Monday, February 02, 2009

Smoking and Economic Stimulas

The Democratic $819 billion super spending bill mislabeled as an economic stimulus bill contains $75 million for smoking-cessation programs. Could someone explain to me how funding smoking cessation programs belong in an economic stimulus bill? I am not opposed to people quitting smoking. Smoking is bad for your health, so stop it. I am not so sure it is a proper roll of the federal government however to fund programs that help people quit smoking. Even if that is a proper federal government roll how does that stimulate the economy? If people quit smoking wouldn’t that actually depress the economy?

Here in Nashville a year or so ago, they banned smoking in most bars. People who like dim lights, thick smoke, and loud, loud music quit going to bars and some fine honkytonks closed in Music City. That smoking ban was detrimental to the local economy.

What would be the economic impact if a lot of people quit smoking? First of all, retail would suffer. With retail hurting already, the loss of the revenue generated from people not buying cigarettes may be the additional loss that moves some stores from profitable to not profitable. If fewer people smoke we could see the closing of more 7-11’s. And if fewer people smoke, we could see layoffs in Winston-Salem North Carolina and other cities were they manufacture the cigarettes. And of course the cigarettes have to be transported, so we will see a hit in the trucking industry. The hardest hit sector will be the farmers who grow tobacco.

Health care is already suffering. In these hard times people are putting off selective surgeries and people are losing their health insurance. Are fewer sick people really good for the health care industry?

We all know how much trouble social security is in. Social security is not a retirement program of course, but is similar to welfare in that today’s workers transfer income to today’s social security recipients. If people live longer that will make social security even worse off and today’s workers will have to be taxed at a higher rate to pay the social security of all the old folks on the dole. If you tax current workers more, that will depress the economy. If fewer people are dying from smoking related diseases that means that there will be that much more strain on social security and a worse economy.

Another economic impact is that state governments benefits from receiving tax revenue from the sale of tobacco. Some states have specific programs, such as children’s health programs, tied directly to revenue from tobacco sales. If less money is flowing into government coffers, then there is less money for government to spend. Less government revenue and highway construction projects are delayed. Some specific programs tied to tobacco revenue will have to be shut down and employees will be laid off.

In a job creation economic stimulus bill shouldn’t we actually be encouraging people to smoke?

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