis than we 
spend on day care. That is most extraordinary. I found it hard to 
believe when I heard that. In Massachusetts alone, our citizens are 
spending $1.3 billion a year on nicotine patches, on different kinds of 
gums, on therapy, on hypnosis, on all of the things that people go 
through to try to stop. We are spending $1.3 billion a year in 
Massachusetts alone. Extrapolate that out across the country--it is 
millions of dollars more than the Federal Government commits to day 
care for our children. The reason this happens is because people get 
hooked at the early stages.
  Now, I want to share with my colleagues something about getting 
hooked in the early stages. We continue to hear colleagues come to the 
floor and say, gosh, this is going to raise money in the expense of 
cigarettes, and that is not a good thing. But they never address the 
amount of money that Americans are spending because of people who 
smoke. They never address the tax that cigarettes ``whack'' every 
American, even those who don't smoke. Every single household in America 
is spending an unwanted, unrequested, undesired 1,300 plus dollars --
1,370 or so dollars. Every household in America spends that, whether 
they want to or not, on the cost of the other Americans who smoke and 
then get sick.
  Let me share a story about some Americans who smoke and get sick, a 
commentary in USA Today by Victor Crawford. The title is ``Tobacco was 
Dad's Life; It Also Took his Life.'' I read from the article:

       My father never had a chance. When he was growing up in the 
     1940s, almost everyone smoked cigarettes. He said it was the 
     thing to do. It was not until 1964 that the U.S. Surgeon 
     General declared smoking was harmful. But by then, my father 
     had been addicted for almost 20 years. His addiction finally 
     killed him last March, one month before his 64th birthday.
       When my father was diagnosed with throat cancer in 1991, 
     some thought he had it coming to him. You see, my father was 
     a Maryland State senator turned tobacco lobbyist. He was the 
     first to dismiss the antismoking people as ``health Nazis'' 
     but spent the last years of his life trying to undo the 
     damage he had done. He admitted he had lied, and he 
     apologized for claiming, ``There is no evidence that smoking 
     causes cancer.'' Unfortunately, tobacco lobbyists understand 
     this simple logic all too well. Like my father, most smokers 
     today start when they are about 13 years old. And since about 
     90 percent of all new smokers are 18 and under, the industry 
     needs to keep hooking kids to stay in business.

  I will skip through a little bit, turning to the end:

       My father said, ``Some of the smartest people in America 
     work at just one thing: trying to figure out how to get young 
     people to smoke. As tobacco kills off people like me, they 
     need replacements.'' My father didn't live to see his 
     daughter graduate from college; he won't meet my future wife, 
     nor will he walk my sister down the aisle at her upcoming 
     wedding; he will never know his grandchildren, and they will 
     never meet their grandfather--all because when he was 13, 
     smoking was the thing to do. Let's give today's kids a 
     fighting chance.

  Mr. President, that is why we are here in the U.S. Senate. We have 
been tied up for more than a week now trying to give kids a fighting 
chance.

[[Page S5596]]

 There is only one reason this bill is on the floor of the Senate: 
because every expert in America, including the tobacco companies, tells 
us that if you raise the price of cigarettes, you will reduce the 
number of young people who smoke. And if we reduce the number of young 
people who smoke now, we will reduce the 420,000 Americans who die 
every year as a result of a smoking-related disease, such as cancer of 
the pancreas, cancer of the larynx, cancer of the throat--one cancer or 
another--and heart disease and liver disease.
  The Presiding Officer understands better than anybody, as a 
practicing physician and one who has been a key architect in helping to 
get this bill in a position to pass it, that this bill is about 
stopping kids from smoking and reducing the costs to America, the costs 
to families, the unwanted, unrequested costs of smoking. Families who 
result with a disease that comes from smoking wind up paying tens of 
thousands of dollars more in health insurance. But the impact for those 
people who don't have insurance, or adequate insurance, is to raise the 
insurance costs for everybody in America, raise the costs of all of our 
hospitals, raise the costs for families who can ill afford it.
  Mr. President, this is the first opportunity the U.S. Senate has had 
to address an extraordinary history. I want to share that history with 
my colleagues. It is now known that the tobacco industry helped to 
create this mess by targeting young people, by creating replacement 
smokers. Many of my colleagues may not have had an opportunity to focus 
precisely on the degree to which that has been true and the degree to 
which, therefore, this effort to try to raise the price of cigarettes 
and create a series of efforts to prevent young people from smoking 
through cessation programs, counteradvertising, and other efforts, is 
so important.
  In 1975, the R.J. Reynolds company, in a memorandum, wrote the 
following:

       To ensure increased and longer-term growth for Camel 
     filter, the brand must increase its share penetration among 
     the 14-24 age group, which have a new set of more liberal 
     values and which represent tomorrow's cigarette business.

  That is the R.J. Reynolds company talking about targeting the 14- to 
24-year-old age group because they are ``tomorrow's cigarette 
business.''

