Editorials
Friday, June 19, 1998

Congress must try
again on tobacco bill

THE death of tobacco legislation in the Senate on procedural votes could come back to haunt Republicans in the fall elections. Democrats were quick to accuse their opponents of being held hostage to tobacco industry contributions. "Big tobacco owns the Republican Party and they've just proven it again," said Sen. Tom Harkin, D-Iowa -- a theme that will be repeated many times in the campaign.

Opponents of the measure -- sponsored ironically by a Republican, John McCain of Arizona -- followed the industry line, set out in a $40 million propaganda campaign that called the bill another big government tax-and-spend measure. It would have raised at least $516 billion over 25 years, in part by raising the price of a pack of cigarettes by $1.10 over five years. It also would have granted the Food and Drug Administration authority to regulate nicotine and severely limited the industry's ability to advertise. In addition, the bill would have settled three dozen state lawsuits against the industry in which local governments are trying to recoup the cost of treating sick smokers.

However, during nearly four weeks of debate senators added a host of controversial provisions -- to cut taxes for some married couples and self-employed workers, limit the fees of attorneys filing lawsuits against the industry, devote some of the money raised to drug-fighting efforts and ban federal financing of needle-exchange programs. By the time the Senate killed the measure, almost no one liked it, for one reason or another, but members hoped its faults would be worked out in a House-Senate conference.

It was nearly a year ago that the states and the tobacco companies struck a deal for a $368 billion settlement of state lawsuits. But it was too much to expect that Congress would be willing to let the state attorneys general decide the issue.

The result of this fiasco is that the country is back to square one. Probably not for long, however.

House Republicans are expected to unveil a narrower anti-smoking bill this week, aimed at curbing teen smoking and drug abuse without raising hundreds of billions of dollars in revenue. Senate Republicans vowed to pursue similar legislation. They will have to come up with a plausible bill if they hope to lose the label of being pawns of the tobacco industry.

In any case, Congress can't avoid passing some sort of tobacco legislation much longer.

Kihano’s sentence

THE sentencing of former House Speaker Daniel Kihano to two years in federal prison for misuse of campaign funds sends a message to other Hawaii politicians that they had better respect the legal restrictions on the use of their own funds.

Such a message, as that sent by the sentence imposed by District Judge Alan Kay, is needed. Kihano's attorney, Benjamin Cassiday, accused the U.S. attorney's office of singling out a weak and vulnerable man for prosecution when other politicians are doing the same thing.

Cassiday had sought a sentence of one year of house arrest, citing Kihano's serious health problems. Kihano's doctor testified that his heart is so weak that he may not live six months.

But Kay ruled that a prison term was warranted, in part because Kihano had failed to accept responsibility for a breach of public trust. In fact, the former speaker had tried to conceal his illegal withdrawals of $27,000 and induced a witness to lie.

Kihano found himself short of funds when he retired from the Legislature and an expected high-level job in the state administration did not materialize. Other elected officials who are contemplating their future finances had better consider this case as proof that campaign funds are off limits.

Asian currency crisis

THE most telling comment on the U.S. decision to strengthen the Japanese yen by selling dollars may have come from Daniel Gilmore, an analyst in Connecticut: "President Clinton simply could not risk arriving in Beijing next week in the midst of another Asian currency crisis."

That observation accurately portrays the U.S. Treasury action as a short-term fix. If Japan fails to take decisive action to solve its economic problems -- and so far the steps it has taken have been inadequate -- the yen's plunge will resume. That would adversely affect other Asian economies that are struggling to recover from last year's collapse.

With the world's second largest economy, Japan is a key to world prosperity, particularly Asian prosperity. A cheap yen makes Japanese exports more competitive, at the expense of other Asian exporters. After months of standing fast, China has been hinting that it might devalue its currency, the renminbi, which would accelerate the race to the bottom for Asian currencies and possibly have even wider damaging effects.

C.Fred Bergsten, head of the Institute for International Economics in Washington, said the administration action "buys time for the Japanese to do more fundamental things to fix their economy." The problem is that the Japanese have thus far refused to face up to the need for such painful steps -- particularly to close down major banks that are saddled with many billions of dollars of bad debts stemming from the collapse of real estate values. The result is that the banking and credit system is crippled, leaving the economy paralyzed.

The problem has major ramifications for Hawaii, with its dependence on Japanese tourists. But Hawaii officials can't control currency exchange rates. Only the Japanese government can take the actions needed to correct this problem, and there is plenty of reason for skepticism as to whether Japanese leaders have the will to act decisively.

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Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor