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February 25, 2014
News Analysis: What Wyden Can Learn From Baucus's Tenure as Finance Committee Chair
by Lindsey McPherson

Full Text Published by Tax Analysts®

It's not easy to chair one of the most powerful congressional committees, having to balance competing interests in an effort to find bipartisan solutions.

As Sen. Ron Wyden, D-Ore., takes over the Senate Finance Committee, he'd be wise to learn some lessons -- both good and bad -- from his predecessor.

Democrat Max Baucus chaired the Finance Committee on and off since 2001 -- the off years being when Republicans were in the majority -- before resigning from the Senate February 6 to serve as U.S. ambassador to China, leaving behind nearly a decade's worth of leadership dos and don'ts from which Wyden can learn.

The following advice is based on conversations Tax Analysts had with several current and former congressional staffers, who requested anonymity so they could speak more freely.

Build Committee Relationships

Committee chairs cannot be effective if they do not have strong relationships with their colleagues, and nowhere is that more true than on the Finance Committee, which has jurisdiction over some of the most divisive policy issues like taxes, healthcare, entitlements, and trade.

DO: Hold weekly meetings with the ranking member.

Baucus started this tradition with Sen. Chuck Grassley, R-Iowa, and it paid dividends. The two worked together to pass legislation, such as the 2001 Bush tax cuts and the 2010 Small Business Jobs Act, and introduced several bills together, including legislation to repeal the alternative minimum tax and bills making technical corrections to the tax code. When Sen. Orrin G. Hatch, R-Utah, took over as ranking member, Baucus continued the tradition of the weekly meetings. Although Baucus never built as successful a working relationship with Hatch as with Grassley, they got along and generally operated the committee in a bipartisan manner.

DON'T: Give the ranking member veto power.

Bipartisanship is important but when you're in the majority, sometimes you have to make the tough decision to go it alone. Democrats on the Finance Committee have thought that Baucus in recent years has deferred too much to Hatch in his decision-making.

For example, Baucus's staff slow-walked the release of their tax reform discussion drafts because they were hoping Hatch would lend his support so they could release them in a bipartisan manner, as they did with the tax reform option papers, sources said.

Wyden is known for his willingness to work across the aisle, having sponsored several pieces of major legislation with Republicans, including a proposal for reforming the tax code. His ability to balance the desire to win over Republicans with the need to please members of his own caucus will be key as he tries to guide major legislation through the committee. (Prior coverage .)

DO: Compliment your colleagues and give them credit for their work.

It's no secret that lawmakers typically love attention and crave public accolades for their work, so a wise committee chair will share some of the attention with his members. Baucus did so at times -- the tax reform options papers he and Hatch released always credited the source of the ideas, and his discussion drafts also paid homage to senators whose legislation influenced his proposals.

Wyden has already made an effort to credit his colleagues. In a February 7 speech at a conference on tax policy and income inequality cosponsored by the University of Southern California's Gould School of Law and the Urban-Brookings Tax Policy Center, he expressed his support for bills introduced by Finance Committee members Sherrod Brown, D-Ohio, Maria Cantwell, D-Wash., and Charles E. Schumer, D-N.Y.

DON'T: Leave your committee members on the sidelines.

Baucus solicited ideas from Finance members on tax reform but he never really got them involved in the actual taxwriting process. Observers have often complimented House Ways and Means Chair Dave Camp, R-Mich., for having his committee break up into bipartisan working groups to study different areas of the tax code and reform proposals in those areas.

Some say Camp should have kept the cooperation going and given his members additional tasks. Many say Baucus too should have tasked his members with tackling specific issues, potentially even breaking them up into groups and having them come up with discussion drafts of their own. His lack of delegation left his members largely uninterested in working on tax reform and made the prospect of a reform bill getting through the committee more of a long shot.

Wyden needs to give Finance Committee members something to do so they feel like they have some involvement in the tax reform effort and get more excited about getting it over the finish line.

Foster Other Relationships, Too

It is important to please fellow committee members, but there are plenty of other relationships that a Finance Committee chair should cultivate.

DO: Show some independence from leadership.

Baucus wasn't afraid to do things without leadership support or approval. His interest in comprehensive tax reform, opposition to the Marketplace Fairness Act, and decision to move an extenders package through the committee in 2012 are all examples of independent decisions he made. Republicans would like Wyden to show a degree of independence from leadership as well and let the committee work its will.

In some ways, an independent committee can benefit leadership. It's often better for leadership if a bill is developed in committee in a bipartisan fashion, with members giving input and working through the partisan disagreements. The Finance Committee has a better chance to find a supermajority deal if given the space to work through regular order.

DON'T: Anger leadership.

