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Will Max Baucus Betray Democrats on Taxes Again?

April 9, 2013

At the very start of his political career back in the 1970's, Montana Senator Max Baucus asked New Deal veteran James Rowe Jr., "Do you think I should run as a Republican or a Democrat?" Rowe's uneasy answer--"I sure hope you'll be a Democrat"--has defined Baucus' career ever since. After all, he voted for the budget-busting Bush tax cuts of 2001 and helped water down the Affordable Care Act in 2010. And now, the Senate Finance Committee Chairman may be aiding and abetting the Republican effort on tax reform.
That's the word from the Washington Post. Just two days after the New York Times documented how his former staffers now dominate the K Street firms lobbying Baucus on tax policy, the Post's Lori Montgomery reported that the Senate's point man for tax reform may be on a collision course with both the Obama White House and his own party.

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.

Given the obvious need for more federal tax dollars in the years ahead, Baucus' fealty to revenue neutrality runs counter to the proposals from both President Obama and Senate Democrats. This week, Baucus and House Ways and Means Committee Chairman Dave Camp (R-MI) announced they would be working together to deliver a tax reform proposal that lowers rates for both individuals and corporations by supposedly closing loopholes and ending tax breaks that now cost the Treasury roughly $1.1 trillion a year. Unfortunately, Republicans show every indication they will slash the U.S. corporate tax rate without eliminating the deductions needed to offset the resulting loss in revenue. It's no wonder former Biden economic adviser Jared Bernstein fretted:

"He makes me nervous. I worry about his commitment to get the revenues we need."

Democrats' worries shouldn't end there. By pushing to make an overhaul of the tax code happen this year, Max Baucus is strengthening the GOP's hand in the Republicans' next round of debt ceiling blackmail, a hostage-taking that could come as early as May:

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.

If that sounds hauntingly familiar to Baucus' erstwhile allies, it should. As the New York Times reported in June 2001, the fence-straddling Max Baucus jumped to President George W. Bush's side to back the GOP's $1.4 trillion tax cut windfall for the wealthy:

Following tradition in signing major legislation, Mr. Bush used a different pen for each letter of his name, then handed the pens to Republican Congressional leaders and a few Democrats whose support was critical.
Among them was Senator Max Baucus of Montana, the new chairman of the Finance Committee, whose decision to reach a compromise between his own party's more modest tax cut and Mr. Bush's more ambitious one angered leaders in his own party, including the new majority leader, Senator Tom Daschle of South Dakota. But tonight Mr. Daschle was headed to the White House for a private dinner with Mr. Bush and his wife, Laura, while Mr. Baucus said he did the right thing by striking a deal with Mr. Bush.
''Every day it looks like a better and better decision,'' Mr. Baucus said at the White House after the signing ceremony. ''In many respects, I think politically I helped the party. We Democrats would have been in trouble in 2002 just saying no to every one of the president's proposals.''

As it turned out, Baucus was wrong on every count. The then-popular wartime President Bush stumped for Republican candidates around the country, helping the GOP gain two seats in the Senate while maintaining its majority in the House. As press secretary Ari Fleischer crowed:

"Historical trends are very hard to break. [But n]ot only have we kept the House, but we've gained seats. This is the first time since the Civil War."

Worse still, the Bush tax cuts of 2001 and 2003 (the latter Baucus opposed) became the single largest driver of national debt since they became law. Having drained $2.5 trillion from the U.S. Treasury by 2010, the cuts if made permanent would have added another $4 trillion in red ink in their second decade. While the fiscal cliff deal in January returned the top tax rate to 39.6 percent for households earning over $450,000 and the capital gains rate to 20 from 15 percent, the revenue gain over the next 10 years is only about $620 billion.
As for Max Baucus, he apparently is approaching the tax reform process in much the same way he does his ultra-marathon racing. As the Post reported:

"You gotta kill some puppies," he said cheerfully, quoting an off-beat motivational poster he once saw in Texas. "You can't do it all. You gotta make choices. It's all priorities. You gotta kill a puppy."

Hopefully, as James Rowe fretted, Baucus' won't be Republican priorities and the American people's puppies.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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