Dole Decision May Kill Bid To Link Bailout, Gas Tax Repeal

Majority Leader Bob Dole's surprise announcement Wednesday that he is relinquishing his Senate seat is a major blow to efforts to pass the thrift insurance fund rescue as part of a gasoline tax repeal.

Sen. Dole, the presumptive Republican presidential nominee, is the primary force behind the gas tax repeal, an issue he has used in his campaign against President Clinton.

The Kansas Republican strongly pushed the Savings Association Insurance Fund capitalization as a way to recoup the $2.8 billion cost of repealing the tax through the end of 1996.

Sen. Dole, who is leaving the Senate in mid-June after 27 years to focus on his struggling presidential campaign, failed to break a Democratic filibuster blocking a vote on the package Tuesday. Republican leaders moved on to other issues, beginning debate on the 1997 budget Wednesday.

With budget debate expected to last until early next week, there is little likelihood Senate Republicans will return to the gas tax before then, sources said.

Furthermore, Republican whip Trent Lott of Mississippi, who is slated to become majority leader, said last week that he does not want to use the thrift fund bailout as an offset for the tax repeal.

Prospects for tacking the thrift-fund fix onto the gas tax repeal bill in the House also are dim. Majority Leader Dick Armey said he would oppose attaching the capitalization plan to the House version of the bill, which is scheduled to go before the Rules Committee today. A vote by the full House is expected May 21.

"With all that in perspective, I think enactment of the SAIF legislation is on hold until the budget is dealt with," said Richard F. Hohlt, a lobbyist supporting the bailout legislation.

American Bankers Association chief lobbyist Edward L. Yingling said he believes chances to pass the thrift fund capitalization plan quickly are now stalled.

"Most people think it's caught up in a logjam," he said.

The ABA is intensely opposing the thrift fund fix because it would force banks to pay $600 million in annual interest payments on long-term bonds used to bailout the thrift industry in the late 1980s. The plan also would force thrifts to pay a one-time assessment to capitalize their insurance fund.

Treasury Under Secretary John D. Hawke Jr., who has been pushing lawmakers to pass the thrift capitalization plan, declined to speculate on prospects for passing the rescue as part of the gas tax repeal. "Our role has been limited to getting this done in the quickest way possible," he said."The gas tax raises thorny political issues we're not involved in."

Senate Democrats Tuesday blocked a vote on the gasoline tax repeal, hoping to gain assurances that both houses of Congress would vote on legislation raising the minimum wage. Sen. Dole had painted the gasoline tax, imposed in 1993 as part of a deficit reduction plan, as an example of the Clinton administration's eagerness to raise taxes.

Holding onto hope, Paul A. Schosberg, president of America's Community Bankers, the thrift trade group, said it's to early to tell whether Sen. Dole's pending departure will hurt prospects for moving the thrift fund capitalization plan quickly. "Reading the political tea leaves and determining the fallout from Sen. Dole's decision is beyond me," he said.

But his organization will continue its efforts to attach the plan to "any and every legislative vehicle that has 'fast track' and 'must pass' on it," Mr. Schosberg said.

Although both the House and Senate budgets include the thrift fund capitalization plan, approval of the spending projections would not make the bailout become law.

Budgets are nothing more than guides for various congressional committees to use when drafting their spending bills.

The House is scheduled to vote on its budget plan today.

Besides the Savings Association Insurance Fund rescue, the budgets contain other banking related provisions including:

*Cuts in the government's direct student lending program. The House version eliminates the program entirely; the Senate's caps the program at 20% of total student loan volume.

*The Senate version, assuming the federal government will lose the goodwill case pending before the Supreme Court, earmarks $9 billion for payments to buyers of troubled thrifts.

*Both budgets gradually increase income limits for tax deductions on Individual Retirement Accounts. For single people, the limit will rise to $85,000 from $25,000; for couples it climbs to $100,000 from $40,000.

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