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Posted on  

June 13, 2002

Memo Shows Bush Advisers Rebuff Idea

Associated Press Writer

WASHINGTON (AP) - While President Bush frequently has promoted the benefits of ethanol, the president's economic advisers are arguing strongly against legislation that would triple production of the corn-based additive, according to an internal White House document.

The document also reveals substantial disagreement within the administration over whether to support banning the gasoline additive MTBE, certain tax breaks for the oil industry and clean coal technology, and incentives for building an Alaska natural gas pipeline.

All of these measures are in separate energy bills already approved by the House and Senate, in many cases with administration support.

Administration officials dismissed the internal document, summarizing various agency positions on key parts of the energy legislation, as a working paper that does not reflect the administration's eventual position as lawmakers work out a final energy package.

"It's a very preliminary work in progress document that is simply a collection of various views across the government," said Trent Duffy, a spokesman for the Office of Management and Budget, which drafted the paper.

But the arguments presented in the document, a copy of which was obtained by The Associated Press, reflect significant - and sometimes surprising - disagreements within the administration over key areas of energy policy.

On the matter of ethanol, an issue that has broad political overtones, Bush has made clear - as he did again last week during a trip to Iowa - that he wants to spur increased production of the gasoline additive to help reduce the nation's dependence on foreign oil.

The ethanol mandate, tripling the amount refiners would have to use in gasoline, passed the Senate with strong White House and Energy Department support. It is a priority of Senate Majority Leader Tom Daschle, D-S.D., and other farm state lawmakers, including House Speaker Dennis Hastert, R-Ill., whose state is the country's largest producer of ethanol.

Nevertheless, the president's Council of Economic Advisers characterizes the mandate as "costly to both consumers and the government" and said it will "provide little environmental benefit," according to the internal White House paper.

The economic advisers also raised concerns about the provision in the Senate-passed bill that bans MTBE, a petroleum-based additive that has been blamed for fouling drinking water in many states.

The MTBE ban could "cost consumers billions of dollars" while the MTBE water contamination problem "can be addressed by a more targeted, cost effective approach," the economic advisers continued.

Despite these concerns, administration officials emphasized Tuesday the president's support of ethanol has not wavered. Both the ethanol mandate and MTBE ban are part of a politically fragile compromise reached in the Senate with White House support. It is not in the House-passed bill.

There also has emerged a debate within the administration over tax breaks for oil and gas development and finding ways to make coal less polluting. Bush and Vice President Dick Cheney frequently have called for measures to spur fossil fuel development and boost clean coal technology.

But, according to the OMB document, the president's economic advisers are arguing that $2 billion in tax breaks for clean coal technology "would provide no environmental benefits" while the oil and gas tax incentives in the energy package "will have a negligible impact on production" and merely offset oil that would be drilled otherwise.

Tax credits for pumping oil from marginal wells "could cost billions of dollars" if oil prices drop, the economic advisers warned.

The White House economists, as well as the Office of Management and Budget, also urged against prescribing the route of a future natural gas pipeline in Alaska - requirements in both the House and Senate bills.

Requiring a Southern route that goes primarily through Alaska instead of more through Canada "could result in the construction of an uneconomic pipeline or prevent construction of a pipeline altogether," the economists and OMB argued.

The economic advisers, Energy Department and Commerce Department all urged against support for provisions in the Senate bill on climate change. A measure to boost government research into global warming would "create an unwieldily and new climate policy bureaucracy," the White House Council on Environmental Quality said.



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