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SATURDAY, OCT 17, 2015
Coca-Cola’s sneaky, evil politics: How Big Soda twisted race and used the Koch Brothers to fight a tax
Have a Koch and diabetes. Big Soda responds to a cup-size limit by aligning with the NAACP, nasty PR and the Kochs
Adapted from Dr. Tom Farley’s "Saving Gotham: A Billionaire Mayor, Activist Doctors, and The Fight for Eight Million Lives"
When I first came to the New York City health department in the summer of 2007, then-health commissioner Tom Frieden asked me what he should do about obesity. What was a middling problem in the 1970s had by then erupted into a public health crisis killing some 100,000 Americans a year. Two-thirds of Americans were overweight or obese and one in nine adults had Type 2 diabetes. Like many others in public health, I saw the source of the obesity epidemic as a toxic food environment, especially cheap, calorie-dense, ready-to-eat foods and beverages, offered at arm’s reach everywhere from office vending machines to hardware stores. I didn’t have a good answer. Frieden surprised me by saying that he thought the single best thing we could do was tax soda. And with that he started down a course that would shape the nation’s response to the epidemic.
Frieden had been Michael Bloomberg’s health commissioner since 2002. Bloomberg was an anomaly of an elected official and a godsend to those of us who worked in public health. As Mayor, Bloomberg believed protecting the health of New Yorkers – rather than just fixing potholes and fighting crime – was central to his job. He thought the best metric for his entire administration was New Yorkers’ life expectancy. A numbers guy, he saw public health actions as better investments than medical care because they saved lives wholesale rather than retail. Since he financed his own campaign, Bloomberg owed few political favors and was willing – even eager – to push worthwhile ideas that stirred controversy. Bloomberg bonded immediately with Frieden and encouraged his big ideas. In his first five years on the job, Frieden – a hyperactive, driven micromanager – had attacked smoking relentlessly. I had been a professor of public health and in 2007 was drawn to the health department by the excitement of the Bloomberg-Frieden combination.
Obesity researchers then were eying sugary drinks with great suspicion. For decades, dietary guidelines had told Americans to cut back on fat. When it came to weight gain, most experts thought, a calorie is a calorie, no matter the source. Because fat has more than twice as many calories per gram as carbohydrates or protein, people should avoid fat. Then in the 1990s, some nutrition experts—watching obesity rates surge despite that advice—started rethinking carbohydrates.
Some scientists argued that eating carbs floods the bloodstream with sugar, which triggers a sharp release in the hormone insulin. Insulin brings blood sugar down and also tells the body’s cells to store fat rather than burning it. After a carb-led surge in blood sugar, the scientists argued, the outpouring of insulin is so great that within about two hours the blood sugar level crashes down to below normal. That low blood sugar makes people feel hungry, prompting them to eat more. By this line of thinking, a calorie wasn’t just a calorie.
At around the same time, Dr. Robert Lustig was arguing that sugar is not just another carbohydrate but is uniquely bad—he called it toxic. When the fructose in sugar hits the liver, he said, it sets off a hormonal chain reaction causing chronically high insulin levels that, over years, lead to obesity and diabetes.
Yet another group of researchers was showing that calories in beverages are not nearly as filling as calories in food. In one study, when people ate calories in food they compensated by eating less later in the day, but when they drank their calories they actually ate more food later.
In the end, it didn’t matter much to the health department whether soda leads to weight gain because it delivers unnecessary calories, or because those calories come from carbohydrates, or because those carbohydrates are sugar, or because the sugar is in liquid form. Sugary drinks make people fat.
And that mattered very much, because Americans were guzzling sugary drinks. Over the previous quarter century, per capita sugary drink consumption in the United States had more than doubled, in parallel with the rise in obesity. In 2000, the average teenager drank 300 calories (24 ounces) of sugary drinks a day, and many teens drank twice that. With consumption levels like that, sugary drinks – while not accounting for the entire epidemic – appeared to be the single most important culprit.
