Deaths linked to alcohol are significantly more common than drug overdose deaths, but lawmakers may promote more drinking through a two-year tax break for producers of beer, wine and spirits as part of the Senate’s tax code overhaul.
The tax break, for 2018 and 2019, would save alcohol producers $4.2 billion, according to the Joint Committee on Taxation. The provisions in the Senate Finance Committee’s tax plan were requested by Republican Sen. Rob Portman of Ohio, but are based on a bill from Sen. Ron Wyden of Oregon, the committee’s top Democrat.
Supporters of the tax break emphasize its benefits for small brewers, whom they tout as job creators. But public health experts who study the link between taxes and alcohol consumption think the economic impacts are overstated, especially since the underlying idea is for people to buy more alcohol.
Portman touted the job growth potential during the Finance markup last week.
Watch: House GOP Giddy After Tax Bill Win — But Will Senate Kill the Mood?
“The industry now supports about 15,000 jobs. Sixty-one new breweries have opened just last year alone in Ohio,” Portman said. “This legislation is only going to promote the expansion and the jobs that come with these entrepreneurial small businesses.”
But all alcohol producers — including giant brewers, wineries and distilleries — would benefit from the changes. The Beer Institute, which lobbies on behalf of all brewers, estimates that it would save the beer industry $130 million a year. Large brewers like Anheuser-Busch InBev, the global conglomerate that makes Budweiser and produces more than 100 million barrels of beer in the United States, would get a modest tax break, around $12 million.
Smaller brewers would get a steeper cut for the first 60,000 barrels they produce. A brewery that makes 10,000 barrels a year would save about $35,000 annually. The Brewers Association, which represents the smaller producers, thinks that these relatively minuscule amounts would go a long way for their members.
“All of those breweries would take that savings and reinvest in their physical plant,” Bob Pease, the Brewers Association’s president, said in an email. “That reinvestment would allow those breweries to make more beer. When small and independent breweries produce more beer, they create more jobs and hire more workers.”
The Brewers Association has not taken a formal position on the broad tax overhaul despite its support for the alcohol-related provisions.
But public health experts cited potential harm from greater alcohol use and cast doubt on the economic effects.
“If the purpose of the bill is to generate more jobs, more economic activity, the only way that’s going to happen is if they generate more business,” said David H. Jernigan, a professor at the Johns Hopkins Bloomberg School of Public Health.
The tax changes would come as per capita alcohol consumption is climbing after dramatic decreases in the 1990s, which followed record consumption rates in the preceding decades. On average, every American age 14 and over consumed the equivalent of 2.32 gallons of ethanol in 2015. That’s 258 beers, 104 glasses of wine and 168 shots per person in a year.
That is down slightly from its recent peak in 2012, when it was the equivalent of 2.34 gallons of ethanol per person. That compares to the equivalent of 2.25 gallons in 2005 and 2.14 gallons in 1997. Increased consumption of wine and spirits are fueling the rise, while beer consumption has dropped slightly.
Excessive drinking is concentrated among a relatively small number of drinkers, since only 56 percent of the population reported having a drink in the past month in 2015, according to the National Institute on Alcohol Abuse and Alcoholism. On the other hand, 26.9 percent of adults reported binge drinking — 4 or 5 drinks within two hours — and 7 percent reported “heavy” use, defined as binge drinking five or more days in the past month.
The most recent data from the Centers for Disease Control and Prevention on alcohol-related deaths come from 2006 to 2010, when each year on average there were 88,000 deaths from alcohol poisoning, traffic accidents or consumption-related chronic conditions. By comparison, drug overdose deaths are likely to be around 65,000 for 2016. The CDC estimates that in 2010, excessive drinking resulted in economic losses of $249 billion from lost workplace productivity and health care expenses.
There has not been extensive research into how a tax cut could impact consumption. But Philip J. Cook, a Duke University professor of public policy, has examined the result of the original 1991 excise tax that the industry is now seeking to reduce.
“What we know is that a higher tax reduces drinking. That’s perfectly clear compared to what it would be otherwise,” he said. “With reduced drinking comes reduced mortality both due to drunkenness and to chronic alcoholism.”
