- The Washington Times - Wednesday, June 28, 2000

High gas prices sent consumer confidence plunging last month even as politicians scurried to find ways to give consumers relief including a possible suspension of the 18.4-cent federal gasoline tax.

Senate Majority Leader Trent Lott said yesterday that the Senate will vote again this week on suspending all or part of the gas tax.

"As heated as this issue is around the country right now, this issue will come up on the floor later this week," the Mississippi Republican said.

Senate Republicans also are discussing alternatives to a temporary suspension of the federal tax. The Senate in April failed to pass a bill that would have suspended the 4.3-cent tax increase that Vice President Al Gore provided a tie-breaking vote to approve in 1993.

The failure was attributed at the time to concern that the temporary tax repeal would undercut the highway-construction program. Senators also are concerned that there may be no foolproof way to ensure that oil companies will pass on any gas-tax relief to consumers at the pump.

Economists said the six-point drop in the Conference Board's measure of consumer confidence last month shows that Americans are reactive to high pump prices and are likely to spend less on other things because of them most likely precipitating a further slowdown in economic growth.

The possibility that high gas prices will act like a tax on consumer spending and deepen the economic slowdown this summer is one reason that the Federal Reserve is likely to refrain from another interest-rate increase at its meeting today, economists said.

Midwestern legislators are particularly focused on rushing aid to consumers, though they acknowledged that getting agreement between Congress and the White House on short-term relief would be difficult in the highly charged, partisan atmosphere this year.

Should the gas-tax suspension fail to attract votes a second time around, Sen. Spencer Abraham said, he will introduce an alternative bill to provide hard-hit Midwestern consumers with a federal income-tax deduction for their federal, state and local gas taxes.

"That would ensure consumers benefit," the Michigan Republican said. "We want to go beyond talk and make a difference."

But Senate Minority Leader Tom Daschle warned that any new attempt at suspending the gas tax would be futile.

"I don't think that repeal or relief from the gas tax is any more popular now than it was a couple of months ago," the South Dakota Democrat said. "To jeopardize meaningful highway construction is not the solution."

House Republicans also are discussing giving consumers some kind of temporary relief from gas taxes, but their plans are not as far along and a vote would not occur in the House until after the July Fourth recess, aides said.

Not all Republicans favor taking action to offset high gas prices. Many contend that the high prices stem from the Clinton administration's energy and environmental policies, and that instead of trying to take responsibility, the Congress should step aside and let this fall's elections be a referendum on those policies, aides said.

Polls show that "nearly half of Americans claim that gas prices have affected their driving habits or vacation plans," said House Republican Conference Chairman J.C. Watts Jr., Oklahoma Republican. "Because of 7 1/2 years of bad decisions, American families are suffering financial hardship."

The Clinton administration and congressional Democrats yesterday continued to promote measures that offer no immediate relief but focus on encouraging energy conservation through various tax incentives and subsidies.

Energy Secretary Bill Richardson stressed that strong demand for gasoline particularly in the Midwest was behind the high gas prices, even as he repeated the administration's charges of oil-company profiteering.

Mr. Richardson noted that oil and gas prices have come down a little since the Organization of the Petroleum Exporting Countries approved a modest production increase last week, but he could not say whether that is a trend.

The average retail price for unleaded gas eased off record levels last week, dropping 2.3 cents to $1.66 per gallon.

"We are still not seeing the greater price decreases … we might have hoped for. The reason for this is quite simple: demand. The world's thirst for oil is steadily rising," he said, noting that demand grew in the spring quarter at a near-record pace.

Rather than grant tax relief, House Democratic leaders proposed a windfall-profits tax on oil companies, with the revenues used to subsidize mass transit and tax credits for buying electric cars or vehicles that get at least 45 miles to the gallon and are "union made in America."

On a 393-33 vote, the House late last night renewed its backing for creation of a special heating oil reserve for the Northeast.

On a voice vote, lawmakers also approved an extra $40 million for more research into renewable energy sources.

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