Those massive consumption levels also were the biggest obstacle we faced in solving the problem. The non-alcoholic beverage industry takes in about $50 billion a year in the U.S. alone, mostly from full-sugar drinks. Coke, Pepsi, and the other soda companies wouldn’t give up that money without a fight.
In June 2008, as Mayor Bloomberg neared the end of his second term, Frieden pitched the idea of a soda tax. Sitting at a round mahogany table in a conference room in the 1800’s-era City Hall, he put up a slide showing the state’s projected $8 billion budget gap. “New York State is broke,” he said. “This is a good thing for us.” Much of that deficit came from soaring Medicaid costs, especially for illnesses related to obesity. Aside from the human suffering that obesity caused—700,000 New Yorkers with diabetes, 2,900 of whom needed amputations and 1,700 of whom died from the condition annually—the epidemic, Frieden explained, was costing city residents more than $4.5 billion a year in medical care. A tax on soda would encourage people to drink less. It would cut rates of obesity and diabetes, and over time, save lives. And it was a tax that no one would be forced to pay because everyone could buy unsweetened beverages or drink water for free.
It wasn’t a difficult sell. The businessman in Bloomberg understood economics and was proud that New York City’s cigarette tax was cutting smoking rates. He was deeply worried about the obesity epidemic and was eager to take it on. Getting a soda tax through the state legislature would be very tough, but he was willing to try.
By the end of 2008, New York State’s plunging tax revenues from the Wall Street crash had ballooned the state’s projected deficit to $15.4 billion, creating the largest budget crisis in the state’s history. On December 17 Governor David Paterson, telling legislators “we’re going to take some extreme measures,” proposed $9 billion in spending cuts, including big whacks in education and a $1 billion cut in payments to hospitals, nursing homes and other medical providers. He also proposed 137 new taxes and fees, one of which he called an “obesity tax”—an 18 percent sales tax on sugary drinks. It was Frieden’s tax, only reworked by the state’s budgeteers, and it caught everyone, including the soda companies, by surprise.
Then almost as suddenly he launched the idea, Paterson – who was appointed Governor after Eliot Spitzer abruptly resigned in a prostitution scandal and who appeared overwhelmed by the job – seemed to shoot it down. At a town hall meeting with college students, Paterson told the “soda addicts” not to worry. “The tax on soda was really a public policy argument,” he said. “In other words, it’s not something that we necessarily thought we would get.” His spokesperson tried to backpedal, saying that “the governor stands firmly behind his soda tax proposal,” but the damage was done. In budget negotiations with legislators opposed to the tax, Paterson quickly abandoned it. We had lost round one.
*
By mid-2009 Bloomberg was running for a third term, Frieden had become the Director for the Centers for Disease Control and Prevention, and I had followed him as New York City’s Health Commissioner.
In Bloomberg’s first two terms, the health department had sharply cut smoking rates with a combination of an indoor smoking ban, cigarette taxes, and tough anti-smoking “counter-advertising” on television. It was a tempting model. As we thought about a second run at a soda tax, we decided to try some counter-ads against sugary drinks.
We faced a problem with deep roots. Like cigarettes, soda isn’t just sold—it’s marketed. Its brilliant advertising, about $1 billion a year in Coke polar bears and Pepsi pop stars, overwhelms our televisions, sports stadiums, movie theaters, delis, bodegas, pizza joints, and snack counters. Coke and Pepsi reinforce those powerful ads by inserting their sodas into movies and TV shows and by sponsoring museums, parks, sports teams, and the Olympics. The marketing has welded an intense emotional attachment to the Coke and Pepsi brands. To tell New Yorkers that Coke and Pepsi meant blubber and diabetes would provoke ugly emotions.
