Tag: tobacco

Andrew Cuomo and the Gunmaker Litigation

There are many reasons to be glum about the impending coronation of dynastic heir Andrew Cuomo, now leading in the New York governor’s race against a GOP opponent (Carl Paladino) who at first polled decently but has since stumbled. Some fret about the Democrat’s reputation for political hardball: former governor Eliot Spitzer (Eliot Spitzer!) last month called Cuomo the “dirtiest, nastiest political player out there,” which is like being called overdressed by Lady Gaga. Others find Cuomo too much of a camera-chaser as attorney general in Albany, and almost everyone is queasy over his role (as Clinton-era housing secretary) in encouraging risk-taking by federally backed Fannie Mae and Freddie Mac, leading by direct steps to today’s ongoing mortgage crisis. (For background, see Wayne Barrett’s famous 2008 Village Voice article.)

I have a different reason for cringing at the idea that voters would ever elevate Andrew Cuomo to higher office, and it’s also based on memories of his tenure as housing secretary. Not the Fannie-Freddie-subprime end of it, although I concede that in a strictly economic sense those were the most damaging things he did. No, what I find permanently hard to forgive is the way Cuomo threw himself into the role of chief national cheerleader for the municipal anti-gun litigation of the 1990s and early 2000s.

Because that litigation mostly fizzled out, it is now only half remembered and doesn’t much feature in Cuomo profiles. At the time, though, it was a close-fought battle and a big story. More than 30 cities and counties sued firearms makers, alleging that courts should hold them financially responsible for the costs of urban shootings. The cry was to make guns the “next tobacco,” following the successful litigation campaign against tobacco companies that extracted hundreds of billions of dollars for the benefit of state coffers (and private lawyers).

Of course there are enormous differences between the tobacco and gun businesses. One is that while major tobacco makers had billion-dollar revenue streams to share as part of a settlement, most gunmakers are smallish enterprises, often family-owned. And this in fact was a conscious element of the strategy for the lawyers who promoted the suits: because gunmakers were too thinly capitalized to withstand the costs of years of legal defense, it was thought they’d fold their hands and yield to “gun control through litigation” (explicitly couched as an end run against a then-Republican Congress resistant to gun control proposals). Smith and Wesson actually did yield to a settlement on this rationale, which soon collapsed following a public outcry from gun owners and others outraged by the use of extortive litigation to achieve gun control objectives. The gamble having failed, the suits eventually reached judges and were generally thrown out, but not before imposing huge and uncompensated costs on many small companies that had violated no laws. Some were bankrupted.

Mindful of traditional tenets of legal ethics that forbid lawyers from using the cost of legal process as a bludgeon, most backers of the suits prudently refrained from any hint that imposing unsustainable legal costs was part of the plan. One exception was Cuomo, who warned gunmakers that unless they cooperated, they’d suffer “death by a thousand cuts.” And another was then-New-York-AG Spitzer, who reportedly warned an executive of holdout Glock: “If you do not sign, your bankruptcy lawyers will be knocking at your door.”

I think Spitzer and Cuomo deserve each other, really. What I can’t figure out is why the good citizens of New York would want either of them.

When Regulators Attack

No, that’s not the name of a new TV series. We should be so lucky.

It’s actually a good description of the government’s approach to tobacco.

Instead of letting adults make up their own minds about costs and benefits of risky choices (which includes most things in life, such as crossing a street and eating a cheeseburger), nanny-state officials have decided to investigate menthol-flavored cigarettes. And since the Food and Drug Administration has been given authority over the tobacco industry and since the FDA’s supposed purpose is to ensure drugs are “safe and effective,” that almost certainly means this latest campaign will lead to either further restrictions on free speech or outright bans.

Here’s a blurb from the Wall Street Journal:

Congress last year added the tobacco industry to the FDA’s regulatory mix and today a panel of health experts making up the agency’s new Tobacco Products Scientific Advisory Committee is kicking off a two-day meeting. First on the agenda: how menthol flavoring in cigarettes affects smokers’ habits. Small wonder that menthol is getting early attention, says the New York Times, which notes menthol butts account for almost a third of the $70 billion U.S. cigarette market.