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

  That is an R.J. Reynolds tobacco company executive, a vice president 
for marketing, C.A. Tucker, on September 30, 1974.
  Let me read what Mr. C.A. Tucker also said:

       This suggests slow market share erosion for us in the years 
     to come unless the situation is corrected . . . Our strategy 
     becomes clear for our established brands: 1. Direct 
     advertising appeal to the younger smokers.

  Let me read what Dianne Burrows, a researcher, wrote in a memo for 
R.J. Reynolds in 1984:

       If younger adults turn away from smoking, the industry must 
     decline, just as the population which does not give birth 
     will eventually dwindle.

  In the same memo, it says:

       Younger adult smokers have been the critical factor in the 
     growth and decline of every major brand and company over the 
     last 50 years. They will continue to be just as important to 
     brands/companies in the future for two simple reasons: the 
     renewal of the market stems almost entirely from 18-year-old 
     smokers. No more than 5 percent of smokers start after the 
     age of 24.

  That is an R.J. Reynolds research memorandum, telling us that people 
don't start smoking after age 24. They targeted young people and got 
them hooked with a narcotic killer substance.

       Brands/companies which fail to attract their fair share of 
     younger adult smokers face an uphill battle.
       Younger adult smokers are the only source of replacement 
     smokers.

  So kill them off and replace them. Kill them off and replace them. 
That is the way it has been.
  This is a Brown & Williamson memo from consultants recommending that 
the company consider Coca-Cola or other sweet-flavored cigarettes. The 
1972 memo says:

       It's a well-known fact that teenagers like sweet products. 
     Honey might be considered.

  They were talking about a way to try to sweeten cigarettes and get 
more young people hooked.
  Another Brown & Williamson memo said:

       Kool has shown little or no growth in share of users in the 
     26 [plus] age group . . . Growth is from 16-25 year olds. At 
     the present rate, a smoker in the 16-24 year age group will 
     soon be three times as important to Kool as a prospect in any 
     other broad age category.

  Let me share a Philip Morris document with you. We are going to 
spread this around. We have had some from R.J. Reynolds and Brown & 
Williamson. This is from a report sent from researcher Myron E. Johnson 
to Robert B. Seligman, then vice president of research and development, 
in 1981:

       We will no longer be able to rely on a rapidly increasing 
     pool of teenagers from which to replace smokers through lost 
     normal attrition . . . Because of our high share of the 
     market among the youngest smokers, Philip Morris will suffer 
     more than the other companies from the decline in the number 
     of teenage smokers.

  So here you have Philip Morris, particularly, concerned about the 
loss between different companies, targeting teenagers.
  This from the same report of Philip Morris:

       Today's teenager is tomorrow's potential regular customer . 
     . . The smoking patterns of teenagers are particularly 
     important to Philip Morris . . . the share index is highest 
     in the youngest group for all Marlboro and Virginia Slims 
     packings.
       Marlboro's phenomenal growth rate in the past has been 
     attributable in large part to our high market penetration 
     among young smokers . . . 15 to 19 years old . . . my own 
     data, which includes younger teenagers, shows even higher 
     Marlboro market penetration among 15-17 year olds.

  This is from a different document, Mr. President. This is a Philip 
Morris internal document in 1987. This came from the Minnesota case. 
This was an exhibit in the Minnesota trial. This may explain one of the 
reasons that Minnesota finally reached a settlement.

       You may recall from the article I sent you that Jeffrey 
     Harris of MIT calculated . . . the 1982-1983 round of price 
     increases caused two million adults to quit smoking and 
     prevented 600,000 teenagers from starting to smoke. Those 
     teenagers are now 18-21 years old, and since about 70 percent 
     of 18-20 year-olds and 35 percent of older smokers smoke a PM 
     brand, this means that 700,000 of those adult quitters had 
     been PM smokers and 420,000 of the non-starters would have 
     been PM smokers. Thus, if Harris is right, we were hit 
     disproportionately hard.

  Here is the kicker: ``We don't need this to happen again.''
  In other words, we don't need to lose these smokers again. We have to 
find a way to penetrate--that, and the young people. But the most 
important thing is they found that their price increase caused 2 
million adults to quit, and it prevented 600,000 teenagers from 
starting to smoke.
  That is a cigarette industry document. For those Senators who keep 
coming to the floor saying, ``Why are we raising this price?'' all they 
have to do is read the cigarette companies that they are inadvertently, 
or otherwise, protecting on the floor by not voting for this 
legislation, because the cigarette companies themselves will tell you, 
raise the price and they lose business. That is precisely why people 
agreed on a volume adjustment in the process of arriving at how much 
money is going to be gained over the course of the life of this 
legislation.
  Let me read from a different Philip Morris memo.

       The teenage years are also important because those are the 
     years during which most smokers begin to smoke, the years in 
     which initial brand selections are made, and the period in 
     the life cycle in which conformity to peer group norms is 
     greatest.

  Mr. President, here we have an admission by Philip Morris of what 
everybody has known--that they are actually targeting the peer group 
which they know to be the most susceptible to exactly the kind of 
advertising that they geared up.

