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Stanton Peele

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States Selling Addiction: "Why Not? We Need the Money!"

Posted: 03/ 7/2009 3:37 pm

States make money off of addictive substances. The cigarette settlements made a ton of dough for the states. But these settlements also created problems - as does raising cigarette taxes. Although the states can claim they are doing God's work by discouraging addiction, at the same time they are reducing cigarette taxes and tobacco-company funding the states need to offset future expenses.

Gambling, on the other hand, which is often administered directly by the states (e.g., lotteries), is an unalloyed financial boon. The more people gamble, the more the states make. Thus, they market gambling unabashedly - in ways that could be seen to encourage addiction.

And, of course, there's the possibility of taxing marijuana - another multibillion dollar business, one that is currently illicit (you know, like lotteries used to be).

In 1998, a settlement was negotiated between the states and tobacco companies resulting in billions of dollars in payments to states. In order to justify these payments, states were to use the money to discourage smoking. But, you see, they had all these billions in their coffers - and their needs were so great!

So what do you think states did? Connecticut state senator David Scribner lamented, "The Legislature has opted to simply use this money to bridge budget shortfalls for the majority of years it has been received, using only 1.15 percent [how about if we call this 1%] toward cessation and prevention programs."

And there are further problems with cigarette funding for states. Raising taxes on cigarettes reduces smoking, but in doing so it can reduce the overall tax yield. Moreover, the settlement provided for ongoing payments to states from tobacco companies pegged to the number of cigarettes sold. So reducing smoking reduces the payments received from cigarette manufacturers.

According to Bloomberg.com:

Higher federal and state taxes on cigarettes this year may bring the biggest drop in smoking ever (as much as 10%), reducing the tobacco industry's annual payments to states by as much as $500 million and threatening the repayment of $37 billion in municipal bonds backed by that money.

Can you imagine state legislators discussing somewhere, "I'd sure like to discourage smoking among young people, but if I vote to raise real estate taxes to make up the shortfall, I'm going to lose my job!"

There are no such problems with gambling. States profit directly from lotteries (remember when street hoods and the Mafia ran the numbers rackets?), and also gain substantially from taxing casino gambling and horse racing. So states want gambling. They need gambling. Thus, eyeing the money made by Native American casinos, last spring Kansas voted to be the first state to themselves own and run Las Vegas-style casinos, rather than simply licensing and taxing them.

In the case of gambling, the states are encouraging what many see as an unwholesome habit. The solution? Use the money for education! Kansas is a bedrock conservative state whose Republican legislature was joined by Democratic Governor Kathleen Sebelius in strongly endorsing the casinos as the only way to meet the Kansas Supreme Court's demand that the state increase its education funding. Of course, the states will be tempted to divert this well-intended money, to wit: "New York Lottery axes $1.4 million in scholarships after taking in $7.5 billion in 2008."

Kansas previously didn't even have private gambling casinos. But politicians simply couldn't stand watching their citizens running to nearby Iowa and Missouri to gamble away their money in those states' private casinos. States all over the country are now looking at ways to expand their gambling operations, including, like Kansas, creating their own casino system. The good news: Sebelius can now, as head of the Department of Health and Human Services, help states improve their gambling-addiction treatment services!

I live in New Jersey (there, I've admitted it) - a state where the budgetary crunch is especially bone crushing. Last month, the New Jersey Senate passed a resolution urging Congress to remove the ban on sports wagering in the state (Nevada is the only state in which sports betting is legal). You can see states and legislators fuming, "This is going on already, we should profit from it!"

Of course, if they're in the gambling business, states need to promote gambling. I watch frequent television ads coming from New York encouraging people to "Pick 3" and "Pick 4" as the path to "Mega Millions" - a unified lottery system across many states (I confess that all of this confuses me - I've never bought a lottery ticket). These ads emphasize three things:

(1) How easy it is: "Visit any of the nearly 16000 New York Lottery retailers throughout New York State and pick up a Mega Millions playcard. Each game costs $1."


(2) How people have no chance to escape their humdrum lives (the Mega Millions Web site pictures a person futilely placing a coin in a piggy bank, ads show people bored and purposeless before gambling), and how the riches of gambling will take them to another plane of existence (pictured are ordinary people like them transported to the storied worlds and playgrounds of the rich and famous).

(3) The likelihood (as well as the joy) of winning are endlessly emphasized and substantially exaggerated (in one work place, first one man breaks into a victory dance for having won Pick 3, only to be superceded by a neighboring worker who has won Pick 4).

What do all of these things point to - addiction! - defined as people seeking magical solutions for daily doldrums and life problems which they have no realistic means to redress.

And, so, when a San Francisco Assemblyman, Democrat Tom Ammiano, proposed legalizing and taxing marijuana in the California legislature last month, what's the diff? Ammiano called it "simply nonsensical" not to tax marijuana, California's top cash crop, given the state's massive financial crisis.

Remember when governments were accused of permitting drugs and alcohol to pervade ghettos in order to stave off the demands of deprived people for better lives? Remember when the Romans bought off the masses with bread and circuses? Our financial and emotional needs now dictate that state governments sedate their citizens, while picking their pockets, from California to Kansas to the Mid-Atlantic, and everywhere else in these United States.

 
 
 

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