Lobbyists Ready to Oppose Clinton's Plans

PRESIDENT Clinton may raise taxes on Social Security benefits next week in his economic package. But the American Association of Retired Persons (AARP) - arguably the most formidable lobby in Washington - is withholding judgment.

"It all depends on what the whole package looks like," says Peter Ashkenaz, spokesman for the association. If the sacrifices are shared widely and the elderly are not singled out for cuts, he says, then the association may not protest.

Mr. Clinton may also raise taxes on personal incomes over $200,000 and corporate tax rates.

The National Association of Manufacturers (NAM) would much prefer he did neither.

But minds are not closed.

"If it's shared sacrifice and would do something real on the deficit, then the manufacturers would go along with it," says Denny Gulino, spokesman for the manufacturers association.

The interest groups that populate this town are not so generous across the board. Many, including AARP and NAM, hold some benefit cuts and tax increases to be beyond the pale.

But many show a willingness, at least so far, to stand for some sacrifice as well. A couple of factors seem to be at work.

One factor is what lobbyist Bruce Kozarsky calls "a pretty strong desire out beyond the Beltway to see the president succeed." Mr. Kozarsky works at the Kamber Group, which advises Democrats and labor-oriented groups, among others.

Another factor, he notes, is that groups that hope to forge good relationships with the new administration are more likely to avoid confrontation on all but their most vital issues.

Some Republicans note that the options the Clinton administration has floated so far for the economic package, which Clinton will announce in a speech to a joint session of Congress Feb. 17, include virtually no spending cuts except on defense. Most of the deficit reduction appears to be taking the form of tax increases.

"It's the same smokescreen," says Walt Riker, press secretary to Senate minority leader Robert Dole (R) of Kansas. Clinton is another Democrat arguing that the rich are going to pay this time, he says. "When you blow the smoke away, it's the middle class that pays."

The strongest organized counterattack so far has mobilized against the suggestion of a broad-based energy tax.

Interest groups from the American Trucking Association to the American Automobile Association (AAA) to the National Consumers League steadfastly oppose a gasoline tax and held a press conference this week to argue against it.

AAA released its own survey Feb. 9, finding that 3 of 4 Americans would oppose a 25-cent-a-gallon tax increase dedicated to deficit reduction. That is about five times the tax increase the Clinton administration is considering.

The major argument deployed against the gas tax is that it hits low and middle-income families hardest.

Trucking association president Tom Donahue says that the lowest fifth of the public by income paid 8.2 percent of their income for motor fuels in 1990. The middle fifth paid 3.6 percent, and the wealthiest fifth paid less than half that share.

NAM would also find an energy tax unacceptable. Mr. Gulino calls it "a direct hit at manufacturing" that would hobble the competitiveness of American industry.

AARP could probably never support a package that froze cost-of-living adjustments in Social Security benefits. Not surprisingly, the White House has pulled such benefit cuts off the table.

Another powerful lobby, the National Association of Realtors, would probably fight to the end to prevent further limits to the deductibility of mortgage interest from income taxes.

"The mortgage interest deduction is very precious to us," says spokesperson Liz Duncan, "and it has already taken a couple of hits."

No one in the Clinton administration has publicly floated a suggestion that deductions be further limited, but the idea has been widely discussed.

The manufacturers' association is watching closely what happens to the tax increases on incomes above $200,000.

These tax hikes could hurt the large number of small and medium-size manufacturers that are privately held, many as family businesses.

Likewise, manufacturers oppose corporate-tax hikes. Yet, Gulino says, "it's not impossible to imagine a package balanced across the board with shared sacrifice that included a corporate income tax."

One explanation of why manufacturers might grudgingly accept such a tax hike is their overriding interest in seeing the federal budget deficit cut.