By Bernie Becker - 07/25/13 07:46 PM EDT
Top Senate Democrats on Thursday threw cold water on the Finance Committee’s drive for tax reform.
Majority Leader Harry Reid (D-Nev.) flatly stated that he wouldn’t be taking part in the process set up by Finance Chairman Max Baucus (D-Mont.) and Sen. Orrin Hatch (R-Utah) to engage the rest of the Senate on the issue.
Reid suggested that other senators who aren't on the tax-writing committee should stand down, and stressed with Sen. Charles Schumer (D-N.Y.) that raising nearly $1 trillion in revenue should be the starting point for any tax reform negotiations.
Baucus and Hatch had sent a letter asking the other 98 members of the Senate to submit, by Friday, ideas for what credits and deductions should be kept in a streamlined tax code.
But Reid said Thursday that: “Frankly, I haven't read the letter. Don't intend to.”
Reid’s comments illustrated the test that both Baucus and House Ways and Means Chairman Dave Camp (R-Mich.) face in pushing tax reform over the finish line at a time when Democrats and Republicans appear hopelessly divided on a range of fiscal issues.
Minority Leader Mitch McConnell (R-Ky.), the other members of the GOP leadership and Republicans on the Finance Committee said in a letter to Baucus and Hatch on Thursday that — like the last time the tax code was overhauled, in 1986 — reform should not raise further revenues.
“Tax reform should not be used as a pretense for increasing the net tax burden on American families and job creators, particularly in the absence of any serious effort to address long-term spending problems,” the 14 Republican senators wrote.
Reid and Schumer’s statements also underscored the divide between Democratic leaders and Baucus on tax reform. Reid said the effort is going nowhere unless there’s an agreement that the legislation will bring in more money to the Treasury.
The Finance Committee, Reid and Schumer said, should look at the Senate budget framework — which would raise $975 billion in fresh revenue for the government — to find a starting point for a viable tax reform bill. Baucus was one of four Democrats to oppose the Senate budget, in large part because he thought the revenue target was too high.
“It has to be under the total understanding that this can't be revenue-neutral,” Reid said at a news conference. “It can't be even close to neutral. It has to be a significant tax target, and we've talked about that. I believe in that. I think it's important.”
The $975 billion figure, Schumer said, “would be a good target to aim for as part of tax reform. To just have a hundred million or so, that's not going to cut it.”
Baucus declined again Thursday to endorse the $975 billion proposal, but did stress once more that — as he has vowed to his fellow Democrats in the past — tax reform will bring in more revenue.
“This all comes down to compromise,” Baucus told reporters. “To get tax reform, there’s going to have to be rate reduction. There’s going to have to be revenue. We’ll work it out in the committee.”
The Finance chairman has said he will consider their input to draft legislation that will be marked up this fall, and panel members from both sides of the aisle said Thursday that Reid’s statements showed the task ahead of Baucus.
“It’s a challenge,” said Sen. Bob Casey (D-Pa.).
Republicans saw the statements from Reid and Schumer as further proof that tax reform was never high on top Democrats’ to-do list.
“I believe there are whole bunch of leaders in the Democratic Party who really don't want to do tax reform,” Hatch said.
Sen. Chuck Grassley (R-Iowa), a former chairman of the Finance panel, insisted that Baucus would have to be wary, given that Reid had “undercut” bipartisan legislation that Finance Committee leaders had worked on in the past.
“That’s something you’ve got to worry about,” Grassley said. “But I don’t know how you’re going to know until you get there. So you negotiate in good faith in the meantime.”
Like other top Republicans, Hatch has said he won’t go along with a tax reform plan that isn’t revenue-neutral. But both Baucus and Hatch have said the differences on revenue should be reconciled at a later date, and Hatch said Thursday that a bipartisan tax reform measure from Finance would up the pressure on Reid.
“You can't just ignore it, especially if it has a broad appeal to the public at large,” Hatch said.
Sen. Debbie Stabenow (D-Mich.), while stressing that she supported the $975 billion figure, said that Baucus was just trying to keep up the momentum for tax reform.
“I think we just have a lot of work to do,” Stabenow said. “It’s really easy to Monday morning quarterback all this kind of stuff. We’ll sit down, and we’ll figure out where the votes are.”