Tobacco Scam: Smokefree Restaurants: Fake Economics - Cooking the Books

New York City

Big Tobacco strategy:

Set up fronts to hide its involvement.
Issue economic threats and twist the arm of grantees.
Fund newspaper and radio advertising blitz.
Hire lobbyists and telemarketers to pressure City Hall.
Commission flawed polls claiming economic disaster.

The campaign to free New York City from secondhand smoke took more than twenty years, beginning in 1983, to overcome resistance from the tobacco industry.

In 1988, amid predictions of economic disaster from Big Tobacco, New York City enacted its first Clean Indoor Air Act. All but the smallest bistros allocated at least half their seats to non-smokers.

Six years later, in 1994, the Coalition for a Smoke-Free City, citing the recently released U.S. EPA report on secondhand smoke, persuaded City Council Speaker Peter Vallone to sponsor a new Smoke Free Air Act affecting virtually all public places. Smoking in restaurants would require a separate, enclosed room; in other workplaces, a separately ventilated smoking room on each floor. Endorsed by Mayor Giuliani and all five borough presidents, it was considered almost certain to pass.

Lobbyists, fronts and astroturf...

To stop the new measure, Big Tobacco hired two veteran lobbyists with close ties to Speaker Vallone. It also activated a Philip Morris-funded astroturf group called the National Smokers Alliance and promoted one hospitality front group that operated under at least four different aliases:

New York Tavern and Restaurant Association (NYTRA)
Manhattan Tavern & Restaurant Association
United Hotel, Restaurant & Tavern Association
Empire State Restaurant & Tavern Association

This association had almost no presence in NYC until Philip Morris renamed it the New York Tavern and Restaurant Association (NYTRA). During the Smoke Free Air Act campaign, none of these organizations actually had offices in NYC.

The only legitimate restaurant group involved in the debate was the New York State Restaurant Association (NYSRA). In the 1980s, it regularly sided with Philip Morris and the Tobacco Institute. But in 1994, NYSRA accepted that some sort of legislation was likely to pass and worked to negotiate a phase-in over several years.

Philip Morris to New York: drop dead...

At the bill's first public hearing, in June, 75 out of 87 speakers testified in favor. The Coalition refuted Big Tobacco's argument that smokers would leave the City to dine elsewhere, pointing out that neighboring Suffolk, Nassau and Westchester were passing similar measures. Barry Fogel, the L.A. restaurateur who served as nominal head of the Beverly Hills Restaurant Association fabricated by Big Tobacco in 1987, testified that his restaurants were all now smokefree and doing fine.

Just before the hearing, Philip Morris threatened to move the company out of NYC. Instead of intimidating Council members, Philip Morris only aggravated them. Later in the summer, Philip Morris's National Smokers Alliance ran full-page newspaper ads criticizing Speaker Vallone and Mayor Giuliani. It organized a signature campaign, paying a dollar each, and flooded City Hall with some 300,000 letters of opposition, almost all form letters.

In September 1994, the Council sided with advocates and included restaurants of all sizes. The morning of the hearing, the New York Times reported that Philip Morris had again threatened to move out of NYC, prompting Anthony Weiner (D-Brooklyn) to berate the company at the hearing:

What does not add to debate is a company standing up at a press conference or releasing a press release saying that, "If we don't get our way we're going to take our ball and go home." My view is, go home now. Philip Morris has done nothing but take someone who was leaning against the bill to leaning for the bill.

The same morning, UHTRA, the hospitality front group inflated by Big Tobacco, slammed the bill in full-page newspaper ads. It had already mailed to 10,000 NYC restaurant owners and produced radio spots criticizing the Council. At the public hearing, UHRTA was asked how it financed the ads and admitted the ads were paid for by the Tobacco Institute.

The New York Times also exposed Philip Morris' attempt to get the New York cultural organizations it supports to oppose the bill:

"They wanted us to stress to Council members that, if the bill passes, it will directly reflect on their funding to us," said a senior executive of a leading arts organization, who asked not to be identified.

...[T]he company, for its part, maintains that it did not intend to drag arts groups into the political maelstrom, but only to contend, as Philip Morris has done repeatedly, that smoking restrictions might affect tourism and hence the revenue of cultural institutions.

Meanwhile, Smokefree Educational Services ran a full page ad in the New York Times exposing the United Restaurant, Hotel, and Tavern Association as a Big Tobacco front:

The United Restaurant, Hotel, Tavern Association of New York doesn't have an office in New York City. It doesn't have a telephone number in New York City. And its Manhattan, Queens, Brooklyn, Bronx, and Staten Island chapters are all defunct!

