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 RJR: Tobacco Deal 'Dead'(04-08-98)

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McCain: Congress Won't Be Blackmailed

Clinton says Big Tobacco making 'huge mistake'; lack of deal could affect '99 budget

WASHINGTON (AllPolitics, April 8) -- Sen. John McCain, whose Senate Commerce Committee is crafting tough anti-teen smoking legislation, warned tobacco companies Wednesday that Congress will not be blackmailed by the industry's decision to walk away from the tobacco settlement. (512K wav sound)


McCain (R-Ariz.) said lawmakers are still early on in the process and urged the parties to stay engaged.

But he also sent the tobacco firms a clear signal, saying if they do not go along with the legislation, public opinion will be against them, they will continue to face lawsuits in at least 40 states, and Congress could adopt even harsher measures to regulate the industry.

"We cannot be either blackmailed or cajoled by the tobacco industry," McCain told a New York news conference. "They will have to make their decisions."

Despite R.J. Reynolds' announcement Wednesday that it considers the tobacco deal "dead," McCain said the public wants Congress to take steps to discourage teen smoking, and he predicted lawmakers will act.

"I think we're a long way from 'falling apart,'" McCain said. "We could never be placed in the position where the terms of this agreement were dictated to us by the tobacco companies."

McCain noted the proposal that cleared the Senate Commerce Committee has been criticized by some in the public health community and in Congress as too soft on the industry, but criticized by the industry as too tough. "So perhaps it reinforces my view that we are on the right track," McCain said.

Congress "will not be deterred by some threats, frankly, from segments of, or all of the tobacco companies," he said.

McCain said other legislative measures available to Congress could be to give the Food and Drug Administration control over tobacco advertising, or impose additional tax hikes.

'Ought to come back to the table'

President Bill Clinton also reacted sharply to the news, and agreed with McCain that Congress should move forward on its proposed anti-smoking legislation.(576K wav sound)


Clinton said the tobacco companies were making a "huge mistake."

"What are they going to do?" Clinton asked, as he returned to the White House from Chicago. "Say, 'We are going to go back to advertising to children? We are going to go back to our previous practices?' Is that what this announcement means?"

Clinton said the tobacco companies "ought to come back to the table and they ought to work with us, but whether they do or not, I am determined to do something about this and I cannot believe that the Congress is going to have a favorable reaction to the announcement today."

Clinton stressed it was critical for Congress to act on the issue regardless of whether Reynolds reconsiders its decision to withdraw.

"I've been working for two years on this and I don't intend to stop now," Clinton said. "I think we've got an excellent chance of passing a good piece of legislation to dramatically reduce smoking by young people and save lives. I don't there is very much in it for RJR or anybody else to walk away, so I hope they will reconsider that." (288K wav sound)

On Capitol Hill and at the White House, some officials saw the R.J. Reynolds move as a way of pressuring Congress to scale back its proposed legislation, which calls for a $1.10-a-pack cigarette price hike and curbs on tobacco marketing.

Sen. Frank Lautenberg (D-N.J.) said the Reynolds announcement "will have very little impact on the progress in Congress to pass tough legislation."

Rep. Tom Bliley (R-Va.), who chairs the House Commerce Committee, called the tobacco companies' move "unfortunate."

In a statement, he said, "Efforts in Congress to reduce teen-age smoking are not dead. I hope Congress will ultimately agree on a tough bipartisan plan to reduce teen smoking.

"We have lacked strong leadership from the president. Now we don't have the cooperation of the tobacco industry. That is unfortunate, but not a reason for inaction.

"As chairman of the House Commerce Committee, I will urge my members to help me produce a strong bill to reduce teen smoking," Bliley said.

A trip to Kentucky

Clinton is due to go to Kentucky on Thursday to talk about the tobacco legislation and, now, the opposition of cigarette makers to a deal.

Clinton plans to meet with tobacco farmers and elaborate on his position on pending tobacco legislation. He will address the community of Carrollton, Ky., and highlight his commitment to tobacco farmers, but will also talk about the dangers of tobacco, particularly for the nation's youth.

An administration official familiar with the president's agenda said he would first deliver a "tough speech to the kids on the dangers of teen smoking."

Later with farmers, Clinton would stress the need for national legislation as a "serious national public health priority," but also make clear he would not sign any measure that did not include protections for tobacco farmers, the official said.

The official said it was the White House's understanding that major tobacco companies were planning to bus in protesters, and Clinton would make clear he believes those who oppose a national settlement are "on the wrong side of history."

Five major tobacco companies have decided not to participate in any effort to get a comprehensive tobacco settlement through Congress this year. Along with R.J. Reynolds, the other companies are Philip Morris, Lorrilard, Brown & Williamson and U.S. Tobacco.

The tobacco industry agreed in June 1997 with the attorneys general from 40 states to pay $368 billion in a settlement over the costs to states for smoking-related illnesses, but that settlement still has to be enacted by Congress. Last week, the Senate Commerce Committee approved a bill that would require the tobacco industry to pay $516 billion over 25 years.

Vice President Al Gore called the tobacco companies' withdrawal a "ploy" and predicted the companies will resume talks.

"I think what you heard today was a bargaining ploy more than anything else," Gore told CNN's Wolf Blitzer. "I think they're trying to influence the shape of the final legislation that passes."

A budget impact if there is no tobacco deal

Failure to enact national tobacco legislation could have an impact on next year's federal budget. Both the president and Republicans in Congress were counting on raising billions from the tobacco companies to pay for election-year spending proposals.

Clinton is banking on tobacco money for the $20 billion he wants to spend on school construction and repairs and to hire 100,000 new teachers. The White House also is banking on tobacco money to pay for a host of other new initiatives, including more than $7 billion in new child care spending, $25 billion in new medical research, $800 million to provide cancer drugs to the elderly, and $900 million to add more poor children to the Medicaid program.

Overall, the president's budget counts on nearly $10 billion next year from a tobacco settlement, and more than $65 billion over the next five years.

Key Republicans say the president should have known better.

"He said all these things he was going to pay for through a tobacco settlement," said Rep. Bill Goodling (R-Pa.). "There is no tobacco settlement. Who knows whether there's going to be a tobacco settlement?"

Gore predicts there will be a tobacco deal this year. If not, he said, "We'll balance the budget regardless. We will make other adjustments if we have to, but we will balance the budget regardless."

Most Republicans want the billions that would come from a tobacco settlement, too. But they aren't relying on it, and if there is a deal, they would use the money to shore up Medicare.

White House aides predict political and economic pressures will bring the tobacco companies back to the bargaining table. But if there isn't a deal soon, all bets are off for next year's budget.

CNN's John King contributed to this report.
In Other News

Wednesday April 8, 1998

Sen. McCain Says Congress Won't Be Blackmailed
Reno Hears King Family's Request
Report: Starr Impeachment Report Under Way
Clinton Promotes School Rehab Plan
News Organizations Ask For Access To Lewinsky Proceedings
Wellstone Launches Presidential Exploratory Committee
Navy To Name Submarine After Jimmy Carter
Bono, Lee Win Special House Elections In California
Hale Accused Of Selling Information To Conservative Groups
N.Y. Congressman Joins Senate Race
Gingrich Selling Self On Book Tour
Americans Chip Away National Debt
Cohen Orders Gay Policy Guidelines

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