WASHINGTON -- Signals that the Bush administration is opposed to the 5-cent-per-gallon gas tax increase included in the House Democratic leadership's draft highway bill are casting further doubt over already-slim hopes that the added revenues could be used to ease some tax-exempt bond curbs.
Though the White House has officially been mute on the gas tax proposal, Council of Economic Advisers Chairman Michael Boskin told reporters last week he does not believe the administration would endorse such a tax increase right now because the economy is not strong enough to support it.
In addition, Transportation Secretary Samuel Skinner -- while personally open to the idea -- has said the administration is unlikely to support the issue because the Office of Management and Budget is strongly opposed to it for budgetary reasons, congressional sources said.
The proposal is being championed by House Public Works and Transportation Committee Chairman Robert Roe, D-N.J., and House Speaker Thomas Foley, D-Wash., as part of a $153 billion, five-year highway and mass transit bill expected to be formally unveiled later this week.
The gas tax increase, which would raise $33 billion primarily for additional spending on highway projects, has been widely publicized along with other major elements of the bill, but the White House until recently had largely kept quiet about it.
In addition to paying for additional highway projects, the bill's drafters have mentioned the gas tax increase as a possible source of payment for proposals to ease some tax law restrictions on bonds issued to finance federally mandated transportation and infrastructure projects.
The authors believe such financing reforms would help state and local governments leverage federal dollars and build more transportation projects. However, House sources said the bill is not likely to actually include any legislative proposals to ease tax-exempt bond curbs when it is unveiled.
Amendments to include bond provisions could be offered in the public works committee's markup session after the bill is announced. If no amendments are added in the bond area, sources said the committee could informally advise the House Ways and Means Committee in the "report language" accompanying the bill to act in that area.
The bill will be referred briefly to the tax committee for action on the gas tax and other tax matters after the public works committee acts on it, and congressional sources said an amendment to ease bond curbs may be offered at that time.
But Open White House opposition to the gas tax increase needed to finance the bond provisions could make even smaller the already slim odds for the passage of such provisions this year, state and local lobbyists said.
Support for the tax increase already appears shaky in Congress. Many members, while saying they want to vote for it, have avoided taking an open stand out of fear the White House would come out strongly against it and use it as a presidential campaign issue, congressional sources said.
"It's like a cat-and-mouse game," one Senate staff member said. "Everyone's waiting to see what's in the bill and what the White House's reaction will be before taking a position."
A two-thirds majority of both Houses would be needed to overcome a presidential veto. But a House Republican aide emphasized that President Bush has not yet threatened to veto the bill over the tax increase proposal, suggesting he might be downplaying his opposition both to give congressional Republicans more room to support the proposal and to avoid criticism of his own flip-flopping on tax increases last year.
The Senate staff source said Mr. Skinner and other Transportation Department and White House officials have been open to discussing the gas tax increase. "Politically aware" members of the administration recognize that the country is "underinvesting" in infrastructure and should spend more to maintain the highways, this source said.
Nevertheless, Mr. Skinner, on behalf of the administration, "told us when we were drafting the Senate bill that it would not support a gas tax increase because of OMB's opposition," he said. As a result, the bill that passed the Senate last month did not include such an increase.
OMB officials declined to comment, but congressional sources said the OMB's objections center on concerns about the way the proposal attempts to circumvent last year's budget agreement. One way it is said to do so is by taking a portion of the highway program out from under the agreement's domestic spending caps -- where it would have to complete with other programs for limited funds -- and creating a new mandatory "pay-as-you-go" transportation program with no cap on spending.
