Moynihan Hints He May Modify Energy Tax Plan

President Clinton’s plan to tax energy appeared to sink into deeper trouble Sunday as Senate Finance Committee Chairman Daniel Patrick Moynihan (D-N.Y.) signaled that he plans to modify it.

Clinton’s proposed levy, pegged to the amount of heat generated by various fuels, would affect virtually all forms of energy, from oil and natural gas to nuclear power. Called a “BTU tax,” it is linked to the British thermal unit, a measurement of heat from any energy source.

But in an appearance on NBC-TV’s “Meet the Press,” Moynihan, whose committee has jurisdiction over this part of Clinton’s economic program, pointedly noted that he is no longer calling the plan a “BTU tax,” but rather “an energy tax.”

“We’re going to call it an energy tax. Haven’t you seen that semantic shift take place right before your eyes?” Moynihan asked playfully as a questioner persisted in referring to the BTU tax.

Dissident Democrats, led by Sen. David L. Boren of Oklahoma, have said--and repeated in televised interviews Sunday--that they might be willing to accept some other type of energy levy, such as a gasoline tax, if it were combined with additional spending cuts.

Sen. John B. Breaux (D-La.), with whom the White House has been negotiating in hopes of finding a compromise, said on CBS-TV’s “Face the Nation” that he plans to offer an alternative economic plan that would include a gasoline tax of about 8 cents a gallon. That is roughly the increase in gasoline prices that is already envisioned under the BTU tax.

However, that would fall far short of the 20 cents a gallon it would take to offset the $70 billion in revenues that would be lost over five years from scrapping the BTU tax. Nor is it clear that a gasoline tax would be any more likely to pass than a BTU tax. It would be a particular burden on parts of the country where people drive great distances.

Such a shift could carry a political cost for Clinton as well. As recently as last Wednesday, the President had assured House Democrats that he would be unyielding with the Senate on the BTU tax. An embarrassing reversal could further erode lawmakers’ confidence in his leadership, which was shaken by last month’s defeat of his $16.3-billion economic stimulus package.

As he left a church service Sunday, Clinton said he was “just warming up” for the upcoming battle.

“It’s been so long since anybody here has been in a fight worth making that they get timid,” he added.

Yet Boren and Breaux each have enormous leverage by virtue of their seats on Moynihan’s tax-writing Finance Committee, which has jurisdiction over the big-money elements of Clinton’s economic program.

A defection by either could doom the President’s entire economic plan on a panel where Democrats hold only a 11-9 majority.

Clinton had attacked Boren indirectly in a speech on Saturday, when he suggested that his opponents were tools of “the big oil lobby.”

“I wish the President wouldn’t have gone on about big oil this weekend, because big oil gets its money in the tax code. . . . This particular BTU enterprise, energy enterprise, is of no concern to them,” Moynihan said.

At the same time, however, Moynihan expressed confidence that Boren could ultimately be persuaded to support the plan. Boren said Sunday that he sees Moynihan’s optimism as a sign “that the White House and others are ready to sit down with us and work on making this package more reasonable, because that, of course, is what I am seeking, and that’s what it would take to get my vote.”

Moynihan also noted that Boren had promised Clinton that his would not be the vote that would stop the President’s economic plan.

Dan Webber, Boren’s spokesman, conceded that the senator had made such a pledge, but added: “This should not be interpreted to be a blank check for just any plan, especially one that increases taxes more than it cuts spending.”

The Oklahoma senator repeated his assertion that he will vote against any economic package that includes the BTU tax.

On ABC-TV’s “This Week With David Brinkley,” he again noted that the tax would fall on virtually every industry, making it harder for U.S. goods to compete with those of foreign manufacturers. Opponents have also complained that the tax is unfair because Clinton has agreed to breaks for some industries, such as aluminum makers, and has excluded certain fuels, such as home heating oil, which is used heavily in the Northeast but not in the Southwest.

However, the Administration argues that the tax is not only fair but would help the environment as well. Officials say it would provide an incentive for widespread energy conservation and would promote clean fuels over dirty ones.

Time is quickly running out on the President. Any changes to the BTU tax would have to be made in consultation with the House, which is scheduled to vote on the massive economic package Thursday, Moynihan said. The Senate committee will take up the plan next month.

“They have to know, when they vote this week, something similar will come out of the Senate,” he said. “You hold hands, you do it together. If we don’t, if we fail, this country begins to lose its stability because the budget deficit will do that to you.”

Even Clinton’s allies in the House say they are reluctant to support the package of politically unpopular taxes and spending cuts if they know the whole exercise is doomed in the Senate.

“When Sen. Boren sends a signal that he’s going in a different direction, why should I fall on the sword one more time?” asked Rep. Craig Washington (D-Tex.), a liberal who supports the President’s plan. Washington also appeared on the ABC program.

But House Majority Leader Richard A. Gephardt (D-Mo.) seemed to be urging the President to hold firm. “I still think the BTU tax, as proposed by the President, will pass in the Senate, and I think we’re going to pass the whole package in the House this week,” he said on the CBS program.

* FIXING BROKEN TIES: Clinton’s challenge is to restore confidence on Capitol Hill. A16