McCain [R-AZ] has proposed legislation that would require tobacco companies to pay $516 billion dollars over 25 years, increase the price of cigarettes by $1.10 per pack by 2003 and give the Federal Food and Drug Administration authority to regulate nicotine as a drug. The legislation has been repeatedly endorsed by President Clinton. Senator McCain was born in the Panama Canal Zone in 1936. He was elected to the United States Senate in 1986 and re-elected in 1992. He was the National Security Advisor to the Dole/Kemp presidential campaign and placed Senator Bob Dole's name in nomination for president at the 1996 Republican National Convention. McCain told FRONTLINE that the tobacco companies have not told the complete truth to the American people. He also believes they were trying to maximize their profits and there have been occasions when they targeted people that they shouldn't have. Nevertheless he believes that making a deal with the companies instead of bankrupting them is the best way to move forward.

McCain: My sense of the industry is that they're a group of business people who have been trying to maximize their profits. And there have been at least a number of occasions where they have targeted people that, ah, they shouldn't have. And that they have employed advertising tactics that have enticed young people into smoking. They denied that. I think that evidence has been revealed recently through documents that, ah, they have not told at least the complete truth to the American people. But could I add, I'm interested in the settlement now as opposed to punishing the, the people. The person who is in charge of the negotiations for the attorney's generals before our committee last week said, said, look, there are a lot of people that are still mad at them and want to get even. What we want is to get even by getting a settlement and preventing kids from smoking. And I think there was a lot to what he had to say.

Q. We're collecting opinions of this industry. They've been called a rogue industry, the masters of deception. What are we dealing with here?

Q. You say that, but the people out there listening probably know that it's been a long time since the congress ever did anything related to this industry. An industry which is credited with killing over four hundred thousand people a year.

McCain: I don't think there's any doubt that the influence of the tobacco industry here in congress was a compelling argument for campaign finance reform. And they did have significant influence. I would also argue that if it had not been for the agreement negotiated with the attorney's generals, then we probably would not be where we are in attempting, anyway, to reach some kind of over all settlement.

Q. In other words if the attorneys general hadn't been able to, in a sense, bring them to their knees, congress wouldn't be able to deal with them?

McCain: I would like to say otherwise. That congress would have dealt with this issue. But everything that I know from my sixteen years here indicates that if the attorneys generals had not forced this agreement, then we would not be at this stage as we are in congress. And that is seriously addressing the issue. Now, whether congress actually reaches a legislative result is, still remains to be seen. But I intend to work as hard as I can to achieve that result.

Q. Could you give me an example of how powerful they were before June twentieth?

McCain: Well, yeah, you know, I can't. Because, because I wasn't involved in their issues. And I, you know, I don't know better. But the fact that, I think the very fact that it took a action such as the AG's did and made, which was unprecedented...in order to motivate the congress, indicates that, ah, there was substantial influence on the part of the tobacco industry here in congress.

Q. People that we've been talking to who criticize the June twentieth deal, say why can't congress simply enact these reforms in the industry? Why give them anything since they're guilty of deception? Guilty of making, helping our children smoke?

McCain: Let me describe the conundrum here. We are not willing to make tobacco an illegal substance. If we were willing to do that as a nation, and all these people who criticize the agreement don't want to make it an illegal substance...if we were able to make it illegal, we wouldn't have a problem. We could restrict everything that they do. But since we're not willing to take the step, as a nation, to make it illegal then we have a problem with their first amendment rights. Which are to advertise their product. So, what we have to do, or try to do, is achieve some agreement with them that they would voluntarily restrict their advertising and engage in campaigns to stop children from smoking. In exchange for some benefit that they might receive. Now, I'm not sure exactly what that benefit should be. We're in the process of negotiating that, negotiating that out. But I can tell you this. We have had a testimony from constitutional lawyer after constitutional lawyer that says, hey, you can only go so far in restricting these people's rights to advertising their products. Because they're not manufacturing an illegal substance. So that, really, is the problem we're facing. And to say, give them no benefits, give them no protection, give them nothing...then risks going to court, them winning, and continuing to advertise their product which then entices children to smoke. So what we're trying to do is weave our way through this very difficult maze so we can achieve our goal. That is to stop kids from smoking. And do what it takes to get there. And if we don't keep our eye on that goal then we can easily be side tracked by a whole bunch of emotional aspects of this issue.

