Ashes to Ashes (100 page)

But Adams, who said he never doubted the cancer peril from smoking as it was explained to him by the ACS’s medical and scientific authorities, was finally willing to edge his organization toward the political stage when the federal laws were changed in 1976 to allow tax-exempt entities to maintain “safe harbors,” or adjunct arms for lobbying, fundable up to a million dollars a year without tax exposure and subject to a 25 percent rate for more than that. The ACS formed a public-affairs committee but shied away from prompt, serious, and visible action on the tobacco-control front. Thus, when the California ACS, its most politically aggressive unit, sought national funds to put over the Proposition 5 smoking restrictions in 1978, Adams was reluctant, and a backdoor approach was adopted. “I was not enthusiastic about legislation for non-smokers’ rights, as favored by our activist California division,” Adams recounted. “It was not the proper role for the ACS. … My position then was that we should stick to the medical aspects of this thing and help to do it by persuasion and reason. … The good will and reputation of the cancer society was our primary concern.”

The effect of such wariness was to free the tobacco industry from political challenge by any powerful foe. The AHA and the ALA were no more eager than the ACS to submerge their identities in a united effort on the smoking issue. “We wouldn’t talk to each other,” recalled Scott Ballin, veteran member of the heart association’s public-affairs department, who was on hand when the AHA opened its Washington office in 1980. The health voluntaries, at best a shadowy presence in the capital’s legislative halls, had no access to the levers of power, and if a smoking control bill was filed in Congress, it was usually done by somebody without senior standing on a key committee. The cigarette companies, meanwhile, were at the pinnacle of their strength and influence. Lane Adams and his advisors were forced to recognize that the ACS’s long-standing policy of nonconfrontation had proven largely ineffectual. Smoking was declining, but at a glacial pace, and not at all among women. The society’s public-affairs committee now began to think seriously about becoming involved in the legislative process. At the same time, enough data had materialized with regard to the links between smoking and coronary and pulmonary diseases to define the common ground on which the ACS ought to be standing side by side with the AHA and the ALA; here was a pressing reason for the Big Three to set aside their territorial concerns and link arms.

Foremost among those pushing the cautious ACS leadership into the national political arena were Allan Jonas, an enlightened California realtor who worked well with the society’s dominant Eastern element and emerged as national president in the early 1980s, and Charles “Mickey” LeMaistre, one of the ten members of the original Surgeon General’s advisory committee on smoking and by then a superstar in the medical world’s firmament. President of the University of Texas System Cancer Center and the M. D. Anderson Hospital in Houston, one of the three largest cancer-fighting facilities in the nation, the tall and handsome LeMaistre with his full head of white hair radiated a no-nonsense air that bespoke authority the moment he strode into a meeting room. Like Adams, he was a sound, deliberate man, very well organized and comfortable directing a big bureaucracy. Unlike the rather remote Adams, LeMaistre had a unique capacity for bringing and holding people together and never turned overbearing. He convinced Adams that the smoking control movement would get nowhere nationally unless concerted action was launched by the public-health community and spearheaded by the Big Three voluntaries. LeMaistre became the moving force behind a carefully orchestrated event held in New York in mid-November 1981, called the National Conference on Smoking or Health—the mere use of that “or” instead of the usual “and” suggested how carefully thought through the undertaking was—which drew representatives from twenty-one nationwide public-health organizations and several hundred of the most knowledgeable and committed professionals in the antismoking field.

From the first, frank words were spoken, led by conference chairman LeMaistre’s introductory remarks: “Many of us have been critical of the lack of concerted action to decrease illness and death from smoking. Many of us have been critical of the agencies sponsoring this conference for failure to unite in a common cause … . Never before have we been afforded collectively such an opportunity … !” Former Surgeon General Luther Terry was equally pointed in criticizing the feminist movement for failing to protest the tobacco industry’s splurge of brands and advertising aimed at women.