       The teenage years are also important because those are the 
     years during which most smokers begin to smoke . . . the 
     period in the life cycle in which conformity to peer group 
     norms is the greatest.

  That is extraordinary.
  So the cigarette companies willfully played on the time period of 
greatest peer group pressure and played to the peer group pressure. So 
it is today that we can hear from people who are in wheelchairs who 
have lung transplants like Pam Lafland, who I quoted a few days ago, 
who tells a story today of her

[[Page S5597]]

starting, as just that kind of peer group pressure person who responded 
to the notion, ``Oh, boy. If I smoke a cigarette, I am going to look 
older.'' Today she looks a lot older. Today she is trying to take care 
of her kids out of a wheelchair.
  Mr. President, that is what this is all about. Let me read from a 
different R.J. Reynolds Tobacco Co. marketing report on the future of 
Winston. This is 1990--15 years ago already of reports that we are 
looking at.

       Winston, of course, faces one unique challenge . . . . It's 
     what we have been calling the `doomsday scenario'.

  Get this, the ``doomsday scenario.''

       . . . an acute deficiency of young adult smokers, 
     apparently implying Marlboro's final domination and our utter 
     demise within a generation.''

  The ``doomsday scenario''--that they are not going to get enough 
young people hooked on Marlboros, and down they go.
  Here is a 1969 draft report from the Philip Morris board of 
directors:

       Smoking a cigarette for the beginner is a symbolic act . . 
     . . `I am no longer my mother's child, I am tough, I am an 
     adventurer, I'm not square' . . . . As the force . . .

  This is really.

       * * * As the force from the psychological symbolism 
     subsides, the pharmacological effect takes over to sustain 
     the habit * * *

  Mr. President, that is one of the most remarkable admissions from a 
company that we have had in this entire debate. I want to rephrase it.
  What they are saying is that after they have abused a young person's 
susceptibility to peer pressure, after they have exploited this young 
person's availability to get them into smoking, they acknowledged in 
1969 that once the psychological symbolism is gone, it is the 
pharmacological effect that sustains the habit. In other words, they 
are hooked. They are addicted. They got to have it.
  Here is a Lorillard executive in 1978:
  ``The base of our business is the high-school student.''
  Mr. President, there are pages and pages of the thoughts of the 
cigarette companies regarding their availability to cigarettes, all of 
which are the most profound fundamental documentation and for which the 
U.S. Senate must pass this legislation in the next days. There is no 
room for excuses in the face of the cigarette companies' own 
acknowledgments of what they have done to target generation after 
generation of Americans in order to get them hooked on a substance that 
is a drug, that is addictive and a killer substance which winds up 
costing Americans increasing amounts of money. costing Americans 
increasing amounts of money.