Q. And the idea of not having children smoke is, in a sense, to cut off their supply of future customers?

McCain: Or, to raise the price to the point where it's a disincentive to engage in programs, ah, ah, that, ah, would educate children not to smoke. Which would then provide penalties for people who sell cigarettes to minors. There's a whole laundry list of ways you can attack this issue. And we worked, let me point out...I've been working very closely with Dr. Koop, with Dr. Kessler, with these organizations that advocate, ah, tobacco free environment for kids...and with the attorney's generals. We've got to work with everybody to come up with what's a salable solution. Because look, whether I happen to like it or not, these people are the referees. And if we come up with a proposal that they attack, maybe not all of them but the majority of them attack...we're not going to get any legislative result here. We're not, we're just not going to get it. These people are watching very closely. They represent the interest that we have to satisfy.

Q. When the June twentieth deal was announced, stock prices for the tobacco industry shot up. Somehow there's this irony. They can pay three hundred and sixty-eight billion dollars and then they're worth more?

McCain: Well, let me just say, I don't care where the stock market goes. But it went up because it gave the, the tobacco companies some degree of certainty I'm told. Ah, more importantly than that, can we go to the American people and look them in the eye and say, look, I've done everything that I can to keep your kid from starting smoking. Three thousand kids a day start smoking. That's our object. The stock market goes up. The stock market goes down. Frankly, I, I'm not happy that they would make more profits. But that's not my primary goal.

Q. What they want is some kind of partial immunity. Something which no other industry has ever gotten from congress. This industry which is known as the great deceiver, sound immoral. Sound like the bargain with the devil.

McCain: Umm-hmm. If there is a way to stop kids from smoking without providing them with anything, I'm all for it. But I have to, to deal, to play with the hand that I'm dealt. The attorney's generals of America, forty of them I believe, tell me that the only way that they can make sure that we're doing everything we can to prevent kids from smoking is by granting them some kind of, of protection. Now I have to listen to these people. They're the top lawyers in America. I have to listen to them. Do I have to go along with it? Not necessarily. But at least I have to listen to their views. And that of others. But I'm not for giving any benefit to the tobacco companies. But my question to those who say, you shouldn't give them any benefit what so ever out of this, is, then why don't you support making tobacco illegal? Well the answer is obvious. Because the enormous dislocation it would cause to the millions, forty million Americans, who do still smoke. That's the answer. So they're not willing to do that. But at the same time they want the best of all worlds and that is not to make any kind of a, of a negotiated settlement with the tobacco companies. Well, it's very hard to have it both ways.

Q. And the fears that we hear from critics is that every time the industry gets into congress, as they did thirty years ago, they will put loopholes in. They will figure out a way to out smart the American people again.

McCain: Well, the thing that's different this time, in my view, is that these advocacy groups, the American Lung Association, the National Cancer Society, all of these other organizations...stop kids, kids free smoke, etc. They're there at the table. They're in constant consultation with us. They've testified at the hearings. They will be, to some degree anyway, the arbiters or the, the referees as to whether this is good for America or not. And they now, and do, and will play, a key role in whatever settlement we've, we reach.

Q. Is the political problem here, who is going to offer up a concession to the industry first? The White House or the Senate or the House?

McCain: Let me just say, the White House has been AWOL for a long time on this issue. When the settlement was announced, they said they would have legislative language within thirty days. Ninety days went by. They came up with five principles. They still refuse to give us exact language. But, and I, and I accept that. I don't like it. But I accept it.

We are now working closely with the White House, with Erskine Bowles, with Bruce Reed, and we are working closely. We will move to get, forward, together with them. Hopefully. Because very frankly, the political reality is, if we disagree we're not going to get an agreement. And that's, ah, something that we, that I recognize.

Q. Your colleagues, your fellow Republicans, the one's who haven't turned down tobacco money, what do they tell you?

McCain: All of my colleagues want to develop a program that will stop kids from smoking. Whether they took tobacco money or not. And many of them have very different ideas. Senator Chafee and Senator Harkin have different idea. Senator Conrad has a different idea. Senator Jefferts has a different idea. That's fine. We need all of this input. And we need to build consensus. We need Republican, Democrat, and administration all working together if we're going to reach a resolution. And I have pledged to do that.

Q. Some people believe that whatever the legislation is, you'll wind up with the government of the United States and the states making a lot of money. Money they've already spent in some cases in their budget allocations. The lawyers will make a lot of money. The tobacco industry will stay in business. It'll save them for the future. And the forty million, mostly working and poor, people who are addicted smokers will support all this. And nothing will change.

