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October 02, 2003

Policy Break: 5 Year Anniversary of the Tobacco Settlement


Possibly you read in the NY Times on September 30 the headline announcing that “States Fail to Meet No-Smoking Goals for Women.” In this story, which you can read here, Anahad O’Connor notes that

Thirty-nine states earned a failing grade when judged by a list of criteria from the Department of Health and Human Services and on the strength of their tobacco control policies. The nation over all also earned a failing grade.

"Where we are in the United States is pretty appalling," said Dr. Michelle Berlin, an author of the study with Oregon Health and Science's Center for Women's Health. "The link between smoking and lung cancer is one of the strongest we know of. Yet more women are dying from lung cancer each year than they are from breast cancer."

Unfortunately, this story pretty much has to be filed under the “like, duuuh” heading. Smoking isn’t declining among women because it’s not in anyone's interest (except for the women and their health insurers) for it to decline. The same is true for all forms of smoking. The latest data available from the CDC (which you can read here) reveals that:

Overall, from 1996–2001, no change in the prevalence of current smoking was noted for 41 states and the District of Columbia.

As for the other 9 states, over that five year period smoking increased in Georgia and Oklahoma, decreased in Tennessee, Utah and Hawaii, and fluctuated up and down in Minnesota, New Jersey, South Dakota and North Dakota.

In short, guys, it’s been a wash. (Yeah, yeah, I know there have been claims that self-reported youth smoking is down, but they’re pretty unconvincing—odd, isn’t it, that there has been no sign of such a decline making its way into the adult smoking statistics after five years?)

Not much of a showing for the enormous Master Settlement Agreement (“MSA”) negotiated five years ago between the state attorney-generals and four major tobacco companies. This settlement will ultimately transfer some $200 billion plus to the states, and has already resulted in the transfer of some $35 billion in “up-front” fees and “annual” fees. (And this doesn’t count another multi-billion dollar settlement between four states and the tobacco companies.) Moreover, none of this exhausts the financial contribution of smokers to our state government kitties, because the MSA- and other settlement-revenues sit on top of revenue from ordinary cigarette taxes. According to the website of Tobacco Free Kids, which you can visit here, total state tobacco revenues in 2003 are at an all-time high:

The states in the current budget year are collecting a record $20.3 billion in tobacco-generated revenue, an increase of nine percent from the year before… Tobacco revenues are up because 21 states and the District of Columbia increased cigarette taxes in 2002.

With all this dough, the states must be pumping out that anti-smoking propaganda like fire trucks at a 4-alarm blaze, right? Wrong.

[In 2003, the states] have cut spending on already under-funded tobacco prevention and cessation programs by $86.2 million, or 11 percent, according to the report.

To meet the CDC’s minimum recommendation for anti-smoking educational campaigns, the states would have to spend all of 8% of their tobacco revenue. The states, have, however, forgone even that fig leaf and are actually shelling out a mere 3.4 percent of their combined tobacco revenue on education programs. (Several states, including my childhood home, Michigan, spend not one dime on education.)

What accounts for this lack of, er, public spiritedness on the part of our state governments? That noted constitutional expert and economic analyst, Dave Barry, pointed out the obvious flaw in the MSA in one of his columns (which you really should read here):

Originally, the states claimed that they would use the tobacco-lawsuit money to . . . well, to do something about tobacco. But that of course makes no economic sense: To actually stop smokers from smoking would be to kill the goose that is coughing up the golden loogies.

I remember staring at news reports of this train wreck back in 1998 as the tobacco industry was effectively “nationalized” by state governments. I even predicted then that the many-decade-long trend of reduction in the number of people smoking would come to a grinding halt. I am appalled, but not all that surprised, to have been proven right.

Okay, the public can be dismissed as a beneficiary of the MSA. Who’s left?. The winners would appear to fall into three camps:

(1) State politicos who are out eagerly spending tobacco revenues and raising highly regressive state tobacco taxes on their chiefly blue-collar populations of “captive” smokers. (These smokers have almost certainly, by the way, not seen their last tax increase; it has dawned on policy makers that while the over $1.00 per pack cost of the MSA slightly reduced the amount of tobacco consumed per smoker, it has had no effect on the number of smokers. In short, the demand for tobacco is very inelastic--thus making it a perfect vehicle for through-the-roof taxation.)

(2) Tobacco companies—over the past five years, Philip Morris’ stock is roughly unchanged, British American Tobacco’s stock is up 50%, and R. J. Reynolds’ stock is up 33%. These same companies have, of course, also been the chief beneficiaries of the MSA-dictated cartelization of the tobacco market in which new entrants have effectively been walled out of the mass market.

