Economy puts heat on politicians

Times Staff Writers

Rising anxiety over the economy, especially soaring gasoline and food prices, is forcing politicians from Capitol Hill to the White House to the campaign trail to scramble for a response.

President Bush on Tuesday sought to assure Americans that he was aware of the problems they faced in paying bills but said there was “no magic wand” he could wave to bring down energy costs.

Congressional Democrats and Republicans rushed to draft new energy proposals -- and dust off old ones -- in order to shield themselves from blame for high gas prices, while plotting strategy for what will be months of positioning on the issue.

The ideas being offered -- including Bush’s renewed call for opening the Arctic National Wildlife Refuge to drilling and Democrats’ demands for investigations of the oil industry and a windfall profits tax -- have been debated for years. Even if approved, they would provide little immediate relief.


But politicians have grown increasingly jittery as pump prices hit a record high Tuesday -- a national average of about $3.61 a gallon for self-serve regular, up from $2.95 a year ago, according to AAA -- and oil companies reported big profits this week.

The high gas prices have come amid a declining job market, a housing crisis and rising grocery prices that are being felt in all regions of the country.

On Capitol Hill, some lawmakers accustomed to hearing from voters about gasoline prices said they had never gotten more calls.

“I was home in Alaska over the weekend, and everywhere that I went the price of gasoline was the main topic,” Republican Sen. Lisa Murkowski said. “What people really care about, what they really want to know is: What are you doing, Congress?”


Sen. Norm Coleman (R-Minn.) said three motorists approached him to complain about gas prices as he was filling up his car.

A number of Republicans have joined Democrats in pressing Bush to give ground on his refusal to suspend purchases for the Strategic Petroleum Reserve.

Bush has resisted halting the purchase of 67,000 to 68,000 barrels of oil a day for the emergency stockpile, contending that it is needed to guard against an interruption of the flow of foreign oil to the United States. He also has argued that a halt would have no significant impact on prices because the daily purchase amounts to one-tenth of 1% of global oil demand.

“I support the goal of protecting America’s energy security,” said Sen. John Barrasso (R-Wyo.). “But the federal government shouldn’t be competing with consumers for oil.”

With the new Republican support, Sen. Byron L. Dorgan (D-N.D.) said he had the votes to attach to a bill moving through the Senate a veto-proof measure that would suspend purchases.

A number of Republicans also are pushing to suspend or repeal the requirement that greater amounts of ethanol, especially from corn, be added to the nation’s gasoline supply, contending that the mandate has driven up food prices.

“While the renewable-fuels mandate was intended to lessen the dependence on foreign oil, it has done little but add more strain to an already shaky economy,” said Rep. Jeff Flake (R-Ariz.).

But efforts to freeze the mandate face strong resistance from farm-state lawmakers who dispute that it has driven up food prices, and a number of ethanol supporters argued Tuesday that without biofuels, pump prices would be higher.


“Ethanol is having the impact that we hoped that it would by increasing supply,” Sen. John Thune (R-S.D.) said.

Bush avoided saying whether he favored a summer-long moratorium on the federal gasoline tax of 18.4 cents a gallon, an idea embraced by the presumptive Republican presidential nominee, Sen. John McCain of Arizona.

Of the Democratic presidential candidates, Sen. Hillary Rodham Clinton of New York has favored suspending the federal gas tax, and Sen. Barack Obama of Illinois has opposed it. The idea faces resistance from a large number of lawmakers from both parties, who fear that a moratorium would cut funding for highway projects.

Bush sought Tuesday to lay part of the responsibility for high gas prices at Congress’ doorstep, assailing lawmakers for failing to approve his longtime goal of opening the Arctic refuge to drilling in order to increase domestic energy supplies.

But opponents of that idea, including McCain, have argued that the drilling would spoil an environmental treasure, that oil found there would take years to reach the market and that it would have a negligible effect on prices.

Bush declined to say whether the economy had entered a recession -- a point over which, he said, “economists can argue” -- after saying last week that it had not. “The average person doesn’t really care what we call it,” Bush said.

On the presidential campaign trail, the economy also has gained new attention.

Obama has spent about $7.7 million, or about 16% of his TV advertising, to discuss energy issues -- including running 3,000 times an ad touting what he says is his independence from oil companies and lobbyists. Clinton has allocated $5 million, or about 18% of her ad spending, to discuss energy issues, according to Evan Tracey, whose company, TNS Media Intelligence/CMAG, tracks political advertising.


In recent weeks, McCain has rushed to sweeten his economic proposals with more offerings for middle-class Americans and has spoken frequently about the squeeze from the rising prices of gas and goods such as milk and eggs.

The candidate faced a barrage of criticism in late March after a housing speech in Santa Ana, in which he said that government’s role in a housing bailout should be limited. He markedly changed his tone two weeks later -- offering government-backed, 30-year, fixed-rate mortgages to as many as 400,000 “deserving” homeowners facing foreclosure.

Clinton, campaigning in Indiana and North Carolina ahead of next week’s primaries, has focused on the plight of the working-class voters she is attracting to rallies and forums.

“I know that times are tough right now,” Clinton told supporters at a veneer factory Tuesday in Indianapolis. “Many of you are being squeezed pretty hard in every direction, between healthcare bills and tuition bills, between grocery bills and prices at the pump.”

Her prescription is a dizzying list of new government initiatives: federally funded job training, a major new road- and bridge-building campaign and a moratorium on home foreclosures, among others.

More recently, Clinton has zeroed in on the rising cost of gas, which she has proposed to address with a gas tax “holiday” and with a major initiative to fund the development of alternative energy sources.

She has also promised to crack down on oil companies and go after members of OPEC.

“In the end, everybody pays the price,” Clinton said, “except the oil companies.”



Times staff writers Noam N. Levey in Washington and Maeve Reston in Los Angeles contributed to this report.