DEATH OF THE TOBACCO BILL

Big Tobacco and Big Money Create an Uproar in Washington

NARRATOR (Clip from TV commercial) Thousands of honest, hard working
Americans in our state make their living from tobacco.

FORREST SAWYER, ABC NEWS (VO) The stakes couldn't be higher.

NARRATOR (Clip from TV commercial) By raising half a trillion dollars in
new tobacco taxes, Washington wants to tax thousands of Americans out of
business.

FORREST SAWYER (VO) The rhetoric couldn't be harsher.

SEN TOM DASCHLE, (D), SOUTH DAKOTA So they killed this bill and,
unfortunately, as a result, children will die young.

FORREST SAWYER (VO) And the motives couldn't be more political.

ERSKINE BOWLES, CLINTON SPOKESMAN This is what I believe is the worst of
Washington. I think politics stopped this thing cold.

UNIDENTIFIED MALE I think that a candidate that votes cheerfully against
the tobacco bill could well pay a price next November.

FORREST SAWYER (VO) Tonight, big tobacco and big money create an uproar i
n
Washington.

ANNOUNCER From ABC News, this is Nightline. Substituting for Ted Koppel a
nd
reporting from Washington, Forrest Sawyer.

FORREST SAWYER Very late this afternoon, after long weeks of wrangling an
d
horse trading, the US Senate finally moved on the historic piece of
legislation, the tobacco bill, an anti-smoking measure intended to bring
nicotine under federal regulation and to curb smoking among teenagers. Mo
st
polls suggest a majority of Americans support the basic idea. For instanc
e,
a USA Today/CNN poll today shows 59 percent support raising federal taxes
on cigarettes by $1.10 a pack over the next five years. But what's
remarkable is that the senators never even voted on the bill. It was simp
ly
blocked and thus killed by procedural maneuvering. Majority Leader Trent
Lott said it was a bill that started out with good intentions and spun ou
t
of control, which seems a good description of the Senate itself. Today's
move comes after the tobacco industry mounted the largest lobbying effort
against a single piece of legislation in history. An estimated $40 millio
n
in a radio/TV barrage over eight weeks. Now there is, in theory, a chance
that the Senate could return to the bill this session, but there is very
little time and the lobbying forces are very strong. Which means that the
collapse of the tobacco bill will likely stand as an old-fashioned civics
lesson. This is what representative government in Washington looks like
today. With a closer look, Nightline's Michel McQueen.

MICHEL MCQUEEN, ABC NEWS (VO) It was a year ago this week. With handshake
s
and smiles all around, the tobacco companies and their opponents issued a
cease-fire-a multi-billion dollar agreement to curb smoking and
anti-tobacco lawsuits. Today, it was a different story. Acrimony, outrag
e
and partisan finger-pointing as the most far-reaching anti-tobacco bill
ever written went down in flames on the Senate floor.

SEN TOM DASCHLE The fact remains that this bill dies tonight but the issu
e
will live. And someday in the not too distant future, we will pass tobac
co
legislation that will rectify what we're doing tonight. This is wrong.

SEN RICHARD DURBIN, (D), ILLINOIS I just couldn't believe that the
Republican leadership would turn its back on an historic opportunity to
pass this bill.

MICHEL MCQUEEN (on camera) The bill would have raised cigarette taxes by
$1.10 a pack and impose penalties on tobacco companies if they failed to
curb smoking among the young. How did a deal that started out with public
acclaim, bipartisan support and the industry's blessing wind up in the
legislative dustbin? In part, the defeat came because some vocal enemies
of
tobacco were skeptical of the deal from the start, reasoning if big tobac
co
was for a deal, it couldn't be in the public's interest.

DAVID KESSLER, FORMER FDA COMMISSIONER (From Nightline, June 19, 1997)
You're asking an industry to sell fewer cigarettes to young people, I mea
n,
and to adults. That's not something that they're just going to do.

MICHEL MCQUEEN (VO) They pressured their supporters to toughen it up, so
much so that the tobacco companies eventually backed out. And then there
was the price tag. What started out as a $368 billion agreement ended up
at
a half trillion dollar cost. That made it easier for the industry to reca
st
the debate as an issue of taxes, not tobacco.

LINDA DIVALL, REPUBLICAN POLLSTER They're saying why are you going to
increase these taxes when teenagers will probably still be able to get
cigarettes somehow and isn't there a better means of trying to eventually
reach our ultimate goal.

