TOBACCO STRATEGY

Act0n Institute for the Study of Reli_~on and Liberty

An esoteric policy group, that focuses on illuminating the free market perspective
on such issues as taxation and the environment to philosophic/religious
organizations and the media---because it believes in not only the power but the
principle of the marketplace to, effectuate growth, prosperity and fairness for
society--Acton has on several occasions written articles and op-eds opposing the
use of cigarette excises as a funding mechanism for health care reform on grounds
of social engineering, economic dislocation and because they are an unstable
revenue source. Acton is presently preparing, with our assistance, a monograph
for the Detroit News detailing arguments against "sin" taxes. I will be contacting
them this week to elicit their assistance in rebutting the just-released University of
Michigan report that attacks industry projections of economic dislocation caused
by prohibitive excise tax hikes.

Alexis de Tocqueville Institution (AdTI)

Written several pieces questioning the efficacy of cigarette taxes to fund health
care reform, based on the inefficiency of the revenue source and the effect of the
resulting hike in the CPI on government transfer payments. We are currently
working with AdTI in media placement in key legislative districts, i.e., those of
House Energy & Commerce and Ways & Means Committee members.

American Enterprise Institute for Public Policy Research (AED

Provided background information to AEI in the development of a series of
monographs examining various aspects of the Clinton Plan, and how other
alternatives would provide a preferable health care system for the American
people. Although AEI is highly bureaucratic and rather slow in getting programs
off the ground, they have a premier conference/forum/panel operation. We should
consider working with them in the development of a well-publicized forum under
their sponsorship that would "expose" various aspects of the Clinton plan and help
explain the benefits of some of the existing alternatives.

Americans for Tax Refo.rm (ATR)

A staunch ally of PM for a number of years in many tax battles,. ATR has
sponsored print ads against the use of excise taxes to fund health care as well as
VNRs on the subject, most recently one detailing the impacts of prohibitive
cigarette excises in Canada on the economy and on crime....which had a profound
influence on the eventual decision to rollback the tax. ATR is very close to
proponents of alternative health care plans, has good access ~ the dungeons of
Washington as well as with its many state-level contacts throughout the country,
and could be mobilized for lobbying or other grassroots tactics either in
Washington or in key legislative districts. This has proven to be particularly
helpful in state excise battles, and, with ATR's expertise in the town hall and
direct mail formats, could be explored here as an adjunct to the CSE effort.

The Business Roundtable (BRT)

We were early supporters of the proposal to back the Cooper plan as the starting
point in deliberations on health care reform....leading to a ground swell of similar
support from the other major business organizations (GMA, NAM, US Chamber).
lqevertheless, BRT has had a history of softness on tax issues, and we need to be
extra vigilant in monitoring their activities and positioning on this debate. In
particular, we need to be careful of White House efforts to divide the business
community in exchange for some prom~ benefits, and especially of attempts by
other BRT members to sell out the tobacco industry to. save their own. skins.

Cat0 Institute

An Associate Broadcaster of NET, Cato is in discussions with us re promotion on
their show ("Cato Policy Forum') of the issues contained in the Regulation
magazine article by Dr. Gary Huber," Smoke and Mirrors: The EPA's Flawed
Study of Environmenta~ Tobacco Smoke'. As Regulation is a Cato product we are
optimistic that such a forum will be provided. Cato is also the'co-sponsor" of the
John Goodman/NCPA/Phil Gramm health cam alternative---which contains no
excise taxes--and hence we should consider working with them in any way
possible to promote this as a better alternative to the Clinton plan. This could
include any of the spate of policy group activities, ranging from conferences and
panel discussions to op-eds and ads, and:, of course, including maximum
promotion on NET.

Center for the Study o,f American Business (CSAB)

Directed by Murray Weidenbaum, former Chairman of the Council of Economic
Advisors, CSAB is perhaps the leading American think tank on regulatory issues.
Wehave worked with them on numerous aspects of the regulatory burden
imposed on the tobacco industry, and their work has. gotten tremendous airplay.
CSbJ3 has proven: to be amongst the true and loyal allies of PM through the years,
with unmatched credibility, and we should continue to work with them, in the
development of pertinent op-eds, for which their syndication will provide
national exposure on the key issues.

