USA

WARNING: This site deals only with the corporate corruption of science, and makes no inference about the motives or activities of individuals involved.
    There are many reasons why individuals become embroiled in corporate corruption activities - from political zealotry to over-enthusiastic activism; from gullibility to greed.
    Please read the OVERVIEW carefully, and make up your own mind.

OPINION ONLY

A Washington State economist who worked for the tobacco industry both through Applied Economics Associates, and later as a cash-for-comments economist via James Savarese & Associates and Robert Tollison.

The first cash-for-comments project began in June 1984 with Tollison and Savarese getting 13 economists on their network to write op-ed articles in support of the tobacco industry position on excise taxes. They were sent first to the Tobacco Institute for 'improvement' and legal clearance, then returned to the economist who was instructed to plant them on a specific local newspaper, then send copies to their Congressman.

This became the pattern of operations, with academic economists available in each state. Dennis Chin's involvement was much more peripheral and it came later in 1985-86; he seems to have served as a 'fill in' for Washington State.

By 1989 Tollison and Savarese seem to have had about 65 Professors of Economics on their books, and about the same number (combined) in the other academic disciplines. The numbers changed over the years, but overall about 130 professors of economics at various state universities were involved.

Decline

Over time — and sometimes abruptly — some of these economists dropped out of the operation. Some obviously did not like their articles being modified by the Tobacco Institute, and [who knows] ... maybe some even developed a conscience?

Some key documents

• Washington economist temporarily recruited onto the cash-for comments network. He normally worked for them via a private economic consultancy "Applied Economics Associates".

1946 May 9: Born in Seattle, Washington

1968 June: BA from the University of Washington

1974–81: Standford University, Assistant Professor [in what?]

1974 June: PhD University of California, Berkley - Economics

1984 June: JD from the University of Washington Law School. Joined Applied Economics Associates and began his private law practice.

1985 Mar 14: Fred Panzer at the Tobacco Institute receives a note from Regional Director, Alexander King, about an economic analysis needed to oppose a Senate Bill in Washington State.

I am advised by Jim Savarese that we do not have an available economist for Washington State, as this was not considered to be a priority State.

    Secondly, the tax materials received from T.I. recently, titled: "A Summary of Cigarette Tax Trends and Impacts in Washington," is unusable. One of the key premises on the introductory page appears to be grossly false, which calls into question all of the subsequent data, charts and graphs, and is a point which will be immediately caught by any Washington legislator.

    [After looking for economic expertise they found] Applied Economic Associates' "Summary of Qualifications" is enclosed.

    After discussion with their President, Guenter Conradus, and their Senior Economist, Dennis Chinn, I am convinced the group can do an excellant job for us in the time available. As important, they are not only prepared to present their findings and review to the legislative committee, they "check out" with legislative sources as to their credibility, integrity and reputation before the legislature.

    As I mentioned to you, Conradus and I "ballparked" their fee in the $5,000 range ($600/day per person), dependant upon how much material and data we could give them that we could save their time doing already completed research.

1985 Mar 18: [This final product arrived only four days after the above memo. Which, allowing for Tobacco Institute decision time and the 5 hour time gap West-to-East, must make this the 'Fastest economic impact statement in the West']

The Economic Impact of an Increase in the Washington State Cigarette Excise Tax, by Applied Economics Associates,Inc. has been prepared by:

• Mr. Guenter Conradus, President
• Dr Dennis Chinn, PhD, JD., Senior Economist
• Ms Cathleen Snow, M.S., Associate Economist

The primary point we make, based on the analysis which is detailed in this report, is that the total economic impacts of the proposed House and Senate bills have not been adequately analyzed. [Talk about the pot calling the kettle black!!]

    [O]ur analysis points up some serious gaps in the economic analysis which underlies SB No. 3320, in particular, strongly indicates that the proposed excise tax increase will not generate sufficient revenue to fund the proposed Basic Health Care Plan, and suggests that existing severe social and economic problems may be aggravated by the proposed cigarette excise tax increase in both SB No. 3320 and HB No. 600

• Senior Consultants, 45 hours at $75/hr — $3,375
• Associate Economist, 12 hours at $45/hr — $540
• + Misc cost. including lodging costs for Dennis Chin
  TOTAL $3,993.24

I have requested that Applied Economics prepare a short addendum to their report, which will address part of the regressivity data developed for Montana's Professor Terry Anderson last week, by Jim Savarese, as that data applies to Washington State. Those expenses will appear on a separate statement, and should put us close to or bit over the "ballpark" figure.

1985 Apr 4: Dennis Chinn has followed up with a letter to Bill Fritz outlining some of the problems with the State using tobacco taxes as a source of income. He is being most helpful.

1985 May 13.: Ed Battison at the Tobacco Institute has put him in touch with Roy Marden of Philip Morris who handles the company's institutional grants. Chinn is trying to get some "international" work from them. He is openly lobbying for business.

I recently talked to Ed Battison at the Tobacco Institute in Washington, D.C., who mentioned that your company and others were currently involved in various projects for which you might be in need of-the professional skills our firm has to offer.

    Ed thought that in addition to economic impact analysis and testimony on domestic proposed legislation and market changes of the kind we did for the Tobacco Institute in Washington State, our strong experience in Asia and Europe could be brought to bear on international issues of concern to the tobacco industry. In what follows I will briefly set out the range of capabilities and experiences our firm has to offer.

Letter to Roy Marden

Letter to Battison

1985 May 30: DL Chinn & Associates of Seattle is also preparing reports on "The Economic Impact of an Increase in the Oregon State Cigarette Excise Tax" for the Canteen Co. of Portland Oregon.
[He has now become a specialist in cigarette taxes.]

1985 June 5: Dennis Chinn was now openly giving one-to-one briefings to editors, journalists and politicians for the Tobacco Institute.

Gloria Miller in the PR section of the Tobacco Institute is sending him along to brief Herb Ronison, the editor of The Seattle Times.

I will call you next week to arrange a meeting with Dr Dennis Chinn, senior economist at Applied Economics Associates, who can answer your questions.

1985 Sep 11: Paul Craig Roberts, Chairman of the Institute for Political Economy (one of the Atlas Group/Krieble network of think-tanks) has written to thank Peter Sparber at the Tobacco Insistute for their support. He includes a report on the newly established, but extremely well-funded IPE (linked also to the Center for Strategic and International Studies).

    Attached is the Oregon Cigarette Tax paper by Chinn.(possibly accidentally attached)

    Sparber has written a note on the letter for internal circulation "I don't see much here for us, except item marked on page 2". This paragraph deals with a conference on "eneergy and the elderly to be held in Washington on September 27"

Because of the benefits promised by social security and the growth of private pensions, the economic status of the elderly will continue to rise. Second, the future tax burden implied by currently promised social security benefits is large and detrimental to economic growth.

1986 Jan 13,: William Polfus, clearly the Washington State PR tactician hired by the Tobacco Institute, had to refine his talking points and "Discuss revenue projections with Dennis Chinn."
We also have the notes from this meeting. [The last, headed "In the State Plan" is a real hoot! They are worried that people will not spend their money if cigarettes are too expensive.]

1986 Jan 9: Strategy Meeting of the Tobacco Institute over the "Washington State Cigarette/Tobacco Excise Taxes" issue list Dennis Chinn as a "Potential Resource"

1986 Jan 11: Chinn was reported by the Seattle Times as appearing before State legislature along with Bill Fritz of the Tobacco Institute.http://legacy.library.ucsf.edu/tid/evh07d00/pdf
    This article, however says his affiliations was with the Tax Institute. He was opposing the use of cigarette taxes to finance water quality programs for Puget Sound.

    He concluded that the State would collect less taxes than estimated because "state officials underestimated how much less people would smoke as a result of the tax hike."
[One legislator responded] "What you're saying is that this is a clean water and a public health measure at the same time."

1986 Jan 13: Alexander King is now in charge of the Washington Task Force for the Tobacco Institute, and Dennis Chinn is one of the team. Along with the professional lobbyists and strategists, he is to receive regular mailings. His $4,000 Retainer Contract begins January 13

"to provide updated economic analysts reports; meet and discuss issues with House, Senate and Dept. of Revenue Staff; meet with media personnel as necessary; provide economic analysis support for remainder of 1986 legislative session.

Account details

1986 Jan 16: Bill Polfus, the PR Strategist from Public Affairs Associates, Inc in Seattle is now putting out a press release promoting

An independent economist [If you don't count the $4,000 retainer!], Dr Dennis Chinn, [who] has analyzed the tax revenue projections on which the proposal is based and has found that the revenues as projected are severly (sic) over estimated.

    "The analysis indicates that the increase in cigarette and tobacco products taxes will not provide the stable, long-term revenue source which is necessary to adequately address the state's water quality projection needs." Dr Chinn explained.

1986 Jan 20: Chinn reports back to the tobacco lobbyists on a meeting: "Conversations with Dept. of Revenue Personnel, House and Senate Ways and Means Committees Staff regarding Water Quality Financing Proposal."

On Thursday January 16, 1986 I visited and talked at length with Don Smallwood (753-5542) and Dan Breard (753- 5564) of the Washington State Dept. of Revenue, Gary Benson and Charles Langen of the Senate Ways and Means Committee Staff (786-7715), and Greg Pierce and Steve Lundin of the House Ways and Means Committee Staff (786-7148).

    At each of these meetings I made clear that the Tobacco Institute was interested in helping come up with viable and rationale proposals for financing cleanup of Puget Sound and that I wanted to know what alternatives had been considered before settling on the cigarette tax.

1986 Jan 30: A copy of Dr Dennis Chinn's file-folder with the Tobacco Institute. He seems to have been paid Professional fees of $1,500 + $108 in expenses. and the $4,000 retainer.

Account details

1986 Feb 21: The Committee of Counsel [top inhouse lawyers of the tobacco companies] is now being advised of the battle over Washington State's 8-cents Tax Fight — with blow-by-blow descriptions of their actions and analysis of why the strategy failed. (by William Buckley Jr)

1986 Apr: /E Dennis Chinn, now acting as an advisor to the Tobacco Institute provides "Thoughts about possible news arguments to raise."

I've been trying to come up with additional arguments to make, but it's tough, I think that they've taken away much of the force of the argument that the revenue numbers are too high and that the water quality program will be underfunded down the road.

    Instead we should argue that General Funds will be required in the future so other worthwhile programs may be sacrificed to what may be less urgent water quality projects because of the earmarking,

I researched Washington case law on taxation and was unable to come up with any basis for possible legal challenge. Basically the legislature has complete discretion in how and who to tax, subject to constitutional restrictions on equal protection.

    If an amendment could be added to make the excise tax rate levied in border counties lower than in other counties to reduce the smuggling incentive the tax would be unconstitutional. But that's what happened to the recent attempt to set differential sales tax rates for border counties so I doubt that it would work.

1986 Apr 8: The Tobacco Institute's administration wants some accounting and address details on Dennis Chinn, Greg Niehaus, James A Papke , Thomas Borcherding and many others

1986 Aug: The Regional Vice Presidents (RVPs) and Regional Directors (RDs) of the Tobacco Institute in charge of various areas have supplied comments on their Economic Witnesses.

    Six of the RVPs thought it important that the economist was a resident of the State, "Ideally associated with the State University", while three did not, provided they were "presented to the legislators by a 'credible... organization' (e.g. chambers of commerce, labour union)." [Provided they hid their tobacco industry backing behind a front organization.] The consolidated and encapsulated comments included:

Region V
Dennis Chin PhD [sic Chinn] "He has proven himself a very trusted witness in all areas. He's extremely effective one-on-one; good knowledge; credible in his presentations and persuasiveness."

    RVP would utilize Chin again in Region V at "any appropriate time." He is "local, non-tobacco user" who does not get into his personal opinion. "He sticks with numbers and can back those up."

1987 Feb 23: Bill Fritz of Public Affairs Associates in Seattle writes to Ed Heintz and Michael Brozek of the Tobacco Institute reporting on a Smoking in Workplace (HB13) bill before the State Labor Committee.

This bill is destined to remain and die in Senator Warnke's committee.

    When asked if it would be helpful to have TI hire Dr Dennis Chinn, Seattle Economist, to conduct a fiscal impact analysis of the potential effect of HB 13 on state revenue and the Puget Sound Water Quality Fund, Sen. Warnke replied, "No, tell TI to save their money because that bill will not get out of my committee."