MICHAEL MOORE, MISSISSIPPI ATTORNEY GENERAL Some people have over reached.
In an effort to get everything that they want, they now don't have
anything. So greed, politics, big business, heavy lobbying, all those
things have gotten in our way.

NARRATOR (Clip from TV commercial) The tobacco tax plan allows a few tria
l
lawyers to pocket billions.

MICHEL MCQUEEN (VO) The lobbying included a $40 million barrage by the
tobacco companies just as the congressional election season started to he
at
up.

NARRATOR (Clip from TV commercial) Washington's tobacco legislation, what
's
in it for you? Half a trillion dollars in new taxes, new federal spending
,
cigarettes at $5.00 a pack, creating a black market. No wonder it's oppos
ed
by millions of hard working Americans.

MICHEL MCQUEEN (VO) The ads came on top of the millions in campaign
contributions the tobacco companies have traditionally given to
congressional supporters, mainly Republicans, a fact Democrats, including
the President, hasten to point out.

PRES BILL CLINTON Needless to say, I am very disappointed that a Republic
an
minority blocked the legislation from being voted on. Today, like every
other day, 3,000 young children start to smoke and 1,000 of them will hav
e
their lives shortened because of it. If more members of the Senate would
vote like parents rather than politicians we could solve this problem and
go on to other business of the country.

MICHEL MCQUEEN (VO) The President went on to insist the bill is not dead
and he will try to attach it to every piece of legislation that comes
before the Congress. And analysts say the lawsuits are an even bigger
threat to the industry.

MARY ARONSON, TOBACCO INDUSTRY ANALYST The horse is out of the barn, the
worms are out of the can, Pandora's box has been opened and all these
negative documents are now on the Internet, for any enterprising
plaintiffs' lawyer to look at and to use in possible litigation against t
he
industry.

MICHEL MCQUEEN (VO) And tobacco industry opponents like Mississippi
Attorney General Michael Moore, who helped broker the original deal, say
that's exactly what they'll do.

MICHAEL MOORE I can tell you about attorneys general. If Congress and the
President of the United States can't handle this problem, we'll handle it
state by state.

MICHEL MCQUEEN (on camera) One thing is certain, the issue will stay aliv
e
during the fall elections, with Republicans saying they thwarted another
Democratic money grab and Democrats painting the Republicans as the enemi
es
of children and the friends of big tobacco. This is Michel McQueen for
Nightline in Washington.

FORREST SAWYER So, what happened today and where do we go from here? When
we come back, we will talk to the chief architect of the bill, the
President's point man on the bill and one of the leading Republican criti
cs
of the measure.

(Commercial Break)

FORREST SAWYER Joining us here in Washington is Senator John McCain,
Republican of Arizona and chief sponsor of the bill, Bruce Reed, assistan
t
to the President for policy development and Senator Don Nickles, assistan
t
majority leader who helped lead the fight against the bill. Senator
McCain, you were the bill's sponsor. It seems fair to start with you. You
are a Republican. This bill was killed by Republicans. What went wrong?

SEN JOHN MCCAIN, (R), CHAIRMAN, COMMERCE COMMITTEE (Washington) Well, fir
st
of all, I was asked by the Republican leadership to move the bill through
my committee and that's how it bore my name and that's why I was
responsible for the bill. It's interesting that when we passed this
legislation through the Commerce Committee, it was a 19-to-one vote and
most people, observers, thought that we had at least 70 votes for the bil
l.
A number of things happened, including this massive ad campaign, which
generated a lot of mail and a lot of pressure. There were numerous
amendments. There was also people in the public health community who, for
example, supported removing of all protections from the tobacco companies.
But I think overall that you have to give credit to the tobacco industry
for orchestrating a very effective and unprecedentedly large campaign.

FORREST SAWYER Well, that campaign actually came down to you as well. I
think you got about 10,000 letters into your office. You've gotten ads
running in your home state and in the states of Iowa and New Hampshire,
where possibly you might be considering a run for the presidency. They we
re
out to get you.

SEN JOHN MCCAIN And my face was in every convenience store as well. It
certainly raised my name ID if you go along with that theory that all you
care is your name's in a race, then I guess I should be grateful. But the
fact is that it was a very, they polled and they could see the big tax
issue. That's what they used against the Clinton health care plan, the
threat of a black market. You saw some clips of it there. And they were
effective. But, you know, it's very, very unfortunate because I think tha
t
we've made a very serious mistake here.

