As Soda Tax Bubbles Up, Food Lobby Mobilizes

Washington lobbyists have been enjoying a multi-million-dollar sugar rush from the food industry.

Soft drink makers, supermarket companies, agriculture and the fast-food business have poured millions into campaigning against what they fear could be a burgeoning national movement to raise money for health care reform by taxing sweetened beverages.

During the first nine months of 2009, the industry groups stepped up their lobbying in Congress. They have spent more than $24 million on the issue of a national excise tax on sweetened beverages and on other legislative and regulatory issues, according to an examination of lobbying reports filed with the Senate Office of Public Records. The review shows that 21 companies and organizations reported that they lobbied specifically on the proposed tax on sugar-sweetened beverages – which among other things would include sodas, juice drinks and chocolate milk.

About $5 million of the money was spent on a national advertising campaign aimed at Capitol Hill lawmakers and promoting a newly formed coalition called Americans Against Food Taxes. The group bills itself on its website as a coalition of “responsible individuals, financially-strapped families, [and] small and large businesses” but its 400-plus membership list is dominated by industry heavyweights such as Burger King Corporation, Coca Cola, Pepsico and Domino’s Pizza.

Many health officials and advocacy groups have argued for years that sugary drinks, particularly those with high-fructose corn syrup, have been key contributors to a rise in obesity rates in the United States, especially among children. Some argue that the time is right for a soda tax, which they say could not only cut consumption but also generate revenue to close state budget gaps and pay for new health care programs.

A proposal for a national excise tax on soft drinks surfaced in a May funding policy options paper during the Senate Finance Committee’s deliberations on health care reform. Food lobbyists attacked then and continued their efforts in July when President Obama raised the possibility of a soda tax in an interview with Men’s Health magazine. The proposal has not emerged in any of the health care reform bills still in play on Capitol Hill.

But the issue may be gaining traction in some key states. This week, California lawmakers are holding a high-profile hearing in Los Angeles to examine the link between childhood obesity and sugary drinks. In New York, Gov. David Paterson has revived the idea of a sugared beverage tax after a previous proposal was shot down by the legislature earlier this year in the face of industry opposition.

“We are reacting to the situation we find ourselves in,” said Kevin Keane, senior vice president for the American Beverage Association, which alone spent more than $7.3 million on lobbying and advertising in the third quarter of 2009, more than six times what it spent in the previous quarter. "In the fourth quarter we are on target to do as much, if not more," Keane said. “We really don’t know when the threat is over.”

Lobbyists for the industry groups argue that soft drinks cannot be blamed for obesity. A beverage tax, they say, would unfairly single out one type of product and would be a particular burden on low-income people, who can least afford to pay a few cents more per can or bottle.

“To say soda is the only cause of obesity, that’s not correct. Just walk down the street and count the number of White Castles or Burger Kings or Jack in the Box,” said Nelson Eusebio, executive director of the National Supermarket Association. “If we eliminate soda, would people stay away from fried food, hot dogs and all the other junk out there?”

Supporters of a beverage tax make the comparison to tobacco, saying that it makes sense to impose a levy on sugary drinks to offset health care costs. Such beverages now account for 10 to 15 percent of the calories consumed by children and adolescents, according to an April 2009 report [1] in the New England Journal of Medicine.

“For each extra can or glass of sugared beverage consumed per day, the likelihood of a child becoming obese increases by 60 percent,” said the article, co-authored by Kelly D. Brownell, a professor of psychology at Yale University, and Thomas R. Frieden, a physician who was then New York City health commissioner and now heads the U.S. Centers for Disease Control and Prevention. “Sugar-sweetened beverages … may be the single largest driver of the obesity epidemic,” wrote the authors, who argued for a federal or state tax.

In the Senate, a federal beverage tax was not perceived as a deep enough well of potential revenue, some congressional aides said in interviews. Others pointed out that the members of the Senate Finance Committee are especially sympathetic to the food industry: Democratic Chairman Max Baucus hails from Montana, a large producer of sugar beets. Iowa, the home state of ranking Republican Chuck Grassley, is the nation’s largest producer of corn.

“It ran into a committee with a lot of farm members,” said Chuck Marr, director of federal policy at the Center of Budget and Policy Priorities, a nonpartisan, nonprofit think tank in Washington that examines fiscal policies. “Senate Finance is a farm-dominated committee.”

