By Alec MacGillis
Washington Post Staff Writer
Friday, June 4, 2010; 2:11 PM
She was a White House aide who, at the age of 37, had become President Bill Clinton's point person on a big tobacco bill, impressing veteran Senate Republicans with her hard work and intelligence.
But then a magazine article portrayed Elena Kagan as the driving force behind the legislation, a central player who had bent it to the White House's liking. This did not sit well with Republicans overseeing the bill, a group led by Sens. John McCain (Ariz.), Orrin G. Hatch (Utah) and Bill Frist (Tenn.)
Kagan rushed to apologize, eager to repair any damage to the compromise she had spent months to craft, which would have regulated tobacco for the first time. The senators accepted the apology, but just weeks later, the legislation collapsed, felled in a political showdown that overwhelmed Kagan's painstaking efforts to find a middle ground.
"It was very disappointing," said Rich Tarplin, then a lead negotiator for the Health and Human Services Department. "It was one of those things where you knew right away that the planets don't align often and we'd missed an historic opportunity."
In Kagan's trajectory through the legal and political establishment to become President Obama's Supreme Court nominee, the tobacco battle of the 1990s proved formative for someone who had little exposure to the messy realities of policymaking. In forging a deal that could satisfy Congress, public health advocates, states and tobacco companies, Kagan was for the first time in a high-profile role where she would hone the characteristics she has become known for: finding compromise in pursuit of a daunting goal and using her command of complex issues to win over powerful people with outsize egos.
The battle drew attention to Kagan as a force to be reckoned with, but it also was a lesson in the limits of compromise and persuasion, especially in the face of big lobbying efforts and partisan rancor. Even as she made inroads, White House attempts to keep both sides happy foundered badly, delivering a major blow to the administration.
"It got too big. We put in anything that anyone wanted," said Mike Moore, the Mississippi attorney general at the time, who had led a multi-state lawsuit against tobacco companies. "It became a Christmas tree that imploded under its own weight."
Kagan first entered the tobacco thickets as assistant White House counsel in 1995 and 1996, when Clinton officials were strategizing with state attorneys general, trial lawyers and public health officials about how to reduce smoking and recoup public health costs. After she was promoted to deputy domestic policy adviser in 1997, she took the lead in developing the legislation needed to complete a historic $368.5 billion settlement that tobacco companies had agreed that year to pay to help cover state health costs caused by smoking.
The legislation needed to define the new authority of the Food and Drug Administration to regulate tobacco, a key settlement provision. It would limit the industry's future liability, a condition of its support, and establish fees and taxes for the industry and limits on advertising.
Those who had been working on the issue for years noted that the White House was giving a relatively junior person a lead role. Richard Daynard, chairman of Northeastern University's Tobacco Products Liability Project, recalls going to the White House for a meeting presided over by Health and Human Services Secretary Donna Shalala and Kagan's boss, domestic policy adviser Bruce Reed. But a colleague pointed out the younger woman behind them.
"He said, 'The one who's really running this thing is neither Bruce or Donna but someone called Elena Kagan,' " Daynard said.
Kagan, a smoker who had recently quit, faced multiple crosscurrents. State officials thought that Clinton was not doing enough to promote their settlement. Public health experts such as C. Everett Koop, a former surgeon general, and David Kessler, the just-departed FDA chief, called the settlement a sellout because it included liability caps. And as 1998 began, the White House was distracted by the Monica Lewinsky scandal.
Amid this uncertainty, Kagan presented an assertive front, exhorting Congress in unusually strong terms to pass a sweeping bill and sounding more like a political veteran than the University of Chicago law professor on leave she was.
"We shouldn't content ourselves with half measures that won't work," she said in January 1998. "We think people will be embarrassed to go home without doing anything," she said two months later.
Behind the scenes, Kagan was working with McCain, Frist and their aides to negotiate a compromise that could get 60 Senate votes. One of the thorniest points was the provision giving the FDA authority to regulate tobacco.
The FDA wanted to exercise that power under its "drug and device" authority, but some senators worried that would give the agency too much leeway. Kagan came up with an alternative: The FDA would regulate tobacco under a new, separate authority, but with broad discretion. She devised another compromise to address concerns that the FDA might try to regulate tobacco farmers.
"She was pragmatic in the sense that she understood that compromise was necessary in order to achieve this huge public health objective," Tarplin said. "But she was also smart enough to know that the FDA needed to get behind it and that their substantive and legal expertise couldn't be second-guessed. That was a very important balance."
Meanwhile, Kagan had to address Justice Department concerns that liability limits and advertising restrictions pass legal muster -- concerns she mostly managed to argue away.
"She was always respectful, but also quite forceful," said David Ogden, then the deputy attorney general assigned to the issue. "She didn't give ground that she didn't think she needed to give. She was thoughtful in listening to valid points, but if you didn't have a valid point she pushed you until it was clear that you didn't. She was very good at that."
Kagan's efforts paid off when the Senate Commerce Committee approved the bill in April 1998 on a 19 to 1 vote, during which McCain singled her out for praise. (The problematic magazine piece -- written for the New Republic by Dana Milbank, now a Washington Post reporter -- appeared a few weeks later.)
But the legislation ran into trouble in the full Senate. The bill had grown more anti-industry -- the criticism from Kessler and Koop had opened companies up to more liability, and the White House and Congress, seeing tobacco as an easy revenue source, had layered more taxes and fees onto the settlement, making it a $500 billion package. The industry had had enough: It launched a $50 million ad campaign, casting the bill as a giant tax increase.
Many Senate Republicans piled on, accusing Clinton of using the legislation's $1.10-a-pack tax increase to pay for things other than its stated goal of reducing teen smoking. That June, the bill collapsed a few votes shy of a filibuster-proof 60, which also killed the settlement. Five months later, the states agreed to a $206 billion settlement that lacked key provisions such as FDA authority.
Moore, now in private practice, still faults the White House, saying that its advocacy needed to be "better and stronger" and that it let the bill get top-heavy. But he absolves Kagan, who "worked her tail off trying to help us."
Kagan put on a brave face, saying the smaller settlement did not reduce the administration's leverage for a "broader resolution of the tobacco issue." She tried to goad Congress into revisiting the reforms by threatening that the federal government would claim half of the states' settlement to cover its share of health costs.
But she left the White House in 1999, and it was not until last year that Congress granted the FDA regulatory authority. Kessler argues that the 1998 battle was worthwhile, part of an extended campaign that has, in two decades, sharply reduced smoking.
"This was one of those stories where, when it started was viewed as controversial, but when the president signed the bill last year was viewed as consensus," he said. "And she played an important role in that process."