By Kevin Bogardus and Bernie Becker - 07/18/13 09:00 AM EDT
It’s game time for tax lobbyists on Capitol Hill.
After years of planning, hired guns for industry are prowling the congressional corridors, going door to door in search of senators who will fight for tax breaks and deductions that are at risk of being wiped from the code.
The stakes couldn’t be higher for K Street firms or their clients, who fear being on the short end if a tax reform bill emerges in Congress — and losing millions of dollars in the process.
Top Senate tax-writers opened the lobbying floodgates last month when they announced that each of their colleagues should make the case for which tax breaks they think should be inserted back into a stripped-down code.
While many are skeptical that the “blank slate” approach from Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Sen. Orrin Hatch (R-Utah) will succeed, K Street’s tax operatives are leaving nothing to chance.
Lobbyists are pounding the pavement and reaching out to allies and staffers to ensure that they have a spot on the tax reform wish lists that senators send in.
“We are going to talk to all of them [senators]. I think some of the groups are doing the same,” said Jamie Gregory, deputy chief lobbyist for the National Association of Realtors. “Our objective will be to be on more than one senator’s request list.”
Senators in both parties say their offices and phone lines have been jammed since Baucus and Hatch issued their challenge. Members of the tax-writing Senate Finance Committee in particular are being lavished with attention.
“Obviously, there’s an awful lot of people who have a stake in the tax code,” said Sen. John Thune (S.D.), a member of GOP leadership and Finance Committee member. “So you can’t blame them for wanting to get on the record and convey the interest they have.”
Lawmakers also said they started hearing from constituents about tax reform when they returned home for the Independence Day recess, and the interest has yet to wane.
“There’s a bunch of them,” Sen. Dan Coats (R-Ind.) said after being asked which tax provisions are important to his state. “And I’m obviously hearing from everybody in Indiana.”
One key challenge for the tax lobbyists this week was figuring out which senators were worth talking to.
While some senators are enthusiastic about diving into the code, others have balked at the letter-writing exercise. Several high-ranking Republicans suggested they would keep their distance until they have assurances that scrapping tax breaks would be used solely to lower rates, and not also to reduce the deficit, as many Democrats want.
“Until they [senators] have an idea of what will be the premise of tax reform — whether it will be revenue neutral or revenue raising — it’s difficult for them to put themselves out there for any one or for several tax expenditure items,” said Micah Green, a partner at Patton Boggs.
“Not knowing the premise adds to the risk of putting yourself out there and defending some tax expenditures and not others,” Green said.
Time is running short for lobbyists hoping to get on the tax reform train.
Baucus and Hatch’s deadline for submitting the tax reform requests is next Friday, leaving lobbyists with just a few days to stitch together coalitions of senators who back their favored provisions.
“The Senate has put a timeline on it. They want it done by July 26, so we are hustling,” said Gregory with the Realtors. “If you have more people supporting your position, the better off you are.”
Gregory said his office has been talking with lawmakers and staffers about the mortgage interest deduction — one of the most expensive and popular breaks in the code — and other tax issues.
Other lobbyists said they are making a beeline to Capitol Hill ahead of the looming deadline.
John Guzik, a partner at The Franklin Partnership, is looking out for a number of tax provisions on behalf of his small manufacturer clients, such as the research and development tax credit and bonus depreciation.
“Because of the July 26th deadline, we are just going back to remind them, from a 30,000 foot level, that there has to be comprehensive reform as well as certainty. And then we explain the tax credits and incentives utilized by small manufacturers and how they boost job creation,” he said. “We are not saying to them support X — all of these credits are good. But if you are going to lower the rates, know the impact and know what credits are good for the economy and job creation.”
Baucus has promised to keep senators’ tax letters private, which could help with the process.
“By calling it private, it’s sending a signal that [the senators] don’t run the risk of offending certain constituency groups that you don’t mention in your letter. But private in Washington doesn’t necessarily mean confidential,” said Green, of Patton Boggs.
Senators could face blowback from key supporters if they don’t go to bat for certain tax breaks. Given the number of people and groups involved, it’s likely that many of the tax reform letters will leak to the press.
Sen. Ben Cardin (D-Md.) said senators have good reason to be cautious about putting their mark on the blank slate.
“Whenever I write a letter, I assume it’s going to be public,” Cardin said last week. “So I always write it with the idea that it’s going to get public one day.”
Some on K Street remain pessimistic that tax reform will move this year, but nonetheless say they have to defend clients’ priorities before it’s too late.
Green said the blank slate should be a “wake-up call for Main Street as much as for K Street.”
“Even if legislation is not passed this year, preliminary judgments are being made about your preferred tax expenditures,” Green said.
“The time to have input is now.”