I have absolutely no sympathy for the looming state budget shortfalls.
Treasurer says state should cash in on tobacco tax
March 22, 2006
By DANIE HARRELSON, The Daily Sentinel
Colorado’s acting treasurer wants state lawmakers to grab a deal while it’s still hot.
US cigarette consumption falls to lowest point since 1951
3/25/06 By Roger Dobson
Documents Suggest that Attorneys General are Scheming with BigTobacco to Protect Financial Health of Major Tobacco Companies
3/20/06 By Michael Siegel
Just one week after the Attorneys General stood before the media and boasted about how great they and the Master Settlement Agreement (MSA) have been for the public”s health, an analysis of tobacco industy documents suggests that the Attorneys General, far from working to protect the public”s health, are instead working with the tobacco companies to protect the financial well-being of the states and major tobacco companies.
Efforts By Large Tobacco Companies To Reduce Settlement Payments Might Affect State Health Care Programs
10 Mar 2006
Large tobacco companies that make annual payments to states under the 1998 national tobacco settlement maintain that they can reduce their payments by $1.2 billion this year, and state governments “addicted to billions in revenue from” the settlement “have begun to worry that they will have to cut back” on health care and other programs, the Wall Street Journal reports. Philip Morris USA and other large tobacco companies to date have paid states $41.1 billion of the $206 billion settlement, which requires the companies to make payments for at least 25 years, with a $6.5 billion payment this year. According to the Journal, large tobacco companies maintain that they can reduce their payments in the event their “collective market share drops below certain thresholds” under a provision included in the settlement over concerns “they would lose market share to smaller upstart cigarette makers that they expected to come into the market.” Large tobacco companies maintain that their collective market share decreased from 99.6% in 1997 to 92% in 2003 because smaller companies “aren”t subject to the marketing limits and cost burdens of the settlement” and “can sell cigarettes at lower prices,” the Journal reports. However, states maintain that the decrease in market share resulted in large part from increased online cigarette purchases and higher demand for generic cigarettes. In addition, states maintain that they have enacted laws to require smaller tobacco companies to make payments in escrow accounts — refundable after 25 years — to ensure a fair market. An independent arbiter on March 1 found that provisions in the settlement significantly contributed to the decrease in market share held by large tobacco companies, and states have until March 13 to submit arguments to the arbiter.
”Bad News” for States?
According to the Journal, a “loss of revenue could be bad news for many states that have come to count on the billions flowing from the tobacco companies,” which have “helped finance health care programs, education and public works,” as well as operational costs. Joy Johnson Wilson, director of the health committee at the National Conference of State Legislatures, said, “It”s important money — and it”s perpetual money — and at this point, it is part of states” ongoing budgets. A major reduction would require some juggling” (O”Connell, Wall Street Journal, 3/8).
Big tobacco seeks $1.2 billion cut in payments to states
March 08, 2006
By Vanessa O”Connell, The Wall Street Journal
State governments, addicted to billions in revenue from the tobacco industry, have begun to worry that they will have to cut back.
The A.G.s are crowing and bragging about their success, while the state DOR”s are panicking!
The states have not known when to let up on tax increases and smoking bans. Big tobacco (really the consumers), have born their massive punishment through the MSA. Independent manufacturers have begun to grow and many sovereign Indians distributors continue to sell cigarettes. Now, the A.G.s appear to be accomplishing their goals in reducing sales of major cigarette brands and the states are crying foul. We all could have told them that many people won”t pay their astronomical use taxes.
More and more smokers are making their own cigarettes and the black market is flourishing too.
Consumers CAN make a difference. These usage reductions are not attributable to smoking rate reductions over the last several years, even though sales have taken a nose dive. College age smoking rates are continuing to increase. I have absolutely no sympathy for the looming state budget shortfalls.
Garnet Dawn
The Smoker”s Club, Inc.
Midwest Regional Director
The United Pro Choice Smokers Rights Newsletter – http://www.smokersclubinc.com
Illinois Smokers Rights – http://www.illinoissmokersrights.com/
mailto:garnetdawn@comcast.net – Respect Freedom of Choice!
Smoking in U.S. declines sharply
Cigarette sales at a 54-year low
Tim Boyle / Getty Images file
March 9, 2006
Americans smoked fewer cigarettes last year than at any time since 1951, and the nation”s per capita consumption of tobacco fell to levels not seen since the early 1930s, the association of state attorneys general reported yesterday.
