President Carter finally won a victory in the Senate on his energy plan yesterday as that body approved, 51 to 37, a modified version of his tax on industrial use of oil and natural gas, the biggest oil-saver of all his proposals.
But the Senate then did something even nicer for its finance committee Chairman, Sen. Russell B. Long (D-La.). It voted, 56 to 38, to give Long "flexibility" he requested to bargain with the House on the final version of the bill.
Opponents said that language Long put into the bill requiring that any tax approved in conference be accompanied by tax incentives for energy production, savings or conversion amounted to a "blank check to give billions dollars to the oil industry."
In other action, the Senate approved, 88 to 2, a special tax credit or cut of $75 a year to individuals age 65 and over to help offset rising energy costs. Those with tax liability less than $75 would be sent a check by the Treasury for the difference. This credit proposed by Sen. Pete Domenici (R-N.M.) was not in the Finance Committee bill.
The Senate then went on to vote down, 43 to 42, a tax credit for intercity bus companies that the Finance Committee had approved, ostensibly as a way of making bus travel more attractive and luring people away from cars. The committee credit would have given the companies $200 million a year for five years to help them buy new equipment and improve terminals. It was struck down on a motion by John Heinz (R-Pa.), who said Greyhound and other long-distance bus companies don't need aid.
The House approved all three main energy taxes Carter requested - on gaz-guzzling cars, on crude oil to cut use by raising price and on industries and utilities using oil or natural gas, to push them to use of more abundant coal.
But the Senate Finance Committee rejected all three taxes. It considered the industrial use tax unfair because it would be imposed on plants whether they could convert to coal or not. And by the time the bill reached the Senate consumer and labor groups had turned on the crude oil tax as a sales tax on the poor. A Senate ban on sale of gas-guzzlers was seized by the committee as a reason to kill the guzzler tax.
Sen. Howard M. Metzembaum (D-Ohio) pushed a modified industrial use tax through the Senate by exempting existing oil or gas-fueled industrial or utility plants. He said almost 90 per cent of existing plants cannot be converted to coal. He also exempted, as did the House bill, plants where oil or gas are used as ingredients in products, or where use of coal is banned for environmental reasons.
Metzembaum said his proposal would save 80 per cent as much oil as Carter's at only 10 per cent of the cost to industry.
Carter had claimed savings of an estimated 3 million barrels of oil a day by 1985 from his industrial use tax plus a companion rebate plan. But it would have soaked up an estimated $90 billion in taxes by 1985 and rebated only about $50 billion to help industry convert, for an estimated industrial loss of $40 billion during that period. By the time the House had carved out exemptions, the estimated oil savings from the tax had slipped to about 1.5 million barrels a day plus another 700,0000 barrels due to conversion by government regulation.
Metzenbaum showed the Senate a report from the Congressional Research Service estimating that his plan would save 1.2 million barrels a day by 1985, take in only $5 billion in revenue and rebate $2 billion to offset conversion costs. Metzenbaum's tax on continuing oil and gas use would rise to $6 a barrel by 1985, compared to a $3 maximum under the House bill.
Long had voted against the industrial use tax in committee and opposed it yesterday, but not vigorously.
"My objection," said Long of Metzenbaum's amendment, "is that it is the kind of thing that could logically emerge from conference." But if the Senate approved part of the tax, that would be considered a floor when the Senate goes to conference with the larger House program and would the Senate then have to go further and compromise somewherre in between, he said.
"The only result I can see is you will end up with more than you want," said Long.
The Senate voted with Metzenbaum, apparently feeling it is tarnishing its image by voting "no" on all of Carter's energy proposals. And this was a tax that wouldn't visibly hurt many voters.
But when it came to something he really wanted, - getting a free hand in conference - Long won easily.
After his committee balked at Carter's taxes and instead approved $40 billion in tax incentives to industry. Long decided to try to whip the tax bill through the Senate with very little consideration and shape the final bill in conference with the House.
Long wants to come out with a crude oil tax, which Carter calls crucial. But Long would give the revenue, or a good part of it, to the industry rather than to the public as the President wants.
To give him a free hand to make about any kind of deal he can in conference, even though it might go beyond the bounds of either House or Senate bill. Long won committee approval of language stating that the final bill could contain no tax "unless this act also contains or provides tax incentives for increased production and conservation of energy and for conversion to alternative sources of energy . . ."
Sen. Henry M. Jackson (D-Wash.) tried to knock this provision from the bill. "It says that a tax on the people must go in whole or part to the oil companies," said Jackson.
Sen. Dale Bumpers (D-Ark.) denounced Long's provision as meaning that the Senate was abdicating its responsibility to legislate. "We'd be saying: Go over there and do good man, and bring something we can pass and go home."
Bumpers said Carter's plan to impose a crude oil tax and rebate it all to the public was "foolish to say, as this section does, that if we have a tax we will rebate it to the oil companies."
Sen. Edward M. Kennedy (D-Mass.) said the language Long justified as giving flexibility "gives flexibility to transfer billions of dollars from the pockets of the public to the oil companies."
Long told the Senate: "The problem is we have a House bill that is one of the biggest tax increases in history and a Senate bill that is one of the biggest tax cuts in history. We will be in one of the toughest conferences in 20 years and to settle it we will have to go beyond the bounds of either bill." The language the Senate kept in the bill is essential to permit Senate conferees to bargain freely without having their work killed by one objection when it is brought back for a final vote, he said.