Up In Smoke Tobacco Makers, Facing Double Liability, Attack Tougher Controls.

The nation’s cigarette makers reacted bitterly to President Clinton’s new tobacco policy, saying that it demands concessions that go far beyond a costly and ground-breaking plan they reluctantly agreed to in June.

Four major tobacco companies, in a joint statement issued in Washington, said the president has ripped up the June accord and offered the companies little incentive to support his new proposal.

Clinton laid down his principles for a national tobacco policy in an Oval Office ceremony Wednesday, demanding tough penalties on cigarette makers if smoking by teenagers did not decline dramatically over the next decade. He also said he would not accept any dilution in Food and Drug Administration authority to regulate nicotine as a dangerous drug.

But while the president called on Congress to move swiftly to enact his tobacco control wish list, he gave no indication of what, if anything, he was willing to cede to the industry and pro-industry lawmakers in return for accepting his demands.

Clinton proposed that unless underage smoking declines by 60 percent in 10 years, the price of a pack of cigarettes should rise by as much as $1.50 through the imposition of stiff penalties on manufacturers. Clinton said the penalties should not be capped and the companies should not be able to deduct their cost from business taxes, significant changes from the June accord.

The president’s plan could ultimately double the industry’s cost of settling its legal problems, bringing the total bill to as much as $700 billion over 25 years.

But the cigarette makers responded that they should not be held solely responsible for the allure smoking has for teenagers. An estimated 4.5 million youths between the ages of 12 and 17 now regularly use tobacco products, according to government statistics.

“We agree that there ought to be a concerted national effort to lower the use of tobacco products by minors,” the cigarette companies said in the statement. “We do not agree that the industry should be held solely accountable for social behavior that neither it, nor the government, can control.”

They said that they had offered historic changes in the way they do business to reach the June accord with state attorneys general, health groups and plaintiffs’ lawyers. Under terms of that plan, the industry agreed to pay $368.5 billion over 25 years to settle dozens of lawsuits in exchange for virtual legal immunity in the future.

The companies would also pay for anti-smoking media campaigns, submit to strict federal oversight and accept unprecedented new restrictions on marketing and advertising.

They said Clinton was now demanding unacceptable changes to that plan.

But the June proposal is now dead, and a new plan, far harsher on the cigarette makers, is emerging in its place. The debate now moves to Capitol Hill, where the tobacco industry’s legendary clout and deep pockets will be tested as never before.

While anti-tobacco Democrats reacted favorably to the president’s announcement on Wednesday, Republicans who have in the past been friendly to the industry responded warily.

Senate Majority Leader Trent Lott, R-Miss., said Clinton’s proposal lacked specifics to guide congressional deliberations. “It’s late, and it’s paltry.” Lott said.

Rep, Thomas Bliley III, R-Va., who is chairman of the House Commerce Committee, said he would hold hearings on tobacco after Congress recessed for the year in late October or early November. But he said that Clinton’s failure to present a detailed legislative proposal “eliminated what little chance we had of getting an agreement enacted this year, and makes it far more difficult for us to do so at all.”

Clinton paid tribute to the parties who had brought the tobacco companies to the bargaining table through a combination of legal pressure and public exhortation.

“They extracted concessions that would have been literally unthinkable just a short time ago,” Clinton said.

In addition to the penalties and FDA proposals, Clinton’s plan calls for rapid disclosure of documents detailing tobacco industry behavior over the past four decades, limits on exposure to secondhand smoke, efforts to stem the global spread of smoking and protection for tobacco growers whose income would decline as tobacco consumption dropped.

In its response, the tobacco industry said that it, too, sought “to end decades of confrontation and uncertainty.” But the four companies - the Philip Morris Cos., the R.J. Reynolds unit of RJR Nabisco, the Lorillard Tobacco unit of the Loews Corp. and the United States Tobacco Co. - indicated that they would work in Congress to restore some milder provisions in the June accord that Clinton wanted to threw out.

The Brown & Williamson Tobacco Corp., the nation’s third-largest cigarette maker, issued a separate statement that took an even harder line than that of the other four companies.

MEMO: This sidebar appeared with the story: TAX BREAK RESCINDED The House voted unanimously Wednesday to rescind a recently enacted $50 billion tax break for cigarette makers. By voice vote, lawmakers repealed a provision of last summer’s balanced budget agreement that granted tobacco companies tax deductions of up to $50 billion to offset money paid out under the terms of a proposed national tobacco settlement. There was no opposition to rescinding the tax break, which the Senate agreed to repeal by a 95-3 vote last week.