  Mr. President, we have that opportunity here. We have the opportunity 
to do precisely what the cigarette companies themselves have now agreed 
to do. They settled of their own accord with a number of different 
States. And in their settlements with those States, they agreed to pay 
amounts of money, they agreed to curb advertising, they agreed to 
engage in cessation programs, and they agreed to raise the price of 
cigarettes--all of the things that we are seeking to do here in this 
legislation. There is no excuse for a U.S. Senator coming to the floor 
and suggesting that we shouldn't do at a national level in the U.S. 
Senate what the cigarette companies themselves have agreed to do in 
settlements with the States--no excuse. The States themselves have 
arrived at settlements. If you extrapolate the amount of money that 
they are paying in those settlements, it is more than the U.S. Senate 
has agreed in its denial of a $1.50 increase and more than it has 
agreed to raise in total in this legislation.
  So this is not a matter of economic survival for those companies. 
This is a question of whether or not we are going to engage in an 
effort to reduce the access of our young people to cigarettes. That is 
what this is about.
  I have heard some people complain, ``Well, you know, it is one thing 
to raise the money but we ought to do the right thing with the money.'' 
Then they start coming and diverting the money to a whole lot of things 
that have nothing to do with stopping kids from smoking.
  It is going to take more than just a price increase to be successful 
in our goals. We need to guarantee that kids who are particularly 
vulnerable--kids who have difficult situations at home or kids who may 
leave school at 2 o'clock in the afternoon for whom there is no adult 
supervision between the hours of 2 o'clock and 6 or 7 in the evening--
are not going to be left to their own devices in order to go out in the 
streets and meet a drug dealer, or subject themselves to the various 
peer pressures and wind up with smoking as a new habit.
  Mr. President, we have the opportunity here to be able to make a 
difference in the availability of kids to that kind of free time. We 
have the opportunity to be able to provide cessation programs, which 
have been proven to work. California, Arizona, my own State of 
Massachusetts, have exemplary programs which are reducing the level of 
teenagers who are smoking, and they do it through various kinds of 
education--outreach, peer groups--different kinds of educational 
efforts within the classrooms and within the schools. But we need to 
train people in that. We need to train teenagers. You need the adequate 
development of teachers to be able to conduct that kind of pedagogy 
with which they may not be familiar. And you need to have an adequate 
supply of materials. You need to be able to help organize it 
administratively.
  I think this bill is structured in a way that tries to afford the 
maximum opportunity to States and local communities to be able to 
decide how to do that. This is not some big Federal mandate. This is 
left largely for the States to be able to decide what works for them 
best and how they will organize their efforts. We have simply tried to 
outline those areas that by most expert judgments there is the greatest 
chance of really having an impact on children and making a difference 
in their lives.
  So those outlines have been laid out as a menu, if you will, from 
which one could choose at the State level. It is not insignificant that 
the Governors, both Republican and Democrat alike, have signed off on 
that concept. If they are content that they can exercise their judgment 
adequately and that this gives them an opportunity to be able to 
continue the things that they have started, I think that ought to 
satisfy the judgment of those who often make a career out of fending 
for the right of States to make those decisions and a career out of 
opposing the Federal Government's heavy hand into something. This bill 
specifically, I think, appeals to both of those best options. I hope my 
colleagues will recognize that upon close analysis.
  Mr. President, I simply wanted to refocus the Senate on the critical 
component of what brings us here. I think we have, hopefully, finally 
arrived at an assessment that there is only one reason for raising the 
price of cigarettes. That reason did not initiate itself in the Senate. 
It came from the tobacco companies themselves, from economists, from 
experts. It came from health experts, and it came from many focus 
groups and analyses, all of which have arrived at the conclusion that 
price is important.
  Now, I thought, frankly, that Adam Smith and others had arrived at 
that conclusion a long, long time ago. I think most people in the 
marketplace have always known that most commodities are price 
sensitive, and the marketplace is price sensitive. Indeed, the tobacco 
companies have underscored that in their own memoranda which say they 
lost smokers as a result of their earlier price increases. What 
happened before will happen again. The question is whether we are going 
to maximize our effort in order to guarantee that kids get a lot more 
than just the price increase, that they get the kinds of guidance and 
the kinds of personal counseling and the kinds of personal education 
that will make a difference in the peer pressure, symbolic side of the 
choice that so many have made. And this ultimately will benefit every 
single American. If we are going to talk about the cost, let us talk 
about the cost to all of America of smoking--the cost through all of 
our hospitals, our pulmonary wards, through emphysema, the length of 
extraordinary care and its cost for those who have terminal illnesses 
as a consequence of smoking and the consequences to all other Americans 
who choose not to smoke but because of secondary smoke.

[[Page S5598]]