McCain: Well, I think that the other options are, do nothing and let the status quo prevail. And then there'd just be a long many years of lawsuits, which the tobacco companies have a pretty good record of winning a lot of those. Or, doing something that is truly meaningful and important. But the important judgment will be made on one basis and one basis alone. Did the congress act to stop these three thousand kids from starting smoking every day? Did they or did they not? But this lawyers fee thing, I think it's obscene for somebody to make two billion dollars for anything. I don't care what it is. Ah, if they invented a cure for cancer I'm not sure they deserve two billion dollars. That's something that's going to be fought out for a long time. As far as the money's concerned, are we...yes, you're right. Everybody's has their hand out. Everybody's got their, ah, they want, ah, a piece of this action. But it seems to me that that division of money is a fight that should not detract us from our, ah, distract us from our major goal. And that's the problem of children smoking.

Q. And then finally, there's the federal grand jury. Our understanding is that every Wednesday and Friday here, the Justice Department is bringing witnesses who no one notices because they're there for Monica Lewinsky...but, every Wednesday and Friday a federal grand jury hears criminal witnesses in the case that the Department of Justice is developing related to the tobacco industry. Could that derail this legislation?

McCain: If the Justice Department determines that criminal activity has been engaged in by the tobacco companies, they should be prosecuted to the full extent of the law. But unless that case can bring about a cessation of children smoking, then we as a nation and a congress must move forward to try to address this terrible problem that afflicts America today. And that is, three thousand children beginning to smoke every single day.

Q. You know, it comes back all the time in the discussions that we have with people is, here is this industry that is hugely profitable. That apparently, knew all these health risks existed, knew that their product was addictive despite what they said to congress, and what they want is to get off. They want to get of their in a sense, moral judgment and pay the piper. They want you to free them.

McCain: Well, ah, I would just make two points. Ah, one, is our goal, in my view, is not so much to punish, ah, the tobacco companies which I would enjoy doing. But that's a secondary issue compared to trying to kid, keep kids from smoking. Second of all, ah, Mr. Mike Moore who was the prime negotiator in this tobacco settlement, testified before our committee. He said, there are people who want to get mad. He said, what we need to do is get even. And the way we get even is to keep them from enticing kids into smoking. I think there's a lot of validity to his statement.

Q. But, Dr. Kessler, Dr. Koop, people we speak with say, how can you trust this industry? They will find a way to get new customers. If not here, overseas. They just want to survive. They know they're on the brink. And now they want congress to bail them out.

McCain: I've had several meetings a short a time ago as last week with Dr. Koop and Dr. Kessler. Dr. Koop and Dr. Kessler, both, have said senator try to, to get this thing, this issue, taken care of. We support you in your efforts. We may not support you at the end of the day with what the congress comes up with. But we want you to try and settle this issue. And that's what I'm trying to do. And that's what I think, ah, a lot of my colleagues are trying to do.

Q. Why you? I mean we thought Tom Bliley or someone or Waxman, or someone who had been involved in this issue for years, on one side or on the other, would have come into breech. And all of a sudden it's you.

McCain: Well I think that the major reason it's going to be the Commerce Committee...and I want to emphasize it's bipartisan. Senator Hollings, Senator Brow, Senator Wyden, and Senator Ford and many others, as well as Dr. Frist and others, are working together...is because the majority of the oversight, the majority of the responsibility for this issue falls under the Commerce Committee. And so, that's...we decided, ah, under, ah, Senator Nicols leadership that it was too unwieldy to go through every committee. So they decided to move it through mine. It happens I think, more because I'm chairman of the committee than, ah, any particular talent or, or oratorical skills that I may possess.

Q. Maybe it's your willing to take it on.

McCain: Ah, well, as you know I have been known to take on issues that, ah, are not exactly non-controversial. So, it's a great challenge. And I'm not convinced that we can succeed. But I want to be able to say that we made every effort.

Q. You don't have any predictions as to whether there'll be legislation this spring?

McCain: No. Except that to say, I think there's an awareness here in congress, that the American people will not look favorably on us if we go home the beginning of next October, in time for the elections, not having done something about children smoking.

Q. You were criticizing the White House and the lack of leadership. At the same time, people have pointed out to us that, that Bill Clinton is the first president to, in a sense, reject the tobacco industry and go against them. Could this be happening unless he was in the White House?

McCain: I don't know. I would like to hope that any president, at this stage in the game, would recognize that after what the AG's did, you have to move forward. He was in office for nearly six years before their was any movement. But look, I was unhappy that the White House did not move, move forward with legislative language as they said that they would do. But look, I can't, I can't look back in anger. I can't hold a grudge. The point is that now they are committed to working with all of us in a bipartisan basis. And I accept them at their word. And I'm working with them now. And I work with them until we either succeed or fail.