1987 May 5: Cotton Mather ('Matt') Lindsay of Clemson University has written an article "Excise Taxes: Facist Finance" which is being circulated at the Tobacco Institute.

    He has discovered through his extensive research that 'vertical equity' means either everyone paying the same in cash value, or alternately it means that the burden is felt equally by both rich and poor. He chooses to use the first definition:

it is difficult to achieve vertical equity [equal cash burden on everyone] through excise taxes because the amount of the tax paid depends on purchases rather than income. [The implication being that it would be more equitable if taxes were highest on those with the higher income]

    Breweries and tobacco companies write checks to the government for the excise taxes on beer and cigarettes, but here economists agree [economists never agree!]; these companies pass these taxes on to consumers. One's share of the burden of the revenues raised by these taxes depends on how much beer one drinks and how much one smokes.

    The unfairness of these excises is manifest; it is not merely another economists' debating point. [In fact, it is a central and primary debating point among economists.] The tobacco excise tax, for example, is the most regressive tax in the federal system. It is paid only by smokers who are today predominantly lower-middle income earners, lower income working women and blue collar workers.

    Some have argued that these taxes are appropriate because the funds can be earmarked for expenditures like Medicare, environmental protection and even public employee pensions. [Medicare and environmental costs are higher with those who smoke and drink to excess.]

    Why beer drinkers and cigarette smokers ought to pay more for such things is far from clear, however. To the extent that these activities shorten life, they relieve the burdens of Medicare and pension funds by removing potential claimants from the eligibility roles. [This is the old "smokers die young" claim from the same tobacco companies claiming that cigarettes had no adverse health effects. It also ignores the burden on relatives and welfare services.]

    Viewed from another perspective, smokers and beer drinkers not only bear a disproportionate share of taxes because they pay excises on these commodities, but they get less for their money, too. Because they live a shorter life span, they collect less in retirement benefits and receive fewer Medicare benefits. [One could also suggest that they get short-changed by

• the tobacco companies, and
• by the academic economists who take a salary to help educate their children — but who also work on the side to promote tobacco industry disinformation]

This may be fine for Mussolini, but it is antithetical to tax principles in a free and open society. [And if anyone knows anything about the origins of fascism, it is Public Choice economists.]

• Prof Dominick Armento — "Yes: Contacted, make good witness"
• Prof Summer LaCroix — "Yes: if needed in Hawaii"
• Prof Allan Dalton — "Yes: Good Witness"
• Prof Fred McChesney — "No Contact. Reported to be OK and could be used in future.
• Prof Cecil Bohanon — "Should be replaced by listed Indiana Economist, Pro. James A Papke"
• Prof Thomas Pogue — "Yes, Could be outstanding."
• Prof Robert McMahon — "Yes: Creditable witness and one-on-one contact."
• Pro Greg Neihaus — "Yes, outstanding witness"
• Prof Raymond Raab — "Yes: Outstanding"
• Prof Terry Anderson — "Yes, Good Witness"
• Prof Terry Logue — "Yes: Outstanding witness"
• Prof Kenneth Greene — "Yes: Only in particular situations with controlled information."
• Prof Cliff Dobitz — "No contact: State not lend itself to Economic witness use."
• Prof Richard Vedder — "No - Conflict minimises effectiveness"
• Prof William Mitchell — "Yes, Good witness"
• Prof Ann Harpert-Fender — "No contact - out of country, will contact in June.
• Prof Arthur Mead— "Yes: Good witness"
• Prof Dennis Hein — "Contact somtimes back; will probably be good witness and usable in 1988.
• Dr Mark Schmitz — "Washington — No"
• Dr Dennis Chinn — "Washington —Yes, Excellent"

1987 May 28: Paul A Jacobson has sent "Economic Witness Evaluation - Region V" to George Minshew at the Tobacco Institute. He runs through the records of a dozen or so witnesses used in his area.

Dr Dennis L. Chinn, PhD Consulting Economist, Bellevue, WA
Dr Chinn has provided extensive writing, consulting, and expert testimony on behalf of TI during past legislative sessions.

Counsel Fritz feels that Dr Chinn is an effective consultant and his services will definitely be utilized again in future tax fights.

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