Oil-tax increase to fund cleanups

WASHINGTON - Responding to the massive BP oil spill, Congress is getting ready to quadruple - to 32 cents a barrel - a tax on oil used to help finance cleanups. The increase would raise nearly $11 billion over the next decade.

The revenue goes to a fund managed by the Coast Guard to help pay for cleanups.

The tax increase is part of a larger bill that has grown into a nearly $200 billion grab bag of unfinished business that lawmakers hope to complete before Memorial Day. The key provisions are a one-year extension of about 50 popular tax breaks that expired at the end of last year, and expanded unemployment benefits, including subsidies for health insurance, through the end of the year.

The House could vote on the bill as early as Tuesday. Senate leaders hope to complete work on it before Congress goes on a weeklong break next week.

President Obama and congressional leaders have said they expect BP to foot the bill for the cleanup.

"Taxpayers will not pick up the tab," Senate Majority Leader Harry Reid (D., Nev.) said Monday.

BP executives told Congress last week they would pay "all legitimate claims" for damages. But the government needs up-front money to respond to spills, as well as money to pay for cleanups when the responsible party is unable to pay, or is unknown. Money spent from the fund can later be recovered from the company responsible for the spill.

The Oil Spill Liability Trust Fund has about $1.5 billion available. Under current law, $1 billion can be spent from the fund on a single incident. The bill would increase the spending limit to $5 billion.

The U.S. Chamber of Commerce said the tax increase was hastily put together, without adequate study, to help pay for an unrelated bill. The tax increase was unveiled Thursday, without any congressional hearings to study its impact.

Even with the tax increases, the bill is projected to add $134 billion to the federal budget deficit.