I Want You to Keep Smoking (Part 2).


In our previous episode our fearless public defenders had just successfully sued Big Tobacco for 206 billion over 25 years.The lawsuit ordered that Big T fork over the dough to help pay the tab on the increasing Medicaid buffet.

The state governments said that the money would be used to pay for Medicaid and smoking education. The tobacco industry said it would stop marketing to minors.And thus began the greatest case of false advertising since Homer Simpson tried to sue the movie “The Never Ending Story”. Big T said that they never meant they would stop marketing to minors, but actually meant miners (or something like that). The States said they needed the money in other places and then started pouring the money into their own general coughers (ahem, sorry couldn’t help myself), squeezing every last drop from the cigarette tax to fund other areas.

In 2010 alone 25.1 billion was collected from tobacco taxes.  Of that a measly 2.3 percent has gone towards helping Dopey, Coughey and Wheezy kick the habit.  And somehow in this weird circle-jerk of lunacy, the state governments had somehow becoming the enablers, themselves addicted to the tobacco revenue that was doled out as punishment. The state governments were no longer in the business of protecting their citizens, but were becoming more interested with keeping Big T in business to support their own source of funding.  Witness the next phase in tobacco enabling: securitization.

The States, faced with shrinking revenues during the Great Recession are looking to borrow against future tobacco settlement earnings. To do this, they have begun peddling bonds against future tobacco earnings to fund current budget shortfalls.  Thus we are stuck with the incredible situation where state governments are in the business of keeping tobacco in business, and opposing any large settlement against the tobacco industry that might threaten earnings.  

How does one escape this pickle? Me thinks higher taxes would be the way. For while taxing the hell out of one segment of the population may cause them to secede from the union (United State of Smokers?), it would also vastly reduce the number of smokers.  The yearly tobacco tax would dry up, along with the persevere incentives it has created. Big T will do fine.  Powered by lungs of overseas youth, it will continue to be our perpetual payout slot machine until 2025. But hey, we can hardly solve the rest of the world’s problems, now can we?