UP IN SMOKE
August 12, 2005
Last week, the Competitive Enterprise Institute (CEI) filed suit challenging the 1998 tobacco settlement on constitutional grounds. The CEI believes the deal, reached between a bloc of 46 states and the country's largest tobacco companies, violates the Compact Clause found in Article I, Section 10 of the Constitution: "No State shall, without the Consent of Congress . . . enter into any Agreement or Compact with another State."
According to Investor's Business Daily (IBD) the $246 billion tobacco settlement was supposed to be used to treat tobacco-related illnesses and for antismoking education. Instead, many states have spent the money on other things:
- Five states plus the District of Columbia have yet to commit their first dollar of the settlement to prevention, and another 15 have spent the minimum.
- Since the program began, only 3 percent of settlement funds have been spent on prevention.
- States have done better when it comes to health-related spending, accounting for about 33 percent of the funds spent this year.
- But they're still shortchanging those they said they'd help, and last year spent a mere 19.8 percent.
Where's the money going?
- Nearly half (44 percent) of last year's payment was used to offset budget shortfalls, and more than a third (36 percent) was used for the same purpose the year before.
- When Gray Davis was governor, California sold $2.4 billion of its share to balance the budget; but the Golden State has hardly been alone in turning future income from the deal into immediate cash -- at a large loss.
For their part, tobacco companies have had to raise prices to pay for the sham settlement. No big deal, say nonsmokers. But wait: Once the lawyers and politicians who fleeced Big Tobacco target another industry, it'll be more than just smokers who'll get burned, says IBD.
Source: Editorial, "Up In Smoke," Investor's Business Daily, August 12, 2005.
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