In a 2012 study, Cook and a colleague argued that the 1991 tax saved more than 6,000 lives in the first year it was imposed. Another 2012 study found that a hypothetical tax increase would mostly have the greatest economic effect on the heaviest drinkers, and would result in an 11.4 percent reduction in heavy drinking and a 9.2 percent reduction in drinking overall.
Interest groups representing the wine and spirits industries did not respond to multiple requests for comment. But the two beer industry lobbying groups pushed back against the idea that it would result in more consumption.
“Because the tax savings is limited for the larger players and spread among 5700+ smaller players, we don’t believe it will affect the price of beer or consumption,” Pease of the Brewers Association said in his email.
Lawmakers behind the legislation don’t believe it would have negative health implications.
“While alcohol misuse and addiction is always a health concern, Senator Wyden’s legislation focuses on revamping antiquated regulations that unfairly punish small craft beverage companies that are growing America’s economy,” said a spokeswoman for Wyden, who noted that he supports access to substance abuse treatment and fought to preserve protections under the 2010 health care law.
Despite the inclusion of Wyden’s provision, he and most other Senate Democrats are likely to oppose the tax overhaul. Throughout the Finance markup, Democrats were insistent that the GOP tax plan would benefit the wealthy at the expense of middle-class taxpayers.
While the industry and its supporters frame the tax cuts as a job-creation tool, researchers point out that the opposite may be true.
A study by Jernigan and several colleagues, published in July in the journal Preventive Medicine, modeled the effect of new hypothetical excise taxes and sales taxes for alcoholic drinks. They found that while those taxes would result in job losses for the beverage manufacturers and related industries, they would result in net increases as consumers would choose to spend their money elsewhere and the government would have more tax revenue to spend.
The public health arguments against an alcohol tax cut are unlikely to gain traction in Congress, where a majority of both chambers support cuts, especially to smaller craft beverage producers.
Jody L. Sindelar, a professor of public health and economics at Yale University, said that it’s harder to make a case for alcohol taxes than for other harmful products like tobacco.
“Most people consume with no problem,” she said. “It’s easy to undermine a desire for higher taxes because you can’t definitively say that it’s bad for you.”
She and others also noted the influence of alcohol lobbyists. Alcohol manufacturers and their trade associations have spent $22.5 million lobbying Congress so far in 2017, and last year spent $26.9 million. They spent $12.3 million supporting candidates for Congress of both parties in the 2016 election cycle, and have so far spent $3.9 million for 2018.
Correction 1:21 p.m. | The headline of this article originally misstated the amount alcohol producers stand to save under a proposed tax break. It is $4.2 billion.
As he prepares to bring the first tax code re-write since 1986 to the Senate floor, Sen. Orrin G. Hatch of Utah is saying his Senate service might not be nearing its end.
In a report published Tuesday, Hatch told the Wall Street Journal he does intend to seek another term.
“I’m planning on running again because I still have the chairmanship of the Finance Committee and they’ll never be another Utahn that’s chairman of the committee, at least not for 40 or 50 years,” Hatch said.
Hatch has wielded the gavel of the powerful tax-writing committee since the start of the last Congress in 2015, meaning that under Republican conference rules he would have two more years of eligibility as chairman at the start of his potential next term in 2019.
According to the Journal, Hatch emphasized that a final decision would not come until the end of 2017 or the start of 2018.
There has been widespread speculation the 83 year-old Hatch will retire at the end of his current term, particularly if there’s interest in the seat from former GOP presidential candidate and Massachusetts Gov. Mitt Romney.
The Romney family has longstanding ties to Utah, and despite the value placed on Senate seniority, the well-known former presidential nominee might have some more clout than an average freshman lawmaker.
One potential conservative rival, Sutherland Institute President Boyd Matheson, said Monday that he would not mount a bid for Senate in Utah.
“I have decided that I will not seek a seat in the United States Senate. Instead, I will focus my effort and attention on the desperate need in the nation for strengthening and building leaders while advancing real dialogue about the principles and policies that will create a better tomorrow for America,” Matheson said on KSL NewsRadio.
