Rangel’s heart tells him to undo some tax cuts

Rep. Charles Rangel (D-N.Y.), who has repeatedly dodged questions on how he would handle the expiration of the Bush tax cuts, is now acknowledging that he wants to abolish them for wealthy taxpayers.

Earlier this year, the Ways and Means Committee chairman voted for the Congressional Black Caucus (CBC) budget resolution that called for repealing the cuts on the top two rates as well as on capital gains and dividends. Asked about his vote in an interview last week, Rangel conceded his preference for rolling back the cuts while insisting that he still doesn’t know what he would do in 2010, when the majority of the cuts expire.

{mosads}“From time to time, my roots come up and I let you know where my heart is, but I cannot tell you where my votes will be,” he told The Hill.

After toiling for 12 years as the Ways and Means ranking member, Rangel appears to be relishing guiding tax, trade and Medicare policy for the majority in the lower chamber, though he expressed frustration with his party’s failure to muscle more of its agenda through the Senate.

Along with Rep. Sandy Levin (D-Mich.), he has been a force on trade, pushing the Bush administration to require tougher labor and environmental rules in its trade deals. This week, for example, Rangel’s committee unanimously approved the Peru trade deal with stringent standards in an informal panel markup.

The 19-term lawmaker has displayed more caution on the tax front, tiptoeing around the subject of tax increases even as he continues to draft what he called “the mother of all tax reforms,” sweeping legislation that he says will repeal the Alternative Minimum Tax (AMT) and provide relief for millions of families yet comply fully with House budget rules.

To pay for the overhaul, Rangel has proposed raising taxes on the private equity industry; he says he wants to “rearrange” or “reorganize the distribution of cuts” to shift relief from the wealthiest households to the middle-class victims of the AMT as well as struggling families.

Few are banking on his plan getting much traction in the 110th Congress, given the near-certain opposition of President Bush to any increases in the marginal rates and Senate Democrats’ tepid interest in repealing the AMT, which will hit an estimated 23 million people next year if it is not patched.

But Rangel’s package will be seen by many as a blueprint for how a Democratic White House and Congress might tinker with the tax code, making the cheery representative of New York’s 15th district a player in the 2008 presidential race.

A little more than a year ago, this was hard to envision. After serving for 31 years on the Ways and Means Committee, a frustrated Rangel announced last summer that he would retire unless Democrats recaptured the House.
Rangel acknowledges the chatter about his potential collaboration with a Democratic administration. A long-time supporter of New York’s junior senator for president, he joked, “I’ve been talking to Hillary Clinton. She said she’d need me for at least two years.”

Asked about a Clinton-Barack Obama ticket, Rangel is quick to say that he doesn’t want to offend the Democratic senator from Illinois by assuming the outcome of the race. Rangel did suggest that he would embrace a Clinton-Obama ticket, though he added there are many factors in that decision and he will respect whatever decision the Clinton campaign might make.

Rangel insists that he chose to stay in Congress because he saw a chance to make a difference for his constituents, not because of the allure of becoming the first black Ways and Means chairman. “I could walk away with less than the chairmanship if I can change the direction in which Congress and my country is going,” he explains.

A decorated Korean War veteran, Rangel is devastated by the troop casualties in Iraq and remains a staunch supporter of reinstating the draft in order to remedy the overrepresentation of poorer Americans in the military. This year, he introduced his legislation to require universal national service for the third time.

Last September, Rangel was optimistic that the war would end in a Democratic-led Congress. Asked at the time how Democrats could force the president’s hand, Rangel said, “You’ve got to be able to pay for the war, don’t you?”

Rangel reserves special blame for what he views as the disastrous decision invade Iraq on Vice President Cheney, with whom he has a record of sparring verbally.

History will judge him “as one of the most powerful vice presidents in the history of the United States for policies that I really believe have cost our credibility international[ly] like nothing other than the fact that we legalized slavery,” Rangel said.

Lea Anne McBride, a spokeswoman for Cheney, said, “Such an offensive statement doesn’t warrant a response.”
Since the Democrats regained control of Congress, Rangel has anguished over the party’s failure to halt the war and to push more pieces of its domestic agenda through the Senate. He was stung by Senate Democrats’ refusal to embrace the House’s more sweeping reauthorization of the State Children’s Health Insurance Program, the federal program providing health insurance to poor children.

