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Beverage industry douses tax on soft drinks

The idea had been floated as a way to finance a healthcare overhaul while combating obesity. But the industry has lobbied key lawmakers and financed scientific studies favorable to its position.

By Tom Hamburger and Kim Geiger

February 7, 2010

Reporting from Washington

Employing a broad-based lobbying effort, the soft drink industry has smothered a plan to tax sugared beverages -- a plan advocates said would have reduced obesity and helped finance healthcare reform.

Only months ago, public health advocates thought the tax would be a natural for congressional Democrats looking for revenue to fund expanded health insurance coverage. The soaring costs of treating ailments related to excess weight -- including diabetes and heart disease -- added urgency to the issue.

But the White House staff reviewing funding options never embraced the idea even after President Obama expressed interest last summer. A key congressional committee, after initially seeming receptive, ended up refusing to consider it. Several minority advocacy groups, including some committed to fighting obesity, lined up against the tax after years of receiving financial support from the industry.

There is no sign that First Lady Michelle Obama will mention taxes Tuesday when she unveils her new healthy-eating initiative, which had input from fast food and soft drink representatives.

Meanwhile, beverage lobbyists attacked some of the country's most distinguished nutrition scientists, accusing them of bias and distorting available evidence. The beverage industry also financed research that reached conclusions favorable to its position.

No one underestimated the difficulty of getting new taxes approved, but Rep. Linda T. Sanchez (D-Lakewood), a member of the tax-writing House Ways and Means Committee, said, "We thought we had a chance to punch through."

That was before the industry unlimbered its guns.

Target lawmakers

From the beginning, fast food and beverage company executives were uneasy about President Obama. He and his wife were known advocates of healthy eating. The executives were also concerned that the promised Obama healthcare initiative might include taxes or other incentives to reduce consumption of fast food and high-calorie beverages.

Coupled with similar initiatives in such states as California, the industry faced the possibility of a full-scale national debate on sweetened soft drinks and their effect on health -- and the nation's ever-higher medical bill.

Another alarm sounded last May, when the Senate Finance Committee heard testimony from public health advocates who proposed using a soda tax to help finance healthcare legislation.

Analysts at Yale University have calculated that a penny-an-ounce tax would induce a 23% drop in consumption, and the Congressional Budget Office has estimated that a smaller tax could raise $50 billion over 10 years. Although the extent to which such a tax might drive down obesity rates is scientifically unclear, nutrition experts argue that it would, at the least, improve health by discouraging consumption of sodas, which have no nutritional value but are packed with calories.

A few weeks later, soda tax advocates in the House Ways and Means Committee reported initially favorable responses from colleagues during closed-door meetings. And in July, President Obama told a Men's Health magazine reporter that such a tax was an "idea that we should be exploring."

Sanchez, who was recently diagnosed with gestational diabetes, was one of the committee members who pushed for consideration of the idea. She told a closed-door meeting of committee Democrats that it would be a political winner: "We are on the moral high ground here," she said. "We can improve health outcomes and get more revenue."

At the beginning, several other Democrats expressed support, including six-term Rep. Bill Pascrell Jr. of New Jersey and freshman Rep. Allyson Y. Schwartz of Pennsylvania, the daughter of a dentist.

Beverage lobbyists immediately went to work, enlisting other industries to help pressure members of Ways and Means.

"The industries in our coalition realized that this is a slippery slope, that once government reaches into the grocery cart, your business could be next," said Kevin Keane, senior vice president, public affairs, for the American Beverage Assn.

The coalition, operating under the name Americans Against Food Taxes, included the soft drink makers, their suppliers, and such mass-marketers as McDonald's and Domino's Pizza.

Using the argument that higher food and drink taxes would unfairly burden the poor, the coalition recruited a bevy of Latino groups, among them the Hispanic Alliance for Prosperity Institute, the National Hispana Leadership Institute and the League of United Latin American Citizens.

Public health analysts were surprised to find that the list included the National Hispanic Medical Assn., which represents 36,000 Latino doctors and focuses on health issues, such as obesity-related diabetes, that hit Latino youth especially hard.

"Why in the world would a Hispanic health advocacy group do this?" asked Kelly Brownell, the director of Yale University's Rudd Center on Food Policy and Obesity.

Nearly all of the Latino groups, including the medical association, had received beverage industry money in the past or have industry representatives on their governing boards.

The medical association's director, Dr. Elena Rios, said the financial support -- which amounted to no more than $10,000 from a single company -- had nothing to do with the decision to oppose the tax, which she and the other Latino groups agreed would hurt minority communities. She also said the evidence is not clear that the tax would effectively reduce obesity. On Friday, Rios said her organization had decided to withdraw from the industry coalition.

