- [CCAA PRESS RELEASE FOR IMMEDIATE
- December 7, 1998
- CONTACT: Scott Goold at 505.293.2504
- Published in the University of
New Mexico Daily Lobo,December 14, 1998
- Getting Down to the Butts of the Attorneys General Tobacco Deal
- On Friday, November 20th, 46 state's attorneys general across the country
agreed to a landmark settlement with the tobacco industry. This settlement
provided that the tobacco companies would pay an estimated $208 billion
over the course of the next 25 years. What does this really mean to New
The most-recent national figures (1993) for total medical expenditures
attributable to smoking amounted to an estimated $72.7 billion. For the
U.S. as a whole, this works out to about $300 per person per year.
In general, individuals do not pay this sum directly. The public costs
are supported through our tax dollars. People with employer-funded insurance
find their employers pay the higher costs for medical insurance. Yet there
is no free lunch. The bottom line is that whether though taxes, work-related
benefits or direct medical insurance costs, each American, every man, woman
and child in this country, pays approximately $300 per year to support
the medical costs associated with smoking.
For a family of four, they pay -- either directly or indirectly -- approximately
$1,200 per year.
New Mexico is scheduled to receive approximately $40 million per year
from the tobacco industry over the course of the 25-year settlement. If
the money were divided equally among the state's 1.5 million residents,
each individual would receive about $27. For a family of four, this would
be an additional $108 for the year.
While a family of four pays indirectly or directly an estimated $1,200
per year to cover the medical costs associated with smoking, the settlement
returns to them about a hundred dollars. This doesn't seem to be much of
a deal, does it?
At present, public officials in New Mexico have suggested that the state
should not spend the money immediately. They would like to see the revenue
placed into a growth fund. Assuming the fund returns a 6% interest rate,
the state would receive $2.4 million dollars in interest the first year.
This would work out to $1.60 for every man, woman and child in New Mexico.
For a family of four, this would be about $6.40 -- less than ten bucks.
This is how much a family can expect their taxes to be reduced or their
public services to be increased based on the first year's payment by the
The next time you become frustrated with the high rate of taxes in the
state or your low rate of pay at your job, consider that New Mexico's attorney
general agreed to the tobacco settlement. With this signing, he gave up
the right to recover the public costs associated with past tobacco-related
medical expenses, and he gave away our right to recover future public costs
associated with smoking -- at least for 25 years.
The tobacco industry insisted that the attorneys general sign the settlement
after only a week of review. Clearly, the tobacco industry did not want
the public to be informed as to the specifics of this settlement. When
you get down to the butts of the tobacco settlement, it doesn't seem to
be a very good deal for New Mexico.
For more about this issue, see the CCAA Web site at: http://www.unm.edu/~sgoold/ccaa.