Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, May 13, 1993 TAG: 9305130151
SECTION: NATIONAL/INTERNATIONAL PAGE: A-4 EDITION: METRO
SOURCE: JIM DRINKARD ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
The industry's campaign included esoteric explanations of metallurgical chemistry, letters to lawmakers and trips to Washington by company executives. But what ultimately made the difference was a classic formula: political clout and arguments about preserving jobs.
It doesn't hurt that the largest employer in the Spokane, Wash., district of House Speaker Thomas Foley is Kaiser Aluminum. The industry also is a major presence in Oregon, home state of Sen. Bob Packwood, the top Republican on the Senate Finance Committee.
Sources in the administration and Congress said Wednesday that debate behind the closed doors of the House Ways and Means Committee was not about whether the industry will receive a break but how big it will be.
For aluminum makers, it is a crucial battle, just one of dozens that are swirling around the White House's five-year, $500 billion deficit-reduction package. The administration is groping for a balance that will win the votes needed to pass the plan without giving up so much that it unravels.
Aluminum lobbyists argued that below-cost dumping of aluminum by Russia has depressed the world market price to below the U.S. cost of production.
And with electric energy amounting to roughly one-third the cost of making aluminum - at Noranda Aluminum's mid-sized plant in New Madrid, Mo., the power bill runs $6.5 million a month - a new energy tax could mean even bigger losses.
It costs American companies an average of 60 cents a pound to make aluminum, the industry estimates. Clinton's tax would add two or three cents to that cost. The world price is about 50 cents.
"If we lose 5,000 jobs, it's another hit to our economy," said Rep. Jim McDermott, D-Wash., a member of Ways and Means, the panel that is taking the first crack at Clinton's deficit-cutting package this week.
The Pacific Northwest is home to at least nine smelters, drawn there by cheap hydroelectric power.
Aluminum smelters also are located in Kentucky, Maryland, North and South Carolina, Tennessee, New York, Texas, Indiana, Montana, Ohio and West Virginia, and together account for 24,000 jobs.
Three of the largest U.S. aluminum producers, Alcoa, Kaiser and Reynolds, gave a total of $151,000 to House and Senate candidates in last year's elections. Kaiser also gave $15,000 to the Democrats' House campaign committee, and $12,000 to fight a congressional term-limits initiative in Washington, which Foley opposed.
The industry also found an ally in organized labor. AFL-CIO lobbyist William Cunningham said the organization was besieged early by industries "trying to use labor people as foot soldiers for `Don't tax me.' " The aluminum arguments were among the few that were persuasive, he said.
Overall, labor is trying to help Clinton win passage of the energy tax, which generally is based on the energy content of fuels. It would raise about $70 billion over five years, costing a typical American an estimated $102 to $124 a year.
Aluminum representatives argue that their industry is unique. Smelting ore into aluminum is a complex process that uses huge amounts of electricity as a catalyst to produce a chemical reaction.
"The science is very clearly on our side on this," said Rep. Mike Kopetski, D-Ore., who has waged the industry's battle in private meetings of the Ways and Means Committee. The industry "has done their job in terms of lobbying," he said.
The fight now, he said, is over whether the industry should be granted an exemption for the 89 percent of electricity that goes into the smelting process. The White House is arguing for a break only on about half the power used, he said.
by CNB