Since President Biden issued an “Executive Order on Promoting Competition in the American Economy” two years ago, his administration has aggressively sought to combat what it sees as excessive market concentration in the U.S. economy.

There is no denying that a robust competitive marketplace delivers real benefits for consumers, but the administration’s efforts have, at times, seemed more focused on demonizing businesses than on improving conditions for consumers. Nowhere is this phenomenon more visible than in the administration’s attacks on the U.S. alcohol sector, particularly the beer industry.

As a follow-up to Biden’s executive order, the Treasury Department issued a report stating that there has been growing concentration “at the distribution and/or retail levels for beer, wine and spirits, and at the production level for beer.” The administration seeks to cast this industry in a negative light, but empirical market data reveals quite a different story.

From the traditional massive light beer market to innovative micro-brew IPAs, it is undeniable that the beer industry gives consumers a wide range of options. The Treasury Department recognizes this, noting a “flourishing of small and craft producers in local markets.”

Given the self-contradictory nature of the report, it is perhaps unsurprising that the administration overlooks the beer industry’s substantial contributions to the economy, notably leaving out the expansion of breweries and increasing beer options.

According to the Beer Serves America report, generated by the beer industry’s trade association, there are more than 92,000 Americans involved in brewing and importing beer, with more than 8,000 active beer company operations — demonstrating a dramatic growth from just 89 brewers in the late 1970s (a fact the Treasury report also acknowledges).

While the administration’s claim of a lack of competition in the beer industry clearly falls flat, it is curious that a proposal ostensibly meant to protect American consumers does not delve deeper into other facets of the alcoholic beverage industry that are objectively at odds with consumer interests.

Take the rum cover-over, for example. This program is a classic example of government favoritism benefiting a handful of well-connected producers at the expense of everyone else. The rum cover-over transfers tax revenue from rum sales in the United States to Puerto Rico and the U.S. Virgin Islands, where most rum is produced. Initially designed to fund infrastructure for the U.S. territories, the rum cover-over has, in reality, created a tax haven for big distillers at the expense of local citizens.

Unfortunately, the rum cover-over is not the only example of the liquor industry using government favors to boost its bottom line. Anothe instance can be seen in Internal Revenue Code 5010, a little-known tax loophole that gives large liquor companies an excise tax reduction for adding all kinds of odd, often artificial, flavorings to their products.

Because the liquor industry does not have rigorous labeling guidelines, consumers are often uninformed about what additives have been put into liquor products.

Policies like the rum cover-over and IRC 5010 may help boost the profits of large liquor corporations, but they harm consumers by keeping them in the dark and providing lower-quality products. If the administration were serious about helping alcoholic beverage consumers, it would prioritize repealing or reforming these outdated laws instead of going after the beer industry.

Further, the administration should ensure that the differences between beer and liquor remain crystal clear. Just a few years ago, Congress made the Craft Beverage Modernization and Tax Reform Act permanent. This popular, bipartisan bill reinforced that beer, wine and spirits are different products and must be taxed differently. Any change to this status quo would disproportionately affect one part of the alcohol sector to the detriment of other alcoholic beverages. The administration must remember this before it makes any moves that could put a finger on the scales.

Despite all the other things it could be focused on, the administration seems intent on attacking the beer industry, which has never offered consumers more options than it does today. If policymakers were serious about promoting consumer welfare, there are far more pressing issues in the alcoholic beverage space for them to look into.

Gerard Scimeca is chairman and co-founder of Consumer Action for a Strong Economy. He wrote this for InsideSources.com.

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