WASHINGTON - Remember the old saying, "Watch what they do, not what they say"?

The maxim is frighteningly helpful when it comes to evaluating the Clinton administration's track record on municipal bonds.

"Watch what they do" is especially true in light of the contradictory statements made recently by high-ranking administration officials the long-term prospects for easing curbs on tax-exempt bonds to encourage financing for infrastructure projects.

A top economic counselor to President Clinton said two months ago - in one of those legendary "background" briefings in which big shots agree to talk as long as they are not named - that the President might be willing to consider proposing the relaxation of some curbs on private-activity bonds to spur infrastructure financing.

Then about a month ago, another top official, Gene Sperling, head of Clinton's National Economic Council, said publicly that Clinton is personally interested in the idea of expanding the use of tax-exempt bonds to spur infrastructure financing and is open to incorporating more bond proposals into his economic program next year.

Proponents of easing the curbs on private-activity bonds began to take heart when Sperling said Clinton is "interested in trying to find ways to increase infrastructure financing through creative techniques."

But their bubble quickly burst 10 days ago when the Treasury's top tax official testified before Congress that the administration absolutely opposes casing the 10% private-use test and making the volume cap more flexible. The two proposals are essential to the creation of any infrastructure financing mechanism designed to leverage more private investment.

Leslie Samuels, assistant Treasury secretary for tax policy, did raise some hopes when he said the administration is reviewing the nation's infrastructure needs and may offer proposals to change the bond provisions of tax law "to facilitate infrastructure financing.'

However, Samuels, in the first detailed comment the administration has made on tax-exempt bond measures, dashed the market's hopes by saying the White House opposes both the private-use and volume cap proposals because they would increase the volume of tax-exempt debt and drain federal revenue.

Samuels also delivered a crushing blow in saying the plan to ease the 10% test would reverse a major change made in the Tax Reform Act of 1986. The administration believes the "benefit of tax-exempt financing should be limited to state and local governments," he said.

Because Samuels' statement represents the first official stance taken by the Clinton administration on private-activity bonds, it sends the chilling message that the prospect for easing the curbs on infrastructure bonds in the next few years is almost nonexistent.

It's just like that old saying. What the administration is doing on bonds is far worse than what they are saying.

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