American Cancer Society Releases Report Refuting Potential Tobacco Company Bankruptcy

American Cancer Society
Thursday, 14 May 1998

Washington 1998/05/14 -Today the American Cancer Society released a report which refutes tobacco companies' claims of being forced into bankruptcy if Senate bill 1415, also known as the McCain bill, becomes law. The report, authored by Massachusetts Institute of Technology economist Jeffrey Harris and attorneys David Sweanor and Edward Dolan, is an objective study of national tobacco control legislation Congress is considering. The three analyses of current proposed legislation come to the same conclusion: Bankruptcy is much more of threat than a real possibility.

"Don't let them fool you. One of the biggest claims the tobacco industry is using to divert attention from the heart of national tobacco control legislation is that the McCain bill will force them to file bankruptcy, and put hard-working Americans out of work. Not so," said the Society's Board of Directors President David S. Rosenthal, M.D. "Our report shows that bankruptcy is a specter raised to scare off Congress."

Harris, Dolan and Sweanor examined the economic, legal and over all impact of the McCain bill. Their conclusions are:

- Economic: Tobacco companies will lose profits due to the McCain bill, but not enough to force them into bankruptcy. The industry as a whole and individual firms will lose money, but remain profitable because of more than $7.2 billion in domestic profits each year.

- Legal: As long as tobacco companies continue to sell their products--as they will because tobacco products are extremely profitable and addictive--filing for bankruptcy will not solve their problems. New liabilities for damage to the health of individuals who use tobacco will continue to accumulate.

- Over all: If tobacco companies go bankrupt, it will be because they continue to sell tobacco products to kids. If youth smoking reduction targets are not met by the tobacco companies, they would be choosing to jeopardize their own existence.

"This report proves that Big Tobacco, as usual, is trying to mislead everyone. Bankruptcy is only a threat--one that is designed to derail attempts at national tobacco control legislation. We must not let Congress be bluffed into doing nothing," Rosenthal added. "It is time for Congress to act on the truth and only the truth."

For more information, or to contact American Cancer Society, see their website at: www.cancer.org