Industry lobby, largely unanswered by White House, poured water on Btu tax

June 13, 1993|By Karen Hosler | Karen Hosler,Washington Bureau

WASHINGTON -- Day after day, radio ads in the Louisiana bayous warned Cajuns of a Washington plot to tax them every time they turned on the air conditioners, televisions or even took "a cold one out of the fridge."

In South Dakota, thousands of fliers were distributed that threatened higher prices on all goods from food to fertilizer and a loss of 600,000 American jobs if President Clinton's Btu tax on energy was enacted. The fliers included postage-paid protest notes to be sent to the state's U.S. senators.

Anti-Btu rallies were held in Bismarck, N.D., Billings, Mont., Phoenix, Ariz., and Omaha, Neb. Local television stations in as many as a dozen states were saturated with advertisements; phone banks targeted calls to a select list of opinion makers; glossy brochures full of industry-paid studies on the dire effects of the tax were sent to local journalists who got follow-up calls from public relations agencies offering interviews.

These efforts were part of a sophisticated industry-financed campaign that went largely unanswered by the White House and succeeded last week in scaring both Mr. Clinton and the Senate away from the centerpiece of his deficit-reduction program -- a broad-based tax on the heat content of fuel as measured in tTC British thermal units. As a result, the Senate Finance Committee is struggling to craft an alternative energy tax -- one that is likely to come under the same kind of organized attack as the Btu.

'Astroturf'

"Astroturf," is what critics like Oklahoma Rep. Mike Synar called the $2 million state-of-the art lobby effort designed to look like a grass-roots uprising against the Btu tax. The campaign was largely the work of two groups, a powerful coalition of energy producers, manufacturers and agriculture and another Republican-led consumer group founded by an oil company executive.

"It was very effective," said Sen. Max Baucus, a Montana Democrat who was one of those targeted by the lobbying. "I think we overreacted. There's always going to be some group that is vociferously opposed to a tax. Our job is to see through the fog and the guff. We abandoned the Btu too quickly."

The anti-Btu campaign started almost as soon President Clinton unveiled the tax in February as a way to raise $72 billion over five years, encourage energy conservation and promote the use of cleaner-burning fuels.

The administration touted it as a fairer levy than a gasoline tax, hitting everyone a little bit. The working poor would be spared any impact because of an offsetting income tax credit for families earning less than $30,000, the White House promised.

But opponents argued that the tax would raise the cost of practically everything while costing thousands of jobs in energy-related industries, manufacturing and agriculture. And they quickly dominated the debate.

There were newspaper ads, anti-Btu buttons, and radio ads.

Many people weren't sure what the Btu tax was even after they were exposed to a negative barrage about its impact, much of it based on statistics from industry-financed studies that are disputed by the Clinton administration.

But there is no doubt of the effectiveness of the campaign or the likelihood that it might work just as well in combating whatever tax the Senate comes up with as an alternative.

Already, airlines, trucking companies and railroads are gearing up to attack a proposed transportation fuels tax. Meanwhile, the huge American Association of Retired Persons is activating its 34 million members to fight potentially deeper cuts in Medicare, the health care program for the elderly, to make up for the money lost by killing the Btu tax.

Turnaround by Boren

In Oklahoma, a prime section of the oil patch that was the top target of the anti-Btu crowd, Sen. David G. Boren started out as an enthusiastic admirer of Mr. Clinton's "bold plan" for deficit reduction. But after an intense pounding by lobbyists, he became a die-hard Btu opponent and was probably most responsible for the administration's decision to abandon the tax last week.

By then, at least three other Democratic members of the Senate Finance Committee, whose states were also targeted by the lobbying campaign, were insisting on major changes in the legislation as a price for their support.

Convinced it had little chance of salvaging the tax in the Senate, the administration threw in the towel Tuesday less than two weeks after the proposal had passed the House.

House Speaker Thomas S. Foley argues almost daily that what Mr. Clinton is trying to do in cutting spending and raising taxes by a total of $500 billion over five years is extremely difficult, a tougher task than any president in memory has tackled.

Yet spokesmen for the American Petroleum Institute, the National Association of Manufacturers, the Farm Bureau and others who were involved in the anti-Btu lobbying campaign said they were inadvertently aided by a White House that started strong but just didn't follow through.

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