Cigarette Sales in U.S. Reach 55-Year Low; Attorneys General: Fewer Americans Smoking Since Implementing MSA Public Health Restrictions
3/8/2006
To: National Desk
Contact: Angelita Plemmer of the National Association of Attorneys General, 202-326-6047 or 703-585-7486 (cell)
WASHINGTON, March 8 /U.S. Newswire/ — Members of the National Association of Attorneys General (NAAG) Tobacco Committee announced today a historic drop in the number of cigarettes sold in the United States last year. According to figures compiled by the Tobacco Tax Bureau of the United States Department of the Treasury, cigarette sales in 2005 declined by 4.2 percent from 2004 levels, marking the largest one-year percentage decrease in cigarette sales since 1999.
More important, the 2005 sales figures continue the unprecedented long-term decline in cigarette smoking that began with the settlement of lawsuits brought by state Attorneys General against the major tobacco companies. Cigarette sales in the United States have fallen by more than 21 percent since the state Attorneys General negotiated the landmark 1998 tobacco Master Settlement Agreement (MSA), which imposed public health restrictions on the advertising, promotion and marketing of cigarettes by tobacco companies.
The 378 billion cigarettes sold in the United States in 2005 represented the lowest number of cigarettes sold in the United States since 1951. This decline is even more impressive because the United States population has more than doubled since that time.
“The work of the Attorneys General in negotiating the tobacco MSA focused attention on the conduct of the tobacco companies and the dangers of cigarette smoking,” said Iowa Attorney General Tom Miller, co-chairman of the National Association of Attorneys General Tobacco Committee. “The continued enforcement efforts of the MSA”s provisions by Attorneys General, along with other health advocates, have made a marked difference in the number of smokers across the country, particularly among youth.”
The continuing long-term decline shows that we are winning the battle against cigarette smoking and that the MSA and the other tobacco state settlement agreements have made a difference, according to the Attorneys General of Iowa, Idaho, California and Utah, who were meeting in Washington, D.C. for the Association”s annual spring meeting conference. The decline in 2005 was one of the largest single-year declines in history and is evidence that the long-term downward trend is continuing.
The decline in cigarette sales and overall smoking prevalence is a huge public health success, the Attorneys General said. In the years immediately prior to the states” settlement agreements with the tobacco companies, cigarette sales in the United States had reached a plateau. By contrast, the eight-year decline in cigarette sales of 21.1 percent since the MSA is unprecedented.
The MSA created a broad array of restrictions on the advertising, marketing and promotion of cigarettes. For example, it prohibited the targeting of youth in cigarette advertising. It also prohibited outdoor advertising of cigarettes and the advertising of cigarettes in public transit facilities, as well as the use of cigarette brand names on merchandise, and a host of other restrictions. The payment provisions of the MSA were designed to compensate the states in part for the billions dollars in health care costs associated with treating tobacco- related diseases under state Medicaid programs.
Tobacco is the number one cause of preventable death in the United States. As advocates for the public interest, Attorneys General across the country are actively and successfully working to enforce the provisions of the MSA to reduce tobacco use and protect consumers from its deadly toll.
“The States have been accused of becoming addicted to tobacco settlement money and wanting to keep cigarette sales high in order to maximize their revenues,” Attorney General Miller said, “but nothing could be farther from the truth. In fact, the costs imposed on the States to treat cigarette-related diseases far exceed the revenues the States get from the settlement proceeds and taxes. The States applaud the decline in cigarette sales and have worked hard and effectively to bring this result about.”
Attorneys General have also directly addressed the issue of youth tobacco use aggressively enforcing the settlement agreements against violations by the tobacco companies — such as Brown & Williamson”s “Kool Mixx” marketing campaign that sought to use hip-hop culture to promote cigarettes; pursuing agreements with major retailers to ensure that they do not sell tobacco products to underage persons; and suing Internet tobacco vendors who sell tobacco products without verifying the age of their purchasers. Recently, the State of Vermont sued Reynolds American Tobacco Company, alleging that advertising of its Eclipse brand was making health claims that could not be substantiated. That suit is pending.
“In addition, through the combined efforts of our public health community and the work of the American Legacy Foundation and its truth campaign, we”re seeing increased public awareness through vigorous anti-smoking campaign advertising and educational outreach,” said Idaho Attorney General Lawrence Wasden, co-chair of the NAAG Tobacco Committee and treasurer of the American Legacy Foundation. The MSA created the American Legacy Foundation, funded by payments from the tobacco companies, to promote awareness of the health effects of tobacco.
