Don Nickles

Mr. NICKLES

Mr. NICKLES. That is not true.

Mr. NICKLES. Mr. President, I will be brief. I know my colleague from Texas has been waiting to speak on the amendment. But there were a few things implied by my colleague's statements, the chairman of the Commerce Committee. He said, ``The Senator from Oklahoma doesn't agree with the look-back assessments that were part of the attorney general's agreement. And if the tobacco companies agree to it, why would he be opposed to look-back?'' I was not part of that agreement. I think my colleague from Arizona once said, ``Why don't you introduce the tobacco settlement so we can mark up from that bill?'' I did not do it. The chairman of the Commerce Committee did. I did not do it because I was not comfortable with it. I did not do it because I do not want to introduce a bill that says tobacco companies will be exempt from class action suits. I did not do it because I looked at look-back assessments and said, ``That's no way to tax.'' I think there is a right way to tax and a wrong way to tax. This is the wrong way to tax. And so to attack me and say that if I am against look-back penalties I am also against every health professional or expert is ridiculous. I think this is a crummy way to tax. I have told my colleagues, you want a tax? Tax. Call it a tax. Don't hide behind saying, ``It's a fee. It's an assessment.'' I just read the attorneys general's deal with the tobacco companies. They did not say anything about having a survey and deeming it ``proper and correct'' and so on. My point being, I am not part of the deal that the attorneys general negotiated. They did not ask me. I am part of the Finance Committee, which is responsible for raising taxes. This Congress has already raised tobacco taxes. And if Senators want to increase them again, they have the right. We raised the tobacco tax last year. I did not vote for it. I do not know if my friend and colleague from Arizona did or not. But we increased tobacco taxes last year 15 cents. The increases have not gone into effect yet, but they will. They are on the books. And that is the way we should do it. That is the way the system works. This convoluted system of industry payments going up to $1.10, plus look-back penalty is wrong. Originally the look-back was $2 billion in the settlement, and then the Commerce Committee bill was $3.96 billion, and then the bill that was introduced on Monday that we have before us is $4.4 billion. And then the amendment that was offered this afternoon goes to $7.7 billion. I am just saying this is not a workable tax. And I did not agree to the tobacco settlement. So my colleague from Arizona, I believe insinuated that I support the tobacco companies. I do not support the tobacco companies. I just think this is a crummy way to tax, and I resent this idea that whoever opposes look-back is supportive of the tobacco industry.

Mr. NICKLES. The Senator used my name about 14 times. I would like to respond, because you made a couple allegations I resent and I would like to respond. But I would like to make a statement, not a question. I would like to make a statement. It would only take me about 4 minutes. But I would like to respond since my name has personally been mentioned, I think, 14 times. I am counting.

Mr. NICKLES. Will the Senator yield?

Mr. NICKLES. I will be happy to answer it.

Mr. NICKLES. I don't have a question. I want to respond.

Mr. NICKLES. May I answer to that?

Mr. NICKLES

Mr. NICKLES. I appreciate the correction. Let me make the comment, Mr. President. In every State in the Nation it is unlawful to purchase cigarettes.

Mr. NICKLES. Yes.

Mr. NICKLES

Mr. NICKLES. I did ask unanimous consent to print this chart in the Record.

Mr. NICKLES. Sure.

Mr. NICKLES. I ask unanimous consent to have printed in the Record a Joint Tax report. Now, first I want to reply to my colleague. This joint tax report, which I have been asking for every day, is dated May 20, yesterday. They didn't have this information before. No one has had a chart on what they thought the industry adjustment would be, but let me just give the facts according to Joint Tax if you worship at that altar. In the first place, they say the figures I have on the gross industry payments, are accurate. They have the exact same figures that I have. They happen to be accurate. They estimate these for the first time. We don't have a CBO study. We don't have a GAO study. We don't have anything from the administration showing what they think the volume adjustment would be. No one has had volume adjustments in any of their charts, because it is a guess. But let me just repeat what the Joint Tax Committee has said. They say the gross figures that I have are identical. They say the total tax on consumers over the first 5 years is $102 billion. They say volume adjustment is $8.7 billion. So the net over the 5 years is $93.4 billion. So this massive change in numbers that you are talking about is not that massive. The total amount of tax on tobacco consumers, according to joint tax, over five years is $93.4 billion. That is pretty significant. So, Mr. President, I just got this yesterday, or maybe we got it today. We got it today. And I am happy to have it submitted for the Record. I am happy to debate facts all day long, and I want to debate facts. I see my colleague from Vermont who supports, I believe, a straight excise tax. I just think you ought to do a tax. I think this scheme of having industry payments and having look-backs and surveys and polls, and those polls are deemed to be accurate--that is absurd, but that is what is in this bill. You have an automatic volume reduction if you have an honest excise tax. Isn't that the truth? If you have an honest excise tax of $1.10 and there is less cigarettes sold, there will be less money going in to the trust fund. It is self-fulfilling if you do it right. This bill does it wrong. This bill says we are going to have this formula for this money to go in, and it is indexed and there is additional formulas if we determine a certain number of people are using the wrong product. And so we will put that in. And then, oh, yes, we will reduce it by volume if we determine that. Why not just have a tax per pack, and if there is less volume, there will be less money going into the pot. And no one will have to argue about volume adjustment that will be determined by the Secretary to send to these various companies, and, oh, he is going to forget to send that assessment to some companies. That doesn't make sense. If somebody makes a different size of Skoal or a different size of snuff, he has a little different tax. You should put the same tax on every pack of cigarettes, the same tax on every brand of moist tobacco or every brand of smokeless tobacco and just do it. And then you have an automatic volume adjustment.