After more meetings, the advisory panel will send recommendations to the FDA, which could eventually decide to ban menthol products or take steps to curtail their marketing.

One can only wonder how far down the slope we will slide. There already are attacks against fatty foods and sugary soft drinks. Both provide pleasure to many people, but that no longer means much in Washington. Will regulators, either at the FDA or elsewhere, eventually decide that anything linked to obesity must be regulated and/or taxed?

And now that government is going to pick up the tab for an even larger share of health costs, how long before the politicians use obesity-related costs as a major justification for further efforts to control our private lives? Maybe some day we will have a Federal Health Police to enforce daily exercise mandates? I better stop now before I give them any ideas.

Thursday Links

  • The financial regulators’ pipe dream: “Most new regulation will do nothing to limit crises because markets will innovate around it. Worse, some regulation being considered by Congress will guarantee bigger and more frequent crises.”
  • The illegal cigarette trade in Ireland reaches “epidemic proportions“  after the government imposes draconian regulations on tobacco products.

Weekend Links

  • The hard truth about end-of-life care in America.
  • If current trends continue, the U.S. government will soon spend a greater portion of GDP on Medicare and Medicaid than Canada now spends on its entire single-payer government-run system. Here’s a way to fix that.

Higher Taxes for Health Care, Fewer Jobs

President Obama broke his pledge not to raise taxes on lower- and middle-income families with his large tobacco tax increase back in February. It appears that the increase is not just hurting tobacco consumers, but also hurting workers in the cigar industry. From Tampa Bay Online:

Tampa will lose part of its cigar heritage in August when Hav-A-Tampa shuts its factory near Seffner and lays off about 495 employees, closing a factory that has been operating since 1902.

Several things conspired to hurt Altadis’ sales, McKenzie said, including the recession and the growth of indoor smoking bans. The bans have especially hurt sales in cold-weather states, where it’s impractical to smoke a cigar outdoors in the winter, he said.

However, the company attributed much of its trouble to the State Children’s Health Insurance Program, or SCHIP, a federal program that provides health insurance to low-income children. It is funded, in part, by a new federal tax on cigars and cigarettes. McKenzie couldn’t say how much sales of Hav-A-Tampa cigars had fallen off, but the numbers have dropped significantly, he said.

Previously, federal excise taxes on cigars were limited to no more than a nickel, said Norman Sharp, president of the Cigar Association of America trade group. The tax increase, which took effect April 1, raises the maximum tax on cigars to about 40 cents, Sharp said.

This health-tobacco legislation raised taxes $65 billion over 10 years. Imagine the damage that would be caused by the giant health bill currently moving through Congress, which will cost $1 trillion or more over 10 years.

Hat Tip: Tad DeHaven

FDA to Regulate Tobacco? Big Mistake

Handing tobacco regulation over to the FDA, as Congress is poised to do, is an epic public health mistake. It is tantamount to giving the keys of the regulatory store to the nation’s largest cigarette manufacturer, Philip Morris.

The legislation that will be voted on shortly in the Senate was cooked up out of public sight by Philip Morris, Sen. Ted Kennedy, Rep. Henry Waxman, and anti-tobacco lobbyists. Philip Morris staffers themselves even wrote large portions of the bill.

There are significant, and numerous, problems with the FDA regulating tobacco, and virtually no benefits to public health. Kennedy, Waxman, and the public health establishment present their legislation as a masterful regulatory stroke that will end tobacco marketing, prevent kids from starting to smoke, make cigarettes less enjoyable to smoke, and reduce adult smoking. But FDA regulation of tobacco will do none of these things.

The bill fails to correctly identify the reasons why young people begin to smoke, and concentrates almost exclusively on restricting tobacco marketing, while leaving the other risk factors for adolescent smoking unaddressed. There is nothing in the proposed legislation that shows the FDA understands the well-documented connections between education, poverty and smoking status, connections that provide the key to helping adults stop smoking.