GOP: Dem hikes risk tax reform

GOP senators are signaling that tax reform is a lost cause until Democrats give up their push for higher taxes.

A number of them have given the chamber’s two top tax-writers no suggestions for tax breaks to be retained, and several top Republican senators said they don’t plan to.

It is a clear sign that many GOP senators agree with Minority Leader Mitch McConnell (R-Ky.), who this week said he did not think a major overhaul would get done.

The stumbling block for Republicans is their belief that Democrats will insist that higher revenues be included in any reform bill.

{mosads}GOP senators say they cannot debate whether a tax break is worth scrapping if they don’t know whether the resulting revenue would be used for extra spending or deficit reduction instead of solely for the lower tax rates that they prefer.

“I think the pool’s about two feet,” said Sen. Pat Roberts (R-Kan.), a member of the Senate Finance Committee. “You don’t want to go in head first.” 

GOP senators said the revenue question was just one of the reasons they were skeptical about participating in the “blank slate” process announced by Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Orrin Hatch (Utah), the panel’s top-ranking Republican. 

Baucus and Hatch have given senators until July 26 to make the case for credits and deductions that they think deserve to be written into a reformed tax code, but it’s unclear how many senators will participate. 

Some senators who aren’t on the Finance panel said they would like to defer to colleagues who are. Others said they fear a backlash from constituents or interest groups if their recommendations become public.

Other senators are bristling at the secretive nature of the process, and say the tax code should be marked up in full public view.

“I think for me to try to draft the tax code in my office, which sounds like what the blank slate would ask you to do, is not the right approach for me to take,” Sen. Roy Blunt (Mo.), a member of GOP leadership, told The Hill. “I think if you don’t agree on the revenue question before you start the process, the process will not produce a result.”

The response from GOP senators underscores the challenge that Baucus, Hatch and House Ways and Means Committee Chairman Dave Camp (R-Mich.) face in dramatically revamping the tax code for the first time in a generation — and why many observers on and off Capitol Hill are pessimistic about the chances for success.

Facing their last 18 months as chairmen, Camp and Baucus have intensified their push for reform, launching a barnstorming tour that this week took them to Minnesota. 

Hatch on Wednesday said he understood why senators might have concerns or doubts, but said he still hoped to get a wide range of input from his side of the aisle.

“I don’t think there’s any reason for people to be fearful. There are some who may or may not want to submit letters on what they like. They may have to just chat with me, for instance, on our side,” Hatch stated.

“We’re going to try to get as much input as we can so that people will know that they have had their power of input.”

The Utah Republican also told reporters that he had gotten a commitment from Baucus that the committee would pass a measure that did not raise revenue. 

But a spokesman for Baucus quickly pushed back on that statement, noting that the Finance chairman has consistently said — and told Democrats this week — that a reformed tax system would raise more revenue. 

Further illustrating the divide over the issue, representatives for both Baucus and Hatch later released a statement saying that the revenue question was hotly debated and still needed to be resolved.

To be sure, some GOP senators — like Saxby Chambliss (Ga.), a fan of the Bowles-Simpson framework — said they were more than ready to make their pitches for the blank slate.

“I’m going to be very active,” said Sen. Richard Burr (R-N.C.), another Finance member. “I was a big proponent of starting with a blank piece of paper, and forcing people to make the case for why things needed to be in the tax code.”

Even beyond the revenue question, lawmakers face a number of major hurdles to completing tax reform.

Some of the most expensive tax preferences, like the mortgage interest deduction, are also among the most popular, and K Street lobbyists are mobilizing in force to protect a slew of other tax breaks.

With all that in mind, some lawmakers said Baucus and Hatch might need to bring their process out from behind closed doors. 

“Candidly, that’s a cleaner route than people sending letters about the ones they want to support,” said Sen. Bob Corker (R-Tenn.), who nonetheless praised the tax-writers for breaking out the zero option. “And if committee members want to try to pass additional deductions in public debate, and do it through an amendment process, that’s great.”

GOP senators also said they were starting to hear from constituents back home and from interest groups about their favorite tax preferences. 

Roberts, for instance, said his office had been flooded the last two weeks, while Sen. John Barrasso (Wyo.), also a member of GOP leadership, said he had heard from constituents during last week’s recess.

“Submit one, where do you stop?” asked Barrasso, another Republican not planning to reach out to Baucus and Hatch. “I’m sure every member will have many requests from folks at home, and it’s a matter of where one draws the line.”

“Each of them have a story to tell,” Roberts said about the groups he’s heard from. “Nothing’s in that tax code that was not put in it for a particular reason. And to take it out, you have to really take a look at what effect it will have.”