Liquor Firms Increase Gifts at Sensitive Time

Congress poised to take up issue of alcohol ads, teens

The alcohol industry is stepping up its political contributions at a time when liquor advertising on TV is becoming an important national issue.

Over the past two years, beer, wine, and liquor companies have doubled their contributions to the two major political parties and become one of the top five donors to both Republicans and Democrats.

Joseph E. Seagram & Sons was the nation's second largest corporate contributor to Congress and the political parties. Beer producer Anheuser-Busch was the eighth largest donor. The spending comes at a time when the Federal Trade Commission and the Federal Communications Commission are starting to look closely at the impact of alcohol advertising on teens. Congress also plans hearings.

"This is a sticky issue. The industry is going to call in their chits and the lawmakers will be looking for ways to please these people without saying they are in favor of kids drinking," says Nancy Watzman of the Center for Responsive Politics, a campaign-finance watchdog group in Washington.

Liquor advertising became an issue last June when Joseph E. Seagram & Sons broke a long voluntary ban on TV ads. The move was endorsed by the Distilled Spirits Council of the United States (DISCUS), which represents the industry in Washington. Rep. Billy Tauzin (R) of Louisiana, whose subcommittee will hold hearings early next year on the issue, recently indicated to the New Orleans Times-Picayune that he might support advertising by liquor producers.

The Senate Commerce Committee, chaired by Sen. John McCain (R.) of Arizona, is also expected to hold hearings. Senator McCain is married to Cindy Hensley, whose family owns an Anheuser-Busch distributorship in Tempe, Ariz.

In the 1995-96 election cycle, Jim Hensley (Cindy's father) or his company donated a total of $19,750 to individual representatives and $30,000 to each of the political parties. McCain has indicated he will recuse himself from any votes on the issue.

Like other industries, alcohol interests not only give direct donations, they try to influence lawmakers and their staffs with lobbyists. For example, this year Seagram hired five separate lobbying firms. Among Seagram's pitchmen: William Daley, the new Commerce secretary-designate.

Part of the recent increase in spending represents differences within the alcohol industry itself. Beer manufacturers, for instance, oppose liquor advertising on TV. They worry that if Congress starts to look into liquor ads, it will end up putting limits on the entire alcohol industry. But liquor manufacturers argue it would be unfair to allow beer producers on TV and leave them out. Thus both sides are lobbying hard.

War of lobbies

The effect of all this money, alcohol-control groups say, is an unlevel playing field. They complain that liquor and beer companies get access to important committee members that they can't - and in Washington access is power.

"They return their phone calls," says George Hacker, director of alcohol policies for the Center for Science in the Public Interest, a lobby group. "We generally cannot get our calls returned, especially on the Senate side."

Spokesmen for the industry offer a different view. David K. Rehr, vice president for government relations at the National Beer Wholesalers Association, says his group spent $1.5 million through its political action committee to try to counter money spent by trial lawyers, liberal activists, and anti-alcohol groups.

In addition, he says, "We saw this as a historic election to retain a pro-small-business Congress since a lot of our members are small businessmen."

Mr. Rehr says his group's legislative agenda in 1997 is to try to prevent groups that receive federal funds from using tax dollars to lobby, and to roll back the federal taxes on beer. According to The Wall Street Journal, in 1995 the group sent cases of beer to the House Appropriations Committee as a gesture of gratitude for slashing funds to the Center for Substance Abuse Prevention, a part of the Department of Health and Human Services.

The spirits producers, particularly Seagram, have stepped up their contributions in the past two years. As of Nov. 1, Seagram, which sells such products as Chivas Regal, had given $1.85 million to the two parties and individual lawmakers. Seagram was second only to Philip Morris, the tobacco manufacturer. Its chairman, Edgar Bronfman and his family, have also contributed generously to political candidates and causes.

Seagram said it does not comment on its political spending. Mr. Daley, currently a lobbyist for Mayer, Brown, and Pratt did not return phone calls.

Where the money goes

A significant portion of the alcohol industry's political contributions is in the form of "soft" money, or donations to the Republican and Democratic parties. The Center for Responsive Politics found that through Dec. 18, beer, wine, and liquor industry political action committees (PACs) contributed $5.4 million to the parties in 1995-1996 compared with $2.5 million in the 1993-1994 cycle.

The industry hedges its bets, contributing to both parties. Through Dec. 18, Republicans had received $3.01 million and Democrats $2.3 million.

The PACs also target their contributions. Seagram, for example, has contributed to almost 30 percent of the members of the House Commerce Committee. But the Beer Wholesalers spread its money to about 250 individual members. "We look for people who have good voting records," says Rehr.

Critics agree, though they would differ over what is a "good" voting record. Allen Hershkowitz, a senior scientist at the Natural Resources Defense Council in New York, says the bottlers have been vehemently opposed to a national bottle deposit bill to encourage recycling. He attributes much of the congressional opposition to the legislation to special-interest money from the bottlers.

Gallo's grip

This is not the first time that money, influence, and alcohol have mixed. According to the book "The Buying of the President" by Charles Lewis, the Gallo wine family has invested well over $1 million in former Senator Bob Dole's activities. "Dole, in return, has worked hard for the Gallos," writes Mr. Lewis.

For example, in 1986, Mr. Dole, then the Senate majority leader, helped guide a tax provision through Congress that would save the grandchildren of Ernest and Julio Gallo millions in inheritance taxes.

Dole has defended the industry's $12 million in federal export promotion funds. And, he intervened in a 1992 dispute between Gallo and the Treasury Department over the labeling on Gallo's champagne label.

Dole did not return phone calls to his campaign office. But, in the past, he has said he was acting in the government's best interest.

Limiting overseas promotion

The alcohol lobby does have its detractors. In 1996, Massachusetts Rep. Joseph Kennedy (D) and Rep. Jim Hansen (R) of Utah introduced legislation to restrict alcohol advertising. Mr. Kennedy also introduced an amendment to eliminate overseas promotion.

The legislation, opposed by the alcohol industry, never had any hearings and did not move out of the House Commerce Committee.

Gregory Boller, an associate professor of marketing at the University of Memphis in Tennessee, looked to see if there was any relationship between the amount of money a legislator received and the probability of voting for or against the Kennedy amendment to terminate the promotion of alcohol overseas. "They vote with their donors," he says.

Kennedy is expected to reintroduce the legislation again this year.

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