Matheson is a former chief of staff to Utah’s other Republican senator, Mike Lee.
In addition to serving as chairman of the Finance Committee, Hatch is the Senate president pro tempore, as the longest-serving senator in the majority party.
Twelve years ago, Sen. Lisa Murkowski sat at the breakfast table with her youngest son, who was in junior high school at the time. It was a big day. The chamber was set to vote on opening up the Arctic National Wildlife Refuge for drilling, a priority of Alaska lawmakers for the previous three decades.
“My son looks up at me and he says, ‘Mom, I thought grandpa passed ANWR years ago,”’ the Republican senator recalled recently in her Hart Building office, referencing her father, former Sen. Frank H. Murkowski. “You have to kind of say, ‘Well, yeah, they kinda passed it, but it didn’t really pass. And so it’s back before us again and we’re going at it.’”
That vote ended up failing. But now her son has a graduate degree and Murkowski could very well have another big day again in the next few weeks.
Drilling in the 19-million-acre wildlife refuge has long been a priority for the Last Frontier’s elected officials. It was the proverbial “white whale” for the late GOP Sen. Ted Stevens. Rep. Don Young, the Republican who has served since 1973 as the state’s at-large representative, has shepherded bills out of the House that die elsewhere.
Now, an ANWR drilling measure is attached to the tax overhaul Senate Republicans are considering, with drilling revenues used to raise money to offset tax cuts. But getting it to President Donald Trump’s desk won’t be easy.
And for Murkowski, it may mean voting for a bill that could do damage to a health insurance system she famously helped save earlier this year.
“There will be many parts of this that I think have a lot of warts on that I don’t particularly like,” she said. “Overall, is this going to result in a better tax policy overall for us to help with our economic growth? To help families? That’s what I need to be looking to.”
Included in the budget resolution that allows Republicans to advance the tax measure with only GOP support was a portion instructing the Senate Energy and Natural Resources Committee to find $1 billion in savings. While it did not explicitly say, lawmakers from both sides of the aisle knew exactly what it was for.
“It is significant that ANWR is included; it certainly is one of those factors that make me want to get to yes,” said Murkowski, the Energy panel’s chairwoman.
Originally established as part of an Alaskan public lands bill compromise in 1980, ANWR is home to migrating caribou, denning polar bears and more than 200 different species of migratory birds. It is one of the last big untouched wildernesses on the North American continent.
That law also left open a window for a future Congress to vote to allow oil production activities in the so-called 1002 area, kicking off a decades-long Capitol Hill policy battle as large as the state affected by it.
“This has been a decades-long fight, a generational fight,” Murkowski said. “And so for Alaskans, when you ask them about whether or not we should open up a small portion of the 1002 area, most will say the bigger question is: Why haven’t we, to this point in time?”
Republicans have long sought to launch oil drilling in the area, citing the economic and national security boon of the estimated 10.4 billion barrels of oil and 8.6 trillion cubic feet of natural gas contained in the deposit, according to a U.S. Geological Survey analysis.
Those efforts have repeatedly been turned back by most Democrats and a collection of moderate Republicans over the years in the Senate.
Alaska lawmakers have gotten close before. Congress passed a reconciliation measure opening the area 22 years ago that was swiftly vetoed by President Bill Clinton.
And in December 2005, Stevens tried, and failed, to shepherd a defense spending bill with ANWR language through the Republican-controlled Senate to a waiting President George W. Bush, but members of his own party were key to voting it down, 56-44.
“It’s long overdue,” Tennessee GOP Sen. Lamar Alexander said. “It has become an exaggerated environmental debate, and I feel like I’m a strong conservationist. … It’s a big win for Sen. Murkowski. I mean, she has worked hard on it and just to get through the committee as she did and into the tax bill is a significant accomplishment by her.”
For Alaskans, though, the initiative has remained the state’s No. 1 policy goal, regardless of party, since that law went into effect in 1980. Murkowski has introduced some type of ANWR drilling legislation in every Congress she has served in since she took office in 2002.
Support is such a given for Alaskan officials that when Murkowski met with Stevens before she was officially sworn into office, the two did not even need to broach the subject of ANWR.
