Rep. Levin’s growing power riles Wall  Street, K Street

Rep. Sandy Levin (D-Mich.) celebrated his 76th birthday Thursday with staff, friends and bakery babkas flown in from his district on the northern edge of Detroit. It’s unlikely, though, that Wall Street high-rollers or Washington’s free-trade lobby considered sending the 13-term lawmaker any ice cream to complement those special cakes.

Levin has emerged as one of the party’s strongest voices on economic policy — and a major thorn in the side of the private-equity industry and corporations pushing for no-strings-attached trade deals.

{mosads}He’s an unabashed advocate of molding the forces of globalization, rather than bowing to them. “The answer is to shape it, not stop it,” he told The Hill in a recent interview.

Levin has become a force on trade, exasperating the business lobby by putting the brakes on agreements with Colombia and South Korea. Delivering a huge win for unions earlier this year, he successfully pushed the Bush administration toward accepting a new template for trade deals with tougher labor and environmental standards.

And in June, he proposed a bill to more than double the tax on the “carried interest” used to compensate hedge-fund and private-equity managers.

Levin has blasted what he described as the administration’s “let it roll” attitude on trade and other economic matters, even when markets aren’t working or are rigged. Their attitude, he says, is that “It’s kind of a one-way street that will correct itself and somehow become two ways. It’s this passive approach.

“They’re wrong,” he said flatly.

The viewpoint puts Levin at odds not only with the president but also with many economic thinkers in his own party who favor mitigating the ill effects of globalization while avoiding attempts to control or contain its forces. And it has earned him plenty of critics in the business community.

Many of them grouse that it would be far easier to pass agreements if only the Democratic negotiator were more like Ways and Means Committee Chairman Charles Rangel (D-N.Y.), who is seen as amenable to making deals. Some have even taken to referring to Levin privately as the “mad scientist,” a gibe at the lawmaker’s academic looks and mannerisms.

Levin’s doggedness on economic matters has won him the respect of fellow Democrats. Rep. Earl Pomeroy (N.D.) described Levin as one of the most cerebral members of the Ways and Means panel. “He lives in the weeds of issues and can wear you out in trying to bring you along the learning curve,” Pomeroy said.

Rangel called Levin a great influence on trade, praising his knowledge of the International Labor Organization and close work with unions. “He’s a great resource to the leadership as well as to me,” he said.

But the New Yorker bristled at the notion that big business sees Levin, and not himself, as the larger impediment on trade, arguing that such critics can’t cite a single example where he and Levin have differed on the issue. “They may tell you that, but no one has insulted me by sharing that view with me at all,” Rangel said.

For Levin, a son of Detroit whose district has strong ties to the Big Three automakers and the United Autoworkers, trade is a touchy issue. He argued that, while the industry has made mistakes and needed the competition from foreign automakers, it does not need unfair competition. A crucial ingredient for any trade deal has to be “working families benefiting here and in other countries,” he insisted.

Levin uses similar language of fairness when discussing tax issues. He pounced on the carried interest issue earlier this year after an old Harvard Law School friend alerted him to the lower capital rates paid by fund managers on the bulk of their pay.

 Concluding that fund managers’ carried interest is earned in exchange for services they perform for partnerships, Levin quickly introduced legislation to tax them at the higher rates for ordinary income. But he swept in not just the private-equity managers but the real estate sector as well, inviting furious opposition to the bill.

Levin seems unlikely to back down. “Our tax structure depends on equity to be enforceable. Part of the reason there has been mostly adherence to tax laws — not entirely, but mostly — is because of a sense of fairness,” he explained.  

Levin boasts an unusual distinction as a House member: He has a younger brother in the Senate, Carl Levin, who was elected in 1978. “Is that an advantage? I think so,” Sandy Levin said.

The two are exceptionally close; they shared a bedroom until Sandy went off to the University of Chicago, played baseball together at camp and were roommates during law school.

