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McCain's Big Deal

Harsh words, strewn chairs and tobacco's lost G.O.P. friends mark a difficult negotiation

By James Carney

TIME magazine 4-13-98

(TIME, April 13) -- Senator John McCain stood in his office, his eyes squeezed into slits and his hands choking the back of a chair. "O.K., what? What?!" he barked. It was mid-morning on March 25, and two of his aides were telling him that the tobacco deal he had painstakingly negotiated among impossibly contrarian parties was disintegrating yet again--this time over how much authority the Food and Drug Administration should have to regulate tobacco products. McCain studied his hands for a moment, as if he were surprised to see the rubber band that he always keeps around his right wrist. Then he looked up. "It's O.K. We knew this was going to happen," he said calmly. "Remember, steady strain. You gotta keep a steady strain."

McCain, a former Navy pilot, made the phrase a mantra during his 5 1/2 years as a POW in Hanoi. Prisoners would find reasons for hope or despair in the smallest things, leading to painful emotional swings. McCain kept his head by controlling his emotions and counseled his fellow captives to do likewise.

That advice served him well during negotiations that concluded last week with the Senate Commerce Committee's voting 19-1 for a sweeping $506 billion tobacco bill. Although tobacco companies are already threatening legal action and anti-tobacco lawmakers are promising to fight for a tougher bill, some version of the McCain Act will probably pass the full Senate by Memorial Day. If the House follows suit, by year's end the President will be signing the most significant public health legislation in a decade.

That's what Mississippi attorney general Mike Moore thought he had negotiated last year when he reached a $368.5 billion settlement on behalf of 40 states. But support quickly vanished. Bill Clinton backed away amid protests by the health lobby and some Democrats that the deal was too easy on Big Tobacco. "I looked around," Moore recalls, "and there was nobody behind me."

Certainly not McCain's fellow Republicans, who were finding their addiction to tobacco money difficult to give up. Instead, they created the illusion of action by spreading the many components of the settlement among various committees--much as kids spread lima beans around their plates to create the illusion of eating them.

Predictably, nothing happened until early March, when something very big happened. The Republicans came to the extraordinary realization that the tobacco industry could be sacrificed--had to be--lest the Clinton Administration hammer them on yet another populist issue. It was becoming clear to the G.O.P. that voters everywhere were increasingly anti-tobacco. Don Nickles, the Senate's second-ranking Republican, called a group of G.O.P. Senators into his office and forced a decision. A single committee would now handle the issue and produce a bill. It was an onerous assignment with a high risk of failure. But when the meeting ended, McCain, the 61-year-old chairman of the Commerce Committee, walked out rubbing his hands. "We get it all," he said, grinning. John Raidt, the committee's staff director, looked at McCain as if he were crazy. "That's a good thing?" Raidt asked.

McCain thought so. The Arizonan is known in politics mostly for his high-minded legislative failures--among them his dogged and so far futile quest to reform the way political campaigns are financed. On tobacco, McCain would again have public opinion behind him, but he also had to please an array of constituencies: Democrats, Republicans, the White House, the industry, plaintiffs' lawyers and hard-line public health groups represented by former Surgeon General C. Everett Koop and former FDA boss David Kessler.

The only way to do it, McCain decided, was to open up the process. He asked the White House to send a team to Capitol Hill to work with the committee, and he called on Koop and Kessler for input and support. Finally, he asked Moore to fly to Washington to serve as a sounding board, along with a team of other AGs and trial lawyers.

Two weeks ago, the Administration finally told McCain the price of the President's support: $1.10. That is, the Administration's budget figured on a deal in which the cost of a pack of cigarettes would rise $1.10 over five years. Some G.O.P. lawmakers gagged at the cost--privately they were still promoting the industry's interests. "We've got to go with the President's numbers," McCain cajoled a worried Republican in a phone call. "Otherwise we open ourselves up to the charge that all we care about is the tobacco companies."