“It was just known that that was No. 1,” Murkowski said.
The duo led the charge in 2005 when Republicans attempted to move the policy through two separate measures: as part of the reconciliation instructions of the fiscal 2006 budget and then later as part of the fiscal 2006 defense spending bill. Both measures failed as moderate Republicans took issue with the potential environmental impacts.
Stevens, the longest serving Republican senator in the chamber’s history at the time he left office, would consider the defeats as among the biggest disappointments of his 40-plus-year career, according to Karina Waller, the executive director of the Ted Stevens Foundation.
Those defeats, while heartbreaking at times for backers, have helped shape how Murkowski has approached this go-around — her first as chairwoman of the Energy and Natural Resources Committee.
“Don’t assume that anyone is going to be with you, because we were disappointed in 2005,” she said. “We thought we had the one extra vote we needed from a Republican colleague, and it wasn’t there. It was very, very disappointing.”
That lesson — that every vote matters — was on full display earlier this summer as Murkowski, along with fellow Republicans Susan Collins of Maine and John McCain of Arizona, scuttled the GOP attempt to repeal the 2010 health care law.
And the lesson will only shine brighter as the Republican tax effort goes under the Senate spotlight.
Senate Republicans saw a potentially easy $1.1 billion in savings, the revenue ANWR drilling is estimated to produce over the next 10 years.
But for Murkowski, she knew her goal could become a reality on election night.
“You learn how and when to pick your battles around here. And with President [Barack Obama] in office, it was just not going to be a possibility,” she said. “But when the administration turned, when it was clear that we had majorities, it presents itself as the time, the time to make the effort.”
The Energy panel approved the drilling plan Wednesday, 13-10. One Democrat — Sen. Joe Manchin III of West Virginia — supported it. And the Senate Finance Committee advanced its tax plan Thursday, 14-12. No Democrats voted for it.
A key decision by the Finance panel, however, now places a giant asterisk next to the tax effort.
Republicans decided after Tuesday’s weekly policy lunch to include in the tax plan an effective repeal of the health care law’s individual mandate, eliminating the need for the government to spend $338 billion to provide health insurance subsidies.
For GOP lawmakers still hung up on their recent health care defeats, it seemed like a no-brainer. But for Murkowski, it could mean voting for a bill that would undermine a health insurance system she voted to save in July.
Still, she said a repeal of the health care law “means a heck of a lot more than just the individual mandate.”
“We recognize that the individual mandate is one of those underpinnings … but it is not the wholesale repeal of the ACA,” she said, referring to the law by its abbreviation.
Murkowski believes legislation from Alexander and Patty Murray, leaders on the Health, Education, Labor and Pensions Committee, is necessary before the mandate — which supporters of the law say is a critical foundation for the current insurance markets — is repealed.
“I think that there is a path and I think the path is a reasonable path,” she said of her support for the measure. “If the Congress is going to move forward with repeal of the individual mandate, we absolutely must have the Alexander-Murray piece that is passed into law.”
The Congressional Budget Office has estimated that repeal of the mandate could lead to 13 million more uninsured individuals over the next 10 years. Republicans argue that those are people simply deciding not to buy insurance. But the CBO also estimated that premiums for others would spike as much as 10 percent because of the mandate repeal.
“Nobody is in a good mood right now. This is tough slogging what they are going through, and getting the votes for significant reform like we are talking about is hard,” she said.
Murkowski could know soon enough if her quest is still alive. The Senate is expected to vote on the tax overhaul the week after Thanksgiving break.
Donald Trump and perhaps his top congressional GOP critic are sparring again, this time with Sen. Jeff Flake’s office disputing the president’s claim that the Arizona Republican plans to oppose the party’s tax overhaul plan.
The president started the duo’s latest back-and-forth with a Sunday evening tweet predicting the retiring Flake — whom he mocked by referring to him as “Flake(y)” — will “be a NO on tax cuts because his political career anyway is ‘toast.’”
Losing Flake would put the bill in serious jeopardy of failing, robbing Trump of a year-end legislative victory.