FORREST SAWYER Senator Nickles, even with all the campaigning by the
tobacco industry, if you look at most polls, by at least some majority,
Americans seem to support the ideas behind this bill. It came out, as
Senator McCain says, from committee with a vote of 19 to one. There were
57
of 100 senators who were in favor of this bill and yet you stopped it fro
m
even going to a vote. Now, shouldn't you have let it go to the floor?

SEN DON NICKLES, (R), OKLAHOMA (Washington) No, we shouldn't spin the rul
es
of the Senate, and incidentally, Forrest, I'll tell you, I support a lot
of
the objectives of the bill. I want to reduce teenage consumption of tobac
co
and of drugs and, frankly, will work to do that. I just don't think you
have to spend hundreds of billions of dollars. You mentioned and the
tobacco companies were running ads saying it's a $500 billion tax increas
e.
Actually, I think it's much, much more than that, almost double that
amount. So it's a humongous tax increase, a lot of spending increases, a
lot of new programs, all of which were above the budget, breaking the
budget, over and above the budget that the President signed onto last yea
r,
that a bipartisan majority of Congress signed onto last year. And we sai
d
wait a minute. Let's come up, can't we come up with a good, effective
anti-tobacco bill, anti-drug bill without breaking the budget, without
spending so much money and creating so much more new government.

FORREST SAWYER Well, now, wait a minute. I guess I should say to you that
you're right there are, there is a tax increase, but it's a tax on
cigarettes. There are amendments, but those amendments were tacked on by
Republicans who were opposed to the bill to begin with.

SEN DON NICKLES Well, no. There was a lot of amendments that were tacked
on
that a lot of us did not agree to. There was expansions. You talk about
greed, there was a new tax that was added on there called look back at $7
.7
billion that would basically be assessed by a survey that was taken by th
e
secretary of Health and Human Services. That, to me, is terrible tax
policy. Then there was an amendment tacked on, again the Democrats said
well, we're going to disallow advertising deductions so that the companie
s
couldn't deduct advertising if they didn't comply with FDA regs. Some of
those FDA regs are just nonsensical. Some of them make no sense whatsoeve
r.

FORREST SAWYER Mr Reed, you were the point man for the White House. You
were involved in much of the discussions and much of the negotiations to
get this bill forward. Mr Nickles says what you've got is bad legislation.

BRUCE REED, CLINTON POLICY ADVISOR (Washington) Well, he's just wrong. Th
is
is a good, strong, comprehensive piece of legislation. It had a clear
bipartisan majority in support, but the Republican leadership got togethe
r
behind closed doors, the tobacco companies bought the gun and the
Republican leadership pulled the trigger.

FORREST SAWYER Mr McCain, you said that you think it's the tobacco indust
ry
that did this, but clearly it was your colleagues who were working very
hard to stop this and clearly they believe that it was a lot of pork and
it
was a big problem and that there's another bill out there waiting
somewhere, it's not this one.

SEN JOHN MCCAIN Well, you know, that's an interesting argument, but we di
d,
as I say, pass it through the committee at 19 to one and before the tobac
co
ads started, it was generally accepted that we were going to pass this
legislation. I think it's also important to point out, without bothering
you with the details, that there was a $190 billion tax cut in here. Ther
e
were some billions of dollars to pay for anti-drug programs. There was a
cap on the legal fees that the lawyers could charge, the first time we've
ever done something like that. And no, it wasn't a perfect bill and we we
re
going to go to conference with the House and then we were going to clean
up
some of the more egregious aspects of it and that's the process we go
through. But we'll never be able to do that unless we get the bill throug
h
the Senate. But its fundamental structure was the same agreement that you
led the program off with, which was the agreement between the attorneys
generals and the industry.

FORREST SAWYER Just to be clear, Mr Reed, you're going to continue fighti
ng
to try to get this through in what little time you have left?

BRUCE REED We're going to bring this back to the floor time after time
after time. So long as the tobacco companies are coming after my children
and Senator McCain's children and all the children around this country,
we're going to be trying to get the United States Congress to say enough
is
enough.

FORREST SAWYER Do you have any reason to believe that you're going to be
able to get it through, since you couldn't get this one through?

BRUCE REED Well, as I said, we had 57 votes today. There's a majority
waiting there if the leaders will just let us do it.

FORREST SAWYER Mr Nickles, do you see any hope for a bill coming through
of
any kind?

