The Proposed Tobacco Settlement: Issues from a Federal Perspective.

Last year, representatives of five major tobacco companies and a group of state attorneys general reached an agreement that, if enacted, could dramatically change the ways in which tobacco is marketed, sold, and consumed in the United States. That settlement would impose large payments on the tobacco industry, strengthen regulatory controls, and expand public health initiatives to reduce cigarette smoking. This Congressional Budget Office CBO paper-prepared at the request of the Assistant Majority Leader of the Senate--examines the settlements potential impacts on consumers and the industry. The reduction in cigarette consumption and the amount of payments by the industry are estimated under various assumptions regarding increases in the price of cigarettes and the response by smokers to those price hikes.