When it came to America’s pastime, Sandy was a better hitter than Carl, a superior fielder who went on to play shortstop at Swarthmore College in Pennsylvania: “I used to hit grounders to Carl endlessly. He’d play shortstop and I’d hit grounders all the time. And I was a pretty good hitter, so I could really smash it at him.”

By 1978, Sandy Levin was a state senator who twice had suffered narrow defeats in runs for the Michigan governorship. “I didn’t expect to run for the Congress, because I’d run for governor,” Sandy Levin said. “And then the seat unexpectedly opened up, and Carl said to me, ‘You know you should run only if you could stand losing again.’”

Sandy decided he could, won the election and has held the seat ever since.

The two brothers remain close. They exchange notes on policy, and rode together in this month’s Hamtramck, Mich. and Detroit Labor Day parades. And they regularly beat each other at squash. “We say we’ve played 10,000, and we’re not sure who won 5,001 and who won 4,999,” the elder Levin said. “We’re both quite even and we’re very competitive.”

Both Levins are staunch defenders of the U.S. auto industry, which shapes Sandy’s views on economic policy. He sees the domestic auto industry as a vital part of the American economy that helped create the middle class.

“Look, for people like my brother and myself, we were raised with the auto industry in our bloodstream, that’s true.

But the more I’ve been here, the more I’ve seen how vital it is in so many respects … in terms of helping to make the middle class of this country,” he said. To allow one of the Big Three to fold would be a serious mistake, he said.

Excerpts of interview with lawmaker

Q: Ways and Means is expected to introduce legislation on trade with China soon. Do you see China as more of an opportunity or as more of a threat to the U.S. economically?
A: I think it’s both. I think it’s an opportunity and it’s also a major competitor. You know, when we met with the Chinese vice premier, she said, “No problem. We make toys and we make shoes and we make apparel, and you send us high-tech stuff.” And later on it was my turn, [and] I said, really, that isn’t an accurate picture, because we have an advanced technology deficit now with China, and shoes and apparel and toys that are prominent now, they represent less than 10 percent of all the exports from China. It’s much more advanced, much more sophisticated and the competition between our countries is far more intense than it was.

Q:  You did vote for permanent normal trade relations with China. If you had that vote over again, would you vote differently?
A: No.

Q: How come?
A: Because China was growing in significance, growing in importance. They were going to go into the WTO [World Trade Organization] without us. We didn’t have a veto power. And it seemed to me we needed to do two things. Number one, to engage China, and also to confront it. [Levin went on to explain several amendments he sponsored that were added to the China legislation before his vote, and criticized the administration’s enforcement of that legislation.]

Q: You haven’t endorsed anyone for the presidency. Have some Democrats struck you as saying the right type of things? Are there some you think would advocate policies you think are helpful to your state?
A: So far, I think most of them have. I haven’t heard everyone, but for example they’ve been asked about the Korea FTA [free-trade agreement], which to put it mildly shortchanges the auto industry, disgracefully so. Right now they ship in 700,000 cars from Korea; we ship less than 5,000. It’s a complete one-way street, they’ve got an economic Iron Curtain. … And so, I think it’s been helpful for presidential candidates to say the Korean agreement is not acceptable, I think including all of those that are in the contest.

Q: Do you think the House should tackle Alternative Minimum Tax (AMT) reform this fall?
A: I think we should try. I very much admire [House Ways and Means Committee Chairman] Charlie Rangel’s [D-N.Y.] approaches. As you know, we’re very, very close. And we’ve tackled some tough issues — you mentioned China — where it wasn’t easy. Social Security — now, in retrospect, it seems a cinch, but it wasn’t such an easy issue. There was pressure on us to come forth with our proposal … And now you get to AMT. Mr. Rangel’s right, it’s indefensible. You talk about inequity. I think the 15 percent tax is not equitable. The AMT is not equitable. What you’re striving for is a structure that makes some sense, that you can go out and defend. You can’t defend the AMT. Mr. Rangel has said that, point blank, that it’s been necessary to paint that issue. The problem we have is the Republicans failed to do anything for all these years, so it built up and up and up and up, right?