Mr. NICKLES. Will the Senator yield?

Mr. NICKLES. There is a Scientific Advisory Committee, there is a National Tobacco Free Education Advisory Board. That concludes this list. And we haven't found them all yet. Since we also added the Lugar amendment, there are several provisions, some of which are similar but not near as extensive or as expensive as that provided in the Commerce Committee bill. It adds a tobacco community's revitalization trust fund, it adds a tobacco quota buyout, block grants, tobacco farmer assessment, and so on. I want to be fair on both sides of the tobacco argument. You add all that together, you have 30-some new programs funded in this bill. You have hundreds of billions of dollars funded in this bill. You have trial attorneys who, in all likelihood, will make over $100 billion out of this bill--$100 billion out of this bill. I ask unanimous consent to have printed in the Record new taxes, assessments, penalties, and new spending authorizations.

Mr. NICKLES. I really don't want to. I have a lot to go through and I want to finish this. I am this far and I have a lot more to go. So I will be happy to talk to you in just a minute. But I want to run through several things, and I don't want to get too bogged down on that one particular thing. Mr. President, let me just touch on a few other things. And I mention that, Mr. President, and I will guarantee you that not one Member, maybe not any Member, certainly not more than two members of the Commerce Committee or the Finance Committee knew anything about that change in the volume adjustment, and it is a big change. It is different than the committee reported bill. And, again, I am troubled by these games. I am troubled by people saying, oh, here is what the bill says and then to play games maybe late at night, Sunday night, Monday night, and have this bill written by the administration. This is not a Commerce Committee bill. This is an administration bill. I think it cries out for change, and the change should be this, I tell my colleagues. The change should be to call a tax a tax. Senator Lautenberg introduced a bill that said let's have a $1.50 tax. That is what the Finance Committee passed. Whatever the tax is, whether it is a $1.10 or $1.50, whatever, we should pass the tax increase per pack plain, simple, clean, and not play this game of, industry, you pay in all these hundreds of billions of dollars, and maybe we will give you some reductions if consumption comes down, but we are going to have penalties if X, Y, Z brand doesn't go down as much as we think it should go down among certain people. That is absurd, and that is what we have, all based on polling that they deem to be accurate. That makes no sense, no sense whatsoever. Let me go on through a few other points. I am going to try to speed the pace up. There are tobacco distributor licensing fees, brand new; there are nonpayment penalties, there are document good-faith payment penalties; there are antismuggling penalties; and then we get into new spending. So all this is on the revenue side. This is on the tax side. This humongous tax bill, I don't care what period you are looking at, this is a bigger tax bill--gross, net, any figure you want to use--a bigger tax increase than the tax cut we passed last year. Maybe that will help put it in perspective. Last year, in a bipartisan manner, we passed $500 tax credit per child. This year, for 1997 it is $400. We passed that. We reduced capital gains from 28 percent to 20 percent. That is one of the reasons you have seen Federal revenues grow by over 10 percent this year. It is because we cut capital gains. People like that. People have more financial transactions, and you are not taxing those transactions so much. It raised a lot of money for the Government. We reduced estate taxes by increasing the exemption. We provided IRAs. We did a lot of good things in the tax bill, a lot of good things. Guess what, this tax increase overshadows it. This tax increase overshadows it, and it is paid for, the strong majority of this is paid for, by individuals making less than $30,000, $40,000 a year. This is a tax increase on low-income people. It is a humongous tax increase. It is bigger than all the tax cuts we gave last year, than all the tax cuts. So that should concern people. My colleague, Senator Gorton of Washington, said we should have some tax relief. We are going to have a humongous tax increase; we should have some relief. We are getting to the spending side now. This is one of the problems that bothered me. I told my colleagues from the outset, I will work to pass a good bill to reduce teenage consumption of drugs and tobacco. I will. I will not support passing a bill that spends hundreds of billions of dollars so government can grow. We grow government in this bill