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Clinton: tobacco pact likely
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April 3, 1998: 12:40 p.m. ET
Clinton says agreement is likely but cigarette firms continue to put up fight
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NEW YORK (CNNfn) - President Clinton expressed confidence Friday that the U.S. will reach an acceptable settlement with tobacco companies but warned that "there is an enormous amount of work still to be done."
"I still believe in the end we will achieve an agreement which they [cigarette makers] will be convinced will be in their interest," said Clinton, speaking at the White House.
Clinton said the uproar over tobacco advertising was the main force twisting the arm of tobacco companies into an agreement.
"With each new revelation of their strategies [to] market cigarettes to children, I think they have an enormous interest in trying to reverse the record of the past to put this unforgivable chapter behind them," said Clinton.
At the center of the issue is a settlement reached in June of 1997 between cigarette makers and the attorneys general from 39 states. Under the proposed deal, tobacco companies would pay $368.5 billion to cover the health care costs of people with smoking-related illnesses.
However, Congress is seeking even greater financial payments form the cigarette makers. A bill passed by the Senate Commerce Committee Wednesday proposes that the industry pay more than $500 billion over 25 years.
It would also increase the price of cigarettes by $1.10 per pack over five years and impose penalties of up to $3.5 billion a year on tobacco companies if they fail to meet targeted reductions in teen smoking.
The tobacco companies have said that the increase in payments would be more than they could pay and remain as financially viable businesses.
Although it may appear that Congress is willing to squeeze cigarette makers until they howl, portfolio manager Ross Margolies of Salomon Brothers Asset Management said that the U.S. needs the tobacco companies to cooperate to be effective in cutting youth smoking.
"The real goal is to reduce teenage smoking, which is a small part of the smoking population. The tobacco companies, through their marketing expertise, can actually help target that," he said.
"If the tobacco companies walk away right now they have a big excise tax, which is a very regressive tax. It's a tax on working people but the tobacco companies aren't going to cooperate on the day-to-day reduction on smoking."
Battle in the courts
While the tobacco companies were fighting one battle on their legislative front, they were launching another initiative on their judicial front.
A U.S. Supreme Court spokesman said Friday that tobacco companies fighting to keep secret thousands of internal research documents have asked the court for a second time to block the release of the files.
On Thursday, Supreme Court Judge Clarence Thomas denied cigarette makers' request to keep the documents from being released. In that decision, Thomas ordered that the 39,000 papers not be released until 5 p.m. on Monday.
A judge in Minnesota, where the state along with Blue Cross and Blue Shield insurers are suing tobacco companies, ordered the firms to turn over the papers on March 7.
Cigarette makers had contended that the documents were protected by attorney-client privilege but the judge refused, prompting the companies to eventually take their argument to the U.S. Supreme Court.
The second request was filed with Judge Antonin Scalia, who now may either act on the request unilaterally or refer the matter to the full court.
-- from staff and wire reports
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