So what happens if the Bush Justice Department does manage to convince a federal judge (see Sept. 21, etc.) that the U.S. tobacco industry has constituted a “racketeering enterprise” for these many years and ought to pay the government $280 billion? Forbes traces some of the likely fiscal consequences: bankruptcy for even very large tobacco manufacturers; a de facto federal ownership stake in the industry through its role as chief creditor; and higher prices for smokers, who presumably count as an innocent party.
Oddly, the Forbes account has nothing to say about the consequences of a federal victory for the group that currently milks the most money out of the tobacco business, namely the state governments and plaintiff’s lawyers who yearly pocket vast sums from the 1998 multistate settlement (along with, in the former case, vast revenues from taxes distinct from the settlement). A good chunk of this expected future flow of settlement money has already been “securitized”, thus securing a short-term cash windfall for the states and lawyers, by selling it to bond investors; presumably the owners of these bonds are also at risk. Now, as asserted property interests go, the interest of these various parties in the future stream of ill-gotten income from the settlement heist has scant claim to be regarded as sacrosanct; still, it will hardly improve this nation’s reputation for security of property for this industry to be pillaged a second time through flimsy legal theories wielded by high authority. (Daniel Fisher, “Smoking dopes”, Forbes, Sept. 22).
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