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Commentary: E-Cig, Vaping Bans Keep People Smoking, Preserving Vital Government Revenue Stream

November 8, 2019

Some states have turned future tobacco settlement payments into cash by issuing securities.

Being privy to the legislative process, I was appalled by the dismissive attitude U.S. Rep. Rashida Tlaib (D-MI) showed recently to a witness testifying on so-called “vaping-related” hospitalizations.

Vicki McKenna, a beloved radio talk show host from Wisconsin, testified before the Subcommittee on Economic and Consumer Policy of the Oversight and Reform Committee of the U.S. House of Representatives in mid-September. McKenna testified electronic cigarettes helped her “quit smoking after 23 years.”

Tlaib, who hails from Detroit, displayed conceit and disdain during the testimony. Her attack wasn’t directed at any “tobacco lobbyist” but toward a constituent from another midwestern state. Making matters worse, Tlaib’s interrogation was based on blatant misinformation.

Tlaib first inquired into McKenna’s political beliefs, noting she has called herself a “converted conservative” and a “reformed Marxist,” before asking whether McKenna was a “conspiracy theorist.” McKenna accurately said her political beliefs should not discount the idea of e-cigarette harm reduction.

E-Cigarettes vs. Smoking

Tlaib’s display of arrogance quickly devolved into apparent ignorance as the congresswoman could not understand that vaping is indeed not smoking.

There’s a reason traditional cigarettes are called “combustible cigarettes.” In case Tlaib needs a basic, fifth-grade-level science refresher: for something to be smoking, it must be combusted. In other words, “Where there’s smoke, there’s fire.”

E-cigarettes and vaping devices do not light e-liquids on fire. They heat them, which creates a vapor, not smoke. More importantly, they have helped an estimated three million Americans quit smoking combustible cigarettes.

Tobacco Revenue Dependency

I would like to inform Tlaib personally that the only “conspiracy theory” surrounding the use of tobacco products in America is that every form of government, from local to state to federal entities, relies on the lungs of smokers for revenue.

Tlaib should already know all about this.

Tlaib, after all, got her political career started in the early 2000s in Lansing, Michigan, when she was hired by then state Rep. Steve Tobocman. She was elected to the same chamber in 2008. During her time at the state capital, Tlaib would have learned exactly how states have used smokers to meet their debt obligations.

Michigan first sued tobacco manufacturers in 1996, seeking “$14 billion in damages for medical costs incurred under the Medicaid program due to tobacco-related diseases.” In 1998, Michigan and other states reached an agreement with the tobacco companies, concluding with the 1998 Master Settlement Agreement (MSA).

Under the MSA, manufacturers agreed to pay the federal and state governments $200 billion over 25 years, after which they will make additional payments “annually and in perpetuity” to defray tobacco-related Medicaid costs. This is in addition to billions of dollars in taxes on tobacco products federal, state, and local governments receive each year.

Settlement-Funded Bonds

From 1998 to 2019, Michigan received more than $5.7 billion in MSA payments. Instead of spending that money on health care programs, the Michigan Legislature agreed in 2005 to securitize the state’s tobacco moneys in the form of a capital appreciation bond so the Wolverine State could receive upfront cash by selling future MSA payments to bondholders.

In 2005, Tobocman voted in favor of securitizing $400 million in tobacco settlement money “to fund the starting balance of the 21st Century Jobs Fund.” In 2007, Tobocman voted in favor of securitizing another $415 million “to help balance the FY 2006-07 state budget.” In 2008, acting as Majority Floor Leader, Tobocman discharged from committee a bill that would have used already securitized tobacco money for “tourism and business promotion.”

The problem with state securitization of tobacco bonds is that MSA payments are based on cigarette sales. So, essentially, Tlaib’s home state is relying on the lungs of smokers to meet future debt obligations. Even more alarming is that Michigan uses very little MSA money and tobacco taxes to help smokers quit. In 2019, the Great Lakes State received $1.2 billion in MSA payments and tobacco taxes but dedicated only $1.6 million, or 0.001 percent, to tobacco-use prevention programs.

Michigan is not alone in bonding-out MSA payments: California, New Jersey, and New York have sold billions of dollars of future tobacco money to investors.

Banning Non-Tobacco Alternatives

Like Michigan Gov. Gretchen Whitmer, New York Gov. Andrew Cuomo has also used executive authority to ban flavored e-cigarettes.

California started the trend, with localities issuing similar bans. San Francisco, a city that receives its own individual MSA payments from the state government, banned the sale of all e-cigarette products earlier this year. One must wonder whether this assault on e-cigarettes is about health or about keeping tobacco funds flowing into state coffers.

An unprovoked verbal assault by a federal legislator on a 51-year-old woman who simply wanted to share her journey of quitting smoking is appalling. Even more appalling, Tlaib worked to redirect future tobacco money away from tobacco harm reduction.

Even worse, Tlaib is now working in Congress to remove e-cigarettes, a proven tobacco harm reduction tool, from smokers in her home state—the people Michigan relies on to meet its debt obligations.

Lindsey Stroud (lstroud@heartland.org) is a state government relations manager at The Heartland Institute. An earlier version of this article appeared at Townhall.com. Reprinted and adapted with permission.

Author
Lindsey Stroud is a state government relations manager at The Heartland Institute.
lstroud@heartland.org