WASHINGTON -- The White House yesterday backed off its proposal to allow the Bonneville Power Administration to privately refinance up to $4 billion of Treasury loans, but another proposal authorizing a bond-financed sale of federal facilities to Alaska appeared headed toward passage in the House last night.
The Bonneville refinancing, as well as similar proposals to allow refinancing of the debt of the southeastern, southwestern and western area power administrations, was championed by Vice President Al Gore in his "Reinventing Government" report. The refinancing proposals were included in an administration bill delivered to Congress this fall to carry out parts of the report that were expected to reduce the federal deficit.
But the refinancing proposals were effectively shot down by the Congressional Budget Office's determination last week that they would cost the Treasury $166 million over five years rather than save money, as the administration assumed.
The problem created by the CBO estimates led the White House over the weekend to back off the debt restructuring provisions and exclude them from their latest version of the $37 billion spending cut bill, which appeared headed for passage in the House last night.
In place of the refinancing provision, the administration agreed to include language in the bill' recommended by the House Natural Resources Committee. The measure would require studies on refinancing options to be conducted by the power administrations and completed by March 1 for Bonneville and May 1. for the other agencies.
"There were all kinds of problems with the BPA proposal," in particular, said an Office of Management and Budget official, who said that the legislative language authorizing the refinancing was objectionable to congressional committees in several ways.
"The language submitted by the administration was technically deficient," says a report of the House committee. "Although the committee strongly supports the goal of the administration to stabilize [power marketing administration] rates and resolve the repayment reform controversy, a variety of circumstances made it impracticable for the committee to report any refinancing legislation" this year, the report says.
Administration and other proponents of the refinancings are hopeful, however, that the legislative provisions can be "cleaned up" and resurrected when the bill goes to the Senate for action early next year. The Senate is expected to recess today without taking action on the administration bill.
The White House's latest version of the spending cut bill contains Gore's original proposal to permit the Alaska Power Administration to sell its two federal hydroelectric projects to state and municipal power authorities for an anticipated $83 million. The state has considered financing the bulk of the sale with bonds.
Unlike the refinancing provisions, the CBO determined that the Alaska sale would net $53 million in revenues for the federal government, after taking into account about $11 million a year in lost power sale receipts.
The Alaska provision was included in a major amendment to the White House bill, which was also scheduled for a House vote last night. The amendment, sponsored by Rep. Tim Penny, D-Minn., and Rep. John Kasich, R-Ohio, does not include any requirement to study the possibility of debt restructuring by the other power administrations, however.
The White House and the House leadership lobbied strenuously over the weekend to defeat the Penny-Kasich amendment, which in cutting $99 billion in federal spending over five years would go much further than the White House bill.
The amendment would target deep cuts in Medicare and other entitlement programs for deficit reduction, a proposition that troubles the White House because it has proposed to use the same savings to help finance its universal health care plan.
Another point of contention on the House floor yesterday concerned the administration bill's proposed $32.5 billion in savings from the elimination of 252,000 federal civilian jobs. The House bill would devote the savings entirely to deficit reduction, but the Senate just passed a $22 billion crime prevention bill that relied on the federal job savings for financing.
House Speaker Thomas Foley, D-Wash., said yesterday that once Congress completes action on the Gore bill and the crime bill, he expects part of the federal job savings will have been used to underwrite the costs of the crime bill.
