WASHINGTON _ When aluminum got passed over by the White House
earlier this month for a break on President Clinton's new energy
tax hike proposal, industry lobbyist Stevenson Walker called an
old friend _ White House Chief of Staff Thomas "Mack" McLarty.
Within a few days, Walker, the top lobbyist for America's No.
2 aluminum maker, Reynolds Metals, was in McLarty's office,
urging the administration to give his energy-thirsty industry a
Accompanied by Reynolds Chief Executive Officer Richard Holder
during a 20-minute meeting, Walker told McLarty that if the
aluminum industry had to pay the new tax, company costs would
skyrocket and some 24,000 aluminum workers might have to be laid
off. McLarty made no promises, but said he would convey Holder's
concerns to Treasury Secretary Lloyd Bentsen.
Walker and other aluminum executives aren't the only people
from energy-intensive industries pleading for a break from the
proposed tax, which is the second-biggest source of new money in
President Clinton's overall, five-year plan to fix the economy.
The Treasury Department handed out exemptions to the tax April
1, cutting the proposed levy on heating oil and eliminating it
for jet fuel used for international flights; grain-based gasoline
additives such as ethanol also were exempted.
Some industries which weren't given a break _ like steel,
glass and paper _ have begun to ask for similar exemptions.
Lawmakers whose districts include large aluminum smelters,
steel and paper mills are getting in the act.
For example, a dozen House members, including Speaker Thomas
Foley of Washington state, recently wrote Treasury Secretary
Lloyd Bentsen outlining the aluminum industry's case for an
exemption. Foley has a large Kaiser Aluminum smelter in his
district with 1,160 employees.
The rallying cries for exemptions illustrates the politically
tough choices the administration faces in crafting a way to raise
money to ease the federal budget deficit while at the same time
trying to avoid measures that would cost jobs and dampen the
The stakes are high: Aluminum-makers say the proposed new tax
would drive up the industry's annual production costs by as much
as $179 million, or 12 percent.
Because they spend one-third of their annual production outlay
on energy, aluminum companies say the tax would hit them harder
than most other industries. And with the market glutted by a
recent surge of Russian-made aluminum, the world price for
aluminum is at record lows at a time when world demand is
"The energy tax could be the straw to break the camel's back
for the industry," said Walker, "and cause plants to shut up and
go overseas, costing jobs."
Last year, Reynolds lost money on its smelting operations, as
did Pittsburgh-based Alcoa, the industry leader.
White House economists acknowledge the proposed energy tax
demands some tough sacrifices of industries, and is encouraging
many of them to pass the cost of the tax to consumers in the form
of higher prices. …