That’s according to MSNBC’s Red Tape Chronicles.
Yesterday you read information we received from PhillipMorris’ PR firm and from the Governor’s office. So now read this.
The money was supposed to help the states pay for health care and anti-smoking campaigns. Instead, much of it — even payments that aren’t due for 20 years — has already been spent on politically popular tax breaks through complicated borrowing schemes initiated by Wall Street investment banks.
Because these states have essentially borrowed against future payments from the tobacco industry, they are now dependent on the continued vitality of cigarette sales. If Big Tobacco stumbles, states will be on the hook for these massive, billion-dollar loans. In other words, David and Goliath are now allies.
Where did those loans come from? Perhaps from you. When Wall Street talked 25 states into borrowing against future tobacco payments — a process known as “securitization” — it sold bonds to individual investors and mutual funds that buy municipal bonds. Now, they are betting on Big Tobacco, too.
-SNIP-
From the start, the tobacco settlement money was intended to help states pay for health care costs related to smoking illnesses and to fund smoking-cessation programs, though the agreement not bind the states to use it for those purposes.
But to date, only about 3 percent of the tobacco settlement money has gone to cessation efforts, such as “quit smoking” marketing campaigns. Meanwhile, 10 times that amount has been used by state legislatures to plug budget gaps, or by governors to offer tax relief.
Yeah, much more interesting than fabricated PR and government spin.
5 responses so far ↓
1 E // Nov 21, 2008 at 12:27 pm
At least it would seem that Kentucky wasn’t one who securitized it’s settlement.
However, given the state’s current deficit issues…never say never.
2 Republican // Nov 21, 2008 at 1:34 pm
I was always under the impression that the tobacco settlement was primarily intended to wean tobacco farmers off growing the stuff, not tobacco users from smoking the stuff. Hence all of Kentucky’s agriculture diversification projects. I was led to believe that the smoking cessation efforts were secondary to getting Kentucky tobacco growers to make their money in another manner.
3 E // Nov 21, 2008 at 2:22 pm
If that were the case then the settlement would have been limited to a half dozen states, foremost would have been North Carolina and Kentucky. The allocation of some of the funds to help KY farmers was a politically expedient move.
The whole premise of the suits (as I remember) was that tobacco use (cigarettes) had resulted in greatly increased health care costs for the states, so the states went after the tobacco/cigarette makers to recoup some of that money.
It was also implied that a lot of the money was to go to prevent future use, and aid in cessation programs…ostensibly decreasing and diminishing the costs to the states for taking care of persons with chronic diseases attributed to smoking.
Clearly, there is a marked difference in what was preached and what was practiced.
4 Republican // Nov 21, 2008 at 3:00 pm
E, I think you are right for the non-tobacco producing states. But my memory is that a cut in tobacco use would result in a hardship to the growers, and it was specifically intended for the settlement to primarily benefit growers in tobacc0-producing states, with cessation programs secondary to that.
Of course the whole settlement was a bunch of baloney. Anyone under 50 years old today who doesn’t know that smoking is terribly bad for you just isn’t paying attention.
5 E // Nov 21, 2008 at 3:49 pm
I’m a cynic…
I believe the settlement was all about money, and money alone, the rampant securitization of the settlements is evidence enough of that.
The allocation of the funds to farming constituents in tobacco dependent states was all about buying votes and getting re-elected.
That it was all marketed to the public as some sort of health issue, and that government was going to protect our children from the evils of smoking is disgusting.
Leave a Comment