Top tax-writer Baucus shows his hand with Senate budget vote

Sen. Max Baucus (D-Mont.) revealed he is playing with a weak hand in the tax reform game by voting against the budget resolution from Senate Democrats last week, lobbyists and experts say.

The powerful chairman of the Senate Finance Committee broke with leadership and the majority of his caucus by voting against a budget framework that would raise nearly $1 trillion in new revenues.

{mosads}That vote is being interpreted as a sign that Baucus finds himself hemmed in by his reelection bid in Republican-leaning Montana even as he tries to lead tax reform efforts in the upper chamber. 

Campaign politics clearly played a role in Baucus’s decision, as it did with the three other Democrats who voted “no” and face reelection next year — Sens. Mark Begich (Alaska), Kay Hagan (N.C.) and Mark Pryor (Ark.).

“He is in cycle,” said Bill Hoagland, a former GOP budget staffer in the Senate. “Voting for raising revenues would definitely be used against him even if nothing happened on tax reform.”

Tax lobbyists and other observers said the budget vote exposed a rift between Baucus and Democratic leadership over revenue, and capped weeks in which the Finance chairman failed to shift his party’s budget to a more centrist position on taxes. 

That dynamic, experts say, could make it more difficult for Baucus to speak for his party in tax negotiations, and give him less leverage at a time when Republicans in the House are pressing for revenue-neutral tax reform.

“I think Baucus is in a tough position,” one tax lobbyist said. “If he doesn’t move, he will be accused of dragging his feet and not moving the ball.”

“If he does do something, he has to answer for it,” the lobbyist added. “For Baucus, keeping things the way they are through 2014 may be the best option.”

Baucus is still pressing ahead with tax reform efforts, announcing recently that Finance panel members from both parties would meet weekly for several months on a range of tax topics. 

The committee released a paper detailing potential options to simplify the tax code, an area where Democrats and Republicans might more easily be able to find common ground. 

A Senate Democratic aide added that tax reform was moving on a separate track from the budget and said the Finance chairman’s vote should not be seen as any broader comment on the status of the tax reform debate. 

The Senate budget is unlikely to be reconciled with the House effort from Rep. Paul Ryan (R-Wis.), so the $975 billion in extra revenue approved by Democrats is not binding.

Still, Baucus resisted the inclusion of reconciliation instructions in the budget resolution that set a revenue target and argued for a higher ratio of spending cuts to revenue. Budget Committee Chairwoman Patty Murray (D-Wash.) told him the higher amounts of revenue were needed to appease liberals on her panel, sources outside of Murray’s office said.

On the other side of the Capitol, House Ways and Means Committee Chairman Dave Camp (R-Mich.) has convened working groups to study a wide range of topics in the tax code and has already released three draft proposals in hopes of pushing a reform package through his committee this year.

If the House acts, Baucus would be under pressure to hold his own markup to show off the Democratic vision for tax reform. But he would be hard-pressed to report out a bill with significantly less in new taxes than his Democratic colleagues voted for, or to rely on too many committee Republicans to fashion a bill. 

“I think Camp has been taking the lead all along and dragging Baucus with him. Look back at the last year and a half,” a GOP tax lobbyist told The Hill. “Ways and Means makes a statement on tax reform, calls for a hearing, announces working groups, et cetera — then Finance does something in response.”

The Senate Democratic aide brushed aside the idea the Finance Committee had been forced to respond to the Ways and Means panel, noting that the House by nature moves at a quicker pace. Camp and Baucus, who have forged a strong working relationship in recent years, also meet regularly to discuss tax reform, the aide said. 

The calendar could also put different pressures on Camp and Baucus, given that the Ways and Means Committee chairman is in his last scheduled term with the gavel.

“The fact that Congressman Camp is tenured and Sen. Baucus is up for reelection isn’t going to help the process,” said Jim Manley, a former spokesman for Senate Majority Leader Harry Reid (D-Nev.).

But by opposing both the Senate and the latest House GOP budget from Ryan, Baucus could also be positioning himself as a bridge between the two parties. 

A Baucus aide has said the Senate budget was not a “sensible compromise.” The senator “was disappointed there was no middle ground,” according to the aide.

“It could give him some advantage,” said Bob Bixby, a budget expert at The Concord Coalition. “He has positioned himself and can say, ‘I can deal with the Republicans.’ ”

The Finance Committee chairman could be off the hook if the White House and GOP leaders strike a grand deficit bargain or if Speaker John Boehner (R-Ohio) decides against allowing a Ways and Means tax reform package from getting a floor vote. 

“Camp will push hard for the Ways and Means Committee to move forward this year, but getting a House floor vote will be very difficult,” said Cathy Schultz, a tax expert at the National Foreign Trade Council.

But a GOP aide on Capitol Hill said that the momentum for tax reform was picking up and that a House bill would make it hard for the Senate to look the other way.

“It is tough to imagine that the Senate wants to be responsible for killing tax reform, but a failure to act would make them guilty of exactly that,” the aide said.

Manley, now at QGA Public Affairs, said Baucus has a history of finding ways to get legislation through when he needs to. 

“There’s no reason why, if there’s genuine desire to get the bill done, that it can’t happen,” Manley told The Hill. “Sen. Baucus knows how to thread the needle.”