Perhaps the most stinging remarks delivered at the conference were those jointly authored by a pair of the smartest and best-informed activists on smoking in the public-health community—former Surgeon General Jesse Steinfeld and pulmonologist David Burns, then serving as the senior consulting editor on the Surgeon General’s annual reports to Congress. Their paper blistered their medical colleagues nationwide for their failure to accept smoking as a serious health menace and to accord it the standing it warranted on the ladder of research priorities. Because no major concerted research effort had been mounted, Steinfeld and Burns noted, knowledge of the precise mechanisms by which cigarettes caused disease “remains fragmentary and incomplete.” There was no “institutional memory” within the research establishment on smoking, since few younger researchers remained for long in the contentious smoking and health field, so that tired old ideas were continually being recycled. The only sustained federal research effort, the NCI’s less hazardous cigarette program, could be characterized “with only mild exaggeration as product research for the cigarette industry.” But the problem ran deeper. “The categorical nature of federal health funding allows the easy exclusion of smoking surveillance, behavior, and control as beyond any one group’s mandate … [and] focuses research on the mechanisms of end organ involvement and therapy rather than on understanding and control of the risk factor.” Complicating the picture were racial, socioeconomic, and occupational variables involved with tobacco issues, all of which helped cause “the current, near complete abdication by the federal government of its role in smoking research.” Equally troubling to Steinfeld and Burns were the failure of the health voluntaries to coordinate their research efforts (or anything else) and a preoccupation with visibility and credit as part of their fund-raising function, which translated into “extremely conservative plans of action in avoidance of controversial issues.” What was needed, above all, Steinfeld and Burns concluded, was a change in the mindset of policymakers and program-shapers in government, academia, and the voluntaries that “activity in the smoking area is political and budgetary suicide,” and until that could be accomplished, “no amount of rhetoric and good intention” would reduce the smoking peril.

An agreement emerged from the conference, thrashed out during sessions that ran well into the small hours, to form the Coalition on Smoking or Health,
a Washington-based office funded by the Big Three voluntaries—a larger membership was thought likely to prove too unwieldy—and aimed solely at advancing federal legislation and regulation. Four months later, with a modest appropriation in place, the Big Three hired Matthew Myers, the attorney who had played a central role in crafting the FTC’s staff report on cigarette advertising, to run the Coalition. Myers was a knowing tactician good at winning rapport with the Big Three officials who had been named to a steering committee charged with guiding the Coalition’s legislative game plan without impinging on the interests or egos of the separate voluntaries.

Despite some ruffling of feathers among functionaries used to going their own way, the Coalition soon had its priorities in order: (1) to implement the FTC proposal for larger warning labels with rotating messages on cigarette packs and in industry advertising; (2) to raise the federal excise tax on cigarettes that had been stuck at eight cents a pack for thirty years; and (3) to end the federal tobacco price support program—although some argued that such an effort was both a political impossibility and a counterproductive gesture even if achieved, since it would likely raise leaf production and lower manufacturers’ costs, with the savings perhaps passed on to consumers, who might then buy more cigarettes. Myers, on a short leash held by a triumvirate of Big Three vice presidents, had a single task: “to create political movement so that our agenda items would get a serious hearing on the Hill. That had never happened,” Myers recounted. “There had never been a piece of antismoking legislation passed that the industry didn’t want,” all things considered. The cigarette companies’ continued existence as purveyors of a legal product depended upon political power that they cultivated more assiduously than any other industry. “The tobacco-state congressmen were willing to fall on their swords over this,” Myers recalled, “trading off votes with anybody for anything.” But he had a sword of his own now, unlike any other ever wielded by an antitobacco commando.

V

SUCCESS
came far more quickly than anyone at the Coalition on Smoking or Health could have guessed. “Lucky timing,” said director Matt Myers. It was a matter of numbers. By 1981, the eight-cent federal cigarette tax had shriveled in value through inflation to two and one-half cents in 1951 worth. When passed that year, the excise tax had amounted to 35 percent of the package price; three decades later, it was down to 13 percent of the consumer’s cost. From the middle of the nineteenth century to the introduction of the income tax in 1913, tobacco revenues had accounted for between 10 and 20 percent of total federal tax receipts; by 1981 tobacco taxes came to less than 1
percent of the total. State taxes on cigarettes by then averaged a nickel more than the federal levy.