like there is no tomorrow. This bill has government growing from the State level, government growing from the Federal level, government growing at almost any excuse. And the administration wrote every bit of it. Did they consult the Appropriations Committee? Did they consult the Budget Committee? No way. We made a little improvement. In the bill that passed the Commerce Committee, this was all off budget and it wasn't subject to an appropriation. All of that was an entitlement. We changed it. Now, only half of it is entitlement. The States are entitled to 40 percent. That is an entitlement. We can't touch that. And then the farmers are entitled--under the bill from the administration and Commerce Committee, farmers are entitled to $28 billion. I know Senator Lugar is going to have an amendment to reduce that, but in both cases those are entitlements. In both cases we are spending billions of dollars. I have a problem with that. I don't know how I can go to my farmers and say those tobacco farmers are going to be entitled to get maybe $18,000 an acre on this buy-out, and of course they can continue producing tobacco after we buy them out. We will buy their quota, but, yes, they can continue producing tobacco forever. I have trouble with that. I have trouble with, Who is going to get most of this money? Let's see; let's figure out who is going to get the money. I mentioned my mother had emphysema and lung cancer. Does she get any money? No. Do victims get any money? No. Government gets money. Who gets money? Do victims of cancer and smoking-related disease and problems get money of out of this? No. Who gets the money? States get the money. The Government gets the money. Where are they going to use the money? The bill says the States get 40 percent of the money, and they are going to get at least $196 billion so they don't sue the tobacco companies. Four have done it and settled. More power to them. Congratulations. Who is going to benefit from that? I guess the States do. They get some money. In the State of Florida, out of an $11.3 billion, the trial attorneys get $2.8 billion. That is 24.7 percent. In Texas, they had a $15.3 billion deal; the trial attorneys get $2.2 billion. We had an amendment the other day to limit it. Maybe it was too low. I am going to tell my colleagues, you are going to have another chance. But we are going to give a few individuals, maybe 50 individuals or something, we are going to make them multimillionaires, maybe billionaires? We have had some of these people working the halls of Congress. These guys, some of them have chances to become billionaires, with a ``b.'' And I am all for people making money, I think that is great, but we should not do it raising taxes on consumers making under $25,000. We are getting ready to do it, and I will tell my colleagues, if we pass this and if somehow you are successful--and I don't think you will be--but if some forsaken way you are successful getting this through conference the way you have it set up right now, you will be more than embarrassed. You will be reading about individuals making hundreds of millions of dollars, trial attorneys making hundreds of millions of dollars off this deal. And you had your hands on it? I would be embarrassed, and I think that you would. I think we are going to fix it. I noticed the Senator from North Carolina was here, and he tried to fix it with one amendment. It didn't pass, but my guess is we have some other ideas. I think we will fix it before it leaves the Senate. If we don't fix it before it leaves the Senate, we will fix it in conference. If we don't fix it in conference, I hope we don't have a bill. I hope we don't have a bill anything like this. And, again, I reiterate my position, I think we can come up with a bill that will be good to curb teenage smoking and consumption of drugs and tobacco. But I do not think we have to come up with a scheme that spends either $500 billion or $755 billion or $885 billion. I don't think we have to do it. I know we don't have to do it. Some people are saying, ``I am reading a poll and''--I don't care what the poll says. Let's do what is right. Let us try to curb teen smoking. You don't have to do all of this. The FDA came up with their regulations 2 years ago, and they said their regs alone were going to reduce consumption by 50 percent. There is not a lot of difference between 50 percent and 60 percent, except I see hundreds of billions of dollars being spent in the process. So, let me talk about that. I talked a little bit about the money going in. I am telling you, there is a lot more money going in than people have mentioned. If they say there is only a dollar and a dime, let's pass an amendment and say here's a dollar and a dime, and I guarantee these figures will shrink. They will shrink.

