Democrats work to cut planned tax on energy Other increases in Clinton package likely to be eased

June 10, 1993|By Karen Hosler and Carl M. Cannon | Karen Hosler and Carl M. Cannon,Staff Writers Staff writer John O'Donnell contributed to this article.

WASHINGTON -- Democratic members of the Senate Financ committee neared agreement yesterday on a rewrite of President Clinton's tax package that would replace his broad Btu tax on energy with a smaller levy on transportation fuels.

After a lengthy day of consultations with administration officials and House members, the committee members left a meeting last night saying they had the broad outlines of an agreement with details to be ironed out, possibly today.

"We've made good progress but no decisions," said Sen. David G. Boren, an Oklahoma Democrat whose objections to the proposed tax on the heat content of fuel helped doom it.

The basis of the new package was a proposal offered by Democratic Sen. John B. Breaux of Louisiana that would raise the tax on gasoline and other fuels by 7.3 cents per gallon. But the committee was also moving toward delaying by six months an income tax increase on upper incomes and individuals and limiting a tax increase on Social Security recipients.

The lost revenue from the $500 billion deficit reduction package would be made up by cuts in mandatory programs, such as Medicare and Medicaid.

But even as the White House seemed within reach of a compromise that could survive in the balky Senate, there were ominous rumblings of wholesale rebellion in the House, which has already passed Mr. Clinton's $500 billion deficit reduction package largely intact.

The Congressional Black Caucus, which boasts a crucial block of 37 Democratic votes in the House, strongly objected to the further cuts in Medicaid and Medicare. Caucus members also protested the possibility of a reduction in the earned income tax credit for the working poor, which is under consideration by the ++ Finance Committee.

The caucus demanded to be included in the Senate negotiations over the tax bill and sought to make its point by refusing to go the White House today for a meeting President Clinton had sought to smooth over relations roiled by his decision to abandon the nomination of Lani Guinier as assistant attorney general for civil rights.

"We are not combative," said Rep. Kweisi Mfume of Baltimore, chairman of the caucus. "But we are not going to roll over out of blind allegiance and accept things that hurt the people that we represent."

Further cuts in benefit programs, such as Medicaid and Medicare, become "a point of non-negotiation and imperil the passage of this legislation," Mr. Mfume said.

Another member of the caucus, Rep. Albert R. Wynn of Prince George's County, remarked later, "We were saying that this is not going to be a budget that is driven by the Senate."

Meanwhile, reports of Mr. Clinton's decision to abandon his controversial Btu tax landed hard on many House Democrats who cast the difficult vote in favor of the tax because they thought the president was committed to it.

"We're doing a tap dance out on the end of a plank while they are sawing it off," complained Rep. Patricia Schroeder, a Colorado Democrat.

Rep. W. J. "Billy" Tauzin, a Louisiana Democrat who is taking enormous heat back home for his vote in favor of the tax, said he was hoping it would be dropped and is pleased that it has been. But he added: "There is resentment with the administration for not allowing the House to make that decision."

At the White House, President Clinton was trying to distance himself from the Senate talks even though key aides, including ++ Treasury Secretary Lloyd Bentsen and Chief of Staff Thomas F. "Mack" McLarty, are sitting at the negotiating table.

"Not every move they make . . . is endorsed necessarily by the administration," said Clinton administration Budget Director Leon E. Panetta. "The key right now is to move the process forward. Whatever it takes to move the process forward, we would encourage. We wouldn't necessarily have to endorse it."

Mr. Panetta also said that just because a provision passes the Senate doesn't mean it has the administration's blessing. He said the House could restore much of what the White House wants in the House-Senate conference required to reconcile differences.

Mr. Panetta insisted, as White House officials have all week, that some energy tax has to be in the bill.

"We need some kind of energy tax," Mr. Panetta said. Asked if he was saying that the White House would refrain from endorsing any of the various alternatives kicking around in the Senate Finance Committee yesterday evening, Mr. Panetta responded, "You got it."

In the rush to substitute a gasoline tax or other kind of energy taxes for the Btu tax, Mr. Panetta also noted wryly, "The tax not on the table is always easier (to pass) than the tax you're dealing with."

Mr. Clinton also tried to distance himself yesterday from Mr. Bentsen's announcement Tuesday night that the Btu tax had been "put aside."

"I'm still not sure how it's all going to come out," the president said, in a question-and-answer session with the Business Roundtable, a group of business leaders.

In formally unveiling his proposal yesterday, Senator Breaux argued that the his "transportation tax" would be much easier to collect than the Btu tax and avoid what he considers the unfair competitive burdens on agriculture and the manufacturing industries.

His alternative won no converts, however, among the Republican and industry-based lobbies that have waged a fierce, grass-roots campaign against Mr. Clinton's Btu tax.

"We're only halfway there," said Jeff Nesbit, a former aide to Vice President Dan Quayle, who now serves as spokesman for Citizens for a Sound Economy. He said the group plans to bring some of Mr. Breaux's constituents to Washington today to confront him on the issue.

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