Jeffrey Escoffier, the health department’s media head, ordered up some anti-sugary-drink ads from Jose Bandujo, who ran an advertising agency on contract with the department. “Don’t worry if it’s tasteful or anything,” he later remembered telling Bandujo. “Just do whatever you can so that it’s strong and a hard-hitting thing on soda.” Then Escoffier showed them to focus groups of soda drinkers, some of whom were overweight.
The problem we faced showed up immediately. In the warm-up, the participants commented that they didn’t think of sugary drinks as healthy, but they didn’t see them as truly unhealthy either. “Anything in moderation is okay,” said one woman. Yeah, said another, drinking one or two sodas a day wasn’t a problem. In fact, an additional one or two sodas every day might be enough to drive the entire obesity epidemic.
The moderator passed around several sets of ads, face down, then asked the participants to turn them over one set a time. One pair of ads made our problem even clearer. The images showed morbidly obese men in stained T-shirts, guzzling soda from 2-liter bottles, and the text said that soda “just dumps sugar and calories into your system. This can lead to obesity, high blood pressure, and diabetes.” The participants refused to believe it. Bandujo remembered, “Immediately people said, ‘He didn’t get that fat from just soda. He got fat from McDonald’s. He got fat from fast food. He got fat from other stuff.’”
Other ads mocked soda brands, with labels like “Dr. Diabetes” and “Mountain Don’t.” The participants were offended on behalf of the soda companies. “It was like we were talking bad about their mother,” said a health department staffer. “And they even got their legal hat on,” said Bandujo. “‘Oh, are you allowed to do that?’ Poor Mountain Dew!”
Another group of ads mixed a tough message with a touch of humor. A woman’s huge buttocks were labeled “Soda Can.” A guy’s gut (going after “sports drinks”) was branded “Sports Section.”
When a group of women turned over the pictures, there was a flutter of nervous laughter. “That’s what my stomach looks like.” “I’m like, wow, I could look like this.” “This is really offensive because it is real.”
One ad from this group showed a little girl’s fat stomach pushing out her bathing suit, with the label “Juice Container.” This one was too painful even to laugh at. “I felt sorry for her,” one man said sadly. “It’s cruel to show kids.”
We couldn’t run ads like those. Even if they worked, they would spark a firestorm among overweight New Yorkers and light up the tabloids.
Bandujo’s team had come up with another idea, one that went directly at people’s disbelief. “People could easily rationalize in their head that when you eat a cupcake, it turns to fat,” he said. “When you eat a hot dog, it turns to fat. . . . People weren’t thinking of a liquid turning into a solid—fat!” The ad just showed a can of soda being poured into a glass, but as the soda fell, it turned into yellowish globules of fat laced with thin red blood vessels. In big letters beneath, the ad asked, “Are you pouring on the pounds?”
Among women, the ad worked beautifully. One said, “I can’t even look at this.” Another said, “It has my stomach churning.” She thought she might vomit right then. Another said, “I would put it on my refrigerator” to remind her not to drink soda. But the men shrugged; to them, the fat globules weren’t disgusting enough. One man said helpfully, “Maybe if you showed somebody drinking it . . .”
Still, the focus group summary report read, “revulsion was the most effective approach.”
We posted three versions of the soda-turning-into-fat ads on the subways showing different beverages: a cola, a lime green sports drink, and an iced tea – each with the headline “Are you pouring on the pounds?”
But Jose Bandujo wasn’t finished. That focus group had given him an idea. He and a producer hired an acting student, sent colleagues to the grocery store to buy the “grossest stuff we could think of to make this yellowish orange-ish chunky concoction,” and turned on their video cameras. In the edited video, backed up by campy music, the actor pops open a can of soda to pour it into a glass, but what plops into the glass is globules of fat. Then the actor tips up the glass and gulps it down, the fat blobs overflowing onto his cheeks and sliding down his chin. Words drop onto the screen to the sounds of deep echoing booms: “Don’t drink yourself FAT.” Then, holding up the glass of fat as if to propose a toast, the young man turns to the camera, smiles, and gives a mischievous wink.
