A Six Billion Dollar Welfare Queen: The American Beverage Association

“It’s not the government’s job to grocery shop for my family. It’s mine.”

– actress on behalf of the American Beverage Association

If that’s the case, why does the American Beverage Association lobby the government to keep buying billions of dollars worth of sweetened beverages?


We’ve known for years that the US federal government’s food stamp program buys billions of dollars worth of soda. This means American taxpayers are forced to contribute to the Type 2 diabetes, heart disease and obesity epidemics that have put our nation on the track to bankruptcy. And it’s all thanks to Big Soda’s lobbyists.

Food stamp soda purchases have deeply penetrated some American communities. In rural Kentucky, soda has become the unofficial unit of exchange. When the government sends out EBT payments each month, recipients rush to convert them into soda packs. The sober minded sell the soda back to black market retailers at a 50% discount, while the dissolute trade their soda for pills and sexual favors. Apparently the locals consider a case of soda a fair exchange for a blow job. The Breaking Bad: Appalachia pilot nearly writes itself (A Coca-Cola bottling plant manager realizes he can corner the local Oxycontin market with one day’s load of soda).

Just how much our government pads Big Soda’s pockets has been unclear until recently. The USDA administers the food stamp program, formally called the Supplemental Nutrition Assistance Program. And Congress does not require the USDA to track how recipients spend the money. In 2012, Yale researchers estimated that SNAP pays for “$1.7 to $2.1 billion annually for sugar-sweetened beverages” using local grocery store data. The Yale team admitted they likely underestimated the true total, however. They looked at New England stores during the colder months, neither a region nor a time period known for their soda consumption.

Here’s a better estimate:

The US government buys poor people $6.44 billion worth of sweetened beverages per year through SNAP, the food stamp program. 

It didn’t take too much work to arrive at that figure. SNAP households spent 9.25 percent of their grocery budgets on sweetened beverages, according to a new USDA report. The USDA report improved on the Yale study by looking at a nationwide grocery chain through an entire year rather than a regional chain during only part of the year. We are fairly safe in drawing inferences about the total SNAP recipient population from this sample group. In fact, the USDA does so itself.

Note that sweetened beverages include sugar-sweetened soft drinks, non-caloric diet soft drinks, and non-carbonated sugar-sweetened beverages such as lemonade and Kool-Aid. Diet soft drinks only represent 25% of total soft drinks consumed in the general population, so it’s reasonable to conclude that a large majority of SNAP soft drinks purchased are fully sugar-sweetened.

The SNAP program handed out $69,655,470,000 in benefits last year, and 9.25 percent of that makes $6,443,130,975. This suggests that the US government foots the bill for at least $6.44 billion worth of subsidized sweetened beverage purchases last year. This is more than five times the CDC’s yearly budget for “Chronic Disease Prevention and Health Promotion.” The US Government spends over five times more money buying poor people sweetened beverages than it allocates to preventing chronic disease. 

Of course, the USDA does not decide how recipients spend their credits–the recipients do. And they are significantly more prone to soda purchases than non-SNAP households. SNAP beneficiaries spent more on sweetened beverages than on any other category of food, save one: meat, poultry and seafood. They spent nearly twice as much on sweetened beverages as on fruit, for example.

Screen Shot 2016-11-29 at 11.29.57 AM.png

Via the USDA. Note the total expenditure includes only the sample group, not the total SNAP population.

$6.44 billion covers a sickening amount of sweet drinks. The average monthly participation in SNAP in 2015 was 45.77 million people. Divide $6.443 billion among 45.77 million and you get $140.77. That’s over $140 per person in sweetened beverage purchases for the average SNAP recipient who stayed in the program for a year.

Coca-Cola goes for roughly $0.315 per 12-ounce can, if you buy in cases.* So the average SNAP recipient could buy 447 cans of Coca-Cola with $140.77 worth of sweetened beverages each year. That’s well over a can a day, a consumption level associated with a significantly increased risk of Type 2 diabetes and heart disease.

The national total of $6.44 billion would purchase over 20.4 billion cans of Coca-Cola per year, all on the taxpayer’s dime. Each can of Coke yields 39 grams of sugar. So the 447 cans the average SNAP recipient could buy expose him or her to 17,433 grams of sugar per year. That amount of sugar weighs more than this Rogue plate:

 

2015-rogue-black-training-plates-2.0-web2.jpg

More than this much weight in sugar, every year. Thanks, Big Soda lobbyists.

As we mentioned earlier, the sweetened beverage category includes soft drinks. According to the USDA, “more money was spent on soft drinks than any other item.” They come out to 5.44 percent of total expenditure by SNAP households, which represents $3,789,257,568 in SNAP soft drink purchases in 2015. This figure nearly matches the 2010 estimate of Michael Jacobson, the founder and co-president of the Center for Science in the Public Interest. Jacobson was “told by grocers that around six percent of SNAP benefits goes toward buying sodas.”

The federal government is thus directly responsible for a large percentage of Big Soda’s profits. 42.5 percent of the US soft drink market belongs to Coca-Cola. If that percentage holds for SNAP households, then SNAP buys $1.61 billion worth of Coca-Cola soft drinks each year. That’s over 1/5 of Coca-Cola’s net income in 2015. And we haven’t even addressed Coca-Cola’s non-carbonated sweetened beverages, such as Powerade and Minute Maid.

Buying Soda Means Paying for Chronic Disease

The impoverished may not pay for their soda at the register, but they still pay the price for consuming it. Poor people are much more likely to suffer from chronic disease. According to a 2011 Gallup poll, impoverished adults are 46.5 percent more likely to suffer from diabetes and 52.6 percent more likely to have suffered a heart attack. Now consider that this likely understates the problem. As Gallup notes, “those in poverty are less likely to have healthcare, and thus are less likely to have regular screening tests.” So many more likely have diabetes, high blood pressure or cancer, but did not report it to Gallup. 