  Mr. President, I suggest the absence of a quorum.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. Will the Senator withhold?
  Mr. KERRY. No.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAMM. Mr. President, I ask unanimous consent that we proceed 
under the current status quo, that Members be recognized for the 
purpose of debate only, until 2:15.
  The PRESIDING OFFICER (Mr. Smith of Oregon). Is there objection? 
Without objection, it is so ordered.
  Mr. GRAMM. Mr. President, I am not going to give a long speech this 
afternoon. We are working to develop a compromise to provide some 
cushion to basically blue-collar Americans who are going to bear the 
brunt of this massive tax increase that is before the Senate. I am 
hoping that we can reach an agreement, and that we will move forward in 
an orderly way. Let me say to my colleagues that I am determined to see 
that we do not allow the Senate to engage in one of the greatest bait-
and-switch legislative activities in history.
  Our dear colleague from Massachusetts has in passionate terms 
indicted the tobacco industry. If this is a trial of the tobacco 
industry, I vote guilty. If this is a lynching, I say hang them. But I 
want to remind my colleagues of one unhappy fact. And facts are 
stubborn things. The cold reality of the bill we have before us, all 
753 pages of it, is that we can damn the tobacco companies all we want, 
and I join in that chorus. As to where conspiracies have been 
committed, we have a Justice Department which is largely unemployed in 
any other activity, let them investigate and prosecute. But I want to 
be sure everybody understands that nobody is talking about penalizing 
the tobacco companies.
  What we hear day after day after day is a steady drumbeat of 
denouncing the tobacco companies while we have 753 pages in this bill 
that raise taxes on blue-collar America. In fact, we have a bill before 
us that not only does not tax tobacco companies but has the 
extraordinary provision that makes it illegal for them not to pass the 
tax through to the consumer. So tobacco companies are held harmless.
  What we have here is a giant bait and switch. The bait is tobacco 
companies. Try them. Convict them. Hang them. But the switch is to 
impose $700 billion of taxes primarily on blue-collar Americans; 59.1 
percent of this tax will be paid for by Americans who make less than 
$30,000 a year. In my State, 3.1 million people smoke. As you listen to 
all of this ringing debate, we are talking about these victims. The 3.1 
million Texans that the tobacco companies have conspired to addict to 
nicotine are going to have taxes imposed on them under this bill. A 
blue-collar family, a husband who is a truck driver and a wife who is a 
waitress, will end up paying $2,030 of new Federal taxes if they smoke 
one pack of cigarettes each a day. So we are damning the tobacco 
companies but we are impoverishing the victims of the tobacco 
companies.
  As my 85-year-old mother, who speaks with the wisdom that comes from 
being 85 years old, has said to me, ``I'm a little bit confused; you 
tell me that this guy Joe Camel makes me smoke and that I am a victim, 
but you turn around and tax me.''
  Mr. KERRY. Will the Senator yield for a question?
  Mr. GRAMM. I listened to the Senator speak for over an hour. All I 
want to do is make my point, and when I get to the end of it, I will 
yield.
  So with the wisdom that comes from being 85 years of age, my mother, 
who has no formal education, has listened to this debate. She has 
listened to this vilification of the tobacco industry--and justifiable 
vilification I might add. Yet she has figured out that nobody is taxing 
tobacco companies, they are taxing her. She is the victim. The 
Government is here to help my mother. And how are we going to help her? 
Having been addicted to smoking for 65 years, and despite her baby 
son's efforts for 55 of those 65 to get her to stop smoking she is 
addicted, and she is not going to quit smoking. She has concluded that 
we are talking about how bad tobacco companies are for having gotten 
her addicted to smoking, but we are taxing her. The cold, persistent, 
unhappy fact is that 59.1 percent of these taxes will be paid by 
working blue-collar Americans who make less than $30,000 a year; 75 
percent of the taxes will be paid by people and families that make less 
than $50,000 a year.
  If this is not a classic case of bait and switch, I never heard one. 
All of the rhetoric is about keeping teenagers from smoking. I would 
love to do that. I would like to get people who are not teenagers to 
also stop smoking. I would love to do that. But why we have to give 
$700 billion to the Government to do that, I don't understand. I am 
struggling, opposing this organized effort and all of these people who 
are outside with their buttons on saying ``Give me your money.''
  Secretary Shalala has said that the price increases will reduce 
smoking by 50 percent among teenagers. This bill sets a target of 
reducing smoking by 60 percent, so they are going to take $700 billion 
and all they claim they are going to be able to do with it is reduce 
smoking another 10 percent. Though it is interesting, when USA Today 
asked the American people in a poll if they believed this bill would 
stop people from smoking, 70 percent said no.
  Here is my point: If we want to raise taxes to discourage smoking, 
that is one thing. But why do we have to keep the $700 billion? Why do 
we have to raise the level of Federal taxes on Americans making less 
than $10,000 a year by 41.2 percent? If the objective is to make 
cigarettes more expensive and discourage smoking, why do we have to 
impoverish blue-collar America in the process?
  What I am saying is, if we believe that raising prices will 
discourage smoking, let's raise prices. But let's take at least part of 
the money that comes to the Government, and instead of paying tobacco 
farmers $21,000 an acre and letting them go on growing tobacco; instead 
of paying plaintiffs' attorneys $100,000 an hour for filing these 
suits; instead of setting up programs where every major Democratic 
contributor will have his charity or his interest funded by this 
program, why don't we raise the price of cigarettes, discourage 
smoking, and take the money and give tax cuts to blue-collar America so 
we are discouraging them from smoking, but we are not pounding them 
into poverty?
  Maybe you can be self-righteous enough that you are not worried about 
a blue-collar couple in Texas paying $2,030 of additional Federal taxes 
if they smoke one pack of cigarettes a day. Maybe you are not worried 
about what that is going to do to their ability to pay their rent, to 
pay their groceries, to have any chance of saving money to send their 
child to college. But I am worried about it. I am not in any way made 
to feel better by damning the tobacco companies while writing a bill 
that protects them from paying this tax; a bill that mandates they pass 
the tax through to the consumer, which basically is blue-collar 
America.
  I have an amendment that is very simple. It says: Raise the price of 
cigarettes, discourage smoking, but instead of letting the Government 
have this money, what one office seeker in my State has called 
``winning the lottery'', instead of setting up a program that gives not 
thousands, not millions, but untold billions to everything from 
community action to international smoking cessation--it is obvious that 
people long since ran out of ideas as to how to spend the money--
instead of engaging in this feeding frenzy, which will bloat Government 
forever, why don't we take some of the money and give it back to 
moderate-income people. So we raise the price of cigarettes, we 
discourage them from smoking, but we don't impoverish them?
  I have picked probably the worst feature of the current Tax Code to 
try to fix as a part of this process. What I have done is targeted a 
part of the Tax Code where it is the policy of the Federal Government 
to discourage people who fall in love from getting married. I happen to 
believe the family is the strongest institution for human happiness and 
progress that has ever been developed. I don't understand a tax policy 
that says if you have a waitress and a truck driver who meet and fall 
in

