Commentary

Warning: The Tobacco Settlement Is Dangerous to Your Liberty

The tobacco settlement is a shameful proposal, extorted by public officials who have perverted the rule of law to tap the deep pockets of an unpopular industry. In a 68-page “Proposed Resolution,” the industry agreed to pony up $370 billion, submit to Food and Drug Administration regulation, and rein in certain sales and marketing practices. In return, tobacco companies will be exempt from punitive damages for past conduct and immune from new class action lawsuits.

Part of the monetary settlement is to fund kids’ health insurance, anti-smoking campaigns, even programs to help kick the habit. But why should tobacco companies be responsible for these crusades? After all, cigarettes are legal; the choice to smoke is freely made. Claims that some consumers are hopelessly addicted, having relied on fraudulent information and deceptive advertising, must be proven in a court of law. Those claims cannot be resolved by legislative fiat or by negotiation at gunpoint. And to hold a single industry financially liable because some families are unable or unwilling to insure their offspring is quite simply intolerable.

Moreover, there is no justification whatsoever for the largest component of the monetary settlement, reimbursement of state Medicaid outlays. To fatten their own coffers, states have sued to recover expenditures for Medicaid recipients with “tobacco-related diseases” — without even showing that an injured party smoked, or that smoking caused his illness. Furthermore, authoritative studies have concluded that excise taxes on cigarettes already exceed public costs attributable to smoking.

If the tobacco industry were the only victim of this settlement, that would be bad enough; but the unhappy prospect is yet more incursions by a nanny state with an insatiable appetite for social engineering. Under the Proposed Resolution, the FDA can ban nicotine after the year 2009, more conspicuous warnings will appear on each pack of cigarettes, and smoking will be prohibited in most public and work places. Right around the corner are similar restrictions on alcohol, diet drinks, dairy products, fast food — you name it. And once the state gets its nose into our business, we should not be surprised at pernicious side effects, including a flourishing black market and rampant crime.

The proposed settlement also contains draconian restrictions on advertising and merchandising. Vending machine sales are prohibited. Text-only, black-and-white ads are the rule. Billboards are proscribed. Joe Camel and the Marlboro Man are history; no more merchandise with tobacco logos; no more sponsorship of athletic events.

It doesn’t take a constitutional scholar to conclude that these rules are ridiculous. We protect gangsta rap from the censors, for example, despite its message to youngsters that the drug culture is admirable and killing police officers is a pleasurable recreational activity. Yet if Tiger Woods shows up wearing a Joe Camel tie tack, our speech guardians will see to it that R.J. Reynolds is prosecuted. Will the Budweiser frogs be next to croak? Shall we muzzle Red Dog beer ads?

Even if we believe that tobacco companies have targeted underage prospects, they clearly have not accomplished their objective. Over the 1985-95 decade, during the heyday of Joe Camel, the percentage of kids aged 12-17 who smoke dropped from 29 percent to 20 percent, with even steeper reductions among minorities. Longer term, the average age of first-time cigarette users has neither advanced nor declined from 1962 through the latest 1994 data. Some ads may have succeeded in gaining brand share, but they have been singularly unsuccessful in expanding the overall market.

Make no mistake, dollars and cents — not health issues — are the driving force behind the settlement. Both federal and state governments opt for financial health over smokers’ health when their money is on the line. Facing claims by military personnel for tobacco-related illnesses, Veterans Affairs secretary Jesse Brown told former soldiers to pay their own freight for having chosen to smoke. When sued by a prisoner who was denied a nicotine patch for the habit he developed in a Florida jail, the state insisted it was no more responsible for his purchase of cigarettes than for his “buying a candy bar at the canteen.” If that principle renders the government immune from liability, it renders private companies immune as well.

The correct disposition of the “Proposed Resolution” is one that ex-presidential candidate Steve Forbes suggested for the tax code: Kill it, drive a stake through its heart, bury it, and start over. Disputes between private parties cannot be resolved in secret negotiations involving defendants who have the boot of government pressing on their necks, state attorneys general who seek to replenish their Medicaid coffers without fiscal discipline, contingency fee lawyers who wield the sword of the state while retaining a financial interest in the outcome, and advocacy groups that have subordinated the rule of law to their health concerns, however well-intentioned. Our courts, not our legislatures, are constituted to deal with these matters; but they can do justice only if the rule of law — objective and evenhanded — is scrupulously applied.

Robert A. Levy is senior fellow in constitutional studies at the Cato Institute.