Chamber of Commerce of the United States of America

As we all know, the Chamber has been all over the map, including on the wrong
side, on this debate. However, we have been intensely lobbying them, behind the
scenes to "bring them in line" consistent with the other major business
organizations, especially on FET, but also on employer mandates. The Chamber
Board is awaiting the results of a membership survey to determine how to proceed
in the debate, but we should coalesce with other large corporate members of the
Chamber (who comprise just 10%of the membership but fully 90% of the dues)
to ensure not only that Chamber waffling be discontin;ued, but that the positions it
takes be representative of its members' interests. Weare presently working on a
strategy to accomplish this.

Citizens for a Sound Economy (CSE)

We are funding a major (400K)grassroots initiative in the districts of House
Energy & Commerce members, to educate and mobilize consumers, throu,gh town
hall meetings, radio and print ads, direct mail, patch-through calls to. the Capitol
switchboard, editorial board visits, polling data, meetings with Members and staff
and the release of studies and other educational pieces. The goal of this effort is to,
show the Clinton plan as a government-run health care system replete with higher
taxes and government spending, massive job losses, less choice, rationing of care
and extensive bureaucracies. CSEis taking aim at the heart of the plan---employer
mandates, new entitlements, price controls, mandatory health alliances, heavy
load of new taxes and global budgets--and, with the program well underway, is
by all accounts, ge~g rave reviews in the respective districts.

Citizens fo,r Tax Justice (CTJ)/Institute on Taxation and Economic PQIicy(ITEP)

As a leading labor-backed organization, CTJ/1TEP' and: we have worked closely to
highlight the regressive nature of tobacco excise taxes, and, in particuIar, how the
problem would be exacerbated by passage of the Clinton plan. As this group has a
strong voice in the labor movement, we plan to reinforce this message through the
mobilization of this important constituency.

The Claremon, t Institute for the Study o,f Statesmanship and Political Philosophy

Worked with this think tank in the development of a major policy paper entitled
"The Clinton Health Plan: Bad Medicine for California'. Bruce Herschensohn and
other Claremont spokesmen are doing a media blitz to disseminate the f'mdings
throughout the state; we could: use the results as the basis for a similar message in
other regions of the country.

Consumer Alert

The antithesis of the Nader/Citizen Action brand of "consumer defense',
Consumer Alert has worked with us in the promotion of the concept that the
Clinton plan is anti-consumer, both in toto and because of the regressive excise
taxes contained therein. Via continuation of their forums, position papers and
op-eds, we are discussing a further media blitz for early Spring, perhaps including
a debate with the Naderites on the implications of the Clinton and competing
plans for the nation's health cam.

Grocery Manufacturers o,f America (GMA)

Worked with GMA in the formulation of a resolution on health care reform
mirroring that of the BRT. We currently chair the GMA Tax Committee and
hence can ensure that no. wayward positioning on excises ensues.

The Heartland Institute

AS a member of the Board, I am working with Heartland in several areas: their
meetings with various members of the House Ways & Means and Energy &
Commerce committees to present health care reform points of view consistent

with our own; their coalescing of state-based free market policy groups to unify
on health care and work with the legislators, media and constituencies in their
respective states to mobilize on health care; their series of town hall meetings,
p~y throughout the Midwest, to educate legislators and the media of the
evils of the Clinton plan and discuss more palatable alternatives; and their
development of fax-back technology, a system for the dissemination of research,
policy positioning, articles and op-eds (including PM points of view) to.
legislators, public opinion makers and media fax machines throughout the
country. Through all these efforts runs Heartland's 1994 top priority: to, inform
policymakers, reporters and opinion leaders of the true nature of the Clinton
Administration's health care reform legislation, and of the availability of superior
aiternatives....as Heartland has consistently opposed any reforms that require
additional government spending, advocating instead the combination of
deregulation, tax reform and medical savings accounts that can now be found in
several bills being considered by Congress.                             --

The Heritage Foundation

Worked with Heritage in the development of alternative policy prescriptions to
the Clinton plan, and articles and op-eds espousing such positioning. Our efforts
have resulted in several major policy papers, including oneon the massive
economic dislocation that would result from the implementation of the Clinton
plan (including drastically less cigarette tax revenue than is currently envisioned)~
one on the implications of a prohibitive cigarette excise hike on the CPI,
government transfer payments and net revenue, one on the misapplication of
science in the EPA/ETS debate, and, possibly, one on the Surgeon General's.
broadside against tobacco advertising combined with a commercial speech/First
Amendment perspective.