[[Page S5599]]

love and get married, we are going to make them pay more taxes for 
being married than if they were single or lived in sin. Or if a CPA and 
a lawyer, working all the way up and down the income structure, fall in 
love, get married and have a whole bunch of children who can pay Social 
Security taxes in the future and solve America's problems in the 
future, we tax them an average of $1,400 a couple because they got 
married. As my colleagues have heard me say on many occasions, my wife 
is worth $1,400, and I would be willing to pay it, but I think she 
ought to get the money and not the Government.
  So what my amendment does is take roughly a third of this money in 
the first 5 years, and then half of it in the second 5 years, letting 
them spend two-thirds of this money, more money than you would possibly 
spend efficiently if your life depended on it. People who would have 
been happy with thousands now will be given billions. Tobacco farmers 
will, in 6 months, take a quota for growing tobacco they could buy 
today for $3,500, and we are going to pay them over $21,000 for it in 
this bill. I personally don't know why these quota prices have not 
exploded, given this bill is out there. Maybe they figured out this 
bill is not necessarily going to become law. Rather than do all of 
those things, I am saying, let's raise the price of cigarettes so we 
try to discourage people from smoking--which is God's work; I am for 
that --but take a third of the money and instead of letting Government 
spend it, let's eliminate this marriage penalty for couples who make 
less than $50,000 a year so that while the price of cigarettes goes up, 
we don't impoverish people.
  That is basically what my amendment does. I hope my colleagues are 
going to support it. Our Democrat colleagues do not really want to give 
this money back. They don't like giving money back. They like spending 
it. And they think anybody who works is rich and they ought to be 
giving more than they are giving.
  But their idea is: Take my amendment and water it down to almost 
nothing, and then get all their people to vote against my amendment. 
Then get them to come back and vote for their figleaf, amendment. Then 
they can all go home and say, ``Repeal the marriage penalty? I was for 
repealing the marriage penalty; it is just I didn't want to do it the 
way that Republicans wanted to do it. But I am with the family. I'm 
with the blue-collar worker. I represent the blue-collar worker.''
  I am hopeful we can reach an agreement that will guarantee that I 
will get 51 votes for my amendment. If anybody wants to watch the 
debate, once it goes over 51 votes, I predict that at least 20 or 25 
percent of our colleagues who have not voted for it will immediately 
rush and vote for it once it is adopted. We might watch that at the 
conclusion of this vote.
  In any case, the point that I want to reiterate, because it gets lost 
in this whole process, is a simple point: Everything that is being said 
about the tobacco companies I agree with. If we are here to indict 
them, they are indicted. If we are here to convict them, they are 
convicted. If we are here to hang them, let the hanging begin. But 
despite all that rhetoric, which is interesting and appealing and it 
makes us feel good, in the end, 59.1 percent of this tax is being paid 
by American blue-collar workers who make less than $30,000 a year.
  The tobacco companies, on the other hand, have a provision that even 
if one tobacco company should say, ``Well, I could get a market 
advantage by not passing this through,'' they have legal protection 
that makes them pass it through to be sure the blue-collar worker gets 
all of the tax burden and that none of it is absorbed by the tobacco 
companies.
  All I am trying to do is say this: Don't get blue-collar Americans, 
who are the victims of the effort by tobacco companies to get people to 
start smoking, confused with tobacco companies. If you want to impose 
taxes on tobacco companies, have at it. If you want to drive them out 
of business, have at it. But you are not going to do that, because 
basically there is a rule that every parasite learns. If the organism 
is to survive, you don't kill the creature on which you engage in the 
parasite activity. You bleed the host creature, but not to the last 
drop of blood.
  My view is, I care nothing about the tobacco companies and, if you 
want to destroy them, have at it. But I do care about 3.1 million 
Texans who smoke. Many of them would like to stop. My mother would like 
to quit smoking, but she is not going to quit smoking.
  All I am saying is, don't get tobacco companies and workers confused. 
And I am talking about taxpayers. If the price increase, according to 
Secretary Shalala, is going to cut consumption by 50 percent and the 
target of this bill is to cut consumption by 60 percent, then this $700 
billion is getting you 10 percent more, supposedly. I just don't see 
how you can spend that much money.
  If you look at what is being done, it is clear that much of what is 
being funded in this bill has nothing to do with smoking. For example, 
we mandate that the States spend the money we give back to them on 
maternal and child care block grants, on funding child care, on 
federally-funded child welfare, on the Department of Education Dwight 
D. Eisenhower Professional Development Program under title II of the 
Elementary and Secondary Act, and it goes on and on and on and on, 
because nobody has ever had this much money before to spend.
  Actually, this is a modest proposal. What I am saying is, give a 
third of what we take in cigarette taxes back to blue-collar workers so 
we get the benefits of the higher price of cigarettes but we don't 
impoverish blue-collar America by making it fund the largest growth in 
Government that we have seen since the mid-1960s.
  I hope my colleagues will support this amendment. One way or the 
other, I hope to see it adopted. I want to get a vote on it. I want 
America to know who is for it and who is against it. That is the 
essence of democracy--accountability. I think this is an issue on which 
we need some accountability.

