Fred S McChesney

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This article is part of the Tobacco portal on Sourcewatch funded from 2006 - 2009 by the American Legacy Foundation.

Fred McChesney was was a Bureau of Consumer Protection official in charge of the FTC's cigarette oversight division [1], who later became a Professor of Economics and Emory University. He was also a close associate of Robert D. Tollison and James M. Savarese and helped them create two Cash for Comments Economists' Networks consisting of academics working for the tobacco industry.

He was a key member of the the first, which was known as the Committee on Taxation and Economic Growth. This group of libertarian economists helped large corporations and trade associations counter tax increases. He was also a leading member of the Tobacco Institute's clandestine Cash for Comments Economists' Network -- a group of academics who helped the tobacco industry fight proposed tax increase on cigarettes, and tried to counter the declining acceptability of public and workplace smoking.

Under the direction of Bob Tollison and lobbyist James Savarese the Cash for Comments Economists' Network grew to the point where it constantly had one professor of economics in each state who was willing to write op-eds or letters to the editor under direction of the Tobacco Institute, and were paid on proof of publication in a local newspaper, with a bonus for sending a copy and a letter to designated local Congressmen.

RELATED ENTRIES
Cash for Comment Economists Network
Network Documents Index


 

HOW THE NETWORK WORKED

The Cash-for-Comments Economists' Network was run by Savarese through a partnership with Professor Robert D Tollison who used the staff and facilities of the Center for Study of Public Choice at George Mason University to prove cut-out and organisation services. They developed and maintained a network of Economics Professors with at least one on tap in virtually every US state. As one Professor transferred or dropped out (there was a regular turn-over) a new one would be recruited in that State. In all, about 130 university professors were involved in the period 1985-1995, and costs ran to $3 million/year at a time when professor's salaries were in the $30-40,000 pa range. An active network member at a State university could almost double his normal salary.

  The main focus of the group was to write commissioned op-ed articles on a subject determined by the Tobacco Institute. The draft article would then pass back through the network to TI staff, who were essentially public relations experts. Here they were 'improved' and refined; then sent to the Institute's outside lawyers for vetting. Modified articles then returned to the professor, who would then send them to a designated State newspaper as if they were his 'independent expert opinion'. The professors received a base amount for writing and bonuses for successfully planting the article on the newspaper. Some, but not all, received a small (eg.$1000) annual retainer.[2]]

  Published papers would also be copied by the professor and sent to his local Federal Representative and Senator (for a further bonus). Sometimes there were special commissions, but generally the work was writing op-eds and LTE's where they were paid just on results (varied from about $700 to $3000 over the years). Network members could also be called upon to provide witness services and promote the cigarette companies' political/economic line at local ordinance or State legislative hearings. An active professor of economics at a State University could almost double his salary with these activities and with some further appearances, for instance, speaking on the importance of cigarettes in economic terms at major economic conferences, etc.
      Cash for Comments Economists Network   &   Robert Tollison   &   James Savarese   &   Network Document Index

 

Documents & Timeline

1948 Nov 19 red S. McChesney was born on November 19, 1948 (Washington, D.C.),


1978 J.D. at the University of Miami


1982 Ph.D. in economics at the University of Virginia.


1982 He is with the Bureau of Consumer Protection, in "complete charge of the FTC's cigarette matters.. He was the official who was involved in a Federal Trade Commission questionnaire used to survey evidence on the size of the cigarette health-hazard warning on its impact and effectiveness. [3]


1983 he became an Assistant Professor of Economics at Emory University (Atlanta, GA)

1985 He is now Associate Professor at Emory university. 1984 June The U.S. Treasury Department held tax simplification hearings throughout the country. Ogilvy & Mather (O&M) was involved in six out of the eight hearings, hiring local academicians in each city to prepare and deliver testimony against excise taxes. They also arranged media coverage for the academicians and traveled to each city to coordinate their activities. [4]


1984 Jun 20At the hearings held in Atlanta McChesney gave his testimony, and excerpts were later published in a brochure issued by the tobacco industry's private Committee on Taxation and Economic Growth entitled: ...The U.S. "Deserves to Have a Tax System Which Looks Like Someone Designed it on Purpose." [5]

The committee had been founded by long-term tobacco lobbyist and academic recruiter, Robert D. Tollison, with Fred McChesney and three other economists (Harold M. Hochman, Thomas E. Borcherding and Dolores T. Martin). It was basically an operation run by O&M for the tobacco industry. A Tobacco Institute document discusses "an informal committee of economists from 42 states who have collectively and individually participated in activities on behalf of the tobacco industry in the areas of excise taxation and public smoking." [6]


1985 Jan 31 M. Hurst Marshall at the Tobacco Institute (a Vice President) sent to his state branches a list of economists from their Economists' network who could "assist TI on the federal cigarette excise tax issue". An attachment to the letter asked them to spread this information to their lobbyists. [7] [8]. This was essentially a list of members of the 'Economist's network' or the 'Committee on Taxation and Economic Growth' (they overlap).


1985 Feb 8 Robert D. Tollison and Fred McChesney participated in tax reform seminar sponsored by the Emory University and featuring Congressman Fowler. [9] [10] [11]


1985 Mar 6 Maureen Delanty of O&M reported in the 'February Monthly Report' to Peter G. Sparber (TI Vice President) that she had:

"Attended Public Choice Society meeting in New Orleans and reported to you on the event. Final revisions are complete on Fred McChesney's paper and he will submit it for publication in the next two weeks." [12]

The Atlanta Journal-Constitution (Atlanta, GA) published on March 10, 1985 an op-ed article called "Simplifed Tax System Is Needed to End Confusion and Inequities" in which he wrote:

"Both excise and corporate taxes should be eliminated. ... tobacco-product manufacturers have an effective rate of 36 percent. Other corporations escape with tax rates as low as 2 percent of income." [13] [14]

1985 Jul 31 Another of his tobacco industry friendly op-eds called "Is the American Tax System Fair? " was published in News (North Tonawanda, NY) on July 31, 1985. [15]


1985 Dec 12: Annual Report of the Tobacco Institute's Public Relations division lists Professor Adams as having served them well:

We believe that the active and creative use of experts -- our scientists in particular -- gives us an edge. But without question, public smoking is our toughest challenge. A close second is taxation. In 1985, most of our resources in this area were focused on the federal situation. That being the case, we concentrated almost exclusively on the home districts and offices of the 56 members of the House Ways and Means and Senate Finance Committees.

We identified and utilized economists from universities in 48 of those districts. Some testified at the four federal tax hearings in which had interest. Others participated in academic symposia attended by Congressional staffers. Others communicated directly with their Congressmen.
And 34 of them wrote op-ed articles on the need to consider excises as part of tax reform. Many of these articles appeared in the principal newspaper in the targeted districts which have, by our estimation, a total circulation of nearly 4 million. The economists were of great help. [SNIP]

Professor Fred McChesney (Emory University) wrote an op-ed article on tax reform that appeared in the Atlanta Journa] Constitution on March 10 (newspaper in home district of Ways & Means Member Fowler). Copies were sent to Fowler and Ways & Means Member Jenkins.

Professor McChesney and Dr. Robert Tollison (George Mason University) participated in tax reform seminar sponsored by Emory University and featuring Congressman Fowler. [16]

1986 and 1987 McChesney was the John M. Olin Fellow in Law & Economics at the School of Law, University of Chicago and a Visiting Professor in 1987 and 1988 at the same university.


1989 Jan 11 his name was still on TI's list of economists. [17]


2000 + More recently Fred McChesney occupies the position of the James B. Haddad Professor at Northwestern University Law School (Chicago, IL).

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