Hoover lr~stitution on War, Revolution and Peace

Have worked with them on several pieces focused on the Clinton: program for
universal health care coverage, which, combined with insurance coverage for
mental health and reduced prescription costs, bound together with a fuzzy plan to,
finance the program, would be a recipe for disaster that will result in reduced
employrnent in the international economy, continued unequal access to medical
services and additions to the federal deficit.

Institute for Research on the Economics of Taxation (IRET)

Led by Norm Ture, former Undersecretary. of the Treasury for Tax and Economic
Affairs, and a long time friend of PM, IRET has been perhaps the leading policy
group exponent of the evils of selective excise taxation. Via conferences, policy
forums, articles, op-eds and the like, IRET has emphasized the point that excises
are inefficient and unfair, and has: beefed up these efforts since the introduction of
the Clinton plan. As a member of the IRET Board I have worked closely with
Ture in their writings and placements, and in placing him on a series of panels
espousing points of view consistent with our own. IRET is presently working on
several policy papers: the mandates contained in the Clinton plan are nothing
more than a disguised tax increase; the off-budget accounting of the Clinton plan
is not only dishonest, but bypasses any m:easure of fit, call constraint; and CBO---

supposedly the independent arm of Congress---may yet buckle under White
House pressure to "create" good cost/revenue numbers.

Mackinac Center for Pobli¢ Policy

Have worked closely with this Michigan-based group in their policy study
opposing the President's health care reform proposal, including its funding
mechanism. Macldnae has published several pieces against the use of cigarette
excises, both in general and to fund health care reform, and has mobili~,ed several
state-based policy groups in the effort to flood the media on positioning consistent
with our interests. I will also be contacting them this week to elicit their assistance
in rebutting the jnst-released University of Michigan report that attacks industry
projections of economic dislocation caused by prohibitive excise tax hikes.

Manhattan Institute

Worked off-the-record with Manhattan and writer Betsy McCaughey as part of
the input to the three-part expose in The New Republic on what the Clinton plan
means to you. The fin'st part detailed specifics of the plan. The second part, to be
published imminently, will focus on the impact the Clinton bill will have on cities.
She will explore why medical education will decline, why teaching hospitals will
be driven out of business, why regional health alliances will shift the cost of
caring for the poor off the federal budget onto the backs of urban workers and
their employers, and why discontinuing Medicaid and enrolling the disadvantaged
in HMO's will fail. Betsy is also: working on a comparison of the other proposals,
what an "ideal" bill should include, and what ~d of reform Congress is likely to,
give us. As a member of the Publication Committee of City Journal, Manhattan's
award-winning policy quarterly, I am in discussions concerning possible
publication of a detailed analysis of the Clinton plan as it impacts New York and
New Yorkers.

Media

Over time we have developed many friendly contacts in the media, particularly in
the conservative press. On an ongoing basis we provide information, background
and commentary, and work on the development of favorable pieces: We are
involved in similar activities with prominent economists, whom we try to place as
spokesmen in appropriate form

National Association of Manufacturers (NAM)

Similar to the BRT, but even more strongly, NAM (with our support) came out in
opposition to the Clinton health care plan: Simultaneously, we have been working
with the NAM Taxation Committee to ensure that regardless of what plan
eventually materializes, no selective excise taxes of any kind will be used to fund
it. We continue to work closely with the key NAM committees and its National
Public Affairs Steering Committee (NPASC) to keep up the pressure on these key
points.

National Center for Policy Analysis (NCPA)

We have worked closely with president John Goodman and the rest of the NCPA
staff in the developmen~ of alternative health care mechanisms absent the use of
excise taxes. NCPA has authored the Gramm plan, which is the most free market
of all the alternative plans, con~g medical IRA's and other personal
responsibility features. We are working with John in the development of a series
of op-eds, and in his presentations: at a variety of fora, e.g., NET.

