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Office of the Press Secretary

For Immediate Release June 27, 1997
                              BRIEFING BY

1:15 P.M. EDT

MR. REED: Good afternoon, I'm Bruce Reed, Assistant to the President for Domestic Policy, and I'm going to talk just for a minute about this process. I think you have a piece of paper in front of you that basically describes everything I'm about to say.

Q We don't.

MR. REED: You don't? I want to make sure you get that piece of paper, so you don't actually have to listen to what we say. It's coming, I promise.

We'll go over some of the high points.

Okay, basically the President has asked Secretary Shalala and me to lead an interagency review of the proposed tobacco settlement. And this is going to be a thorough public health review that will involve a number of agencies and departments here within the White House. I think there are about 10 agencies involved and several White House offices. We have a great deal of expertise --

Q Pardon me, sir, but is this the beginning of a new health act -- national health act, or what?

MR. REED: No, this is --

Q Is this the beginning of a new national health program?

MR. REED: No, we're simply going to spend the next month reviewing the proposed tobacco settlement that was reached between the Attorneys General and the tobacco industry last week.

There will be about -- a little over 50 senior people from around the government involved and the review is going to focus on four basic areas of the proposal. First, there will be a panel looking at regulatory issues. This is an area that the President just talked about at the bill-signing event. It will look principally at the FDA's authority to regulate nicotine as well as access, advertising, and labeling. It will also look at another element of the settlement, which is a proposal to limit environmental tobacco smoke in the workplace. And the regulatory team is convened by Elena Kagan, who is my deputy here at the White House. It involves people from HHS, Justice Department, FDA, and consists in large part of the lawyers and public health experts who put together the FDA rule in the first place which the President proposed in August of last year.

The second team will focus on the program and budget issues, the proposed uses of the settlement funds, including programs to reduce smoking and to provide children's health insurance. This team is made up of our top health policy experts. The meetings will be convened by Chris Jennings from here at the White House, who many of you know. It also includes Nancy-Ann Min from OMB, Bruce Vladeck from HHS, and several other top people from HHS.

A third group will be the legal team focusing on legal issues. This one also will be convened by Elena Kagan, and it will focus on the provisions on liability and damages and document disclosure, as well as other broader constitutional and legal questions about the proposal. And many members of this team are the same lawyers who helped build the legal case that secured the historic court victory in Greensboro on the FDA authority.

And then a fourth team will look at industry performance and accountability, primarily the economic impact of the proposal on industry performance and federal revenues and consumers and farmers and so on. This is the group that will look at the proposed incentives and penalties for reducing smoking that are part of this settlement. It will look at impacts on the price of tobacco, on consumption. And the Council of Economic Advisers will play a leading role in this group.

All of these groups have met in the past week. We're going to continue meeting over the next several weeks. And at the same time, we're going to have a comprehensive public outreach effort, particularly to public health experts and to the public health community. We will be working closely with a number of our allies in the effort to reduce smoking, including Doctors Koop and Kessler, and the major public health advocacy groups. And at the same time, we'll be spending a lot of time reaching out to members of Congress who obviously have a great interest in this proposal.

Q What's the goal of all of this?

MR. REED: Well, let me stop there and give Donna a chance to make a brief statement.

SECRETARY SHALALA: Let me just say a couple of things, and then I'll answer Helen's question. We wouldn't be here discussing this if the President hadn't already exerted bold leadership in this area of trying to reduce the number of children who start smoking in the first place and putting a regulatory framework in place over the issue of tobacco.

The review process we've just launched is rigorous and it's thorough. It requires interdisciplinary depth and very sophisticated analysis. We have not been handed a piece of legislation. We've been handed a proposal which has ideas, some of which are in great detail and others which are sort of the outlines.

What we need to do is to ask about that proposal, how it sits within existing law. Does it extend the regulatory framework and the power of the federal government? What role would the federal government play in relationship to cigarettes, for example? We need to ask, how is it balanced? How would it be implemented? Is it enforceable? How does it sit, again, within the existing framework of a set of laws that we now -- and regulations that we now operate under? What is the impact on the economy? There has been a discussion about how much money it is; but who pays for this proposal? Is it the stockholders? Is it individuals because taxes will go up on cigarettes? Is it the broader taxpayers because some might be deductible under current laws?