SEN DON NICKLES Certainly I do, one that's targeted at reducing teenage
consumption of smoking and drugs. But you don't have to spend hundreds of
billions of dollars. This is closer to a trillion dollars. But I think
you'll see us, Forrest, this year try and put some money in an
appropriations bill that's going to conduct a very aggressive campaign
telling kids not to smoke, don't use drugs. We can do that and I think
we'll be far in excess of what the President had in his budget for
anti-drug campaign effort, far in excess of what the President had in his
budget to get kids to stop using, to stop smoking. So we can do that. You
just don't have to spend, you know, close to a trillion dollars over and
above the budget to make that happen. And so I think you'll see an
energetic effort to have a more targeted bill, one that's really targeted
at getting kids to quit smoking and not to grow government.

FORREST SAWYER Gentlemen 8A

SEN JOHN MCCAIN Forrest, could I just say 8A

FORREST SAWYER Yes, sir.

SEN JOHN MCCAIN-that everybody's entitled to their opinions, but we have
to
rely on the experts. Every public health organization in America, every
living attorney general, everyone who's respected in this field says you
have to have a comprehensive bill and it has to be along the lines of wha
t
we were trying to pass through the Senate and nothing else will do it. An
d
Senator Nickles' present proposal won't get it.

FORREST SAWYER Let's come back to that when we come back in just a moment.
Stay with us.

(Commercial Break)

FORREST SAWYER Back again with Republican Senators John McCain and Don
Nickles and Bruce Reed from the White House. And Mr Reed, I've got to tel
l
you, it feels a little bit like I've fallen through the rabbit hole here.
I
listen to you and Senator McCain and you say this is an important bill, i
t
is critical for the public health, we've got to keep fighting to the deat
h
on this. And I listen to Senator Nickles and he says it's not only a bad
piece of legislation, it's a disaster. Now, where is this thing coming a
cropper?

BRUCE REED Well, I think that the main problem is that we have a leadersh
ip
that wants to stand in the way of the will of the American people and the
will of the bipartisan majority of Congress.

FORREST SAWYER And do you think that they're trying to stand in the way
because they are tied to the tobacco industry or because they genuinely
believe there's something wrong with this thing?

BRUCE REED Well, I think you have to wonder when a bill could save a
million lives why the Republican leadership would listen instead to $13
million in campaign contributions.

SEN DON NICKLES Bruce, I take issue with that. Just a couple comments. We
already have laws on the books in every single state in the nation that
it's against the law for teenagers to smoke. Those laws should be enforce
d.
A lot of us are willing to say what can we do to make sure the states do
enforce them. What encouragement can we give the states to enforce them?
Let's let the states and encourage the states to pass laws that if kids
smoke under the age of 18, they have to do public service. They have to
clean up parks. If they continue to do it, maybe they lose their driver's
license. Let's put some accountability on the youngsters themselves. Let'
s
run some campaign ads that say hey, you shouldn't smoke. Now, you know, w
e
have a president that really blasted Congress today because we weren't
acting like parents and at the same time he wins a case with Paula Jones
or
something, next thing you know, he's puffing on a cigar and then he's on
MTV talking about inhaling marijuana. So for the President 8A

FORREST SAWYER Senator Nickles, honestly 8A

SEN DON NICKLES For the President 8A

FORREST SAWYER I don't know that these ad hominem attacks are going to he
lp
us very much in trying to understand this bill.

SEN DON NICKLES Well, I'm just saying we don't have much of an example.
Here the President's lecturing the Senate and saying we should act more
like parents and at the same time he's on MTV or earlier he was on MTV
saying he would smoke marijuana and he's puffing on a cigar. I don't thin
k
that's the kind of example we need from the White House.

FORREST SAWYER Senator McCain?

SEN JOHN MCCAIN Forrest, I was not an expert and probably am still not an
expert on this issue. So when we considered the legislation, which was
based on the agreement that we discussed earlier, we consulted every publ
ic
health organization in America, the American Medical Association, the
Cancer Society, the Lung Society, every one. We consulted and got
correspondence from every living attorney general, every single one back
to
1973. And you know what their unanimous opinion was is that we had to pas
s
legislation that was comprehensive if we were going to attack the issue o
f
kids smoking. Now we are not doing that and that's the tragedy of this
whole situation because as we speak, tomorrow we will not act and 3,000
kids will die, will start smoking. And I know that that sounds a bit
rhetorical and inflammatory but it's a reality and it's something I think
we ought to have looked at more carefully when we decided to set this
legislation aside.

