Last month, Sen. Max Baucus summoned members of the Senate Finance Committee to a closed-door meeting to discuss the first full-scale rewrite of the 5,600-page U.S. tax code in more than 25 years.
The task would be gargantuan, and much of Washington has called it impossible in these contentious times. But after two years of watching President Obama and congressional leaders take on tax policy and other areas of the committee’s vast jurisdiction, the Montana Democrat who is the panel’s chairman was ready to reclaim his turf.
Senators arrived in a Finance Committee conference room to find crystal bowls filled with green and white M&Ms imprinted with pictures of President Ronald Reagan, as well as Democratic Rep. Dan Rostenkowski and Republican Sen. Bob Packwood, the committee chairmen who engineered the last tax overhaul, in 1986.
They found a detailed schedule of 10 more meetings, where committee staff members will present option papers for achieving such popular goals as simpler filing rules.
And they found Baucus in emphatic agreement with Sen. Orrin G. Hatch (Utah), the ranking Republican on the panel, according to notes taken by a Democratic aide in attendance, that the committee should aim to produce a tax-reform plan by August, when Congress will once again need a face-saving deal to justify raising the legal limit on the $16.8 trillion in federal debt.
The move throws Baucus, a conservative maverick who often infuriates Democratic leaders, into uneasy contention with his more liberal colleagues to shape the next phase of the federal budget battle. With Republicans and Democrats advocating vastly different plans for getting the nation’s debt under control — and the White House due this week to offer a proposal — Baucus argues that his committee is best positioned to forge a bipartisan compromise and avoid another economy-shattering showdown.
Liberals still fuming over Baucus’s 2009 performance as point man on Obama’s health-care package fear that means conspiring with Republicans to promote legislation that would not raise significant new revenue from wealthy households, Democrats’ chief tax goal.
“He makes me nervous,” said Jared Bernstein of the left-leaning Center on Budget and Policy Priorities, who served for two years as chief economist to Vice President Biden. “I worry about his commitment to get the revenues we need.”
The campaign for tax reform comes as Baucus is gearing up to seek a seventh term representing Montana, a state Obama lost last year by more than 13 points. A recent poll found Baucus’s approval rating at an anemic 45 percent, and liberals worry that the timing will make him even less inclined to toe the Democratic line on taxes.
The senator has done little to allay such concerns. Last month, he was one of only four Democrats who voted against the Senate budget, telling reporters that its “$1 trillion in tax increases is too much.” He meets regularly with House Ways and Means Committee Chairman Dave Camp (R-Mich.), who said Baucus shares his vision for legislation that eliminates loopholes and lowers rates without producing more revenue.
“We both agree that comprehensive, revenue-neutral tax reform is the right thing now,” Camp said.
Meanwhile, Baucus is insisting on overhauling the individual tax code as well as the corporate code, a position in line with the GOP but at odds with many Democrats. The Obama administration has promoted corporate reform, but has been indifferent to far-reaching changes to the individual tax code.
Privately, senior Democrats dismiss Baucus’s activities, saying tax reform will not happen unless Obama strikes a broad deal with Republicans that includes $600 billion more in taxes over the next decade. But Republicans are unlikely to agree to higher revenue without a tax-code rewrite; aides said Camp is pressing GOP leaders to demand tax reform in exchange for supporting a higher federal debt limit.
For that, Hatch said, Obama needs Baucus.
“Tax reform is not something you can do in Leader Reid’s office,” Hatch said, referring to Senate Majority Leader Harry M. Reid (D-Nev.). “I do believe we can do something worthwhile here if we can allow Max to lead.”
In an interview in his office — decorated in leather, paintings of the American West and mementos from nearly four decades of representing Montana — Baucus said he is determined to build consensus with Republicans and at last resolve the standoff over taxes and spending that has gripped Washington since the GOP took control of the House in 2011. Last-minute deals cut in backrooms by a handful of party leaders, he said, have produced winners and losers, but no lasting compromise.
“I don’t dispute” that the White House has shown little interest in comprehensive tax reform, Baucus said. “But it’s irrelevant. Because I’m just going ahead.”