(3) The private tort lawyers who participated in the MSA and have been awarded well over $10 billion in fees. (For a scathing look at these fees and exactly how they were awarded, you should check out this American Lawyer story here.) And beyond the actual cold hard cash, the tort bar has been inspired by the fact that Americans tamely submitted to a significant tax increase imposed by litigation (unlike the old fashioned kind that requires, you know, elections and voting and stuff.)

What an unholy trio—politicians, tobacco companies, and tort lawyers. Maybe next time the public will look a little more askance when these Three Amigos come calling, bearing so-called public health gifts.

As an acquaintance of mine remarks—“You know, I get more cynical every year, but I just can’t keep up.”



posted by Friedrich at October 2, 2003


If a recent discussion at rec.arts.sf.fandom is an indicator, the idea that smoking is unhealthy has sunk in, but with the result that people think they can smoke for a while when they're young and then stop. If anyone actually wants to discourage smoking now, the thing to publicize is the details of how hard it is to stop.

Posted by: Nancy Lebovitz on October 3, 2003 8:26 AM

Unofortunately, it seems like the "public" who did not get served by this is the same one who caused it. I mean, if juries hadn't fallen for the stupid argument that it is tobacco companies' "fault" that smokers smoke and get sick from it, and awarded these huge awards, there would have been no money for the states to count on, or fight over. The people getting the most screwed are certainly the smokers: states have increased educational programs and built roads from those smoking proceeds rather than raise state taxes to pay for those things. Talk about weath transfer!! The truth is, people know it isn't good for them and enjoy it and do it anyway. I don't think more "non-smoking education" is going to make a whit of difference. Prohibition didn't stop drinking; venereal disease and unwanted pregnancy doesn't stop sex, and some people are gonna smoke. Another recent study in Britain shows that second-hand smoke is not clearly linked to disease (I don't know, I'm not a doctor). I would guess that second-hand stress from obnoxious people, or unemployment, creates a lot more health risk. We have not outlawed either of those things.

Mostly, I don't know why people care so much. But the results of the tobacco cases are certainly a powerful argument against jury trials.

Posted by: annette on October 3, 2003 9:35 AM

It's not that hard to stop smoking, if you are the kind of person who can stop smoking and most people seem to be that kind of person.

Rather than throwing out stats, I'll just ask you to stop for a second and think of all the people you knew who smoked when they were in the 20s, and don't smoke now.

Posted by: j.c. on October 3, 2003 10:19 AM

Maybe it's time for a different message. Not "Don't Smoke!" or "Smoking isn't cool!" but
something like:

"Wizards prefer Pipes!" or

"Cigarettes are only for kids, orcs, and wife-beaters."

Posted by: Pouncer on October 3, 2003 11:34 AM

If, as annette says, "states have increased educational programs and built roads from those smoking proceeds rather than raise state taxes to pay for those things" (and I have no reason to doubt the assertion), then hasn't the non-smoking public benefited from the MSA?

Posted by: Patrick on October 3, 2003 11:57 AM

J. C.:

It's not that hard to stop smoking, if you are the kind of person who can stop smoking and most people seem to be that kind of person.

Maybe most, but not all. It looks like 15-25% of the population in most industrialized countries are not able or willing to quit, even in the face of anti-smoking education or very high tobacco costs (for example, smoking rates in the U.K. are quite similar to those in the U.S. despite substantially higher tobacco prices than the U.S. has experienced to date.) What's depressing to me is that state governments seem to have simply decided to exploit this group of "hard core" smokers financially.


Taxing minorities is always a profitable idea for majorities in the short run; it clearly "works." Perhaps we differ in our views of this, but taxing someone else purely to make life better for me--but not him--strikes me as unethical. You might check out the Lincoln-Douglas debates on why mistreating minorities is, er, wrong--despite democracy's inherent incitement to that very behavior.

Posted by: Friedrich von Blowhard on October 4, 2003 3:25 AM

Well a certain percentage of smokers are actually self-medicating for depression (nicotine is a MAO inhibitor anti-depressant, among other things).

And they've also found that there is a genetic basis to how hard it is to quit nicotine or not.

And also found a marker gene that indicates that you are 120 times more likely to get lung cancer. Almost all smokers that get cancer have it. The rest are those 'aunt maude who smoked till 95' types.

Don't worry, once we all get our personal DNA mapped, we'll know who is at risk for what, and can make much more informed decisions.

But is anyone shocked that the same time the lung cancer marker gene research broke, there were some press-releases from nanny-state do-gooders advocating that we BAN TESTS FOR IT, on the basis that "those who smoking didn't give cancer to would still smoke, and that might Hurt The Children".

Posted by: David Mercer on October 7, 2003 5:04 AM

I have read this blog, but I think this theme is very important!!!! And we must discuss it!!!

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