And finally, does it meet our public health objectives? We have been very clear about our public health objectives. Cigarettes kill people. In particular, we know that if a youngster doesn't start smoking before they're 18, they're less likely to begin smoking. Eighty percent of the people who smoke in this country started as teenagers. Our goal has been to reduce the number of teenagers. So the public health implications are very broad and central to what the President asked us to do.

Our goal is to find out whether this proposal will improve the public health and at what cost. And the cost implications are not just financial. They're implications for the way in which the government does its business and the way it organizes its business in relationship to an industry in this country.

Q Do you have any preliminary view?

SECRETARY SHALALA: No. And it's interesting. We don't because it's a complex proposal, and I think that even I, who normally has a view, an initial view from reading something, I do not. In some ways, the first people that have read this have read it for the five or six things that they have deep concerns about. We're reading it differently. We're going to take a comb and comb right through it.

For instance, the Treasury people will want to look at every pot of money and ask a series of questions. Our regulatory people want to look at the regulatory framework. We want to look at whether it's enforceable. We don't -- this proposal doesn't have an enforcement mechanism in it. We have to think about, how would you enforce this on a private company.

That's why our approach, we believe, serves the public interest and makes certain that the President has the answer to every question anyone might possibly ask. It took us a year of very detailed work, once we decided to go ahead, to develop the FDA regulations that we currently have, and took a multi-disciplinary team. In my own department, every part of the development will be involved: from the National Institutes of Health, to the CDC, to the General Counsel's Office, to the substance abuse experts, to the FDA -- the same team that sat together for over a year -- more than 100 people we're involved -- to develop those regulations. We sat last night for five hours with a huge interdisciplinary team, just going through line by line to figure out how we're going to structure our work with these various committees. It's hard work.

Q Is 30 days enough?

SECRETARY SHALALA: You know, we don't know. Every President I know wants everything done in 30 days -- (laughter) --and we take our President seriously, with great passion. We will tell him where we are in 30 days. We'll try to meet any deadline that he sets for us, but this is hard work and not easy to do from a proposal, as opposed to a piece of legislation, that interrelates with other laws.

Q Do you feel that a lot of the areas that you describe as being only a sketch outline as opposed to detail were deliberately left in sketch outline --


Q -- because they hadn't reached agreement on those areas?

SECRETARY SHALALA: No, not necessarily. I haven't come to any conclusion about motivation. It just could have been who was at the table at the time and what information they had, so I don't have any view on it.

Q One of the concerns that the President has expressed repeatedly now is this question of FDA's ability to regulate nicotine and cigarettes. Can you explain for us why that concern is there, what you have seen in the agreement thus far that causes you to have some concerns, and what the goal is, why it's so important that the FDA have that authority?

SECRETARY SHALALA: Well, I think that we go back to our original proposal, and that is, we exerted -- we had a major public health problem in this country that we basically have been attacking with a variety of different campaigns and without much leverage on the industry, that we believed was increasingly creating a problem with young people, without ascribing a direct connection between that. We had larger and larger numbers of young people starting to smoke. Three thousand a day. A very scary proposition for the public health.

What authority did the federal government have to do something about that? It turned out it was the regulatory authority of the FDA as a way in which we began to move on a major public health problem. It wasn't the CDC; it happened to be the FDA. And therefore that has been the most powerful instrument that we have had to attack a public health issue.

In this proposal, to be fair to them, they seem to change the way in which the FDA does its business. Some people have said it's a negative, but when we looked at it there is a positive part to. It looks like they expand some authority. We need to look at the balance of that and whether it changes the power equation and the authority equation. And I think that's about as far as I would go without looking at the analysis my folks are doing.

Q And then how does the process work from there? Do you go back to the negotiators with your concerns, or do you go to the Hill? Or what --

SECRETARY SHALALA: Oh, I think that this has been sent to the President --

MR. REED: And to the world.

SECRETARY SHALALA: -- and to the world and to the Congress. And everyone is going to look at it. The important thing is that these were in fact private negotiations that now are in the public. Some of them are requests to change federal law and to change the way we do business. That requires that the Congress pass laws, the President express an opinion, decide whether he's prepared to change some of those laws.

