Thursday, October 10, 2013

What the Current Washington Stand-Off Means to Beer

The DC shut-down over the congressional Republicans refusal to sign a continuing resolution that does not include new cuts to Obamacare actually impacts the craft beer industry in two meaningful ways.

The first and most obvious is that with the shut-down the Alcohol and Tobacco Tax and Trade Bureau (TTB), a little-known arm of the Treasury Department, is also mostly shut-down as well.  That means no approval for new recipes and new labels.  Of course, TTB will continue to collect taxes from existing permit holders.

From the Associated Press:
Lagunitas Chief Operating Officer Todd Stevenson called the TTB shutdown a "headache." He said the company was planning to submit an application to package its autumn seasonal Hairy Eyeball in 22-ounce bottles instead of 12-ounce bottles but can't move forward.

"It's just aggravating," Stevenson said. "It is frustrating that government can't do its job. Doing what they're doing now is unprecedented."

Bryan Simpson, a spokesman for New Belgium Brewing in Fort Collins, Colo., said his brewery has three recipes and five new labels awaiting approval. The company is especially worried that the release of its new spring label, Spring Blonde, could get pushed back. More delays might force New Belgium to shell out extra money to speed up the label printing and rush the beer to market, he said.

"Everybody is frustrated in general," Simpson said. "The whole way this has played out has been disappointing for the entire country."
The second is that Obamacare might, in fact be a boon to craft beer businesses that are typically of a size that will be helped immensely by it. Here is James Surowiecki of the New Yorker:
[T]he likely benefits of Obamacare for small businesses are enormous. To begin with, it’ll make it easier for people to start their own companies—which has always been a risky proposition in the U.S., because you couldn’t be sure of finding affordable health insurance.


Even more important, Obamacare will help small businesses with health-care costs, which have long been a source of anxiety. The fact that most Americans get their insurance through work is a historical accident: during the Second World War, wages were frozen, so companies began offering health insurance instead. After the war, attempts to create universal heath care were stymied by conservatives and doctors, and Congress gave corporations tax incentives to keep providing insurance. The system has worked well enough for big employers, since large workforces make possible the pooling of risk that any healthy insurance market requires. But small businesses often face so-called “experience rating”: a business with a lot of women or older workers faces high premiums, and even a single employee who runs up medical costs can be a disaster. A business that Arensmeyer represents recently saw premiums skyrocket because one employee has a child with diabetes. Insurance costs small companies as much as eighteen per cent more than it does large companies; worse, it’s also a crapshoot. Arensmeyer said, “Companies live in fear that if one or two employees get sick their whole cost structure will radically change.” No wonder that fewer than half the companies with under fifty employees insure their employees, and that half of uninsured workers work for small businesses or are self-employed. In fact, a full quarter of small-business owners are uninsured, too.

So Obamacare should make it easier for small craft breweries to hire and retain employees and could lead to more folks taking risks and starting their own business because they don't have to fear leaving that job with benefits.

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