The $350 Billion License to Kill

Monday, June 23rd, 1997 -- The business world is stunned by the Big Four cigarette makers' offer to pay $368 billion over 25 years to rid them of future worries over lawsuits and to lock in damages today.

The agreement reached between the tobacco giants, 40 attorneys general, and a nearly 60 private lawyers is shocking in proportion -- especially for an industry whose profits are about $8 billion a year. Under the proposed agreement, which must be approved by Congress and the White House, the firms would pay $10 billion a year plus a $60 billion "starter" which would deny punitive damages for future litigants. Tobacco giants would then up the ante to $15 billion a year to offset health care costs for smokers. Limits on advertising and payments to help people quit were also part of the agreement, as well as mandated targets on teen smoker reduction. The kicker is an agreement to allow the FDA to regulate nicotine as a drug.

But don't worry about RJR and Philip Morris. Rumor has it that they'll write off the billions as a business expense and increase cigarette prices to make up the rest of the difference! Added to this is the "good news" that Asians, Europeans and Africans are smoking more now than ever.

What all this will mean to health in America is up for grabs.

The big question this week is whether Congress and President Clinton will go along with the deal.

Methinks yes.

Just follow the money.

Tobacco is one of the mega-exports of the US economy. Tobacco purveyors pay more than $3 billion in income taxes each year and provide tens of thousands of jobs to Americans. But the icing on the cake is the stunning total of political money, contributed to Republicans and Democrats alike, from cigarette makers.

The biggest losers in the deal might be manufacturers of cigarette vending machines -- which become a no-no under the agreement.

The biggest gainers? Trial lawyers, who might split as much as $20 billion in legal fees among themselves.

Watch for a lot of hemming and hawing over the next few weeks as Congress and the White House "pose" as concerned over the ramifications of allowing big business to buy a license to kill for only a few hundred billion dollars.

In the end, they'll all fold.

After all, this is America, isn't it?

© 1998, 1997, American Politics Journal Publications Inc.