CRFB Corporate Ties: Budget Watchdog Funded By Big Tobacco In 1990s Health Care Fight

Pictured are packs of cigarettes waiting to be purchased at a Chicago area news stand Friday, Nov. 30, 2012. New tobacco prod
Pictured are packs of cigarettes waiting to be purchased at a Chicago area news stand Friday, Nov. 30, 2012. New tobacco products have come nearly to a halt in the U.S. because regulatory reviews for thousands of applications required by a 2009 law are taking much longer than the law requires. Though it might sound like good news from a health perspective, the halt demonstrates how tricky it is to start regulating an industry.(AP Photo/Charles Rex Arbogast)

WASHINGTON -- The Committee for a Responsible Federal Budget is known in Washington as a nonpartisan budget watchdog, a central voice in calls to rein in the nation's debt. The CRFB features a respected list of Republicans and Democrats on its board and regularly hosts current leaders in the nation's capital for panel discussions on the future of the budget.

But historical documents raise questions about whether the CRFB -- which is also the primary vehicle advocating private equity billionaire Peter Peterson's debt reduction agenda, including cuts to social safety net programs --- has allowed corporate donations to influence its work on budget issues.

The organization was used in the early 1990s to create a front group for tobacco companies during the battle over President Bill Clinton's health care reform proposal. That group, called the Cost Containment Coalition, presented itself as a civic-minded coalition of those interested in finding the most responsible solution to the health care crisis. The corporate interests funding it had entirely different motives, according to documents collected by the Public Accountability Initiative, a public interest research nonprofit.

According to these documents, found in the Tobacco Legacy Library and at the Securities and Exchange Commission, the CRFB from 1992 to 1994 accepted money from the tobacco industry -- including Philip Morris and the Tobacco Institute -- in exchange for using the group's image as a bipartisan budget watchdog, through the coalition, to advocate against a proposed excise tax on tobacco products.

In a 1992 memo, Philip Morris spokesman Craig Fuller wrote that health care coalitions at the time were focused on how to solve the problem of access to health care, while "[v]ery little attention has been paid to the true problem with the health care system that actually impairs access and also puts Philip Morris at risk vis-a-vis increased excise taxes -- the escalating costs of the system and how to pay for it."

The solution to explaining this "true problem" was found in the formation of the Cost Containment Coalition. This group, according to the same 1992 Philip Morris memo, was to be formed "under the auspices of the Committee for a Responsible Federal Budget, and will be directed by Carol Cox," then president of the CRFB.

At the time, the CRFB president, whose full last name is Cox-Wait, was listed in an internal Philip Morris document as one of many "corporate affairs consultants" receiving personal compensation from the company. These documents show that she received $47,000 from the tobacco company in 1993, in the middle of the CRFB's work for the tobacco industry. Cox-Wait was also married to Philip Morris Vice President Bob Wait.

In an interview, Cox-Wait denied any impropriety, saying that the information in the tobacco documents may reveal Philip Morris' perspective on its interaction with the CRFB, but it was not that of the committee.

"They contributed to us, and they may have seen it that way, but what we were doing was a very serious study," Cox-Wait said, referring to a report on health care reform costs released by the CRFB.

In 1993, Calvin H. George, tax counsel at the Tobacco Institute, the industry's lobbying arm, described that report as "useful" to protecting tobacco profits.

"What is most useful here is a strong statement from a bipartisan group of budget experts warning that rhetoric about reforming health care as a means of bringing the deficit under control should be viewed with skepticism, at best," George wrote in an internal message to Susan Stuntz, vice president of public affairs at the Tobacco Institute.

Cox-Wait further defended her dual work at the time as both a corporate consultant and the head of the respected budget group. "When I was president of CRFB, I also ran a small consulting firm called Carol Cox & Associates. My board was aware of it. When I did that, I took a cut in pay and separated the time I did for the two of them."

Corporate interests pushing unpopular policies often seek cover from respected independent groups. In the tobacco industry's eyes, the CRFB apparently filled that role. "Because of her bipartisan Board, 'Committee for a Responsible Federal Budget,' and given her 'neutral' status, Carol is able to access many people who would be inaccessible to us given our issues," another internal Philip Morris document explained.

Cox-Wait said she always made it known that her consulting work was separate from her work at the CRFB. "I would say this is two hats, and this has nothing to do with the committee when I was giving budget process advice to private parties and being paid for it," she said.

The CRFB's connection to the tobacco industry did not end after the Clinton health care proposal fizzled in 1994. Internal documents from both Philip Morris and the Tobacco Institute show that Cox-Wait continued her consulting for the industry up until 2001. In a Feb. 7, 2001, letter dictating a schedule for a Philip Morris tax-and-budget team meeting, Cox-Wait is listed as the presenter for the "Federal Budget Situation."

Tobacco companies were not the only ones who saw the CRFB as worth connecting with. During the 1990s, insurance companies made contributions to the group and, according to a 1994 SEC filing by the health insurer Cigna, Cox-Wait was paid $12,000 as a consultant before joining the company's board in 1995. While Cox-Wait was under contract with Cigna, which opposed health care reform, the CRFB released a 148-page report that pointedly criticized seemingly every significant health care reform proposal at the time.

Cox-Wait remains on the board of the Committee for a Responsible Federal Budget, which is now run by Maya MacGuineas. Last year, the CRFB created a new entity called Fix the Debt, also headed by MacGuineas and funded by Peterson and multiple CEOs and corporations. Fix the Debt is calling for a grand deficit bargain to be reached by raising revenue, cutting spending and reforming social insurance programs.



Health Care Reform Efforts In U.S. History