  Quite frankly, I think my amendment improves this bill. We ought to 
be giving about 75 or 80 percent of the money back in tax cuts. We need 
to have an effective but reasonable program for antismoking, and we 
need to throw out about 745 pages of this 753-page bill so that it is 
really about smoking and not about the largest money grab that has 
occurred in Congress in my period of service.
  This amendment is a first step in the right direction. I hope it is 
not the last step. I understand there are others who are going to be 
offering provisions related to tax breaks for health care and other 
items, but this is a logical place to start, and it is where I want to 
start.
  Mr. President, I yield the floor.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I was entertained listening to my friend 
from Texas, who makes some pretty broad statements about who is for 
what and who supports what. I think I heard him just say Democrats 
don't really want to give the money back but the Republicans do. Maybe 
he wishes that were the fact, and sometimes the wish is the father to 
the fact, but not in this case.
  As far as I know, Democrats are wholeheartedly in favor of a fairness 
that has escaped every single proposal that the Senator from Texas has 
ever brought to the floor with respect to taxes. There isn't one tax 
proposal that has passed the U.S. Senate in the 14 years I have been 
here that wasn't proposed on the Republican side of the aisle that 
wasn't made fairer by the efforts of Democrats on this side of the 
aisle. There isn't one tax proposal that the Senator from Texas and 
others have brought to the floor--not one--that wasn't geared to the 
upper-income level of people in this country, and usually at the 
expense of the low-income level of people.
  My friend from Texas may wish it were otherwise, but the fact is that 
the distinction is not whether or not we want to give money back, the 
distinction is whom we want to give it back to and whom they want to 
give it to in the first place.
  Every single tax bill I have ever seen worked on here, whether it was 
the capital gains distribution, or how it came in, or the depreciation 
allowances, or just on the income tax, or on efforts to roll back some 
of the impact of the payroll tax--in every single instance, we, I 
think, have been able to improve the distribution. Let me give a 
classic example.

[[Page S5600]]

  In the agreement we reached last year, with much ballyhoo, on the 
budget, which brought us to the point of a balanced budget and on the 
available money for individuals earning $40,000 or less, under the 
proposal that the Senator from Texas supported and our friends on the 
other side of the aisle supported, a single-parent mother would have 
gotten zero income back, zero tax rebate, at $40,000 or less of income. 
And it was only when we refused to pass that legislation without 
changing it that she got something. In the end, we passed legislation 
which provided that single parent with an income of $40,000 with $1,000 
of tax benefit rebate.
  The distinction here is who gets what, and that will be the 
distinction in an alternative we will offer, if we have to, with 
respect to the marriage penalty, because we understand, just as well as 
the Senator from Texas, that the marriage penalty is unfair, the 
marriage penalty is an aberration in the context of the Tax Code, and 
has a negative impact on an institution that we respect equally with 
the Republican Party.
  So we will offer, I think, in fact a fairer and better structuring of 
an elimination of the marriage penalty, and we will give the Senate 
another opportunity to vote on fairness. You can vote for Senator 
Gramm's proposal, which will benefit not as many people at a lower 
income level as ours; and we will let others be the judge as to whether 
ours is, in fact, a fig leaf or yet another Democrat effort to make the 
Tax Code fairer and to protect people in the institution of marriage. I 
know where my vote will go. I know what I will be comfortable with 
based on that judgment.
  So, Mr. President, the real issue here is, What is the distribution? 
The Senator from Texas stood there and said, ``All I want is one-third, 
just one-third. And then they'll have plenty of money to spend on all 
the other programs that they want.'' Well, analyze that and you find 
that is not true either. Because the Senator from Texas cannot control 
what other amendment may come that may try to grab additional revenue.
  So the first grab may be the marriage penalty, but then you may 
have--you will have an additional amount of money for drugs; you will 
have an additional amount of money here or there; and unless the 
Senator from Texas is prepared to say he and his colleagues will stop 
trying to raid the effort to stop children from smoking, we would be 
hard pressed to say that it is only one-third of the money.
  But there is another reason that one is hard pressed to say that it 
is only one-third of the money. Because, once again, the Senator from 
Texas has only told you part of the story. Here is the part of the 
story the Senator from Texas did not want to tell you. It is right 
here. The one-third of the distribution of the Senator's money on his 
approach to dealing with the marriage penalty, yes, it is about one-
third in the first year--in the first 5 years. But in the second 5 
years, it jumps up to $82 billion, which is 53 percent; in the next 5 
years, because we are talking about a bill that works over 25 years--
they are always coming to the floor and telling you it is a $700 
billion bill or a $600 billion bill or a $500 billion bill, so when it 
is convenient for them, they talk about the numbers in the context of 
25 years; but when it is inconvenient for them and it tells another 
side of the story, they try to limit it to just 5 years. Let us put it 
in the same context as the 25 years they are talking about.
  In that 25-year context, Mr. President, here is the effect: The first 
5 years, it is the one-third the Senator talked about. In the next 5 
years, it is 53 percent. Wow. In the third 5 years, it is 80 percent of 
the amount of money available under this legislation. And in the last 
two sets of 5 years, it is 77 percent and 73 percent.
  So the Senator is really talking about gutting--gutting--the effort 
to stop kids from smoking. And every time he comes to the floor he 
talks about all the things this bill does that is Government. Well, by 
gosh, a cessation program involves somebody organizing people to help 
people not to smoke. And since schools are where most of our children 
reside for the better part of a day or a good part of a day, and the 
better part of a year, it makes sense to involve our schools in 
cessation programs. To do that, you have to spend a little money and 
organize it.
  State block grants--that has been something that I always thought the 
Republicans were for; they want block grants. They want to give the 
money to the Governors. ``Let the States have a decision as to what 
they want to do.'' As to education and prevention, smoking prevention, 
counteradvertising, those are important aspects. Enforcement, there is 
$500 to $600 million a year for enforcement.