“It is not a coincidence that cigarette sales are down and fewer people are smoking. The Master Settlement Agreement was designed to protect the public and reduce cigarette consumption – and it does just that,” said Vermont Attorney General Bill Sorrell, chair of the American Legacy Foundation, a national public health organization committed to building a world where young people reject tobacco and anyone can quit.
“The Master Settlement Agreement placed significant restrictions on the advertising and marketing practices of the tobacco companies, and also provided funding for an effective anti-smoking public education campaign targeted directly at youth,” said Cheryl Healton, Dr. P.H., president and CEO of the American Legacy Foundation. “These new numbers conclusively demonstrate that the combination of these two factors — together with the hard work of the Attorneys General and the public health community — has resulted in major reduction in smoking rates since the MSA was signed.”
TOBACCO-RELATED ATTORNEY GENERAL PUBLIC HEALTH INITIATIVES
In the past year, Attorneys General:
— armed with a new study that demonstrates that “exposure to movie smoking has a strong association with smoking initiation” by adolescents, have challenged Hollywood movie studios to reduce smoking depictions in movies and to include an anti-smoking public service announcement on all videos and DVDs with movies that depict smoking.
— concluded an agreement with Time, Inc. (which publishes Time, People and Sports Illustrated), and Newsweek, Inc. (which publishes Newsweek) to eliminate tobacco advertising from school library editions of those four major magazines, which have significant youth readerships.
— obtained a commitment by several major credit card companies and carriers that they would not provide their services in connection with the illegal sale of cigarettes over the Internet.
— entered into a Protocol with Philip Morris, the largest manufacturer of cigarettes in the United States, that would combat the illegal sales of its cigarettes over the Internet by having Philip Morris suspend shipments to, or incentive programs with, its distributors or retailers found to be engaging in illegal Internet sales or selling to those who make such sales.
— after multi-state investigations, brought two actions to enforce the Master Settlement Agreement and Smokeless Tobacco Master Settlement Agreement: (1) Vermont sued R.J. Reynolds Tobacco Company alleging material misrepresentations of fact by making express and implied health claims in its advertising for “Eclipse” cigarettes; and (2) California sued U.S. Smokeless Tobacco Company for various violations of the Brand Name Sponsorship limitations in its “Skoal Racing” sponsorship in the National Hot Rod Association.
— secured R.J. Reynolds” agreement to cease and desist its “Camel Coasters” promotion, which encouraged binge drinking by young adults by mailing them coasters with recipes for mixed drinks with high alcohol content and tag lines that promoted excessive and irresponsible drinking.
——
The National Association of Attorneys General (NAAG) was founded in 1907 to help Attorneys General fulfill the responsibilities of their office and to assist in the delivery of high quality legal services to the states and territorial jurisdictions. The Association fosters interstate cooperation on legal and law enforcement issues, conducts policy research and analysis of issues, and facilitates communication between the states” chief legal officers and all levels of government. The Association”s members are the Attorneys General of the 50 states and the District of Columbia, the Commonwealths of Puerto Rico (Secretary of Justice) and the Northern Mariana Islands, and the territories of American Samoa, Guam, and the Virgin Islands. The U.S. Attorney General is an honorary member.
http://www.usnewswire.com/
Attorneys General Take Credit for Declines in Cigarette Consumption
March 9, 2006
By Michael Siegel
The National Association of Attorneys General (NAAG) and the American Legacy Foundation announced yesterday that cigarette consumption has dropped to a 54-year low, as Americans smoked fewer cigarettes last year than at any time since 1951.
According to an article in the Washington Post: “Americans smoked fewer cigarettes last year than at any time since 1951, and the nation”s per capita consumption of tobacco fell to levels not seen since the early 1930s, the association of state attorneys general reported yesterday. Using data the federal government gathers when it collects taxes on cigarette sales, the group found a 4.2 percent decline in 2005 alone and an overall drop of more than 20 percent since tobacco companies reached a legal settlement with the states in 1998.”
The cause of the decline?
According to the National Association of Attorneys General and the American Legacy Foundation, credit for the decline in cigarette consumption goes to the National Association of Attorneys General and the American Legacy Foundation:
The press release issued by NAAG boasted that: “‘The work of the Attorneys General in negotiating the tobacco MSA focused attention on the conduct of the tobacco companies and the dangers of cigarette smoking,’ said Iowa Attorney General Tom Miller, co-chairman of the National Association of Attorneys General Tobacco Committee. ‘The continued enforcement efforts of the MSA’s provisions by Attorneys General, along with other health advocates, have made a marked difference in the number of smokers across the country, particularly among youth.'”
