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THE WHITE HOUSE WASHINGTON September 5, 1997 MEMORANDUM FOR THE PRESIDENT FROM: Bruce Reed SUBJECT: Tobacco Update When you return next week, Secretary Shalala and I will give you detailed recommendations on how to proceed on tobacco. We are scheduled to meet with you on Friday, and you are scheduled to announce your position on Tuesday the 16th. This memo is a brief summary of what we are likely to recommend and what strategic and policy decisions you will need to make. I. Overview Although the industry was hoping for quick passage, some Republican leaders in both houses said this week that the tobacco settlement was too complicated for Congress to enact before they adjourn in late October. Lott would still like to get it done this year, but with the legislation being referred to six committees in the Senate alone, we need to stake out positions that can hold up over time. Over the past two months, we have held extensive discussions with the public health community, attorneys general, members of Congress, and farmers. The public health community will welcome our recommendations on most issues: guaranteeing full authority for FDA to regulate nicotine; imposing tougher penalties on the industry if it fails to reduce teen smoking; demanding an additional $50 billion to offset the credit in the budget agreement; making it somewhat easier to disclose industry documents; looking out for tobacco farmers; and so on. The only concerns of tobacco opponents that we cannot easily meet are dramatically increasing the overall price tag (Kennedy would like to see it doubled, to $700 billion) and demanding to see all the documents before capping liability (Leahy, Waxman, and Skip Humphrey are pushing for "no immunity without disclosure"). The central strategic question is how far we want to push the industry for additional concessions, at the risk of losing this opportunity altogether. Bruce Lindsey and I have 1