Mr. NICKLES. Let me go to that, and I appreciate the Senator's comments because I knew the bill's proponents would say my numbers don't assume a volume adjustment. The administration, when they did their projection to come up with a $516 billion price tag for this bill, they did no volume adjustment. When the AGs came up with their price tag for the settlement, they didn't do a volume adjustment. And finally, we discovered that the White House changed the volume adjustment threshold in this legislation over the weekend. That bothers me a lot. That was changed Sunday or Monday night. And that bothers me a lot. Let me conclude. I know what my colleague is going to say. Let me take you through this a little bit further. The volume adjustments, the formula that passed out of the Commerce Committee says the industry payments will be reduced by the volume. If there is a reduction in sales, we will reduce the tax. Again, in calculating the costs of their own bills, both the $516 billion current dollar estimate and the $755 billion nominal dollar estimate, they didn't calculate the volume adjustment. Now, what happened Sunday and Monday night was a humongous tax increase that nobody knows about because the volume adjustment was triggered not when sales dropped below 100 percent of 1997; it is triggered when sales drop below 80 percent of 1997. So you get no volume reduction unless you reduce total consumption to below 80 percent where we are today. So I am not sure there will be a volume adjustment ever. Now, I do not know if my colleague caught that. In the original Commerce bill, it says we will take these figures on my chart and we will reduce them, if there is a reduction in volume of sales. We will have a CPI increase, and we will have a volume decrease, and so maybe the figure will stay close to $23 billion. If volume went down 3 percent and CPI went up 3 percent, maybe you could take this figure, $23 billion, for all future years. Well, what they did in the stealth of the night of Sunday or Monday, they said, oh, we are going to change that. We are not going to give a volume adjustment unless they reduce total consumption to below 80 percent of where it was in 1997. Wow. Now, this is getting too complicated. Most of our colleagues aren't going to follow it, and I don't want to get too bogged down in the minutia, but that is a big tax increase. That means you are not going to have reductions. You may never have a reduction. My point being, that the way you do volume adjustment, the real way is to have a direct excise tax on the product--very clean, very simple. You don't have to argue about whether or not you are talking about constant dollars, inflated dollars, whether you are talking about volume adjusted. If you have an excise tax per pack, if you sell less packs, so what. You have accomplished your objective. You have done it. This is the worst method to tax we have ever imposed in the Federal Government that I can find. This is so convoluted, so distorted, so deceptive, so contrived say we are raising taxes $1.10 and not do it. If our colleagues want to be honest, they would say let's scrap all this and let's make the tax $1.10, and then you have an automatic volume adjustment. You have an automatic volume adjustment. Because if you purchase less, then that will happen. Let me just mention, too, the volume adjustment section, just for my colleagues'----

Mr. NICKLES. I have a lot to say.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from New Hampshire (Mr. Smith) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from New Hampshire (Mr. Smith) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I appreciate the Senator's comments. I will yield the floor in just a moment. I just make the comment to my good friend and colleague, I stand willing to work with him. I have no intention of unduly delaying. I know my colleague from Massachusetts has an amendment to increase--I don't know if it is taxes or fees of $1.50. I know there are other amendments dealing with the taxes, or the fees, and we need to address those. We can do so. I just do not think we can do it in that short of a timeframe that was proposed. Several Senators addressed the Chair.

Mr. NICKLES. Yes.

Mr. NICKLES. I appreciate my colleague's remarks, the chairman of the Judiciary Committee. I know he has had hearings on at least tobacco legislation. I don't know that anybody has had hearings on this bill. Right now we are being asked to vote on some of the most significant amendments of this bill and we really have had very little time to even debate the general provisions of the bill, to maybe ask the sponsor of the bill and the proponents of the bill to explain some sections. Just to give you an example, there is a look-back provision. The Senator from Utah said maybe it is unconstitutional. There was a look- back provision that was added that wasn't passed out of the Commerce Committee and that wasn't passed out of the Finance Committee. It was just added. It was introduced last night. The look-back provision says we are going to do sampling and find out. If we don't meet the target for teenage consumption, as specified, there will be a penalty of $1,000 per teenager who smokes specific brands. It looks very bureaucratic and, frankly, unworkable to this Senator.

Mr. NICKLES. Absolutely.

Mr. NICKLES. Yes, I am.

Mr. NICKLES. Mr. President, I will be very brief. I am not trying to delay my colleague from Massachusetts. I am telling my colleague from Arizona--and actually I told him in private what my colleague from Texas just said--I am not going to agree to a unanimous consent. This proposal was to vote on a $1.50 tax increase, and vote on or in relation to the amendment at 10 a.m. tomorrow morning. I am not going to. That is one of the largest tax increases in history. It says no second-degree amendments. Some of us aren't quite ready to go quite that fast. This idea of saying submit all your amendments--I am working on a bunch of amendments, but I will tell you we just got the bill last night. We were being pretty collegial saying we are not going to object to going to the bill. We could have tied the Senate up for 3 days and had more time to study the bill. Some of us need time to study the bill. Some of us are reading the bill and there are interesting things to find. On the first day the bill is on the floor to say we will have an amendment introduced at 6 p.m. and we will vote tomorrow morning at 10 a.m. on the largest tax increase, without giving us a chance to offset it, without giving us a chance to amend it, I think is a serious mistake. Now, we are not going to be railroaded. It takes unanimous consent to pass this kind of amendment or get this kind of agreement. I told my good friend from Arizona he is not going to get it. So we can have the debate. We need to have the debate. We need to talk about whether this is a tax increase or price increase. I think we need to study this thing a little bit further and not try to railroad it through the Senate. I am happy to yield to my friend from Utah.