Energy Plan Unravels As Lobbyists Pick It Apart

LAST week, oil companies were placing full-page advertisements in newspapers across the country to protest the proposed energy tax based on British thermal units (Btu).

This week, angry seniors are phoning senators to protest plans to slash Medicare benefits, and transportation executives are crowding the marbled halls of the Capitol to rail against fuel taxes.

As the content of President Clinton's fiscal plan has changed, so has the lobbying swirling around the taxes-and-spending debate.

One constant has been the fact that, no matter what plan Congress considers, somebody is sure to take a hit.

At first, Mr. Clinton managed to make that a virtue by hailing "shared sacrifice." But shared sacrifice broke down as one group after another won concessions from the administration and congressional Democrats. Now it has become difficult for the Senate Finance Committee - where the defection of a single Democrat can sink the plan - to agree on any compromise.

The unraveling of the president's fiscal plan started with farmers and petroleum companies and other industries successfully seeking exemptions from the Btu tax. That emboldened opponents of the tax to go in for the kill. The National Association of Manufacturers, the Chamber of Commerce, and the American Petroleum Institute formed a group called the American Energy Alliance and sank more than $2 million into an anti-Btu lobbying effort spearheaded by the public- relations firm Burson-Marsteller.

Using approximately 120 full- or part-time lobbyists, the alliance targeted 10 to 15 states in agricultural or oil-producing regions that would be hard hit by the tax. In some states, the group paid for polls showing that most voters didn't like the Btu tax - and shipped the results to lawmakers. In other states, the group sponsored heavy ad campaigns, says Paul Huard, vice president of the National Association of Manufacturers.

"The ad campaigns contributed to a heavier than usual number of phone calls and letters," says Laurie Boeder, communications director for Sen. Kent Conrad (D) of South Dakota, a target of the lobbying effort.

By June 9, the administration was conceding defeat in the face of the heavy lobbying. With the Btu tax seemingly dead, senators groped for an alternative. The plan that has won the most support so far is a proposal by Sen. John Breaux (D) of Louisiana to add a 7.3-cent tax on transportation fuels. Senators are also looking for more spending cuts, possibly from Medicare.

Predictably, those plans have stirred opposition from transportation industries and seniors' groups. But while those organizations are trying to put together an effective lobbying effort, their activity is unlikely to reach the high pitch of the anti-Btu campaign.

For one thing, the Senate plans are changing so fast that it is difficult to mobilize opposition. "Every day there's a different rumor. It's hard for seniors to write in because they don't know what they're opposing," says Victoria Wingman of the National Council on Aging.

Another difference is that many industry groups, such as the National Association of Manufacturers and the Association of American Railroads, prefer the fuel tax to the Btu. That leaves the industries hardest hit by the fuel tax - principally airlines and trucking - to go it alone.

BOTH are protesting loudly. "In recent years we have not been able to pass along tax or regulatory costs to consumers," complains Tim Neale of the Air Transport Association. "The airline industry is in really rough shape."

"Fuel taxes are regressive, unfair to rural areas, and politically dangerous to those who support them," adds Thomas Donohue, head of the American Trucking Association.

His group, with a budget of more than $40 million and a staff of 300, is organizing a whirlwind campaign against the fuel tax. Members have been told to contact their lawmakers, lobbyists have met with White House and Treasury officials, and 300 chief-executive-officers were scheduled to storm the Capitol yesterday.

Their concerns have been heard. Sen. Max Baucus (D) of Montana, a member of the Finance Committee, has expressed opposition to the fuel levy, saying it would unfairly hit Western states where people drive longer distances.

The senior citizens' lobby also has made its power felt. Originally, seniors' groups went along with a House plan that called for $55 billion in Medicare cuts. But when the Senate last week began talking about trimming an additional $22 billion, 20 seniors' groups released a letter calling the cuts "completely unfair and unjustified."

Their concern was echoed by liberal senators, such as Barbara Mikulski (D) of Maryland, who wrote to the White House saying, "I do not believe that seniors should be asked to pay more than their fair share in order to give the energy industry a break."

To back up that message, seniors' groups sent "action alerts" to their members, asking them to organize telephone calls and letters to lawmakers.

But the 33 million-member American Association of Retired Persons (AARP) has no plans to declare all-out war along the lines of the American Energy Alliance.

"We don't want to put the whole package in jeopardy," says John Rother, the AARP's legislative director. "We need to pass an economic package to get to health reform, which is our major action item."