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“More money was spent on soft drinks than any other item” (Via the USDA).

Might the sky-high rates of Type 2 diabetes and heart disease in poor people have something to do with the US government buying them $6.44 billion worth of sweetened beverages every year? As Harvard Medical School’s Dr. David Ludwig explains,

“The public pays for sugary drinks, candy, and other junk foods included in SNAP benefits twice: once at the time of purchase, and later for the treatment of diet-induced disease through Medicaid and Medicare,”

Diet-induced diseases–i.e., chronic diseases–are massively expensive. In the US in 2013, public spending on health care totaled $1.3 trillion dollars, or 47 percent of total health care spending. Eighty-six percent of those funds went towards treating the chronically diseased. That means taxpayers spent over $1.1 trillion in 2013 to treat patients with chronic diseases, or over $3,459 per American citizen.

It’s only going to get worse. The Congressional Budget Office explains that health care spending, combined with an aging (hence sicker) population, has put the US on an “unsustainable” fiscal trajectory:

Mainly because of the aging of the population and rising health care costs, the extended baseline projections show revenues that fall well short of spending over the long term, producing a substantial imbalance in the federal budget. As a result, budget deficits are projected to rise steadily and, by 2040, to raise federal debt held by the public to a percentage of GDP seen at only one previous time in U.S. history—the final year of World War II and the following year.

Big Soda Bought Off Hunger Advocates

Why then does the US government make the chronic disease crisis worse by funding SNAP soda purchases?  Everyone–from Republican Maine Governor Paul LePage to former New York Mayor Michael Bloomberg to Congress’s National Commission on Hunger–agrees this needs to change. But the American Beverage Association and the “hunger advocacy” groups it funds have blocked any progress.

For example, the Food Research and Action Center opposed a bill that would allow states to restrict junk food SNAP purchases. FRAC’s sponsors include Coca-Cola, PepsiCo, Mars, General Mills, Kellogg, and more. And the Congressional Hunger Center and Feeding America both engage in the same self-confessed “unholy alliance.” In fact, these organizations’ very focus on hunger rather than chronic disease suggests a biased approach that does not support the best interests of America’s poor. As Dr. Ludwig wrote in JAMA, “Among poor populations, 7 times as many children are obese as underweight.”

The American Beverage Association argues for SNAP soda purchases by claiming,

“People using SNAP benefits make the same food-buying decisions as we all do; they don’t need government telling them which aisles they are allowed to go down and how best to serve their families,”

Big Soda’s lobbyists grossly distort reality, as they are wont to do. If SNAP benefits stopped covering soda, the recipients would still be “allowed” to buy soda. They would just have to pay for it themselves. In the words of Michele Simon, SNAP recipients,

“… are free to buy whatever they want with their own money, but a program that uses tax dollars to improve nutrition shouldn’t allow sugary beverages.”

Moreover, SNAP benefits already exclude some foods and beverages. They do not cover alcohol, hot food, or “foods that will be eaten in store,” for example. Which does it make more sense to buy a hungry person: a hot sandwich or a 2-liter bottle of Coca-Cola? The SNAP program excludes the sandwich and permits the bottle of Coke.

Some argue that ending SNAP sweetened beverage purchases would not reduce consumption, that seems highly unlikely. If SNAP benefits have no effect on beverage revenue, though, why do beverage companies lobby the government to continue subsidizing their products through SNAP?

Big Soda is keenly aware how much of its revenue comes from the federal government. When they sued the city of Philadelphia over its new soda tax, the ABA’s attorneys argued that “$23 million of the $91 million the city hopes to raise through the tax would come from SNAP benefits,” as reported by Politico. That means SNAP benefits pay for a whopping 25 percent of Philadelphia’s soda purchases.

What does $6.44 billion dollars in federal sweetened beverage purchases mean to Coca-Cola, PepsiCo, and Dr. Pepper Snapple? For one, it puts the $38 million Big Soda spent this year lobbying against soda taxes in context. The federal government spent 169 times more money buying poor people sweetened beverages than Big Soda spent fighting soda taxes. In a way, American taxpayers are subsidizing Big Soda’s lobbying against soda taxes. How many more major cities would have to pass soda taxes for the effect on Big Soda’s sales to equal $6.44 billion?

Big Soda applies a “land of the free” strategy to fight soda taxes and labels. For example, the American Beverage Association created a website called Your Cart, Your Choice. The “About” section states: “Americans for Food and Beverage Choice is a group dedicated to protecting the rights of Americans to make these choices for themselves.” And ABA Consultant Steve Maviglio used the same argument in a Sacramento Bee editorial opposing the California Warning Label Bill, explaining, “Soda is my lifestyle choice.”

Yet this free market rhetoric is the pinnacle of hypocrisy. Big Soda may be the biggest welfare queen of them all. Thanks to American Beverage Association lobbyists, American taxpayers have no choice. We have to fund billions of dollars worth of sweetened beverage purchases every year, whether we like it or not.

* Prices vary by location. We called four stores across the country. At Publix Super Market in Piedmont, Atlanta, Georgia, a 24-pack of Coca-Cola goes for $8.99, or $0.37 per can. At a Houston, Texas, Walmart, a 24-pack went for $5.98, or $0.25 per can. You can get a 35-pack of Coca-Cola for $11.00 at the Costco in Livonia, Michigan, which is $0.31 a can. Finally, at the Walmart in Torrance, California, 24-packs go for $7.98, or $0.33 per can. Averaging these four data points gets you roughly $0.315.

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