Baucus did not have the best relationship with Senate Majority Leader Harry Reid, D-Nev., although neither of them would say so publicly. Congressional staff point to a tense closed-door meeting Reid had with Baucus and other senators who were involved in the Marketplace Fairness Act debate as an example of how frustrated Reid was with Baucus at times. The public debate over the Marketplace Fairness Act was also contentious. Baucus opposed the bill and held it up in committee, but when leadership decided to bypass Finance and bring it to the floor, Baucus asked and was denied the opportunity to have it remitted to Finance for a markup.

But that wasn't the first time Baucus angered Democratic leadership. Four years ago, Reid panned a deal Baucus brokered with the committee on extenders. During the healthcare reform debate, leadership was annoyed that Baucus was taking so long in putting together a bill for a markup because he was trying to win over Republicans. After that, leadership started to bypass the Finance Committee more on legislation.

And when Baucus and Hatch released a Dear Colleague letter noting their plans to take a "clean slate" approach to rewriting the tax code and soliciting ideas, Reid said he didn't even read the letter.

DO: Brief the caucus.

Baucus and his staff at times conducted issue briefings for the Democratic caucus or briefings for all of the Democratic tax staff. The briefings can be a helpful way to get the caucus behind an issue and everyone on the same page.

DON'T: Lose the caucus's trust.

Baucus comes from a red state so he's often voted on the opposite side of issues as his caucus. For example, he helped pass the Bush tax cuts and worked on legislation to enact the Medicare Part D prescription drug benefit. Some Democrats believed Baucus was more interested in working with Republicans than his own caucus.

The caucus had already lost confidence that Baucus was on their side before he announced last April that he was planning to retire at the end of his term, but they were especially angry about votes he made around that time. Shortly before his retirement announcement, he voted against a gun control bill that was ultimately defeated and against the Senate Democratic budget. When Baucus delivered his farewell address following his confirmation, only a few of his fellow senators stayed on the floor to listen.

Politically, Wyden can live a lot closer to the Democratic caucus because he is from a state that trends more Democratic. While Wyden is perceived as an independent, he seems to have the respect of the caucus. He needs to continue to engage Democrats without isolating Republicans, a difficult balance to maintain. Bipartisan deals are only successful when the lawmakers doing the negotiating have the trust of their caucus.

DO: Keep in touch with the administration.

As with his weekly meetings with the ranking member, Baucus spoke with Treasury Secretary Jacob Lew every week. Finance staff worked with Treasury staff on some issues. Baucus also worked with the president at times, such as during the healthcare reform debate when Baucus took the lead putting together legislation in the Senate.

DON'T: Pass up opportunities to engage the administration.

It's not clear whether Baucus attempted to get the administration more involved in the push for tax reform, but administration backing and promotion certainly would have helped the chair as he set out to overhaul the tax code.

While the administration discusses support for corporate tax reform, Wyden would do well to try to use his new perch to convince the president it's worthwhile to reform the individual side of the code as well. It could help that Wyden already has a concrete proposal to use as a selling point, namely the Bipartisan Tax Fairness and Simplification Act of 2011.

To further engage the administration, Wyden could hold more hearings in which the committee asks Treasury and IRS officials to testify.

DO: Have a good network of allies in the private sector.

Having a long Senate career in which he quickly climbed up in rank on the Finance Committee, Baucus has had a lot of talented people join and leave his staff. After departing the Senate, many Baucus staffers have gone on to find lobbying and government affairs jobs in a private sector. While much of the focus has been on how the former staff members benefit from their boss, Baucus too benefited from having a strong network of allies in the business community.

DON'T: Ask for input and not show you're using it.

In the work he did on tax reform, Baucus often asked stakeholders and industry leaders for input through hearings, as well as the release of the committee's tax reform option papers and discussion drafts. But he never gave many signals that he was using much of the input he received. Wyden can show he's interested in gathering input by holding hearings on Baucus's drafts, but if he does, he should do something afterward to show he's listening. Doing so will buy him more support for any final legislative product.

Keep the Committee Functioning

It's been widely reported that the Finance Committee just doesn't haven't the juice it used to before partisan gridlock became the norm in Congress. But it's not just gridlock and diverging viewpoints that have kept the committee from functioning as one of the most powerful committees in Congress should.

DO: Hire good staff.

Baucus hired competent staff and relied fairly heavily on their guidance. His staff also had good relations with the tax and trade communities; they were good at returning calls and were able to deliver bad news gently. Some of Wyden's staff, meanwhile, have a reputation for being non-responsive and at times combative, sources said.

Wyden is bringing some good staff with him to the Finance Committee, but the people he has filling the chief policy positions are largely untested, sources said. While a lot of changeover has occurred in the top committee roles, Wyden is expected to keep a lot of other committee staff that worked under Baucus, including some of the tax counsels.

DON'T: Let your staff lose power.

Although he made a lot of good hires, Baucus lost some staff in recent years that were seen as key to his ability to get things done. Former Baucus staff members such as Russ Sullivan, Jim Messina, and Jonathan Selib were respectfully feared for their ability to cut deals and potentially deliver retribution, leaving members more inclined to cooperate with Baucus.

