Tax vacancies ‘a vacuum’

With huge vacancies in the Treasury Department’s tax office, President Obama is struggling to find a way to pay for healthcare reform.

The top position at Treasury on taxes, assistant secretary for tax policy, remains filled by an acting official, and two deputy tax positions at the department are also empty.

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“It’s a gigantic vacuum,” said Jeffery Trinca, a vice president at Van Scoyoc and Associates who counseled former Sen. David Pryor (D-Ark.) during the tax reform debate of 1986.

The absence of an assistant secretary means Obama lacks a “Darth Vader” figure who can head to Capitol Hill for late-night meetings and deliver tough talk representing the administration’s position, Trinca said.

“You’ve got to have someone in there with their sleeves rolled up as part of the debate,” said Trinca.

Lobbyists with ties to both parties say the administration’s tough restrictions on lobbyists exclude otherwise-qualified applicants. Others don’t want to go through the Finance Committee’s tough vetting process.

“The process can be very dicey,” said Deloitte Tax’s Clint Stretch, another veteran of Capitol Hill. “We’ve seen this in the past, where people will get hung up for taking a position that staff on the Hill disagree with.”

In addition, many of those with the expertise required for the position would have to accept a substantial loss in income, something unappealing after a year of stock market losses.

The assistant secretary for tax policy is charged with analyzing, developing and implementing tax policy. In practical terms, the official determines whether a tax proposal is administrable and whether policies the administration might seek to implement can really be accomplished through changes to the tax code.

The official could offer key advice on whether it is wise to impose a surtax on the wealthy to raise $540 billion for healthcare reform. That’s the dominant tax issue on Obama’s agenda right now, though his budget includes far-reaching proposals that would change taxation of multinational companies and individual taxpayers.

When the administration inevitably runs into differences on tax policy with Democrats on Capitol Hill, it is battling at far less than full strength, Stretch said.

He said the administration lacks the person who can “take a bullet” during those fights. The absence also hampers staff in the tax office who are working without a leader. During drafting sessions on legislation with Treasury and Ways and Means staff, it’s hard to sell Treasury’s position without the department’s top tax official, Stretch said.

Treasury Secretary Timothy Geithner and Obama Chief Economic Adviser Larry Summers must carry more of the burden as long as the position is unfilled, sources said. That’s tough given the fact that the two already have enormous responsibilities.

The administration has tried to fill the assistant treasury position. It nominated University of Southern California Professor Elizabeth Garrett to the post in March, but she withdrew at the end of May, citing her family situation.

Jobs, not drills

Republicans are having a field day with the nation’s 9.5 percent unemployment rate, which they say illustrates the failure of President Obama’s $787 billion stimulus package.

But high unemployment is also keeping fuel prices down, as drivers are spending less time commuting to work and traveling for vacation. That could take some of the oomph out of Republican calls for offshore drilling, which dominated the August break in 2008.

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Reports from different analysts of petroleum markets suggest the same general trend: The country is consuming less fuel than it did two years ago.

Energy Security Analysis (ESA) projects fuel consumption to be down about 60,000 barrels a day from 2008. That’s significant given that consumption was down 3.2 percent, or 300,000 barrels a day, in 2008, when high gas prices curbed demand.

“It’s basically high unemployment that’s eating into the inelastic component of gasoline demand,” said ESA analyst Sander Cohan.

Gas prices did jump a bit this year after Memorial Day, though they didn’t come near last year’s peak prices.

Factors behind the jump included speculation that prices would rise because of the summer driving season, hopes that the economy was improving and even unrest in Iran.

Now, with the July 4 holiday and about half the summer vacation season in the rearview mirror, there’s little sign of a rebound for prices in the short term.

The price of oil increased as the stock market rallied in April and May, but prices fell steeply last week and dropped by another $1 a barrel on Monday, to under $60 per barrel.

“I think we’ll continue to see demand remain weak,” said Michael Lynch, president of the Strategic Energy and Economic Research consulting firm in Massachusetts.

Of course, lower gas prices aren’t the best news for Obama — or the worst news for the GOP — when they’re a consequence of high unemployment.

The nation’s jobless rate is expected to increase this fall, and may hit double digits.

That suggests a line of attack for the GOP. When Congress adjourns for the summer recess, speeches on the House floor about “jobs, jobs, jobs” may resonate more loudly than “drill, baby, drill.”

Dreier, Kucinich team up

Reps. David Dreier (R-Calif.) and Dennis Kucinich (D-Ohio) are unlikely partners on a resolution introduced Friday that the U.S. should work to eliminate trade barriers to green technologies.

Dreier is one of the staunchest free-trade advocates in Congress, while the liberal Kucinich is an opponent of most trade deals. As a result, their partnership on the bill raised some eyebrows on K Street.

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H.R. 628 has some curious terminology. The word “trade” isn’t mentioned; neither are “barriers” or “tariffs.”

Instead, the resolution’s goal is the elimination of “obstacles” to the “proliferation” of technologies and services that could address environmental problems.

But a press release from Dreier makes the issue clear.

“Unfortunately, there are currently a number of tariff and non-tariff barriers to American high-tech exports that could help deal with these challenges,” Dreier said.

“We can spur job creation, as well as new innovation, by tearing down the barriers to our green technologies, goods and services and ensuring our exporters have access to markets around the globe.”

In a statement e-mailed to The Hill, Kucinich said the U.S. must be at the center of spreading green technological innovation throughout the world.

“We may disagree on the way to make sure these technologies are spread, but my friend, Congressman Dreier, and I agree that it must happen.”