We had no money to run the ad on television, so we posted Man Drinking Fat on YouTube and sent out a press release. The ad incited a swarm of outraged “sharing.” In its first week online, Man Drinking Fat got nearly a half million views and a piece of Jay Leno’s monologue. With all the outrage, the ad was doing exactly what we wanted—getting people to talk about how sugary drinks make you fat.
*
In January 2010, Governor Paterson tried a soda tax again, alongside a dollar-per-pack increase in the state cigarette tax. His new proposal took Frieden’s idea intact: a 1-cent-per-ounce excise tax on sugary drinks, with the revenue paying for health care. The sugary drink distributors would pay the tax based on how many ounces they shipped. We assumed—from experience with cigarette taxes—that the distributors would pass the cost on to retailers, who would then raise the prices for sugary drinks at stores and restaurants. The tax would grow as the volume of soda grew, encouraging people to buy less. Channeling the tax revenue to health care would help get voters behind it. One poll found that while only 47 percent of voters supported an “obesity tax,” 76 percent supported “a tax on sugary soft drinks to balance the city budget.” In a second poll, 76 percent preferred a soda tax to cuts in health care.
This time we thought we had a good chance of winning. Pulling in the same direction were the governor, the mayor, the hospitals, the union of hospital workers, and a charged-up coalition of health organizations, including the American Heart Association, the American Cancer Society, and the American Diabetes Association. State health commissioner Richard Daines wrote op-eds, met with editorial boards, and barnstormed the state, haranguing anyone willing to listen about the soda tax’s “triple play”: better health, less need for treatment, more money for health care. The hospitals were among the biggest employers in the state, and their 1199 SEIU union supported political campaigns, so they both had clout. Together with the health advocacy coalition, they put in more than 7,000 phone calls to legislators, met with more than a hundred of them, held a rally with 250 health care workers at the capitol, and held symbolic “soda buy-back” events around the state. They also ran television ads that featured doctors and nutritionists talking about the damage obesity was causing in kids and the link to sugary drinks.
The soda companies fought back by bringing in the public relations company behind the “Harry and Louise” ad had that helped kill Bill Clinton’s health care reform plan. Under its new name Goddard Gunster, the agency today calls itself “the most sought-after guns for hire,” which is proud to be “among the first to apply aggressive political campaign strategies to issue advocacy efforts.” Its website explains its technique: “Through facts and research, we define the parameters of the public debate and align consumer, corporate, and government interests.”
The PR firm created an Astroturf group called New Yorkers Against Unfair Taxes and fired back with an ad campaign of its own. One ad featured a woman unloading groceries. “Making ends meet is a constant struggle for families like ours. . . . Instead of cutting out-of-control spending in Albany, [Governor Paterson would] tax families. . . . Tell Albany to trim their budget fat, and leave our grocery budgets alone.”
But the serious combat took place in back rooms. In New York State in 2009, the American Beverage Association had increased its donations to state legislators from nothing to $900,000, and the two soda companies increased their state lobbying spending to $3 million. That included $36,000 channeled to State Senator Jeff Klein, who then switched from being a soda tax supporter to one who was, according to an inside source for the Daily News, “instrumental in getting the soda tax off the table.”
In 2010, after Paterson’s second proposal, the companies went into higher gear. Coke and Pepsi sent workers to meet with the governor, telling him the tax would kill their jobs. They brought in the Teamsters, whose members drive soda delivery trucks, to pressure union-friendly legislators. The ABA opened its wallet further, spending nearly $13 million – more than lobbyists spent on any other issue.
The tax proposal went nowhere in the legislature. Coke and Pepsi had shown that they were stronger than a governor, a mayor, and the state’s health commissioners, hospitals, and most powerful union combined.