  We hear people coming to the floor and saying in one breath, they do 
not want to have this bill passed because it will increase smuggling; 
in the next breath they do not want to acknowledge the very Government 
they are criticizing that is spending money for antismuggling 
enforcement efforts.
  So, Mr. President, it seems to me that on close analysis we will be 
able to make a strong judgment as to whether or not there is a fairness 
in the marriage penalty approach of the Senator from Texas, or whether 
it is just an effort to try to kill this bill.
  I am for getting rid of the marriage penalty, and I will vote to find 
a way to do that. But it makes sense, it seems to me, to recognize that 
even if we pass getting rid of the marriage penalty on this bill, that 
is not going to stop one kid from smoking; that is not going to do one 
thing for additional research into why people get addicted; it is not 
going to do one thing for counteradvertising to stop kids from smoking.
  So we can go home and feel good because we took the tobacco bill, 
which is geared to try to stop kids from smoking, for which the Senator 
has agreed the price increase is targeted, and you turn out passing the 
marriage penalty. If you take too much of it, you begin to strip away 
at the ability to accomplish the purpose of the bill.
  I am prepared, as I know other Democrats are, to vote for a 
legitimate amount of money so that we can parcel the appropriate 
proportion of these revenues to the job of reducing the number of kids 
who smoke. But I think there is a place where common sense says you 
have to stop if it goes too far in stripping us from the fundamental 
purpose of this bill itself.
  I also point out that there are other areas that will want to compete 
for some of this funding. I think it is important for Senators to think 
about the overall amount of money that would be available for those 
purposes.
  The final comment I make is the Senator from Texas spent a lot of 
time saying how this bill is misdirected. He is crying for the poor 
people who are going to pay for an additional cost of a pack of 
cigarettes. He says how misdirected this bill is because it comes down 
on the victims, and not on the tobacco companies. But then he says he 
is willing to raise the price.
  You cannot have it both ways, Mr. President. You just cannot have it 
both ways. There is no way to focus a tax on the tobacco companies, 
whatever you call it. I heard him the other day call it a ``windfall 
profits tax.'' No matter what you call it, if you tax them, you tell me 
a company in the United States of America which winds up with 
additional costs of manufacturing a product that does not, unless they 
just eat them--and nobody expects the tobacco companies to do that--
that does not pass it off in the cost of doing business. The cost of 
the product will rise.
  But by doing this in the way that this bill seeks to do it, by 
setting a fee that is levied at the level of manufacturing, you 
actually have a far more effective way of constraining the smuggling 
of, of creating accountability in the system; and ultimately you wind 
up doing the very same thing that would happen under any other 
circumstances, which is the tobacco companies are going to pass it on 
to the consumer.
  In the end, there is a benefit from raising the price. The benefit 
outweighs whatever crocodile tears we are hearing shed for those who 
are going to pay the additional cost of the cigarette. First of all, it 
is voluntary. Nobody forces them. They buy it. Secondly, it is a 
smaller amount in total than the amount that people are paying anyway. 
Then the costs to our society as a whole, which will be reduced by 
accomplishing what the cigarette companies themselves have said will 
occur, which is if you raise the price,

[[Page S5601]]

you will reduce the number of kids who are smoking, you will ultimately 
reduce the numbers of people who are addicted and you will 
significantly reduce the costs overall.
  So America has a choice. You can reduce the costs, reduce the number 
of kids who are addicted, reduce the number of our fellow Americans who 
die, reduce the overall costs to our hospitals and ultimately wind up 
with a better and healthier society as a consequence of that, or you 
can take the alternative route, which is the only alternative to what 
the Senator is saying, and vote to leave it the way it is and let the 
tobacco companies continue to addict the next generation without making 
a legitimate effort. I think the case ought to be very, very clear.


                  cosponsorship of amendment No. 2446

  Mr. CONRAD. Mr. President, on Tuesday, June 2, during Senate 
consideration of the McCain-Kerry and others amendment No. 2446, I was 
added as a cosponsor of that amendment, however, the Record of June 2 
does not reflect my cosponsorship.
  I, therefore, ask unanimous consent that the permanent Record be 
corrected to reflect my cosponsorship of Senate amendment No. 2446.
  In addition, I now ask unanimous consent my cosponsorship of Senate 
amendment No. 2446 appear in the Record at the appropriate place.
  The PRESIDING OFFICER. without objection, it is so ordered.
  Mr. CONRAD. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HUTCHINSON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Hagel). Without objection, it is so 
ordered.
  Mr. HUTCHINSON. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________