A $47 Million Cigarette

In 2006, a ballot initiative to add $2.60 to a pack of cigarettes sold in California went down in flames as Big Tobacco pumped $67 million into the state to defeat the measure. The June 5^th ballot measure, Proposition 29, sought a more modest $1-a-pack charge, a tax that would generate approximately $735 million a year. The funds were not to go into the very-deficit-needy general fund, but would be used to pay for healthcare and other related programs directed at preventing smoking and curing the many ailments that are caused or accelerated by smoking (cancer research alone would generate an estimated 15,000 new jobs for the local economy), all very serious drains on the entire healthcare system.

Smoking has always increased healthcare costs, making private insurance more expensive and the underlying social safety nets (Medicare and Medicaid) push near the breaking point, amplified with that other national crisis, obesity. “With one exception, the studies find the annual medical costs of smoking to constitute approximately 6-8% of American personal health expenditures. The exception, a recent study, found much larger attributable expenditures. The lower estimates may reflect the limitation of analysis to costs associated with the principal smoking-related diseases. The higher estimate derives from analysis of smoking-attributable differences in all medical costs. However, the finding from the most recent study, also considering all medical costs, fell in the 6-8% range.” According to one highly-respected study (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1763946/). This tax measure was simply one way for taxpayers to defer some of those costs and place them directly on the users that cause the problem.

Supporters of the legislation successfully raised almost $9 million dollars to fund a campaign that, when individual voters are polled on the question of the tax, is heavily favored: “Indeed, arguing the goals of Proposition 29 would be a losing strategy for the tobacco industry since a vast majority of Californians support an increase in the state cigarette tax (currently one of the lowest in the nation), understanding that it will benefit public health.” Los Angeles Times, June 1^st. Donors include the American Cancer Society, the American Lung Association, the American Heart Association and even large individual donors like Lance Armstrong and New York’s Mayor Michael Bloomberg.

But on the other side of the equation is Big Tobacco, which mustered almost $40 million to defeat the initiative. “The tobacco industry’s campaign against Proposition 29 is a case study for how corporations attack generally good initiatives that are harmful to their business interests, especially by diverting the discussion away from the initiative’s true purpose. This classic "red herring" strategy strives to confuse voters…” write LA Times editorial contributors Sherry Lansing and Kriistina Vuori in the LA Times, June 1^st. The ads in question spoke about new taxes, the massive bureaucracy that would be created and how there were no specific allocations or mandates for cancer research. Ads with individuals from seemingly neutral-sounding associations spoke with all-sincerity about the evils of big government, including one gentleman touted as a respected family physician, dressed in an appropriate white lab coat as he denounced the ballot initiative. Of course, there was no statement of how these individuals and/or their organizations were compensated or where the funding for such entities may have come from.

Big Tobacco admitted that two of the major contributors were R.J. Reynolds and Philip Morris but claimed that many other “independent” organizations joined their cause. Really? Opponents included the Small Business Action Committee, the California Chamber of Commerce, the California Taxpayers Association (Cal Tax) and Americans for Tax Reform. NBC’s local affiliate in San Francisco “followed the money trail” citing reports from campaign-finance-tracking maplight.org and publicly available information, and here are some of its findings as reported on June 4^th: “Maplight.org’s analysis of California’s Secretary of State campaign finance records shows that Philip Morris gave the Small Business Action Committee in California $500,000 in 2010. That’s about a third of the entire receipts of $1.47 million received by the Small Business Action Committee in 2010.

“Since 2010 Philip Morris also gave two different political action committees associated with the California Chamber of Commerce, JOBSPAC and CALBUSPAC, more than $2 million, including $109,500 just last week… Both the Small Business Action Committee and the California Chamber of Commerce are listed on the ‘No On 29’ website…

“Searching through the 62 million documents that make up the Legacy Tobacco Documents online, we discovered dozens of papers that detail big money contributions and cozy relationships between the tobacco industry and some of the same groups now opposing Proposition 29… For example, the California Taxpayers Association or Cal Tax opposes the initiative. We discovered evidence that the organization has been affiliated with RJ Reynolds Tobacco Company for more than three decades…

“Then there is another letter dated May 19, 1999 from the president of Americans For Tax Reform, Grover Norquist. In the letter Norquist asks Philip Morris’ Manager of Public Affairs, Kirk Blalock, for a quarter of a million dollars. ‘This is a formal request for $250,000 in general support for the work of Americans for Tax Reform,’ the letter states. ‘Americans for Tax Reform opposes any and all tax increases and fights onerous regulations on both the federal and state level.’”

In the end, the voters were sharply divided (confused), but the extraordinarily lopsided level of pernicious contributions seemingly intended to mislead and misinform suggest that once again, America is governed more by those with hidden agendas and the huge dollars necessary to push their campaigns than by the issues themselves. The measure failed by the slimmest of votes, 50.8% against, 49.2% in favor. Do you think that Big Tobacco’s leading an advertising campaign, misleading at best, that outspent healthcare proponent by about a four-to-one margin had anything to do with the result? Does that disparity of money always buy votes on issue-related measures?

I’m Peter Dekom, and a society that is governed increasingly by special interests at the expense of the average citizen is a society that is sowing the seeds of its own destruction.