Rangel declined to criticize directly Senate Majority Leader Harry Reid (D-Nev.) or Sen. Max Baucus (D-Mont.), his counterpart in the upper chamber, over the dispute: “I’m outraged not with personalities. I’m outraged at not realizing earlier that I’m dealing with a Republican-controlled Senate.”

The leadership style Rangel has employed on Ways and Means sharply contrasts with that of his predecessor, retired Rep. Bill Thomas (R-Calif.). Rangel has succeeded in fostering far more good will between committee Democrats and Republicans.

One of Rangel’s colleagues and friends, Rep. William Jefferson (D-La.), was kicked off the Ways and Means Committee last year in the wake of bribery allegations. Rangel said that Jefferson, who was subsequently indicted, should be given the chance to make his case for returning to the powerful panel if he is cleared of wrongdoing.

Though both Rangel and ranking member Jim McCrery (R-La.) advocate a permanent fix to the AMT, the panel leaders differ sharply on how to tackle the problem. McCrery argues that AMT repeal shouldn’t be offset with tax increases because the tax was never meant to hit middle-class taxpayers.

Despite his differences with Republicans on the issue and the vanishing days in the congressional calendar, Rangel seems to have grown more ambitious in his thinking on the tax overhaul.

Earlier this year, Democrats floated a plan to shield a swath of middle-class taxpayers from the AMT, to be paid for with a surcharge on wealthy families on income above $500,000.

But after studying the tax code, Rangel claims to have found an embarrassment of loophole-closers and other revenue-raisers — enough to wipe out the AMT entirely and grant tax relief to 90 million families.

 “We started looking at monies that we could pick up; we said instead of 23 million people and eliminating their tax burden, we could enlarge the child earned-income tax credit, the child credit, the family deduction,” he explained.

Contending that there are not enough easy fixes to pay for such relief, Republicans expect Rangel to reach much farther down along the income scale than just those families earning more than $500,000. They point out that abolishing the AMT alone is estimated to cost the Treasury between $872 billion and $1.6 trillion over the next 10 years.

Pressed on the issue of tax increases last week, Rangel held his cards close to the vest: “In the adjustments of rates, I assume the higher rates will be modified.”

Yet he talked freely about his openness to cutting corporate tax rates, an idea being pushed by the Bush administration. Rangel said he has talked with Treasury Secretary Henry Paulson about closing corporate loopholes and using the proceeds to slash the rates. He may tackle such changes in his tax overhaul.

“I don’t have any problem with revenue-neutrality or making our corporations more competitive. Hell, he’ll be talking about closing loopholes and raising taxes, not me,” he said.

Jonathan E. Kaplan and Ian Swanson contributed to this article.

Video of The Hill’s interview with Rangel can be accessed on Hilltube

Q&A with Ways and Means Chairman Rangel

The Hill:  The Congressional Black Caucus budget resolution that you voted for earlier this year calls for rolling back the Bush tax cuts on wealthy taxpayers next year. You did vote for that resolution.

Rangel: I try desperately hard to remind myself that I’m the chairman and that I can’t endorse bills that I support, that part of my job now is to get the votes for things that can be reported out. But from time to time, my roots come up and I let you know where my heart is, but I cannot tell you where my votes will be.

The Hill: What do you think about wealthy celebrities, such as Magic Johnson and Robert L. Johnson, the founder of Black Entertainment Television, saying that your proposed tax hike on private equity managers will hurt minority recruitment to the industry?

Rangel: [Smiling] I’m trying to set up a minority set-aside to allow the rip-off to continue until they get a good ride.

The Hill: You’re putting together this big tax bill that will repeal the Alternative Minimum Tax. Are you working with Republicans on that?

Rangel: I have said that I would hope the Republicans would participate in reforming and simplifying this tax system even if I know they aren’t going to vote for it … I’m just saying that, if your amendment makes sense, hell, I know you’re not going to vote for the bill, but I want to make certain to have the best bill that we can.

The Hill: Do you think the House leadership should have pushed harder on SCHIP?

Rangel: No, because the House leadership knows, as we know now, that if we don’t get any bill on the president’s desk, we and the kids are losers. If we don’t get it on the president’s desk, then we’ve rejected the Democratic-Republican overture, and so Democrats have kept it from the desk. If the president decides to [sign] it, then we got far less than what we wanted but far more than what we got. If the president decides to veto it, then we don’t have any fingerprints on this and we can just come up with an extension.