Referring to industry donations, Brownell said, "It's all about payback. Public health advocates ran into the same phenomena when seeking to increase taxes on tobacco."

The coalition launched an intense lobbying effort, including a $10-million television ad campaign in key markets warning against taxing food. The paper industry, a major supplier of fast food companies, also contacted members of Congress. Even some truckers joined the fight.

By the time the Democratic caucus held its next closed-door meeting in early summer, the atmosphere had changed, Sanchez said -- an assessment shared by Pascrell and some committee staffers.

Democratic Rep. John Lewis, the civil rights pioneer who represents Atlanta, the corporate headquarters of Coca-Cola, argued that the soda tax could lead to taxes on other foods, raising prices for hard-pressed consumers during a severe recession. If you begin taxing one sugar product, where do you draw the line?, he asked.

Rep. Ron Kind (D-Wis.), who represents a rural district where dairy farming is widespread, said he became concerned about the fairness of targeting one industry. Kind had heard from local Pepsi and Coke distributors, and he and other members also received letters from the National Milk Producers Assn. concerned that the proposed tax could apply to chocolate milk.

"We went from having real interest in this idea to it just falling off the table," Sanchez said. "It was my perception that opposition increased as members began hearing from local businesses" that were part of the beverage industry coalition.

Focus on the science

While winning its battle at the Ways and Means Committee, the soft drink industry was also waging a long-term war over the scientific evidence linking soda consumption to the nationwide problem of obesity.

In a two-pronged campaign, the industry attacked the findings of prominent nutrition scientists and underwrote studies by other scientists whose work was more supportive of beverage companies' claims.

Among the outspoken scientists criticized by the beverage association are Yale's Brownell and Harold Goldstein, who heads the California Center for Public Health Advocacy.

"Sugared beverages are the single largest source of sugar added to the American diet," said Brownell, noting that consumption averages 50 gallons a year for every American.

Goldstein recently joined with researchers at UCLA in a survey of 43,000 Californians that found adults who drink one or more sodas per day are 27% more likely than non-soda drinkers to be overweight or obese.

Both scientists have equated the beverage industry campaign to tactics employed by the tobacco industry in defense of smoking.

Keane of the American Beverage Assn. said researchers like Brownell and Goldstein were acting as advocates.

"Cigarettes kill. Soda doesn't," Keane said. "They pick and choose the facts that support their view and they attack anyone who disagrees," including those whose work appears in peer-reviewed journals, Keane said. "It's scientific McCarthyism."

The American Beverage Assn. website for the campaign against the soda tax points to three studies in peer-reviewed journals that dispute a link between soda and obesity.

One was conducted by an author working for Archer Daniels Midland, a major producer of high-fructose corn syrup. Two were conducted by a researcher who now works for the beverage association; one of those studies was funded by a grant from the association.

Despite the funding source, "the researchers worked independently and their findings were published in a peer-reviewed journal. That's the gold standard in the scientific community," Keane said.

Some of the studies Keane cites point to sedentary lifestyles and high-fat diets as the significant causes of weight gain. And, largely through reviews of previously published studies, they say that the existing science on soft drinks' role is at best unclear.

Keane also says that soda accounts for just over 5% of the average American's calorie intake, and that blaming soda for the obesity epidemic "defies common sense."

Goldstein says the industry is blaming obesity on physical inactivity -- "that it's the couch, not the can." But one reason Americans need more exercise "is because they're drinking so much soda," Goldstein said.

One theory that has been embraced by Goldstein and others is that the body has not developed a system for processing sugared beverages, which are relatively new to the human diet. One study found that children who drank soft drinks consumed nearly 200 more calories per day.

The beverage industry rejects the argument that liquid calories lead to greater weight gain, pointing to a study conducted by Frank Sacks, a professor in the nutrition department at Harvard School of Public Health. The study sought to determine whether certain diets are more effective than others at achieving weight loss. Sacks concluded that diets that reduce calorie intake result in weight loss, regardless of which calories are cut.

Keane argues that the study proves his point: "a calorie is a calorie," regardless of whether it's consumed in solid or liquid form.

But Sacks disagrees. "I don't know how they possibly could come up with that kind of interpretation," Sacks said. "There was no testing of sugar-containing beverages, and in fact the participants were taught to avoid them."

The industry has cultivated an unusual relationship with the American Academy of Family Physicians, sending a contribution "in the high six figures," AAFP Chief Executive Dr. Douglas Henley acknowledged, to underwrite "educational materials to help consumers make informed decisions."

Henley said "content development is completely independent" of the funding.

Harvard School of Public Health professor Walter Willett criticized the association's website as "misleading and incomplete." The website advises men not to consume more than one can of soda per day, an amount, according to Willett, that "will substantially increase risk of Type 2 diabetes."

tom.hamburger@ latimes.com

kim.geiger@latimes.com

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