National Empowerment Television (NET)

Through a major f'mancial grant (200K) we have signed on as. an Associate
Broadcaster of this 24-hour-a-day cable/satellite network with potential
viewership of nearly 25 million people. We are meeting Friday with producers:
and staff to plan the miniseries on health care....which will focus on debunking the
myths of the Clinton plan and the use of excises to fund such a plan, and to
investigate more market-driven alternatives. NET will also seek to motivate
constituents from influential congressional districts by engaging them in the
policy debate through interviews: and viewer call-ins. Participants will include
policy group allies of PM who share our viewpoint on health care. We are also
working with NET in the presentation of our side of the story on other tobacco
issues, as evidenced by their interview with Steve Parrish last week re FDA
regulation and nicotine, and coverage of the march on Washington. If the health
care miniseries goes well, the possibilities of working with NET to presenf our
side of the story are virtually limitless (VNRs, district-by-district canvassing,
etc,).....but will require a substantial amount Of increased suppo~

National Journalism Center

This group was developed to train budding journalists in free market political
and economic principles. As a direct result of our support we have been able to
work with alumni of this program ....  about 15 years worth of journalists at print
and visual media throughout the country,...to get across our side of the
story....which has resulted in numerous pieces consistent with our point of view;
We also co-sponsored in December a policy minibriefing on health care for a
broad cross-section of the Center's Alumni Council, and are now working with the
Journalixm Center in the development a major health care reform policy
conference (tentatively scheduled for late April/early May) that will debunk the
myths of the Clinton plan, explain the ill-advised proposals to fund any such plan
with excise taxes, and promote alternative, market, driven plans. The forum will
be chaired by Sen. Gramm (R-TX), and will have considerable participation from
legislators, media an.d friendly policy group personnel.

Nafignal P~licy Forum

Billed as: "the Republican Center for the Exchange of Ideas.", this partisan, think
tank will be exploring policy, alternatives from the grassroots perspective. They
have formed 14 Policy Councils, and I serve on the one entitled "Reforming
Health Care", chaired by Gov. Carroll Campbell (R-SC)and Rep. Nancy Johnson

Pacific Research Institute for Public Policy (PRD

As a member of the Board,~ I have worked closely with PR.I in the development of
policy pieces and op-eds, particularly for major Western markets, in opposition to
the Clinton plan and in support of free market alternatives. As a Canadian, the
president of PR/has first-hand experience of the evils of government-run health
care, and we have worked closely to get the message against a national health care
system, global budgets and premium caps across, including in suck forums as
NET. Shortly, at our request, PILl is convening a meeting of major think tanks to
plan further strategy on this issue, including the use of mass mobilization
technology in: individual districts to educate and persuade legislators,
policymakers, media and the general public on the health care debate....consistent
with the interests of PM.

Philanthropy Roundtable

This "trade association" of free market philanthropic foundations is conducting a
study on the implications of the Clinton plan for philanthropy, particularly
amongst the largest corporations.

Pioneer Institute for Public Policy Research

A close advisor to Massachusetts Governor Weld, Pioneer is working on a piece
examining the impact of the Clinton plan on Massachusetts. It is envisioned to be
a parallel piece to the Claremon~t Institute's California analysis~

Tax Foundation

Heavily involved in analyses of the impacts of the Clinton plan on a state-by-state
basis. PM is a major supporter of this group, and we have extremely close ties. At
our behest the group!s executive director has appeared in two VNR's espousing
points of view consistent with our own, and we plan: to further take advantage of
this opportunity as the debate heats up.

The Texas Republic

Working with the editor of this free market monthly, funded by PM, on an
analytic piece debunking the Clinto~ plan in general, highlighting the negatives, of
what it means for Texas, and pointing out free market alternatives that would be
more in. consumer's interests. As the editor is also a syndicated columnist with the
Dallas Morning News, we expect th.e piece will result in favorable columns across
the country.

Washington Legal Foundation (WLF}

A close ally of PM for many years, WLF has been involved in numerous aspects
of the tobacco industry debate. They have filed amicus briefs against the EPA;
they have written and promoted policy papers supporting our position on the
advertising/First Amendment issue; and, most recently~ they authored a major
paper detailing why the tobacco industry is already one of the most highly
regulated industries in America and does not need further regulatory control: