One theory is that it was an American saying "as p*****as an Inuit"...ie Eskimo, as they are genetically more susceptible to the effects of alcohol than most races. Another view is that, in the 18th century, gentlemen often left their horses in the care of lads, nicknamed 'newts', outside hostelries. They'd send out drinks as the evening wore on with the result that the 'carers' were often the worse for wear by the end of the day. A third possibility is that it is a corruption of a Cornish phrase: 'os pyst os yn neweth' which means 'you're daft, you're in (second) childhood'. In other words, it has nothing to do with newts at all! Take your pick.