Trump wrote that Flake is “unelectable in the Great State of Arizona (quit race, anemic polls) was caught (purposely) on ‘mike’ saying bad things about your favorite President.”
Sen. Jeff Flake(y), who is unelectable in the Great State of Arizona (quit race, anemic polls) was caught (purposely) on “mike” saying bad things about your favorite President. He’ll be a NO on tax cuts because his political career anyway is “toast.”
Flake was caught on an open microphone Saturday saying if Republicans "become the party of Roy Moore and Donald Trump, we are toast."
The tweet raised eyebrows in Washington, with congressional observers and reporters firing off their own tweets noting Flake had not previously announced how he intends to vote on a tax overhaul bill that cleared the Finance Committee late Thursday evening.
Several White House officials had not responded to an inquiry seeking more information about Trump’s prediction, including the basis of his prediction. Several hours after the president’s 6:22 p.m. post, a Flake aide disputed Trump’s prediction.
“Sen. Flake is still reviewing the tax reform bill on its merits. How he votes on it will have nothing to do with the President,” the aide said.
But the president’s tweet introduces another new dramatic twist in his and Senate GOP leaders’ efforts to score their first shared legislative victory since Trump was sworn in on Jan. 20.
That’s because Sen. Ron Johnson, R-Wisc., already has signaled his opposition unless changes are made to benefit small businesses. If both Flake and Johnson oppose the measure, it would leave no margin for further defections for GOP leaders and the White House. And several other Republicans have expressed skepticism over the measure, including about its projected impact on the federal deficit.
Sen. Roy Blunt of Missouri, a member of the chamber’s GOP leadership team, tried to quell the deficit concerns Sunday on NBC’s “Meet the Press” program.
“It doesn't take much in economic growth to offset both of those numbers. If we get back to the 70-year average of 3.2 percent growth instead of the Obama-[era] average of less than two, we’re up to 3 [percent] already,” he said. “We’re anticipating in this bill 2.6 [percent]. And every tenth of a percent of growth there makes a huge difference in federal revenue.”
On the same show, White House Office of Management and Budget Director Mick Mulvaney, a former House GOP deficit hawk, was asked whether the Senate bill is built on gimmickry to get around chamber rules given Republicans and the White House call it a $1.5 trillion tax cut but several independent estimates project a $2.2 trillion hit on the deficit.
“Yeah, to the extent it’s a gimmick, a lot of this is a gimmick,” Mulvaney admitted. “Obamacare was a gimmick to get through these rules in the Senate.
“And what you should really be looking at is the policies themselves,” he said, “and we think these are excellent policies.”
Trump’s final Sunday evening tweet reflected what his chief of staff, John F. Kelly, has acknowledged is the former businessman’s frequent impatience with the slow pace of the legislative process. He also tried to put a little pressure on them while they’re back home hearing from voters.
The president wrote to his 42.1 million Twitter followers that GOP senators are “working very hard” on the tax bill, adding: “Hopefully it will not be long and they do not want to disappoint the American public!”
Republican Senators are working very hard to get Tax Cuts and Tax Reform approved. Hopefully it will not be long and they do not want to disappoint the American public!
Sen. Lindsey Graham, R-S.C., a frequent Trump golf partner, has said his party will be in trouble in the 2018 midterm elections if it cannot pass a tax bill. That is amplified by the fact the GOP, given its majority in the House and use of Senate rules, can send Trump a tax bill without a single Democrat voting for it.
It’s decision time on the ultimatum Republican leaders have been issuing to members all fall: Pass a tax overhaul or wave the House majority goodbye.
But some of the party’s most vulnerable members, many from high-tax states in the Northeast, have come out against the House tax plan over its curtailing of deductions for state and local taxes and mortgage interest. Others are still undecided, afraid of how the measure will affect their districts.
“Voting for this hurts the majority,” Rep. Peter T. King said on the eve of Thursday’s vote. The New York Republican opposed the plan long before the Democratic Congressional Campaign Committee added him to its target list last week.
“We could end up losing all the members in the Northeast,” King said, acknowledging an incongruity between what leadership is saying about the policy and political strategy going into 2018 and what members from his region see in their districts.
