The tax compromise that may never be Panel deeply split, even among allies


WASHINGTON -- To get a sense of how difficult it will be for Congress to approve President Clinton's budget package, look no further than two key members of joint House-Senate committee now trying to thrash out a compromise plan.

Sen. Max Baucus of Montana and Rep. Charles B. Rangel of New York represent opposite ends of the Democratic Party, a party in which nearly everyone must be appeased because Republicans cannot be counted on to vote for the measure.

Mr. Baucus, 51, the second-ranking Democrat on the Senate Finance Committee, comes from Big Sky country: the fourth-largest state in area but the forty-sixth in population.

He worries about the gas tax and the impact that a middle-class tax increase would have on Democratic incumbents seeking re-election next year. He also is concerned about tax breaks for small businesses and making sure spending cuts outweigh revenue increases.

Like most senators, Mr. Baucus tends to be independent. A 14-year congressional veteran just beginning to reach the upper levels of power, the Montanan demonstrated during earlier debate on the budget bill that he's willing to lob a grenade in at the last minute to get his way.

When the Senate Finance Committee was about to raise gasoline taxes 7.3 cents a gallon to replace President Clinton's ill-fated Btu tax, Mr. Baucus balked until the increase was cut nearly in half.

Hurting Clinton

Sen. George J. Mitchell, D-Maine, the majority leader, was reported to have complained during one closed-door session that Mr. Baucus was hurting the Clinton presidency.

Certain things, the senator says, are non-negotiable.

Mr. Rangel, the 63-year-old congressman from the teeming, poverty-wracked streets of Harlem, operates in the more orderly manner typical of senior House members, particularly one who ranks fourth among Democrats on the highly disciplined Ways and Means Committee.

"They certainly can't assume they can depend on me to support whatever they come up with," Mr. Rangel says. "But it really doesn't help for me to give people the impression that if I don't get what I want, I'm going to go huffing out of the room."

As the only black lawmaker to be included in the exclusive group of tax-writing committee members who will spend the next two )) weeks or so hammering out the final package, Mr. Rangel will be representing the concerns of the Congressional Black Caucus and urban liberals in general.

That means the New Yorker will be less worried about holding the line on taxes than in providing for new social spending and trying to minimize cuts in existing social programs.

"Our issues are not just black issues," he says. "Medicare cuts affect mostly old white folks. The food stamp program affects farmers. And empowerment zones -- it's true that I've worked on that for nearly 10 years -- but this bill has six zones [to increase business investment] in urban areas, three for rural areas and one on an Indian reservation. So, that's not really a black issue, either."

But despite his refusal to appear strident, Mr. Rangel insists the Black Caucus could not accept a bill that puts too great a burden on the poor and disadvantaged.

It may not be possible to come up with a deal acceptable to both Democrats unless the conference committee agrees to raise the corporate tax rate -- which would undermine business support ++ for the bill -- or abandons any serious attempt to reach Mr. Clinton's deficit reduction target of $500 billion over five years.

Mr. Rangel and Mr. Baucus both said in interviews last week they expect the deficit-cutting target to be lowered as a result of new White House estimates that suggest the budget shortfall will be about $34 billion less than expected between 1994 and 1998.

"I don't think that would be inconsistent with what we had to do last spring, which was to make deeper cuts in the budget when we thought the deficit would be higher than expected," he said.

No deal yet

With committee deliberations scheduled to begin in earnest this morning, the congressman and senator say there is no draft blueprint yet of a budget deal.

"I think there are tentative blueprints in the minds of the some of the people participating, but I don't think they are all in agreement," Senator Baucus says. "I think they are at least beginning to converge on some points, though."

For example, he adds, "A lot of Democrats are saying we shouldn't have any tax increase that affects the middle class, because it violates the president's campaign promise and potentially hurts us at the polls in 1994."

Representative Rangel says the conferees need more guidance on these issues from Mr. Clinton.

The White House is "doing a hell of a job trying to mold public opinion, but quite frankly, I don't know which bill they are supporting," the congressman says. "There are so many ways we could go about raising this revenue."

The complex tax bill also contains less prominent provisions that each lawmaker cares deeply about and will be fighting for, such as Mr. Baucus' support for tax incentives to encourage research and development and Mr. Rangel's interest in preserving tax breaks for drug companies that do business in Puerto Rico.

"Both men want more than they're going to get," said a staff aide to the committee. "If they got everything they wanted, they would think they hadn't asked for enough."

A piece of the action

If efforts to produce a compromise on taxes followed the traditional practice, neither Mr. Rangel nor Mr. Baucus would be included in the hard-core bargaining usually conducted exclusively by the chairmen of the House and Senate tax committees.

But both men expect much broader involvement this year because, as Mr. Baucus put it: "This is not your garden-variety tax bill. . . . In the context of the 1994 elections, the White House as well as Democrats in the House and Senate all have a stake in whether the results are politically salable. I think most Democrats are going to be playing a greater role than usual in the policy-making."

More than 210 lawmakers have actually been assigned to the conference committee, most serving on small subcommittees far away from the tax deliberations.

But if the experience of getting the original legislation through each chamber is any guide, Mr. Rangel said, "There are many, many groups that will have to be considered."

Among the few certainties in the process, Mr. Baucus said, is that the job will be difficult, but it will be done and done relatively on time -- so the lawmakers can recess in early August for their summer family vacations.

"Everyone has personal commitments," he said. "That's why it will be done on time."

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