TOBACCO SETTLEMENT: White House Backs Legal Immunity
Today's Wall Street Journal reports that the Clinton administration "for the first time will explicitly support granting the tobacco industry relief from potentially crippling lawsuits." The administration's position will be articulated in "testimony to be delivered today by a Justice Department official." David Ogden, counselor to Attorney General Janet Reno, will testify: "If there is agreement on a comprehensive bill that advances the public health ... then reasonable provisions modifying the civil liability of the tobacco industry would not be a dealbreaker." According to his prepared testimony, Ogden will suggest that Congress cap punitive damage awards involving "past misconduct" by tobacco companies or "allow them in cases 'based on facts not disclosed by the tobacco manufacturers to Congress and the public."
Ogden will further recommend "that Congress consider raising the annual cap on industry legal payouts from the $2 billion-to-$5 billion level in the settlement," and will suggest that cigarette makers reveal their "'calculations and research' about the financial needs of 'those injured by tobacco products.'" Ogden will further recommend that Congress pass "measures that 'improve injured tobacco users' access to justice." While his prepared testimony does not specify how Congress should do this, the Journal notes that "some lawmakers are discussing a settlement fund in which smokers could file claims for damages without litigation" (Taylor, 2/5).
GOP Tax Cut Parade
The Los Angeles Times reports that congressional "Republicans are beginning to talk seriously about a stand-alone tobacco tax increase, a step that would deprive the overall tobacco settlement of one of its most attractive features." One proposal under consideration is a 75 cent or $1 per-pack tobacco tax hike, which "would be used primarily to finance an individual tax cut, with some funds set aside for states to enforce stricter controls on youth access to tobacco." House Budget Committee Chair John Kasich (R-OH) said, "Let's say we don't get a tobacco settlement, then Republicans would have to look at whether we raise taxes on tobacco and use that money to give Americans a broad-based tax cut" (Rubin, 2/5). But House Ways and Means Committee Chair Bill Archer (R-TX) yesterday raised doubts about tying tax cuts to a higher cigarette tax. He noted that "[a]n increase in tobacco taxes ... will alienate a core of Republicans who oppose all tax cuts." He said, "I think it's really premature to begin talking about raising one tax to give tax relief somewhere else. I don't know how, ultimately, that will play out" (Godfrey, 2/5).
An editorial in today's Washington Times warns that the issue of providing legal immunity threatens to derail the overall tobacco settlement. "Without immunity, the industry has little reason to abide by" the deal, meaning the overall settlement "is in danger of collapse." "Trouble is," the editorial notes, "the president had planned on setting aside about $65 billion from the settlement for new spending initiatives over the next five years. If the tobacco settlement goes down, the funds available for spending go down too. This dilemma highlights, in some ways, the moral bankruptcy of the whole arrangement. If teens actually stopped smoking now and failed to pick up the habits as adults, the tobacco industry would have to cut back. Then there would be no company money to pay off the settlement and no money for the feds to pay for the new spending" (2/5).