“You get into a tough race, some things are beyond your control,” he said. “But this is basically an unforced error. We’re doing it to ourselves.”
Without a legislative victory on health care to tout in their districts, Republicans have been adamant that they need to pass something — anything — on taxes. And GOP strategists admit that those scare tactics have likely boosted the chances of the tax bill’s passage Thursday.
Watch: Which Members of Congress Might Not Be Back in 2019?
But House races, as any campaign consultant will admit, are localized affairs. Many Northeastern Republicans survived in districts Hillary Clinton carried last fall, in large part by distancing themselves from the national GOP and localizing their races.
As many of the same members did on health care, some of these lawmakers are now distancing themselves from the national party on the tax vote. Even so, it’s likely the Republican tax plan will still be used against them.
New Jersey Rep. Leonard Lance, who was also strongly against the GOP health care effort, plans to vote against the tax bill. A DCCC target next year, Lance sits in a district Clinton carried by 1 point.
“We are judged based upon how we vote,” he said Wednesday, dismissing any concerns about his own vulnerability.
Besides Lance, New York Rep. Dan Donovan also opposed the GOP health care plan and will vote against the tax overhaul. (New Jersey Rep. Frank A. LoBiondo fits into that category, too, but he recently announced he won’t seek re-election, making his district more competitive for Democrats.)
California Rep. Darrell Issa, who tops Roll Call’s list of the 10 most vulnerable incumbents, backed leadership on health care but is against the tax bill. New York Rep. John J. Faso, the third most vulnerable House incumbent, also backed leadership on health care, but he came out against the tax plan Wednesday evening.
Two additional New York Republicans have come out against the measure: Rep. Lee Zeldin and the National Republican Congressional Committee’s own head of recruitment, Rep. Elise Stefanik. The NRCC is touting the plan in digital videos.
At least four Democratic targets were undecided as of press time: New York Reps. John Katko, California Rep. Dana Rohrabacher (the 5th most vulnerable incumbent), New Jersey Rep. Rodney Frelinghuysen and Pennsylvania Rep. Ryan A. Costello. Katko and Costello voted against the earlier health care bill.
Donovan said the tax plan “kills the people” in his district. He’s facing a primary threat from former GOP Rep. Michael G. Grimm and a Democratic challenger the national party is excited about. Donovan emphasized the importance of members doing what’s best for their own districts.
“If this is harmful for your constituents and you’re still voting ‘yes,’ then yes, I would be worried about that person,” Donovan said. “If it’s good for the people back home and you’re voting ‘no,’ I’d be concerned about that as well.”
Democrats aren’t about to give these members a free pass.
The DCCC has signaled it will attack all Republicans for the tax vote, regardless of how they voted, just as it did after the House GOP’s health care vote earlier this year. It started running Facebook ads this week in 36 GOP districts, including against members who had already said they’d vote against it.
After the House GOP budget vote last month, Democratic recruits in New York and New Jersey tried to use the vote against Republican incumbents. Max Rose, an Army veteran challenging Donovan in New York’s 11th District, went after the incumbent for not working harder to “kill” the measure.
Blanket attacks don’t always work. Some moderate Republicans overcame Democratic attempts to tie them to candidate Donald Trump last year, arguing they were nothing like Trump and the real estate mogul wasn’t a Republican.
But Democrats aren’t using Trump so much these days; they’ve rediscovered Speaker Paul D. Ryan as their boogeyman. And it’ll be much harder for rank-and-file members to distance themselves from Ryan than from Trump.
On the eve of the tax vote, Donovan shrugged off threats of Democratic attacks.
“They’re going to attack us no matter what,” he said.
NRCC Chairman Steve Stivers is excited about the tax overhaul, but acknowledged some of his most vulnerable members still aren’t happy with it. Still, he scoffed at King’s suggestion that the tax plan could hurt the party’s chances of keeping the majority.
“We’ve got to try to do more for some of our colleagues who are in special circumstances, and we’re working with them,” the Ohio Republican said. “We didn’t write this on tablets in stone. It is written in ink and pencil, and it will be changed before it’s enacted.”