The figure made Moore nervous too. McCain and the White House wanted nearly twice as much as the 68 cents he had originally negotiated, raising the cost of the deal at least $138 billion. Since McCain had barred the tobacco companies from the negotiations, Moore and the other AGs found themselves serving as reluctant surrogates. The AGs feared that the hike was a backbreaker that would cause R.J. Reynolds, the most vulnerable of the Big Five, to pull out. But McCain was able to reassure them that RJR could handle the costs.

McCain also needed the support of the committee's ranking Democrat, Ernest Hollings, the six-term Senator from tobacco-friendly South Carolina. Hollings, 76, is up for re-election this year in what has become one of the most reliably Republican states in the Union. For him, backing any anti-tobacco bill is perilous. But Hollings believes in the goal of stopping kids from smoking. After a meeting on March 25, he agreed to support McCain's bill. In return, McCain will fly to South Carolina this week to explain the deal to a meeting of 4,000 tobacco farmers.

Late the following night, negotiations dissolved into a shouting match over the thorny question of how much, if any, protection from lawsuits to give tobacco companies in return for their agreement to all but eliminate cigarette advertising and marketing. One negotiator, who wanted the industry protected from class-action suits, kicked over a chair in frustration. He lost. McCain, meanwhile, worked diligently to keep allies from bolting. At one point, he called Democratic committee member John Kerry to apologize for a staff member's brush-off. "I'm deeply embarrassed," McCain told Kerry, a fellow Vietnam vet. "You do play an important role." After hanging up, McCain chided his aides: "Look, if John's not in on the takeoff of this thing, he won't want in on the landing."

As word of a deal spread, Republicans started balking. Did you agree to a bill that would bankrupt the tobacco industry? House Speaker Newt Gingrich wanted to know. "Newt, I know you're hearing that we've gone crazy over here on tobacco legislation, but I want to assure you it's O.K.," McCain told him. And when White House chief of staff Erskine Bowles called to fret that McCain was losing the public health community, McCain said, "Erskine, we are working on that as we speak."

In the end, the committee all but ignored protests from cigarette manufacturers. Despite giving more than $12 million since 1995 to the Republican Party and G.O.P. candidates and spending record sums on Ermenegildo Zegna-clad lawyers, the once mighty tobacco lobby has lost almost all its clout in Congress. Quipped a G.O.P. fund raiser: "Twelve million doesn't buy what it used to." McCain wasn't so sympathetic either. He was convinced that once the companies realized that the deal would only get worse for them the longer they held out, they would come aboard. Not that the fight is over. "Keep a steady strain," he said after the vote. "We're not home yet."

--With reporting by Bruce van Voorst/Washington

Highlights From The Tobacco Bill

PRICE RAISE $1.10 a pack by 2003. The industry will pay the government more than $500 billion over 25 years for health-care and other costs

ADVERTISING AND MARKETING Bars outdoor advertising and use of human images and cartoon characters, and eliminates vending-machine sales

GOALS AND PENALTIES Sets targets for reducing teenage smoking each year. The industry will pay up to $3.5 billion annually if those levels are not achieved

REGULATION Gives the Food and Drug Administration broad new authority to control nicotine as a drug

INDUSTRY LIABILITY Doesn't prohibit class actions or punitive-damage awards, but caps the industry's payouts at $6.5 billion a year

In TIME This Week

Cover Date: April 13, 1998

The Presidents: History's Judgment
Day Of Deliverance: Judge Tosses Out Jones Case
Interview With President Clinton: "It was in the best interest of the country"
Meanwhile, Back In Arkansas...
Washington Diary: Paula, We Hardly Knew Ye
Viewpoint: What Paula Has Taught Us
McCain's Big Tobacco Deal
Whitewater: Hale Storm Rising
The Strange Case Of The Spy In The Winnebago
The Notebook: Webb Hubbell Back In The Spotlight

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