Tobacco Industry Gets $50 Billion Deal Controversial Provision In New Bill Cuts Liability By $2.5 Billion A Year

In a late-hour addition to the tax bill that cleared Congress on Thursday, lawmakers inserted a favor to the tobacco industry that could exceed $50 billion - by letting cigarette makers keep money that was supposed to compensate victims of smoking-related diseases.

The provision would undercut a settlement reached in June among the tobacco industry, state attorneys general and lawyers for smokers and their families.

The negotiated settlement required the tobacco industry to pay about $10 billion a year for 25 years into the funds for victims. Congress on Thursday agreed to reduce that amount by as much as $2.5 billion a year - the amount expected to be raised by higher taxes on cigarettes.

Many anti-smoking lawmakers - and even some budget negotiators - were unaware of the tobacco provision. But its inclusion underscored the industry’s still-formidable power.

The wording was inserted by lawmakers at the insistence of tobacco companies - particularly RJ Reynolds - even though Democrats and the White House opposed it, said Rep. John Spratt, D-S.C., a top budget negotiator.

“I’m surprised to see this in the final agreement because the meetings I was at, the administration dismissed it out of hand. But stuff happens,” said Spratt, the ranking Democrat on the House Budget Committee.

Anti-smoking forces in Congress frantically tried to derail the change when details began drifting out late Thursday afternoon. By then, however, it was too late.

Freshman Sen. Richard Durbin, D-Ill., was defeated 78-22 on a procedural vote when he tried to reopen the tax bill to challenge the provision. “This was a clear attempt by the tobacco industry to sneak in the back door … it was a calculated move by an industry which still has plenty of friends on Capitol Hill,” Durbin said.

Opponents learned of the provision after seeing a copy of the bill on an Internet home page controlled by House Speaker Newt Gingrich, R-Ga. Because of the speed with which the bill moved, that was the only written version that could be publicly viewed.

Representatives of tobacco companies could not be reached for comment.

The $2.5 billion is roughly the amount that tobacco smokers are expected to pay annually in additional taxes to finance a new health-care program for uninsured children. In a companion budget bill that also cleared Congress on Thursday, Congress approved a phased-in, 15-cent-a-pack increase in the 24-cent cigarette tax.