And according to the Washington Post article: “Association leaders and other tobacco-control advocates hailed the decline as a sign that sometimes-controversial developments triggered by the $246 billion settlement have been effective. The drop was a result, they said, of factors that include the sharply higher cost of cigarettes, restrictions on cigarette advertising and a shift in public perceptions as the dangers of smoking are more aggressively and widely publicized.”
“”I think we”re reaching a tipping point, where the image of tobacco is that it”s unhealthy and dangerous, and not glamorous like years ago or neutral like the cigarette companies say now,” said Tom Miller, Iowa”s attorney general and co-chairman of the National Association of Attorneys General”s tobacco committee.”
“Cheryl Healton, president of the American Legacy Foundation, a tobacco-control group initially funded by the legal settlement, said the continuing decline suggests that the national health goal of reducing smoking rates even further by 2010 is within reach. ”We”re on target to exceed the national goal” of having no more than 15 percent of youths and 12 percent of adults smoking, Healton said. Few of the other national health goals adopted in 2000 appear to be achievable, she said, ”but this is one battle we”re winning.””
Iowa”s Attorney General, Tom Miller, said that the declines in cigarette consumption were welcome by the states, even though they will result in reduced payments to the state under the Master Settlement Agreement: “”We knew from the beginning that if we succeeded in changing the cigarette culture, that sales would drop and so would our payments,” he said. ”But states deal with rising and declining revenues all the time, and this is one decline we”re quite happy to see.””
The Rest of the Story
I can’t say that I’ve ever seen such a display of self-congratulatory, flamboyant, and bogus hot air since the last Albuquerque hot air balloon contest.
The rest of the story, to start, is that cigarette consumption in the United States has dropped every year since 1980. And per capita cigarette consumption has dropped every year since 1975.
So the announcement that cigarette consumption in the U.S. declined sharply last year means very little. You could have said that every year for the past quarter century. If cigarette consumption had increased it would have been an earth-shattering announcement. So to stand up in front of microphones and take credit for cigarette consumption declining seems just slightly disingenuous to me.
And boasting about the fact that cigarette consumption has fallen to levels not seen since 1951 is even more disingenuous. Because every year for the past 30 you could have said that cigarette consumption has fallen to levels not seen since some year back in the early or middle part of the 20th century.
In 1990, for example (far before the Master Settlement Agreement existed), one could have boasted that cigarette consumption had fallen to levels not seen since a quarter century earlier (in 1965).
And in 1995, again before the MSA, one could have bragged that cigarette consumption fell to levels not since since 1960, the lowest levels ever seen since I was born!
While NAAG titled its press release “Cigarettes Sales in U.S. Reach Historic 55 Year Low,” one could title the press release with a similar claim every year. In fact, even if the Attorneys General were to completely abandon all their tobacco-related activities and the Legacy Foundation were to cease its actions, we could soon say that cigarette consumption has fallen to reach a historic 56 year low. And so on.
The second part of the rest of the story is that the same Attorney General who is boasting about how much he cares about declining cigarette consumption and about how much he is willing to sacrifice state fiscal resources (from cigarettes sales) to save lives intervened in an Illinois tobacco court case, submitting an amicus brief to a trial court judge urging him to reduce the $12 billion appeal bond he had ordered Philip Morris to pay, as specified by Illinois law, after the company was found guilty in a class-action lawsuit.
In intervening to protect the financial well-being of Philip Morris, Miller and 36 other Attorneys General wrote: “Defendant Philip Morris has informed the States that the $12 billion appeal bond required in this Court”s March 21, 2003 Judgment may prevent it from making the $2.6 billion payment to the States that the MSA requires it to make on April 15, 2003. The States submit this brief to advise the Court that many State programs, including vital public health programs, depend on MSA payments for their support and to urge this Court, after a full assessment of Defendant”s financial condition, to exercise its discretion to set an appeal bond that does not interfere with the States” vital interests. … The States have a strong interest in preserving the value of the settlements they fought for and won, and the results in this lawsuit should not prejudice those settlements.”
In other words, Miller and most of the other Attorneys General were arguing that because the legal remedy awarded to plaintiffs in Illinois – under the judicial system and laws of Illinois and under the United States Constitution – affected financial payments to their states, the judge should alter the application of Illinois law to protect their state”s financial interests, and that concern should override the pursuit of justice by these citizens under the laws of Illinois.
The rest of the story, in fact, is that Miller did not put the public’s health above financial payments to the states! In fact, he intervened to ensure that justice would not be served, that the public’s health would not be protected, and that cigarette companies’ financial well-being would not be hurt, solely to protect his state’s and other states’ financial interests.
