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Tax Panel Chairmen Show Sign of Deal Making Amid Gridlock

In a Congress obstructed by political divides, House Ways and Means Committee Chairman Dave Camp and Senate Finance Committee Chairman Max Baucus are starting to develop a record of deals both parties can support.

Camp, a Michigan (BEESMI) Republican, took over the House tax- writing panel in January 2011 and has maneuvered around fiscal battles to reach agreements with Baucus of Montana, his Senate Democratic counterpart. Aided by their work, Congress extended a payroll tax cut last month, sent three long-stalled trade deals to Obama in October and repealed a tax requirement in the health-care overhaul last April.

Those are minor accomplishments compared with the work that awaits them at the end of the year. On Dec. 31, the 2001 and 2003 income-tax cuts and the payroll tax reduction will expire.

In the lame-duck session that Congress will convene after the November election, lawmakers also must decide the fate of the estate tax, other expired tax breaks and whether to shield millions of Americans from the spread of the alternative minimum tax. Meanwhile, the U.S. will again approach the $16.4 trillion debt ceiling late in the year.

Lawmakers in both chambers said they are starting to have some optimism that the tax-panel chairmen’s emerging relationship will lead to other fiscal-policy accords.

Photographer: Alex Wong/Getty Images

Senator Max Baucus, right, a Democrat from Montana, and Senator Mike Crapo, a Republican from Idaho, during a meeting on payroll tax cuts in Washington, on Feb. 7. Close

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Photographer: Alex Wong/Getty Images

Senator Max Baucus, right, a Democrat from Montana, and Senator Mike Crapo, a Republican from Idaho, during a meeting on payroll tax cuts in Washington, on Feb. 7.

“As difficult as the payroll discussion was, the end of the year will be much tougher so we’ll need all the help we can get,” Senator Bob Casey, a Pennsylvania Democrat on the House- Senate panel that resolved the payroll impasse, said in an interview. “That relationship will help in December.”

160 Million Workers

Camp was chairman of the payroll conference committee. The deal with Baucus to extend the tax cut for 160 million U.S. workers through 2012 may help regain some trust in Congress, said Senator Ben Cardin, a Maryland Democrat.

A Gallup poll last month found that the public approval rating for Congress fell to 10 percent, a record low. Gallup released a March 8-11 poll yesterday that showed Congress’s approval rating at 12 percent.

“If you start getting some confidence, as we did on the conference committee, that shows a working relationship and that we’re listening to each other, that is how the process is supposed to work,” Cardin, also a member of the House-Senate panel, said in an interview.

Camp, 58, and Baucus, 70, still have plenty of disagreements, especially on issues that reflect their parties’ ideological divide over taxes and spending. They were members of the congressional supercommittee that in November couldn’t come to an accord on a deficit-reduction strategy. Unless Congress acts, that will result in $1.2 trillion in cuts to defense and other spending in January.

Representative Dave Camp, a Republican from Michigan, listens during a committee meeting on payroll tax cuts in Washington, on Feb. 1. Photo: Pete Marovich/Getty Images Close

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Representative Dave Camp, a Republican from Michigan, listens during a committee meeting on payroll tax cuts in Washington, on Feb. 1. Photo: Pete Marovich/Getty Images

Deadlock in December

Last month’s debate over the payroll tax cut would have been unnecessary if congressional leaders had resolved the issue before the tax break almost expired at the end of 2011. That deadlock resulted in a two-month extension that kicked the issue into February.

Camp and Baucus were members of the president’s 2010 fiscal commission and both opposed the panel leaders’ proposal. Camp said he rejected it because it called for tax increases. He is among 236 House Republicans who have signed anti-tax advocate Grover Norquist’s pledge not to raise taxes.

Baucus voted against the plan because he said it would hurt rural residents by raising taxes on gasoline and cutting some farm programs.

Representatives for Baucus and Camp declined to comment for this story.

Tea Party

Striking more accords will require Camp to help assemble measures that can survive in the Democratic-controlled Senate without alienating Tea Party-backed Republicans in his chamber.

Camp so far has struggled to unite his conference, said Clint Stretch, managing principal of tax policy at Deloitte Tax LLP. Still, he said in an interview, “When the conference knows where it wants to go, the leadership of Ways and Means is very good at knowing how to get them there.”

Camp is aided by a close relationship with House Speaker John Boehner of Ohio, who has placed Camp at the center of tax and budget battles and has publicly backed his efforts.

“Chairman Camp has done a terrific job taking the lead on some of the toughest challenges Congress has faced over the past year and the speaker certainly appreciates it,” Michael Steel, a Boehner spokesman, said in an e-mail.

Camp often seeks to build support for a deal by reminding fellow Republicans of his effort to maintain party principles. Some Republicans were reluctant to back the payroll tax cut extension because it will add $89.3 billion to the deficit over 10 years, according to the Congressional Budget Office.

Unemployment Benefits

Camp reminded them that the measure also gradually reduces the number of weeks the unemployed can claim government benefits, said Representative Patrick Tiberi, an Ohio Republican on the Ways and Means panel.

“He said: ‘Hey, we have to deal with Harry Reid and Senator Baucus and a president who has different views,’” Tiberi said of Camp’s comments to House Republicans, referring to the Senate majority leader. “He said: ‘We’re going to get the best deal we can but we have to get 218 votes in the House, enough votes in the Senate and a president who will sign it.’ I think he’s done a good job negotiating on our behalf.”

Camp grew up in Midland, Michigan, near Lake Huron and about 120 miles northwest of Detroit. The district, which he won with 66.2 percent of the vote in 2010, stretches through rural areas to Traverse City, a resort town near Lake Michigan. He was first elected to the House in 1990, the same year as Boehner.

Campaigning for Romney

After Camp secured the payroll tax cut deal in February, he returned to Michigan to campaign for Republican presidential candidate Mitt Romney, who needed a win in the state to bolster his bid for the party’s nomination.

Camp and Romney have similar visions for a revised tax code. Both would lower the top corporate rate to 25 percent from 35 percent. Romney would reduce the maximum individual rate to 28 percent from 35 percent while Camp would cut it to 25 percent. Camp and Romney haven’t specified which tax breaks they would eliminate to cover the cost of lowering rates.

Romney won the Michigan primary on Feb. 28 and carried Camp’s home county of Midland.

Camp’s support of Romney and the similarities in their tax proposals has led some to say that Camp might become part of a Romney administration if he wins the presidential election, said Bill Ballenger, the publisher of Lansing-based Inside Michigan Politics, a nonpartisan publication. He said Camp might achieve more by pursuing his proposed tax overhaul from his Ways and Means perch.

“He’s at the apogee of his influence and prestige,” Ballenger said.

To contact the reporter on this story: Steven Sloan in Washington at ssloan7@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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