*
If any of the soda companies’ arguments against the tax had struck a chord with New Yorkers, it was that the government was just using the obesity epidemic to squeeze people for their money. And that made me think of a different angle.
It had to do with the Supplemental Nutrition Assistance Program – or SNAP, formerly Food Stamps. The program pays for groceries for low-income people, and by 2010 it reached 48 million people, or one in eight Americans, and paid for $65 billion in food a year.
Across the nation, SNAP funds bought mountains of unhealthy food, like candy, chips, snack cakes, and soda. No one outside of USDA knows how much the program spends each year for sugary drinks, but it is at least $1.7 billion and could be as high as $5 billion. The latter figure is nearly five times CDC’s budget to prevent chronic diseases. I thought that the government shouldn’t buy, and then hand out for free, the food that was the single biggest contributor to our nation’s number one nutritional problem—at all, but especially in a nutrition program.
In October 2010, Mayor Bloomberg and Governor Paterson held a press conference in the diabetes center of King County Hospital to announce that New York was submitting a request to the USDA for a two-year demonstration project that would exclude sugary drinks from the SNAP program in New York City. The rule change wouldn’t affect the size of the benefit. SNAP participants would get every penny of their monthly food allowance.
The idea wasn’t new or radical. When Congress started Food Stamps in 1964, the House version of the bill had excluded soda. Aside from SNAP, no federal nutrition program in 2008 included sugary drinks.
It wouldn’t have been a big change to the program. SNAP benefits are not cash. You can’t use them to buy cigarettes, beer, pet food, paper towels, or prepared food (including deli sandwiches). Our proposal would just add one more item to the excluded list.
And it wouldn’t have been a big change for people enrolled in SNAP. For most people, the average SNAP benefit of $133 per person each month was too little to cover the entire grocery bill. SNAP is a supplement. Families enrolled in SNAP used their own money after their monthly benefits ran out and to buy excluded items. If SNAP participants wanted to buy soda (instead of drinking water for free), they could spend their own money for it. And then they could use the SNAP benefits they saved by not buying soda to purchase healthier foods.
The SNAP proposal stirred up the press, roused opinion writers, and scrambled the usual political lineup. Most people viewed our other ideas as liberal, but Republicans and conservatives tended to like the SNAP proposal, and Democrats and liberals generally didn’t. At the same time Bill de Blasio then the city’s Public Advocate, endorsed it.
But the proposal enraged the soda companies. The day after our announcement, Coca-Cola CEO Muhtar Kent sent a letter to Bloomberg, calling the idea “unjustified and discriminatory.” PepsiCo CEO Indra Nooyi, writing the same day, was more threatening. “When we met earlier this summer,” her letter said, “we let you know that as we restructure our business, we are redoubling our commitment to retain and increase our investment in New York City and New York State. But apparently commitment and loyalty is a one-way street in New York. Since our meeting, attacks on our business by the City of New York have gone unabated. . . . I am particularly concerned that you have chose [sic] to focus on just one category, and assault it across the board. I am sincerely hoping we can meet and talk about how we can work together.”
Days later the grocery stores complained to the USDA: the Food Industry Alliance of New York State wrote that “no food inherently is bad within the context of a balanced diet. . . . Yet, by government imposing its directive into food choices . . . SNAP shoppers will be deprived of nutritional decisions heretofore left to their discretion.” The stores also argued that people might travel to the suburbs just to buy soda with SNAP.
The public face of the opposition, though, was not the soda companies or the grocery stores. It was “antihunger” organizations that ran food banks and advocated for SNAP. The same day the grocery store letter hit the USDA, the widely quoted antihunger activist Joel Berg sent the agency his own fiery eight-page letter. Under screaming heads like “The proposal would punish low-income people for the supposed crime of being poor,” he wrote that our proposal “violates the law, restricts freedom, and criminalizes hunger by eliminating the ability of low-income SNAP recipients to even occasionally obtain sugar-sweetened beverages.”
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