So much for the interest in reducing tobacco use outweighing the financial interests of the states in protecting the financial conditions of the cigarette companies!
The insincerity of Attorney General Miller and the National Association of Attorney Generals is simply overflowing in their press release. How can they seriously attempt to convince us that fighting the tobacco companies and protecting the public”s health is their primary concern when they went to bat for Philip Morris, intervening and interfering in the pursuit of justice by a class of citizens in another state, all in an effort to protect the financial welfare of the nation”s leading tobacco company (so that their own states” financial status would not be affected)?
The third aspect of the rest of the story I would like to point out is that once again, this is really shoddy science rearing its ugly face. You simply can’t look at overall trends in cigarette consumption and credibly make claims about specific factors that are affecting the changes in consumption without doing a careful, rigorous analysis that attempts to account for a large number of factors that influence cigarette consumption.
I myself have conducted such research and I have reviewed such research, and I can tell you that the claims that NAAG and Legacy are making based on a simple ecological comparison of cigarette consumption trends and the timing of the MSA simply do not hold water.
It is simply too difficult to know what would have happened to cigarette consumption had the MSA not been signed.
I will go out on a limb here. I am going to offer my expert opinion that I believe we would have seen a much greater decline in cigarette consumption from 1998 to 2005 had the 46 states continued pursuing their individual lawsuits against the tobacco companies, rather than signed the MSA, which I argued just yesterday is the worst public health blunder of my lifetime.
The public education, the successful and effective framing of the issue of the tobacco problem, and the policy gains resulting from the 46 separate lawsuits, if allowed to go to completion, would have, without any doubt in my mind, resulted in a far better outcome for the public’s health than the disaster that is the MSA.
I can’t prove it – but you know what? Neither can NAAG and Legacy prove that I’m wrong. And until they present some credible analysis of what would have occurred in the absence of the MSA (which means in the presence of 46 individual lawsuits against the tobacco companies), and present a rigorous analysis that controls for the myriad of factors that affect cigarette consumption, their claim that the MSA resulted in significant declines in tobacco use is what I consider to be very shoddy science, something for which I would without hesitation fail one of my graduate students (and I’m known as somewhat of an easy grader).
In fact, if you use the reasoning that NAAG is using, one could just as easily conclude that the severe cut in funding to the Legacy Foundation’s “truth” campaign is the reason for the unprecedented decline in cigarette consumption in 2005. After all, this unprecedented decline in cigarette consumption coincides perfectly with the reduced funding of, and reduced intensity of the “truth” campaign. Based on the observed trends, we should eliminate the “truth” campaign completely in order to see even more unprecedented declines in cigarette consumption in 2006.
By the way, I don’t doubt that increased cigarette prices as a result of the MSA contributed to the decline in cigarette consumption. But a major part of the decline probably had something to do with the spread of smoke-free workplace laws throughout the country, something for which NAAG and Legacy cannot take credit. Nevertheless, my contention is that prices of cigarettes would be even higher today had the MSA not been signed. I have little doubt that the lack of financial predictability of the outcomes of 46 separate state lawsuits, the almost sure victories in at least a few states, the more favorable settlements that would have been achieved, and if nothing else, the $12 punitive damages bond that Philip Morris would have been required to pay, would have all added up to a much bigger acute cigarette price increase than occurred.
Plus, I have little doubt that there would have been more success in substantially raising cigarette taxes over the past seven years had the states not become tobacco industry partners due to the MSA. Again, I can’t prove it. But neither can NAAG prove that I’m wrong and therefore credibly take credit for some sort of public health victory.
Finally, I must say that the Legacy Foundation’s prediction that we are on target and will reach the goal of reducing adult smoking prevalence to 12% by 2010 is wrong. Based on what I see happening in the tobacco control movement right now, I don’t see any chance that we’re going to reduce smoking prevalence to 12% within the next 4 years. I think that’s little more than a sales pitch to make it seem like we’re doing so great thanks to the efforts of the American Legacy Foundation, whose own data, I must say, have convinced me that there is no evidence that its “truth” campaign has had any effect on youth smoking.
There was a day when tobacco control groups looked objectively at cigarette consumption data, did rigorous analyses, and drew careful and scientifically-grounded conclusions, instead of jumping in front of microphones and television cameras and congratulating themselves for work done largely by others. And we did it all without talking out of both sides of our mouths. I was a part of that and I look back fondly on those days. It’s just sad to see what things have come to.
Read more about the MSA