When you think about it, it isn't surprising to learn that the outfit behind the campaign attacking the City Council for protecting the health of New Yorkers is none other than — Philip Morris, the giant tobacco company, whose executives still deny that tobacco smoke causes cancer or any other disease.

Bogus claims of economic suffering...

At the third public hearing, in December 1994, UHRTA forecast a loss of $410 million a year in restaurant sales, at a cost of 9,200 jobs. Its study, conducted by Price Waterhouse, merely asked restaurant owners and managers for their predictions. It used no empirical data.

Immediately before the full Council vote, Philip Morris hired a telemarketer to urge people in the National Smokers Alliance's New York City database to voice their opposition. Telemarketers coached each person on what to say, patched the call through to the Mayor's office or City Council representative, and listened in to the conversation.

Regardless, the Council passed the NYC Smoke Free Air Act by a vote of 36-8 and it went into effect in April 1995. The final version still exempted restaurants with fewer than thirty-five seats. UHRTA continued to forecast dire economic consequences: "...we expect it to cost the city 11,000 jobs and the hospitality industry more than $500 million."

Real data shows New York flourished...

Through front groups, the Tobacco Institute budgeted $45,000 for monthly Price Waterhouse polls, starting just two weeks after NYC's measure went into effect. The pollsters chose a sample of NYC restaurants and asked their opinion of what was happening. Absent objective evidence, such as sales tax receipts, all these polls concluded that the law was harming the restaurant business.

In reality, subsequent analysis of data obtained from the New York State Department of Taxation and Finance for March 1990-February 1997 shows that restaurant and hotel sales tax receipts actually increased in New York City after the smokefree measure went into effect — while decreasing in the rest of the state. Growth in NYC restaurant employment (17.6%) more than tripled that in the rest of New York (4.6%).

Tourism also prospered. The UHRTA had claimed in the New York Times:

On a larger scale, New York stands to lose millions of dollars as the meetings and conventions that bring visitors from all over the world take their business and vacations elsewhere. New York today has over 25 million visitors every year. Tourism is a $14 billion industry. This helps support our city. It means jobs. Other big cities that compete for this business will be very glad to see this smoking ban pass.

New York City's smokefree ordinance (blue line) had no effect on the trend of increasing tourism, as measured by hotel revenues.

In fact, adjusted for inflation and underlying economic conditions, New York City's hotel revenues grew faster in the years following the smokefree measure than before it.

Ten years later, all of New York is smokefree...

A report from New York City's Bureau of Tobacco Control picks up the story in 2002:

The 1995 measure prohibited smoking in many workplaces, but permitted smoking in stand-alone bars, restaurants with fewer than thirty-five seats, bingo parlors, and a limited number of enclosed workplaces. In addition it permitted "smoking areas" in bars, bowling alleys, convention centers, and performance halls.

The revised New York City Smoke-Free Air Act...effective March 30, 2003... closed the loopholes in the 1995 law, prohibiting smoking in virtually all workplaces.

An educational campaign was also implemented...focusing on the lives that smokefree air legislation would save. For example:

4,000 premature deaths would be prevented among non-smokers by protecting them from secondhand smoke exposure
7,000 premature deaths would be prevented among smokers by encouraging them to quit

Public opinion polls were conducted and results were widely publicized:

69% of New York City residents polled favored smokefree restaurants and bars
89% said they would plan to eat out as much or even more frequently as before

Advocates, including employers, building owners, restaurant association members, and community-based organizations, were engaged to lend their support to this all-out effort. Letters, informational materials, and "No Smoking" signs were produced in five languages and sent to more than 20,000 restaurants and bars.

Due in part to the success of this educational effort, there has always been high compliance with the 2002 Smoke-Free Air Act. A report issued on the one-year anniversary of the law's implementation found that tax receipts in restaurants and bars had risen 8.7%, employment in restaurants and bars had increased 7%, and 97% of restaurants and bars were in full compliance with the law.

By the end of the second year, there had been a 5.1% increase in the number of liquor licenses issued in the City, bar and restaurant employment had increased 8.4% in the two years since the law's enactment, and more than 99% of establishments were in compliance. Additionally, 150,000 fewer New Yorkers were exposed to secondhand smoke on the job.

The 2002 Smoke-Free Air Act is only one component of New York City's comprehensive tobacco control program. Through its 5-point plan — taxation, legislation, cessation, education, and evaluation — New York City continues to implement cutting-edge evidence-based strategies to make it harder to smoke and easier to quit.