It's unclear whether the staff Wyden has hired to lead the committee will be able to achieve the level of power necessary to control the committee, sources said.

DO: Get bipartisan buy-in before acting.

Baucus often tried to work across the aisle and was successful in moving several pieces of bipartisan legislation through the committee. Before the committee marked up tax extenders legislation and a bill providing funding for the Highway Trust Fund in 2012, Baucus held bipartisan meetings, as well as individual meetings with Hatch, to work through issues and ensure bipartisan support. During the preparation of healthcare reform legislation, Finance committee staff held regular bipartisan meetings with individual committee members' staff to discuss problems that arose.

Wyden has said he wants tax extenders to be one of the first priorities of the committee, and how he handles the issue will be a good test of whether he has the chops as chair to bring people together. He could also hold closed-door committee meetings to discuss Baucus's tax reform discussion drafts in an effort to facilitate a bipartisan dialogue and show he's interested in members' ideas on the issue.

DON'T: Let the committee stop working.

Baucus's focus on tax reform as well as the atmosphere of a do-nothing Congress contributed to a lack of action by the Finance Committee in recent years. Wyden should learn that senators don't want to get a coveted spot on the Finance Committee just to sit around and do nothing. It has not been good for morale or for fostering cooperation. By focusing almost exclusively on tax reform and leaving most other issues that members were interested in on the back burner, Baucus wasn't helping himself win support for reform.

Wyden seems to acknowledge the importance of getting members' heads back in the tax space when he talks about seeing extenders as a bridge to comprehensive tax reform. Having the committee working together on smaller tax bills in preparation for reform would likely improve the taxwriting process and keep the committee functioning and in the spotlight. Wyden could also allow members to hold more subcommittee hearings and encourage them to work on issues they care about.

Have a Vision and Be Ready to Act on It

Setting a large policy agenda is commonplace among committee chairs, but not everyone commits enough time to preparation and planning to execute it. Baucus has a mixed record of accomplishing major legislative feats.

DO: Have a vision of where you want to go.

Baucus did not suffer from a lack of vision. Although some wish he had been more specific about his goals at times, he often left things open ended, leaving more solutions on the table. With tax reform, Baucus was intentionally vague about how much revenue tax reform should raise and he never specified an exact rate goal. While this made tax reform harder to sell, it allowed Baucus and his staff to focus more on individual policies than the end product.

Although Baucus did not manage to release a comprehensive tax reform bill, his experience on other legislation that made it before the panel shows that he was able to govern markups, deal with problems that arose, and ensure that nothing would derail the bill from being approved. While Baucus has been criticized for some of his approaches to handling healthcare reform, he has been praised for how he kept Finance Democrats on board through the markup of the Affordable Care Act.

DON'T: Underestimate the time and effort it will take to reach a goal.

The timelines for tax reform always seemed to fall behind. Baucus last summer talked about releasing and having the Finance Committee mark up a tax reform bill in fall 2013. But he didn't even put out discussion drafts until late November.

Before attempting to take up reform, Wyden should sit down with the various players, particularly the Joint Committee on Taxation, and figure out what they'll need to make it happen. The JCT will be less overwhelmed once Camp finally releases his tax reform plan the week of February 24, but he'll still have logistics to work out if he decides to bring the bill before the committee for a markup.

Wyden can save himself a lot of trouble if he just plans ahead. He'll have lots of questions to answer: Does he want to hold more hearings? Should he release his own discussion drafts? Should he tweak his 2011 reform bill or draft a new one? How long will all those things realistically take to get done? How will the amendment process work when the bill goes to markup? How does he get leadership to support the effort?

DO: Set a foundation and be prepared.

The prospects for most pieces of legislation are dismal with the current state of politics in Congress, but that doesn't mean lawmakers should sit idly by and wait for the time to be right before preparing legislation.

A lot of observers and even fellow senators thought Baucus was wasting his time when he had the Finance Committee mark up an extenders package in the summer of 2012. But when Senate Minority Leader Mitch McConnell, R-Ky., and Vice President Joe Biden wanted to include extenders in the legislative package that they were negotiating around the fiscal cliff late that year, they turned to the Senate Finance Committee proposal because it was the only one available.

DON'T: Hesitate to move forward.

There were times when Baucus probably waited too long to move legislation. Many point to the healthcare debate -- when Baucus continued to hold bipartisan meetings with the Gang of Six in hopes of reaching compromises on some tough issues that were ultimately never resolved -- as an example of when he should have forged ahead.

Baucus was the last Democrat trying to work across the aisle on the issue, even as Republicans started to exit the group. Some Democrats say Baucus didn't have a great ability to read the intentions of the Republicans, who they say were just trying to delay legislation.

Follow Lindsey McPherson (@lindsemcpherson) on Twitter for real-time updates.

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