K Street sees tax reform slowly dying

K Street is ramping up efforts to get the new budget committee to focus on tax reform, but lawmakers don’t appear inclined to take that advice.

Lobbyists don’t have high hopes that the 29 budget conferees, who meet for the first time Wednesday, will have a breakthrough on tax and entitlement reforms, especially since top players on Capitol Hill have gone out of their way to lower expectations. 

But K Street hands say it’s their job to sell Congress on the need for tax reform, even if the payoff isn’t immediate.

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“I don’t really know how attainable it is in the budget conference,” said Kirt Johnson, the vice president for tax policy at the Retail Industry Leaders Association (RILA). “But it has to happen sometime, one way or another.”

Dorothy Coleman of the National Association of Manufacturers (NAM) noted that lobbyists “haven’t had the opportunity for several years to weigh in with a budget conference.”

“The key word is opportunity,” said Coleman, NAM’s vice president for tax and domestic economic policy.

NAM pressed budget negotiators this week to include instructions for tax reform in whatever deal they strike, and joined more than two dozen other interest and lobbying groups on Tuesday in imploring the conference to act.

Those groups, which included RILA, the Business Roundtable, the Chamber of Commerce and a trio of corporate coalitions supporting tax reform, urged the budget conference “to seize this opportunity to pave the way for pro-growth, comprehensive tax reform in 2014.”

“This is a top priority, and we’re going to continue to work towards those goals,” said Scott Talbott, senior vice president at the Financial Services Roundtable, which was among the K Street groups that joined the Tuesday statement.

Talbott said the parties invested in a tax-reform push are making the case every chance they get. “We’re delivering our case to everybody,” he said.

After its initial Wednesday meeting, the first House-Senate conference in four years will still have more than six weeks before its Dec. 13 deadline.

But House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Majority Leader Harry Reid (D-Nev.), among others, have essentially ruled out a “grand bargain” on entitlements and taxes.

That stands in stark contrast to previous negotiations in which both lawmakers and outside groups expressed early hopes for a big deal. 

Republicans and Democrats remain deeply divided over whether any fiscal deal should raise new revenue, a gulf that has kept tax reform from moving for years.

The revenue divide is also just one of the reasons that Ryan and other budget negotiators have set their sights on a smaller agreement that would seek to replace a portion or all of the automatic sequestration cuts.

“If people see this as an excuse to raise taxes, we’re not going to get anywhere,” Ryan told reporters on Tuesday. 

The revenue rift has already left many tax lobbyists skeptical that Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) could get tax reform over the finish line anytime soon. 

Lawmakers are also scheduled to be out of Washington for significant chunks of time over the next six weeks, intensifying the doubts that the budget conference could strike a bigger deal.

Because of that, lobbyists privately acknowledge that they must be careful not to place too high of expectations on the negotiators when it comes to tax reform.

But interest groups also see the talks as a chance to get to know a wider range of lawmakers, given that the majority of the 29 conferees currently aren’t on tax-writing committees.

“This gives us an opportunity to be in touch with some key players who have a role in the process,” said RILA’s Johnson.

Ryan did tell reporters on Tuesday that he speaks regularly with Camp, who has made tax reform his overriding goal. 

The Ways and Means Committee chairman has insisted that he plans to use the regular committee process to push tax reform forward and plans to mark up an overhaul of the code this year. 

Baucus has said that he plans to work on a parallel track with the budget conference and would be in close contact with Senate Budget Committee Chairwoman Patty Murray (D-Wash.).

But Ryan and other members of the budget conference from both parties brushed aside questions Tuesday about how big of a deal they could reach.

“I would be very supportive of doing something substantial that would to put us on a sustainable fiscal path, which we’re not on now,” said Sen. Pat Toomey (R-Pa.), who is one of the conferees. “But I recognize that the prospects of that are not great.”

Russell Berman and Peter Schroeder contributed.

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