FORREST SAWYER Mr Reed, you were involved in the negotiations back a long
time ago and you know that they are tough negotiations. Now, there was a
deal on the table for $350 billion and it was hammered out by the state
attorneys general and others. You could have taken that deal, others
pressed for a larger deal and you walked away from that one and held out
for the $500 million. Was that a mistake?

BRUCE REED No, I don't think so. We pressed for a good bill and that's th
e
bill we brought to the floor and it's nowhere near as large as Senator
Nickles says. It's really the settlement that was agreed to last year plu
s
the $190 billion tax cut that was included at the Republicans' insistence.

FORREST SAWYER Well, I understand that you thought that it was a good bil
l,
but the fact of the matter is you don't have it. You have nothing.

BRUCE REED Well, we're not done yet and Senator Nickles can try all he
wants to to wriggle out from under these charges but let's face it, the
Senate had a very simple choice today. They could protect kids or they
could side with big tobacco and unfortunately 8A

SEN DON NICKLES I take 8A

BRUCE REED-they've gone the wrong way.

SEN DON NICKLES-issue with that.

FORREST SAWYER Senator Nickles, let me tell you what you're going to get
hit with this fall. You're going to get hit with that and a lot more.
You've got the tobacco industry, which has been donating to a very large
measure to Republicans and you've got a Republican minority that stopped
this bill from going to the floor and they are going to pound you and pou
nd
you again all the way through this election in the fall.

SEN DON NICKLES Forrest, this bill was on the floor for four weeks and it
wasn't coming close to closure. This bill is closer to a trillion dollars.
This bill had $50 billion in for child care. It has nothing to do with
smoking. It was for child care. It had $28 billion for tobacco farmers,
many of which would become multi-millionaires as a result of this bill,
most of which don't farm tobacco, incidentally. So it had, it became a
cookie jar. The White House couldn't resist the temptation and a lot of
Democrats, they wanted to spend a lot of money. So this wasn't targeted s
o
much at kids, it was targeted at growing government. My commitment is is
that we're very committed, many of us are in the Republican side, to pass
a
bill that will target teenage consumption of tobacco and drugs, will put
more money-we'll probably double what the President requested to have a
good, strong campaign to discourage consumption of drugs and also to
encourage the states to enforce the law. It's right now against the law i
n
every state for kids to smoke under the age of 18 and we want to states t
o
enforce the law.

FORREST SAWYER Mr Reed, do you just keep hammering them with the $500
billion bill or do you go back and try to cut a deal with that minority?

BRUCE REED We've got a good bill. We're going to come back again and agai
n
and again and bring this choice and if the American people don't get thei
r
way, they can pick a different leadership.

SEN DON NICKLES Forrest, I think the American people want to conduct a
campaign against tobacco. I just don't think they believe we have to spen
d
hundreds of billions of dollars and raise prices and taxes on some of the
lower income people to do it.

FORREST SAWYER Senator 8A

SEN JOHN MCCAIN Forrest, could I just point out?

FORREST SAWYER Yes, sir, you can. Let me ask you a question if may, Senat
or
McCain. You've heard the White House and you've heard the Democrats say
that what they believe is that there are a minority of Republicans who we
re
campaigning against this who are in the pockets of the tobacco industry.
Do
you believe that?

SEN JOHN MCCAIN No. I believe that the opponents had honestly held views,
including Senator Nickles and Senator Gramm and others. But let me just s
ay
that every penny above the original settlement of $368 billion is in the
tax cut. The biggest tax cut in 20 years is in this bill and it'll pay fo
r
low income Americans who have to pay for their health insurance and it'll
eliminate the marriage penalty, something we promised the American people
we would do a long time ago. So the billions and billions will be in the
form of a tax cut and for the first time we have limited attorneys' fees,
which is, in my view, being a conservative Republican, one major, major
victory. So I hope we can move forward.

SEN DON NICKLES Forrest 8A

FORREST SAWYER I'm sorry, Senator Nickles, I'm going to have to leave it
there.

SEN DON NICKLES OK.

FORREST SAWYER Let me come back in just a moment. Thank you very much.

(Commercial Break)

FORREST SAWYER More from Senator McCain on Good Morning America tomorrow
morning, but that is our report for tonight. I'm Forrest Sawyer in
Washington. For all of us here at ABC News, good night.