Q Are any of these groups going to take a look at the fees that the plaintiff lawyers would get --

SECRETARY SHALALA: Once you put this into the public arena, everybody is going to look at everything -- on what's appropriate and who's paying them.

Q Because it wasn't mentioned as part of these working groups.

MR. REED: Well, there is nothing in the settlement about fees --

SECRETARY SHALALA: I think it was done as a separate arrangement. But that doesn't mean that the groups that are coming in to advise us aren't going to make some comment on that. It's now in the public arena, and there will be lots of commentary.

Q Does your department take on this mission with relish, or with a heavy heart?

Q This proposal is barely making it through Congress. Yesterday's hearing was very contentious between --

SECRETARY SHALALA: Why don't you go ahead, and then I'll take the next one. Go ahead.

Q Are you enthusiastic about this or is this a heavy burden that you have to slog through?

SECRETARY SHALALA: Let me tell you what I told my colleagues the night before last as we sat down for the five-hour kind of line-by-line review. I said that when the President took the step on FDA regulations, I told them that this was a chance of a lifetime, that once in your career you get to take a step in an area of public health that is so dramatic and so significant in terms of its implications for the public health. And I said to them, I never thought we'd get another kick at the can. And if there was any possibility that we could take another giant step for the public health, we should not shirk from at least taking a look to see if there was a possibility. We go into this looking for another opportunity to take a strong step for public health, but with the same kind of hard-nosed rigor that we brought the first time around, when everybody said to us: Not a chance, the President is going into an election; there is not a chance that anyone is going to take this kind of step.

Q How do you get past the fact that there are all kinds of parliamentary tactics being invoked yesterday during the initial hearings to stall it, to kill it? How are you going to get any sense of cooperation out of the Congress when they themselves can't even -- in this process when they among themselves can't even agree how to do it?

SECRETARY SHALALA: Well, I'd say, each to its own style in terms of a review. We're going to take a look at it analytically, tough-minded, without revealing our hand early on. The Congress is going to go through a public process, public reviews. We're going to obviously bring in people to give us their opinion. And at the end of the day, I would expect the Congress to do the same thing the President is going to do, and that is, give it the tough-minded review that the work that was done deserves.

Q Does the Supreme Court asbestos decision mean that you are looking more closely at having to do something in Congress, that you really need to get a proposal through Congress you can live with as opposed to going through litigation in the courts?

SECRETARY SHALALA: Oh, I think -- no. We will not do anything in our review that will undermine what we believe is the very strong case that we have on the FDA regulations. So anything that we say or do as part of this review will not undermine our determination to go forward. We believe that what we have done is legal, that the FDA has the authority, that we have not undermined the First Amendment. We intend to go forward with that case.

Q Secretary Shalala, from all the voices we've heard, this is definitely a very contentious and controversial issue. I don't think King Solomon could probably solve it. But which way can you guarantee that the position the executive -- the White House comes out won't be seen as a political decision, that you'll have enough backing that people will think your study is a valid one?

SECRETARY SHALALA: I think the President has a record that we're building on in children's health. He has made fundamental tough decisions -- one of the toughest decisions any President has ever made to go forward on the issue of tobacco and children by putting the FDA regulations. We have credibility on this issue because we've stepped forward, we did it, we did it in the middle of an election year, when everybody said, can you believe that anyone would make this kind of decision. And the President believes deeply that the fundamental question we ought to ask is, will the public health be improved if we do something related to what the proposal is.

Q Is there anyone who is cautioning within the administration or voices from outside advising you, saying we ought not tinker with this too much because it was a carefully constructed deal and the tobacco companies might just walk away and that's not what we want? Or is the view more, hey, we're going to take a long hard look at this, and they can do whatever they want after the fact?

SECRETARY SHALALA: Every one. Everyone is saying everything. All of the above. I'm saying, let's be cautious and let's be rigorous. They're saying, well, if you tinker with it too much -- but that's what people always say when they bring you a piece of legislation: We've got this very carefully constructed coalition. It's not new for us. People bring us proposals all the time -- usually not as complex as this one -- and we say, we're going to look at it through the clearest eyes that we possibly can because we have a responsibility to the public and we're going to do it in public.

Q Well, let me ask you, how seriously do you take their threat to, if you change it too much, we're going to take our stuff and go home?

