Tax-Return Provision in Spending Bill Dropped

The House voted unanimously last night to scuttle a controversial provision empowering Congress's appropriations committees to examine Americans' tax returns, clearing the way for a $388 billion government-wide spending bill to be sent to President Bush as early as today.

Voting 381 to 0, the House killed the provision in response to a demand by the Senate that the language be dropped before the big spending bill -- which was approved by both houses late last month -- could be sent to the White House for Bush's signature.

Democrats and some Republicans contended that the provision, added to the bill by a mid-level House Appropriations Committee staff member with drafting help from the Internal Revenue Service, could lead to abuse of taxpayer privacy. GOP leaders said it was intended only to ensure effective oversight of IRS spending.

Before the vote, Republicans and Democrats traded politically barbed charges over who was responsible for the chaotic process of jamming most spending bills for the year into one big package -- a process that led to inclusion of the tax provision without the knowledge of key lawmakers.

House Appropriations Committee Chairman C.W. Bill Young (R-Fla.) accused the Senate -- which, like the House, is under GOP control -- of forcing Congress to resort to a catchall bill because it did not complete action on its individual appropriations measures before Congress's pre-election recess.

"This whole comedy of errors of the omnibus appropriations bill wouldn't have happened if the other body [the Senate] passed their bills. . . . The other body didn't do its job," Young said.

Rep. David R. Obey (Wis.), ranking Democrat on the Appropriations Committee, blamed House Republican leaders.

"The House has egg on its face because the House leadership has an agenda on appropriations bills" that so underfunded some critical services it was unacceptable to the Senate before the elections, Obey said. This, he added, led to the 3,000-page omnibus bill, which few if any lawmakers read before voting on it.

The bill funds 12 domestic departments of government, along with the State Department and foreign aid. Separate bills to fund military programs, homeland security and the District of Columbia were passed earlier. The omnibus bill provides for growth of less than 1 percent for domestic programs, the smallest percentage increase since the mid-1990s.

Soon after convening in January, the new Congress will be faced with a major new funding demand from the Pentagon for military operations in Iraq and Afghanistan. The amount has not been determined, but sources have said it could be in the $75 billion range.

The tax-return flap began when an aide on the House Appropriations Committee added the IRS provision during the final hours of drafting a House-Senate compromise version of the omnibus bill.

Although the purpose was to allow staffers on the House and Senate appropriations committees to enter IRS sites where returns were being processed without violating rules pertaining to taxpayer privacy, the language gave staffers broad authority to see tax returns.

IRS Commissioner Mark W. Everson acknowledged in a letter Friday to Sen. Kent Conrad (D-N.D.) that his agency had drafted the language at the request of the House staff and "failed to recognize that the language provided did not include the parallel protections" contained in a separate law governing taxpayer privacy.

Everson, who supported the provision's repeal, said IRS officials who provided the language "had little time to prepare it and believed that it would be perfected by House Legislative Counsel or otherwise properly vetted."

Senior House members learned of the provision's existence early on Nov. 20 and took several steps to limit the political damage. Ways and Means Committee Chairman Bill Thomas (R-Calif.) engaged in a dialogue on the House floor with Young, in which he said he understood the provision was intended to provide access to IRS facilities for oversight purposes but not to tax returns, data or tax information.

Young concurred with that interpretation. Later that day, he issued a statement of "regret that some have misinterpreted" the provision or the purpose for it.

The problem was that the provision clearly did give Appropriations Committee staffers the power to examine tax returns.

Although the omnibus bill was rushed through the House with little controversy, the provision stirred a storm on the Senate floor later that day. Senators of both parties denounced it as a violation of taxpayer privacy, and Democrats suggested that GOP leaders were aware of the provision.

In the House, Democratic leader Nancy Pelosi (Calif.) accused Republicans of abusing House rules requiring a three-day delay so members can read bills before they go to the floor and held up final action on the measure until yesterday to bring pressure on GOP leaders to stop short-circuiting the rules. Americans "expect and deserve a government that respects their privacy," Pelosi said during yesterday's debate.