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Could Obama-McConnell Liquor Choice Invite Look at Bourbon Laws?

Could bourbon laws get another look after an Obama-McConnell summit? (CQ Roll Call File Photo)

There was no sign of brown liquor President Barack Obama's Friday lunch meeting with bipartisan political leaders, but the bourbon industry is using renewed attention to press its own lobbying interests.  

At the top of that list is the issue of the tax treatment of the whiskey that's aging in barrels in warehouses.  

By law, bourbon must age for at least two years, and distillers tend to age the brown spirit far longer than that. But the way inventory rules work in the tax code, costs can't be deducted along the way. Legislation already introduced by Mitch McConnell and his fellow Kentucky Republican, Rep. Andy Barr, proposes a change so the aging process would not be considered part of the production period. Every single Kentucky lawmaker, including Sen. Rand Paul, is on board.  

With tax reform a possible area of compromise in the coming months, Obama's suggestion he "would enjoy having some Kentucky bourbon with Mitch McConnell" might be well-timed for bourbon moneymakers.  

"I don't know what his preferred drink is, but — my interactions with Mitch McConnell, he has always been very straightforward with me. To his credit, he has never made a promise that he couldn't deliver," Obama said.  

"I strongly support Kentucky's historic bourbon industry & the jobs it creates. I appreciate the President highlighting this fine product," Kentucky Republican Mitch McConnell said via Twitter Thursday evening.  

The Kentucky Distillers' Association has seized on the attention from 1600 Pennsylvania Ave., even selling "Keep Calm and Drink Bourbon" Obama-McConnell mugs and baseball caps on its website. The association has said it will donate proceeds from the merchandise to the Henry Clay Center for Statesmanship at Transylvania University in Lexington. That seems fitting because, as noted in the McConnell biography "Republican Leader," he wrote his undergraduate senior thesis at the University of Louisville about Clay, a Kentucky statesman known as "The Great Compromiser."  

Kristin Meadors of the distillers' association told CQ Roll Call the group would seek to have the tax issue resolved through the "larger tax modernization bill that will hopefully come at some point." A rewrite of the tax code for the first time since 1986 has proved elusive in recent years.  

"I am confident that with the right trade, tax, and regulatory policies, Kentucky's bourbon distilling, bottling and tourism industry is poised to enter a new era of growth and job creation for the people of this Commonwealth," Barr said in a statement announcing the bill last year.  

Meadors said the group of Kentucky distillers also supports expanding trade and backs a revival of  Trade Promotion Authority, otherwise known as "Fast Track." Trade policy is an area where Obama is more in tune with Senate Republicans than many of his fellow Democrats. Meadors said the Kentucky bourbon industry has $1 billion in annual exports.  

"The president and I were just talking about that right before I came over here," McConnell said at a news conference Wednesday in Louisville. "Most of his party is unenthusiastic about international trade. We think it's good for America. And so I've got a lot of members who believe that international trade agreements are a winner for America. And the president and I discussed that right before I came over here and I think he's interested in moving forward. I said send us trade agreements. We're anxious to take a look at them."  

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