SECRETARY SHALALA: I just -- I think that we shouldn't comment on that, because what we want to do is to do what the President has said. We want to make a very rigorous -- take a very rigorous look at this.

Q Well, are you tinkering or just judging it at this stage?

SECRETARY SHALALA: I think we're taking a very rigorous look at this proposal and you'll be the judge when the President decides what he wants to do.

Q Did the negotiators know you were going to do that?

SECRETARY SHALALA: Yes, the President announced it --

Q I mean, did they get any kind of word?

SECRETARY SHALALA: The President announced it before the negotiations were finished. The President announced that it would be put through a rigorous review by this administration.

Q But to come back to my question, do you see at the end of this process of 30 or whatever number of days it is that you will have just said, this works for us or this doesn't or this part -- or will you be saying, this doesn't work for us but this would if you did something to it?

SECRETARY SHALALA: I don't know the answer to that question because we haven't finished our review. That's for a later point.

Q Is there any polling taking place to determine the public attitude on this settlement?

SECRETARY SHALALA: I don't know of any polling. Do you know of any polling? I'm sure that -- my guess is, because the issue is out there, that there may be some public polling by the big polling agencies, but I'm not doing any polling. We know what the polls are and the public's attitude about children and tobacco.

Q One follow-up on that. What sort of role would there be for Mr. Moore and some of the tobacco -- and others like tobacco representatives in this review process?

SECRETARY SHALALA: Well, you know, we may have some questions for them, I would think, about what did you mean by this. There is some language used in this that -- for instance, in the first review, even some of my lawyers weren't quite sure what a "national protocol" meant. I mean, there was just some language -- I'm sure we'll be asking them questions. I'm sure they'll want to talk to us and tell us what they were trying to achieve. I'm sure they'll want to pitch us on how delicate it is. And the fact is that we're open, as we have always been on any proposal that comes to us.

Q How seriously are you taking Kessler and Koop's criticism of the FDA restrictions? Are they going to be advising your group?

SECRETARY SHALALA: The President has indicated that the Koop-Kessler committee will be listened to carefully. David Kessler has long been an associate. He and Chick Koop are the leading spokespeople on these issues and have been leaders in changing the role of the federal government. Their views will be taken very seriously.

Q They say it's unacceptable.

SECRETARY SHALALA: And we've already talked to -- they've said that parts of this agreement are unacceptable, including the FDA piece. But you heard the President, he wants to make sure there is an FDA regulatory framework that's firm and as clear as what we currently believe we have.

Q Do you think it's within your mandate when you're doing this review -- it must have already been discussed -- that you can do the review and make recommendations about regulation, et cetera? And when you're making this study, are you going to be looking at regulation vis-a-vis enforceability? I mean, you've had experience with this with the drug war.

SECRETARY SHALALA: I think that we're pragmatic about this. We need to know whether this works, what does it cost, what's the balance -- do we have to give anything up, what are we gaining. We're looking at it as we would any complex piece of legislation, in terms of its impact. How does it inter-relate? What are the new roles and responsibilities? What are the new regulatory frameworks? This proposal has a huge framework over retail business. It has implications for advertising, for the agriculture people, for everybody that sells a cigarette in the United States. It has a new framework for that.

That's why you can't just go through six things like this. You really have to look at it with great care.

Q How in this process do you address the overall question of whether it's tough enough on the tobacco industry? That's come up a lot in Congress.

SECRETARY SHALALA: Bruce and I will be working on this. I think that the first way I look at this is, does it substantially improve the public health. And then my second question is, at what cost and at what price.

But we're really single-minded in this administration. We want to substantially improve the public health. We want to reduce the number of kids that start smoking in the first place, substantially.

Q Will you be looking at --

SECRETARY SHALALA: And we're going to look at this as it adds to what we've already done. We've already set our goals. We've already put our regs in place. So that's the way --

Q But you don't have some level in mind which would be punishment enough for the tobacco industry --

SECRETARY SHALALA: No, because you have to --

Q -- some good can come of it.

SECRETARY SHALALA: No, no. And I don't know enough to answer those questions yet. You're asking for more detail before we've really gotten into it. In fact, because I don't know much more than that, I think we've about run --

MR. REED: Thanks.

THE PRESS: Thank you.

SECRETARY SHALALA: Thank you very much. Thank you.

END 1:36 P.M. EDT