The staff of Vice President Dick Cheney submitted a proposal Tuesday to the House and Senate tax writers that seeks to resolve the outstanding tax items that have halted progress on comprehensive energy legislation over the past weeks, according to a Republican aide. At press time, the details of the proposal were not known, and the tax writers had not yet responded.

The proposal, which was crafted primarily by Cheney staff, attempts to settle the bitter dispute between the tax writers on several tax issues, including tax breaks for corn-based ethanol and their impact on revenues for federal highway funds, and proposed price guarantees for Alaska natural gas production to support the construction of a $20 billion gas pipeline from the North Slope to Lower 48 states. the aide noted.

There was no deadline for Chairman Bill Thomas (R-CA) of the House Ways and Means Committee and Chairman Charles Grassley (R-IA) of the Senate Finance Committee to respond to the Bush administration proposal, said Republican spokeswoman Marnie Funk. Her boss, Sen. Pete Domenici (R-NM), is the chief negotiator of the energy bill. The staffs of the two tax committees were expected to meet 4 p.m. Tuesday.

“We may be back in business” assuming Thomas and Grassley respond favorably to the proposal. “I think we’re all a little more hopeful” that an end to the weeks-long impasse may be in sight, Funk said. Both Senate Majority Leader Bill Frist (R-TN) and House Speaker Dennis Hastert (R-IL) reportedly supported the Bush compromise.

Given the news of a proposed tax solution, “we continue [to] think odds are high that an energy bill will hit the president’s desk before Congress leaves this year,” said Charles Schwab energy analyst Christine Tezak Tuesday. If the ethanol portion of the bill is “sweet enough,” Senate Minority Leader Tom Daschle (D-SD) “will likely manage to pull together enough votes in the Senate to erode the viability of a Democrat-led filibuster of a final conference report, even if it includes liability protection for the manufacturers and blenders of the other oxygenate, MTBE,” she noted.

An energy bill is a priority of the Bush administration. Last week, President Bush called on House and Senate negotiators to quickly settle their differences and forward legislation to the White House before adjourning for the year. The president also dispatched Cheney to Capitol Hill last week to try to mediate the tax dispute.

The feud between Thomas and Grassley has led to mounting concern that an energy bill would fall apart in conference again like it did last year. “There’s a real sense of frustration,” said one energy industry legislative analyst.

If a conference report on the energy bill could just get to the Senate and House floors, he believes there still is enough time for legislation to be passed this year. “The tax folks have to be willing to have a meeting of the minds,” however, he added.

If the Bush tax compromise is accepted, Tezak believes that a conference vote could be scheduled two days later, and the bill could emerge from conference in a day or two. The House then would likely pass the energy bill in short order, while the Senate “could take a week or more to bring it to the floor, depending on the level of filibuster threats from Democrats,” she said.

But if the tax stand-off continues, “Congress starts losing credibility at some point,” the legislative analyst noted. He doesn’t believe Congress has reached this point yet, but he noted “it’s slipping away…it’s at the threshold.”

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