Aside from the mathematical case for pushing the federal tax back up toward where it had been in real-dollar value, there were several other good arguments that the Coalition brought to bear on Congress during its 1982 session. The cigarette tax was easy to collect at the point of sale—indeed, it was prepaid to manufacturers by wholesalers. And as a “sin” tax imposed on smokers who were already afflicted by guilt over their increasingly derided habit, a hike in the cigarette excise was unlikely to spark a consumer revolt. Nor was a doubling or more of the old levy likely to have a significant impact on sales to those same addicted users. Finally, the Reagan administration, elected on an antigovernment, antitax gospel, had dramatically slashed income taxes and now, with a recession cutting down on the pump-priming effect predicted, was badly in need of any remotely justifiable step to raise revenues. An increase in the cigarette tax could be masked as a kind of user’s fee in view of the higher costs that smokers were said to force the rest of society to bear in the form of health benefits and insurance premiums.

The tobacco industry was caught somewhat off guard, then, as the Reagan White House averted its eyes from a doubling of the federal cigarette levy, which was counted on to bring in about $5 billion. But as with every other action the government had taken in an effort to discourage cigarette sales, the industry used this setback to its advantage. With classic hypocrisy, the companies entered a lip-service protest against the tax increase as discriminatory and regressive—since smokers were poorer on average than nonsmokers and paid a disproportionate piece of their income to feed their tobacco habit—and then used the higher federal levy, which went into effect at the beginning of 1983, as a cover to boost the price of cigarettes at a rate never before contemplated. Until then, the industry had raised prices at irregular intervals, mostly to keep pace with inflation and then a bit more. But starting in August of 1982, in anticipation of the higher federal tax, the cigarette makers put through a series of four piggyback hikes over a six-month period and kept raising prices thereafter in a semiannual ritual amounting to about a 10 percent yearly jump, far in excess of the inflation rate.

As expected, 1983 cigarette sales dipped a bit—something over 4 percent—and the industry pointed to the tax increase as the reason. But the average pack price rose from sixty-two cents in 1980 to ninety-six cents in 1984, allowing the manufacturers to realize delightfully wider profit margins and an industrywide annual return on equity of well over 20 percent, twice the average for corporate America. Realists within the tobacco camp recognized that the U.S. government was taxing their product, even at sixteen cents a pack, far more lightly than most other industrial nations were. The tax hike, rather than a setback, actually helped the companies reach deeper into the pockets of their customers,
who were understandably a bit fuzzy about how much of the higher price they were now paying was actually due to government punishment for their favorite dissipation and how much to the manufacturers’ profiteering. Besides, as industry strategists grasped, the more government at any level relied on tobacco revenues, the less likely public officials would be to impose regulations materially discouraging cigarette sales.

VI

BY
1979, seven years after he had moved to Winston-Salem as a kind of senior counselor and co-regent of the company, Paul Sticht ruled alone atop still prosperous and cash-rich R. J. Reynolds Industries, market leader of the tobacco world. Even the ever louder footsteps of runner-up Philip Morris did not greatly perturb the easygoing folks at RJR, satisfied so long as they held on to their one-third of U.S. cigarette sales and convinced that the challenger was grabbing market share from everyone else in the business but themselves.

A somewhat stiff and undemonstrative figure, not without a gentle sense of humor and a pleasing civility, Sticht enjoyed a magisterial hold on his board of directors while remaining remote from the company’s day-to-day operations. Some saw in him a cunning Machiavellian, craving the power he had unexpectedly come into in a second corporate career and exercising far more sway than he had ever enjoyed as president of Federated Department Stores. Although he had no visceral feel for the rough-and-tumble tobacco business, the bespectacled Northerner in his tweed jacket and striped rep tie was in many ways an ideal choice to bring Reynolds into the industrial mainstream. An out-sized company with small-town ways of thinking, uneasy in its global dealings, its managers unhappy when far from home, RJR continued to rely on its meat-and-potatoes sales force and had never developed the marketing finesse it needed to repulse the onrushing sophisticates from New York. Sticht brought the company a broader view of its potential and a sense of mission beyond tobacco, even as George Weissman had done in winning the CEO post at Philip Morris. But Weissman had a large pool of gifted tobacco merchandisers at his disposal; Sticht found the Reynolds company cupboard bare of first-rate talent and enlisted a growing number of executives from big, decidedly un-Southern outfits like Pillsbury, Lever Brothers, and American Cyanamid. Only three of these imports, though, would survive to play sustained roles well into the ’Eighties. Like him, none of the three knew the tobacco business before joining RJR; unlike him, they were all tough, lashing executives who issued sharp marching orders to the lethargic tobacco giant and motivated the ranks more by instilling fear than by inspiration or innovation.