The Tobacco Deal: Suddenly, The Corpse Is Stirring

A pall hung over the National Governors' Assn. winter meeting in late February--and with good reason. The guvs thought they had come to pronounce last rites over the $365 billion national tobacco settlement and say goodbye to the fat cuts their states would get from the deal. Indeed, with Hill Republicans and Dems bitterly divided, Iowa Governor Terry E. Branstad declared the 1997 accord between state attorneys general and Big Tobacco "dead."

Well, somebody better call the undertaker, because the corpse has sprung back to life. Fearing a backlash if they let the measure die, President Clinton and key members of Congress are laboring to collar the votes for enactment this year. Their goal: Make sure states and the feds get their hands on the megabucks a tobacco deal would generate.

Signs of compromise are cropping up all over Capitol Hill. Such lawmakers as Senate Commerce Committee Chairman John McCain (R-Ariz.), House Commerce Committee Chairman and longtime industry defender Tom Bliley (R-Va.), and anti-tobacco Representative Henry Waxman (D-Calif.) all say they're open to a bipartisan solution. "We have a weird phenomenon taking place," notes a veteran Senate staffer. "People are actually trying to be statesmen."

"DO-NOTHING." Clinton, needled by GOP leaders for failing to spend enough political capital on a deal, has launched an offensive of his own: He's calling for a massive industry-funded campaign to curb teen smoking as part of any agreement.

Republicans, for their part, want to avoid the "do-nothing" label come the fall elections. At the same time, the GOP covets tobacco cash to pay for tax cuts and new health programs. And by persuading the industry to sign off on a tough, bipartisan bill, Republicans hope to deflect Democratic charges that they're captives of a special interest that has funneled millions into GOP campaign coffers.

Other hopeful signs: Big Tobacco, launched an ad campaign on Mar. 11, calling for congressional action. The next day, a bipartisan group led by Senator John Chafee (R-R.I.) planned to unveil a compromise that would finance the deal with a $1.50-per-pack hike for cigarettes over two years.

The improved odds for an accord can be seen in the shifting public pronouncements. A month ago, GOP leaders were blasting Clinton for proposing new social initiatives financed with illusory tobacco-deal dough. Now, House Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Trent Lott (R-Miss.) talk of using the money for tax relief or entitlement reform. "There is [now] an assumption that Congress is going to pass comprehensive tobacco legislation," says White House domestic policy aide Elena Kagan.

Getting a deal remains tricky, given all the feuding Hill barons with overlapping jurisdictions. After a let's-reason-together session called by McCain on Mar. 11, the senator said there was "some agreement [on] broad parameters."

But even if the turf wars can be halted, Clinton and Congress must solve two potential dealbreakers: how much protection to give Big Tobacco from legal action, and whether to pay billions in fees to trial lawyers who represent the states. Some public-health groups have vowed to kill a deal they find too industry-friendly; trial lawyers have sworn the same fate for a pact they judge to be attorney-hostile.

Nobody minimizes the obstacles ahead. Cautions McCain: The coalition backing the agreement is "very, very fragile." Still, the tobacco deal doesn't look ready for burial just yet.

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