01 May 1998 Ironies of the Tobacco Wars

Did you know that airline air was better back when smoking was allowed on planes?

According to the respected travel magazine Conde Nast Traveler, in the days of airline smoking, pilots let up to four times as much fresh air into airplane cabins as they do now. They had to, to disperse the smoke. Nowadays they save money on fuel by using less fresh air and more recirculated air ­ air that sometimes carries colds, flu and even tuberculosis from passenger to passenger.

I was reminded of this irony while listening to the Senate debate on the National Tobacco Policy and Youth Smoking Reduction Act, commonly known as the John McCain (R-AZ) tobacco tax bill. As I listened, I heard irony after irony. Rarely, I suspect, did a majority of the Senators notice them.

For instance, the McCain tobacco tax bill is designed to raise the price of cigarettes so smokers will have “sticker shock” and quit. But it also phases in the price increases specifically because the Senators want to avoid “sticker shock.”

And: The bill is supported because Senators don’t like the tobacco business. But the bill exempts tobacco companies with a small share of the market, which means that new tobacco companies will have a price advantage over established competitors. The result of the bill’s passage, therefore, will surely be a rush by entrepreneurs to start more new tobacco companies.

That’s not all:

• A tobacco tax is necessary, say the bill’s supporters, because people are victims of tobacco companies. They start smoking, this theory holds, because of tobacco company advertising, and then find that they can’t quit. To help these people, the supporters of the McCain bill would raise tobacco taxes… thereby victimizing the victims of tobacco once again.
• The McCain tax bill is supposedly designed to penalize tobacco companies… but Section 404 specifically forbids the tobacco companies from paying the tax.
• Supporters of the McCain bill say its tax increases are needed to deter teens from starting to smoke, because once teens start smoking, they can’t quit, even when they are older and wiser. But… they also say raising the price of cigarettes will make smokers quit.
• Proponents of the McCain tax say it will make people quit smoking, but the bill’s proponents assume that a new $1.10 per pack tax will raise $868 billion. If people quit smoking… where will the $868 billion come from?
• An amendment to the bill sponsored by Senator Lauch Faircloth (R-NC) would have capped legal fees paid under the bill so that while some lawyers might become millionaires from the bill, no one would become a billionaire. But the Senators ­ supposedly motivated by concern for the welfare of the mostly lower-income people who will pay these taxes ­ voted this amendment down. The Senate robs from the poor to give to the rich… in order to help the poor.
• When the Senate debated putting caps on legal fees so low-income Americans wouldn’t be taxed to make other people billionaires, it was the conservative Senators who spoke up for the poor and the liberal Senators who spoke up for the rich. Explaining their reasons, the liberal Senators, who support the tobacco tax and other restrictions on the tobacco industry, explained that they oppose the caps because… they are against interfering with the free market.
• Senator Ted Kennedy (D-MA) has been the Senate’s leading champion of raising the minimum wage for decades, because he believes that the working poor can’t make ends meet. So when this $868 billion tobacco tax increase was proposed, 53% of which would be paid for by people making under $30,000 per year, and only 3% by people making over $75,000 per year, the Senator tried to amend the bill… saying this highly regressive tax increase wasn’t big enough.
• All this recent fuss over tobacco got started because 40 states were suing to recover funds lost due to smoking. But… the states make money from smoking. An analysis by W. Kip Viscusi, Director of the Program on Empirical Legal Studies at the Harvard Law School, shows that states profit from every pack of cigarettes sold, because tobacco is already heavily taxed and smokers’ shorter life spans decrease their total lifetime medical and old-age costs.

The tobacco bill has a long way to go. The Senate will debate it again in June and the House sometime afterward. But what I want to know is, if this bill does pass, will President Clinton celebrate as he has been known to do on other occasions? That is, with a nice fat cigar?

Amy Ridenour is President of The National Center for Public Policy Research, a Washington, D.C. think tank. Comments may be sent to [email protected].