Does Bye-Bye Baucus Mean Bye-Bye Tax Reform?

Does the Montana Democrat have enough clout to cut one last deal?

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Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., who has been in Washington since 1978, will retire rather than run for re-election in 2014.
Senate Finance Committee Chairman Sen. Max Baucus, D-Mont., who has been in Washington since 1978, will retire rather than run for re-election in 2014.

In the longer term, Washington insiders are wondering if the sudden retirement of Montana Democrat Max Baucus will help the Republicans move one seat closer to becoming a majority in the United States Senate.

A generally reliable liberal during his more than 30 years as a member of the "world's greatest deliberative body," Baucus is somewhat out of step with the extreme partisan positions often taken by Majority Leader Harry Reid, D-Nev., and President Barack Obama. Operationally, he owes his allegiance to an earlier time, when cooperation across the aisle was the order of the day.

His frustration with the way things have been going is palpable. In the days before he announced his retirement he made considerable news by describing the Obama Administration's work to implement the Patient Protection and Affordable Care Act as "a train wreck." This won him no friends in the White House and was all the more remarkable because it was Baucus and his committee staff who wrote most of the bill in the first place.

[See a collection of political cartoons on Congress.]

In the short term, however, the question on everyone's mind is what impact Baucus' retirement will have on the push for tax reform. Michigan Republican Dave Camp, who chairs the Ways & Means Committee and is Baucus' opposite number in the House, has for some months now championed the idea that the best way to kick start the lagging U.S. economy is for Congress to pass and the president to sign the same kind of broad-based tax reform that lowers marginal rates while closing so-called "loopholes" for which Ronald Reagan successfully led the charge in 1986.

There are some who think that Baucus' decision to retire means he can focus his remaining time in the Senate on producing a bipartisan tax reform package that is acceptable to his Senate colleagues, to the House, and to the president. There are probably an equal number of people who think he has come to the conclusion that he can't, not in two years and probably not in twenty, and so there isn't much point in sticking around.

The day the news of his retirement was announced, Capital Alpha Partners, a respected Washington firm that analyzes political developments for investors, said Baucus' looming departure from the Senate "does not terminate prospects for tax reform, but it does make an already-tight window even more narrow as the 2014 election cycle approaches. It is also puts a premium on passing tax reform, if this is possible, in the last year before Baucus retires. The next opportunity may not come until 2017."

[Read the U.S. News Debate: Do the Rich Pay Their Fair Share in Taxes?]

Nonetheless, the firm also advised that, while he will play "a significant role" in any tax reform activities, "his leverage will surely decrease as the end of his term approaches."

Describing him as "a moderate and a deal-maker," Montana's senior senator would "necessarily be a key player in crafting a compromise between the liberal Senate Democratic leadership and the conservative Republican House. The less time he is available to play this role, the less the chances of a breakthrough deal and the greater the odds of a status-quo outcome."

So, while major tax reform is still possible, and Camp has committed to passing a bill on the House floor by the time the current Congress adjourns, Baucus' retirement likely means that tax reform will have to wait until there is a new sheriff in town.

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