Tobacco Deal Critics Want Cost Doubled

Critics of a proposed tobacco deal urged President Clinton on Friday to double the cost of the estimated $368.5-billion settlement, and said cigarette prices should be increased by $1 to $2 a pack to raise the additional funds as well as cut smoking.

Under the proposed settlement, tobacco companies would pay $8 billion to $15 billion a year to settle 40 state lawsuits and fight teenage smoking. They would raise the money by boosting cigarette prices an estimated 50 cents a pack, and in return get protection against smokers’ lawsuits and against full government control over nicotine.

“That is an inadequate amount of money,” Peter Angelos, the attorney in charge of Maryland’s lawsuit against tobacco companies, said Friday after meeting with top Clinton aides.

The Clinton administration is finalizing its review of the proposed settlement.

Angelos and Minnesota Atty. Gen. Hubert Humphrey III, critics of the proposed settlement, said cigarette prices should be raised $1 to $2 a pack. That would raise $30 billion a year--still less than the $50 billion a year in medical bills the nation accumulates from sick smokers, Angelos said.

“We’re not talking about putting these companies in bankruptcy,” Humphrey said.

But the higher cigarette price would cause a significant reduction in smoking, particularly among price-conscious teenagers, he said.

In addition, Angelos said, it is unfair for cigarette companies to put the entire cost of the settlement onto their customers. He called instead for part of the tab to come out of each company’s yearly profits.

“They are dreaming. They are hallucinating,” tobacco industry chief negotiator J. Phil Carlton said in dismissing that call.

Under the deal, which hinges on approval by Clinton and Congress, tobacco companies would pay an initial $10 billion out of their profits, but the remaining $358 billion, in payments spread over 25 years, would come from increased tobacco costs.

Clinton is expected to call for changes in the deal, including stricter regulation of nicotine, when he returns from vacation in early September. But the White House has not signaled whether increasing the settlement’s tab is a high priority.

“We’ll consider all those views as we evaluate the proposed settlement,” White House spokesman Mike McCurry said Friday.

In a separate development Friday, a Florida judge presiding over the state’s $1-billion lawsuit against the tobacco industry said that cigarette makers will be allowed to present evidence that their advertising did not mislead the public about the dangers of smoking.

Palm Beach, Fla., Circuit Judge Harold Cohen also said the tobacco companies may introduce documents or direct testimony from corporate executives to show there never was any intent to mislead anyone about the hazards of smoking.

However, Cohen made it clear that the only documents the tobacco companies could use to rebut the state’s charges of fraudulent advertising and racketeering were those that company officials relied on in making their decision.

Opening statements are expected to take place soon after Labor Day with the trial lasting until January.