The National Corn Growers Association spent $200,000 to lobby Congress against the tax and other issues through September, records show. Jon Doggett, an association spokesman, said other factions of the sugar lobby pushed hard on Congress, but didn’t describe their work on public filings as specific to the sweetened beverage tax. “They have kind of kept their heads down a little bit," Doggett said. "Nobody plays politics better than the sugar guys." 

In state capitals, the financial crisis has sparked more interest from officials scrambling to make up for lost tax revenue. Although 33 states have sales taxes that apply to soda, the taxes are not aimed at raising money for health care and generally are too low to affect consumption, according to another New England Journal of Medicine article. The Center for Science in the Public Interest, a health advocacy group, released a study this October that estimated that states could generate as much as $10 billion a year by adding a seven-cent tax to a 12-ounce can.

This week’s hearing in Los Angeles, sponsored by Democratic state Sen. Alex Padilla, was prompted by a policy brief [2] on soda consumption called “Bubbling Over,” published in September by the California Center for Public Health Advocacy and UCLA. It found that 41 percent of the state’s children between the ages of two and 11 drink at least one sweetened beverage a day.

One of the speakers will be Yale University’s Brownell, co-founder and director of the Rudd Center for Food Policy and Obesity. He said he expects to see the beverage tax adopted first by the states.

“It’s just a matter of time,” Brownell said. “If the tobacco tax is any precedent—and I think it is—it will happen first in the states. … If politicians in other states see it happen in California, they will see it as a winning issue.”

Keane, of the beverage association, agrees that the industry has never faced such a political challenge. He said he helped design the television ad campaign for Americans Against Food Taxes to focus on families and to point out how a new tax could squeeze the middle class.  One scenario portrayed a family at a campsite as a narrator intoned: “This is no time for Congress to be adding taxes on the simple pleasures we all enjoy, like juice drinks and soda …. We all want to improve health care, but taxes never made anyone healthy.”

In two other 30-second ads that played in prime time [3] in the past few weeks, a young mother says: “They say it’s only pennies. Well, those pennies add up when you’re trying to feed a family. Washington, are you listening? What doesn’t seem like much to you can be a lot to us.”

Keane said the ads were aimed at lawmakers more than consumers. “We found that all the lawmakers in D.C. get their news on satellite, so we had to buy national cable ads to reach them,” Keane said.  “It directly targeted the policymakers and staff and those who are directly active and engaged in the process.”

In addition to the producers of Coca-Cola, Pepsi, Dr. Pepper, and Snapple, Americans Against Food Taxes also counts the U.S. Chamber of Commerce among its many partners and has encouraged Hispanic and African-American interest groups to write letters and send e-mail blasts against the sugar tax as unfair to lower-income families.

Elena Rios, a physician who is president of the National Hispanic Medical Association, said she sided with the beverage industry because a tax on soda wouldn’t be “a comprehensive approach” to health problems in her community.

“I’m not convinced that [a sugared beverage tax] is a positive incentive to make people aware of nutrition,” Rios said. “So instead of sugar, what do they use? Sweetener? I think we have to step back and take a broad approach.”

The National Supermarket Association’s Eusebio, a leader in Americans Against Food Taxes, said his organization is providing grassroots manpower. When New York Gov. Paterson raised the possibility of a soda tax, Eusebio organized petition drives in neighborhoods that would feel the pinch of a few pennies on a can of Coke.

At Key Food Supermarket at 161st Street in New York, shoppers who wanted to protest the tax waited in a line that stretched a city block, Eusebio said.

He has since coordinated with grocer associations in South Florida, Massachusetts and Connecticut – all who see a nickel-a-can tax as prohibitive.

“Unfortunately, these days whenever a state or federal government needs money—and right now the state of New York needs money—this is what happens,” Eusebio said. “They are trying to make this out as something else. This is just a way to raise money.”

Soft Drink Tax Lobby
A proposed soda tax to fund health care reform spurred lobby spending during the first three quarters of 2009. A look at the top 10 companies and organizations [4] lobbying this issue. Editor's Note: Figures for Coca-Cola Enterprises and Coca-Cola Company have been combined. (Source: U.S. Senate Lobbying Contributions Database)

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