Fine Print - August 2009

Politicians’ nicotine fix
By G.D. Gearino

I’m not a smoker, but it wasn’t for lack of trying. Once, as a kid, I sneaked an unfiltered Chesterfield out of the pack my father always had within easy reach and lit it up outside. I didn’t understand that I was supposed to inhale the smoke — I just held it in my mouth, then blew it out — but it still made me swimmy-headed. Years later in college, a couple of buddies and I fell into the habit of lighting up in our dorm rooms after dinner. After about two weeks, I declared myself out of the smoking club. I also had brief flirtations with cigars and pipes, but none of it took. Tobacco and I just never fell in love.

That’s not the case with the federal government or with the governments of every state in the union. Appearances to the contrary, government loves the tobacco industry. Or at the very least, it has a powerful addiction to it. Take the government’s hand-wringing over tobacco’s threat to the health of its citizens for whatit is: a bit of theater needed to ensure that those very same citizens don’t dwell too long on the fact that eliminating tobacco use is the last thing government needs.

The kindest thing that can be said about the government’s love/hate relationship with tobacco is that an appealing libertarian philosophy is in evidence. Despite its recent decision to have tobacco products regulated by the Food and Drug Administration, the federal government has chosen not to intrude forcefully into personal choices made by its citizens. It will whine and nag, but if smokers wish to smoke, they can still do so. But in every other aspect of government’s bond to tobacco, hypocrisy, avarice and cold-bloodedness dominate.

The first is a minor sin. All of us harbor some degree of hypocrisy, so it’s unwise to hurl a large stone here. Still, it’s odd that a government such as North Carolina’s can operate a numbers racket (called the “Education Lottery”) and act as the exclusive supplier of hard liquor to its citizens — but simultaneously be agog with concern over the economic and health risks of smoking. No one ever slaps around his wife and terrorizes the kids after smoking too many cigarettes; no one ever buys a pack of smokes in the starry-eyed hope that somehow, against disheartening odds, they’ll get rich through that purchase. The fact that government — any government — can market a lottery while also claiming to be concerned about the tobacco industry’s advertising practices requires a breathtaking display of moral gymnastics.

But it’s when you ponder the money part of the equation that the symbiosis between tobacco and government becomes most apparent. Prior to this year, the federal government collected nearly $7 billion annually in tobacco taxes, thanks to a 39-cent levy on each pack of cigarettes. In April, that federal tax went up to $1.01 a pack — a 159% jump with the stroke of the president’s pen. The extra money, estimated to be $35 billion over the next five years, will pay for a children’s health-insurance program. The problem? Making cigarettes more expensive causes some smokers to stop or cut back — reducing the anticipated revenue. The solution? Replace former addicts with fresh ones. “[Government] would require 22.4 million new smokers by 2017,” the Heritage Foundation reports.

States and cities have their own dependencies on tobacco. Don’t forget the 1998 agreement in which the tobacco industry agreed to dole out $243 billion in installments to states to settle various lawsuits. On top of that, as The New York Times estimates, the states collectively net nearly $20 billion a year from smokers, while municipalities skim about $600 million. Ironically, state and local leaders are none too happy with the recent federal tax increase; they’re now having to recalculate downward their projections of tax revenue because the feds’ money grab will reduce the number of smokers from whom taxes can be extracted. They’re bemoaning, not celebrating, a reduction in tobacco use. Quelle surprise!

The crocodile tears rolling down the face of government, though, are most obvious when you consider the actuarial benefit to smoking — which bureaucrats really, really hate talking about. Vanderbilt University economist (and former Harvard law professor) Kip Viscusi churned the numbers related to smoking — the health-care expenditures on behalf of smokers versus the savings reaped by Medicare, Social Security and pension plans when smokers die young — and concluded that the country saves 32 cents for every pack of cigarettes smoked. PLoS Medicine, a peer-reviwed journal of the Public Library of Science, published the results of a Dutch study on the cost of obesity that turned up an even more interesting nugget. For purposes of comparison, the researchers used smokers and nonsmoking healthy people as two control groups, against which the health-care costs of obese people were measured. Smokers had by far the lowest lifetime costs after age 20: $326,000. Healthy people were the biggest burden on the health-care system, with average lifetime costs of $417,000.

Fiscal benefits notwithstanding, government can’t encourage smoking. But to bluster about its ills while raking in billions from smokers and pocketing Social Security payouts is the very definition of cold-blooded.