Q. Is this on a partisan basis, is the past alliance between the republican party and the tobacco industry, ah, a problem?

McCain: Well, I would argue that that alliance also was amongst, ah, democrats from southern states. I would say that alliance was much more regional than it was, ah, party affiliated. As, ah, republicans picked up seats in the south obviously that switched. But twenty years ago the tobacco supporters were all democrats because of the make up of congress. But no I don't, I don't think so. I think that, ah, ah...and I'm pleased with what Congressman Bliley is doing. And I think that Senator Ford is very, has been very helpful. So, ah, I think we can, ah, and will, ah, put that aside. But, a seminal moment, which when the fifty billion dollar tax break that was put in last year was repealed in overwhelming numbers, that was very significant of the diminishing of the influence of the tobacco industry in congress.

Q. Because?

McCain: Because it was repealed. And it was repealed in a New York minute.

Q. A New York Minute? When you heard about that, what was your reaction? When you heard, well there was deal June twentieth. And then all of a sudden there's this stealth amendment.

McCain: I was surprised. I was just surprised that it was in there. And I wasn't surprised when there was a, a strong effort mounted, ah, to repeal it. And it was repealed and it was repealed rapidly.

Q. Well you voted for it initially, right? I mean, it wasn't...it was in the bill or whatever.

McCain: No. It was in the budget. And as you know, ah, none of us knew that it was in there. Except for a few people until after the bill was passed. It was an omnibus bill.

Q. How do you slip in a fifty billion dollar tax break with no one noticing?

McCain: The same way you slip in a pork barrel project for you state, ah, or district. Ah, you go in conference and it's in a huge bill. And by the time people dig it out, ah, the bill has been passed. I mean, it's a, it's a terrible way to do business. And it's one of the reasons why the American people are often cynical about the way we do business here.

Q. No one noticed?

McCain: Well, I'm sure that, that a few people did. But the overwhelming majority of us didn't know about it until after it was passed.

Q. No one. And no one took credit for it?

McCain: I understand that no one has taken credit for that. Which is a bit unusual around here.

Q. Your colleagues aren't shy.

McCain: Well, around here, ah, I'm reminded of Jack Kennedy's words after the Bay of Pigs where he said, victory has a thousand fathers and defeat is one poor lonely orphan.

Q. What does congress have to say to the American people since it's taken so long for congress to do anything about this?

McCain: Well I don't know exactly what they say. Ah, obviously we've gone through a change in American society. Ah, when I was a young pilot in the navy many years ago, all of us smoked. Ah, cigarettes were in the C rashionings that soldiers had. Cigarettes and smoking was a way of life in America. I'm fascinated by the fact that it, ah, almost every movie I see they're still smoking. Which does have an impact on young people, by the way. And criticism of Hollywood has been strangely absence, absent throughout this debate. But I think there's been a change in American society. There's an emphasis on wellness, on health. And the, a greater awareness of the evils of smoking. And finally it's culminated in this effort that, ah, I hope we will successfully, ah, conclude. And, ah, it has to do obviously with trying to keep kids from starting to smoke.

Q. Why is it that the federal government, if congress didn't do anything, why is it that the federal government did so little for so long? There was no Justice Department lawsuit against the industry for deceptive advertising or anything other practices.

McCain: I think the FDA did make some efforts in resent years, ah, concerning tobacco and the use of it. And they issued some pretty, very, effective rulings. But I think the reason why any administrations didn't act was the same reason congress didn't act. For most of this, ah, countries history smoking was a part of our life. And it's only been, I would say, perhaps in the last twenty years that there has been a real effort made to educate people about the evils of smoking. There's still, look, there's still spittoons in the floor of the senate. That show you how quickly we move forward.

Q. There are a lot of countries where there are severe restrictions on tobacco advertising. Doesn't seem to make any difference if you smoke it.

McCain: That's an interesting issue because Dr. Koop has said that we don't know exactly how you go about stopping kids from smoking. One aspect of it that he's confident of is you have to get them at a very, very early age. And, there's no doubt that it's a complex issue. But I'm convinced if we devote the money to research and to study and to finding out what it is that can prevent kids from smoking, that we can succeed. But yes, there's also evidence that raising the price of a pack of cigarettes has done two things. One, not decrease smoking so much. And also generated a black market. So these are all issues that we have to be very careful when we approach them.