UNIVERSITY DAILY KANSAN
Monday, August 18, 1997
15A
Proposed tobacco deal will not affect profits of cigarette makers
Health groups divided about stricter policy
The Associated Press
WASHINGTON — An internal Treasury Department audit said cigarette makers could profit hand-somely from a proposed tobacco deal, a finding that puts additional pressure on President Clinton to increase the cost of the controversial settlement.
The audit concluded that tobacco companies will raise cigarette prices just enough — an estimated 62 cents a pack — to offset the 7 percent of Americans who might quit smoking rather than pay more.
Treasury officials wouldn't comment on the audit. But, the Associated Press has learned that it confirms private economists' predictions on the how deal will
help the tobacco industry.
"When you look hard at the proposed settlement, all indications are that the industry will remain very profitable for the long term," said David Kessler, the former Food and Drug Administration chief who is advising Clinton and Congress on the deal.
To settle 40 state lawsuits, tobacco companies agreed in June to pay $368 billion during 25 years and curb advertising. In return, they would win protection from smokers' lawsuits and restrictions on how heavily the FDA can regulate nicotine.
Clinton has said the FDA must have more authority over nicotine, and is contemplating other changes.
But the deal could unravel if this so-called list (of changes) means increasing the money figures or regulatory provisions, warned lead tobacco negotiator J. Phil Carlton.
Industry warnings aside, health groups are splintering just weeks after they joined Kessler and former Surgeon General C. Everett Koop to
All indications are that the industry will remain very profitable.
David Kessler former FDA chief
propose a national tobacco policy far stricter than the deal.
The American Medical Association quietly formed a new lobbying effort with 11 health groups to draft for Congress a list of acceptable compromises.
The AMA's Thomas Houston said the new group merely is pragmatic and doesn't want to wait until Congress rejects the tough Koop-Kessler plan — as is expected — before outlining doctors' true bottom line.
The American Lung Association, which is not part of the AMA's new effort, said Clinton should heed the dissension.
"There's going to be a major backlash if this bailout becomes law," said President John Garrison. The Treasury audit found that if cigarette companies raised prices 50 cents a pack, smoking would drop 5 percent but they would still take in the $15 billion a year needed to make annual settlement payments.
If companies increased prices 62 cents a pack, smoking would drop by only 2 more percentage points — or 7 percent overall — leaving the industry with additional profits after the payments, the audit found.
Raising cigarette prices $1 to $2 a pack, however, would drop smoking by double digits and threaten the industry's extra profits
Republicans attack Clinton tuition plan
The Associated Press
WASHINGTON — As President Clinton promoted new college scholarships and tax breaks on Saturday, his refusal to spend public money on private school tuition drew personal criticism from Republicans.
"We want every child in America to have the same choice as Chelsea Clinton," Minnesota Gov. Arne Carlson said in the weekly GOP radio address. The president's 17-year-old daughter recently graduated from Sidwell Friends, a private prep school in Washington.
"What are Democrats so afraid of when it comes to choice, competition and accountability in our schools? .. A few more national tests, a few more summits and a truckload of tax dollars will
not solve the problem," Carlson said.
In his own broadcast,
Clinton looked ahead to the new school year and urged
Bill Clinton
parents to telephone the Education Department's toll-free hot line (1-800-872-5327) to find out how they can take advantage of higher education programs just signed into law as part of the balanced-budget package.
In the Republican response, Carlson touted Minnesota's program of tax deductions for tutoring, summer enrichment camps, private or parochial school tuition and other educational purposes.
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