When President Carter sends his long-awaited tax revision package to Congress late this year or early next, its frist stop - after the further delays the White House announced last week - will be in the House Ways and Means Committee. The 37-member panel, which technically originates all tax legislation in Congress, has the capital's biggest say on tax bills: It gets to them first and shapes their basic outlines before the rest of the House and the Senate even can consider them.
If this were 1976, most tax onservers would say the President's new package would have a pretty good chance. The committee, after all, has just undergone a spate of fundamental reforms, from the accession of a more liberal chairman to an expansion and new open-meetings policy that have transformed it substantially from the old secretive "club" run by former Rep. Wilbur D. mills (D-Ark.). Those who have watched the panel says it has come a long way indeed.
But this time, the administration is facing a new - and somewhat paradoxical - situation: While the committee is decidedly more "liberal" and sophisticated than it has been in recent years, it also is more independent - and unpredictable. As a result, seers say the panel is unlikely to approve the kind of comprehensive "tax reform" the President and his advisers have indicated they're considering.
In fact, some say the Ways and Means Committee could be the biggest obstacle the administration is apt to face in trying to push through its new tax revision package. Unless the panel goes along with a significant portion of the Carter proposal, it's unlikely much of the legislation will get through the Congress intact. "The reformers are running scared this year," says Thomas J. Reese, spokesman for Tax Analysts and Advocates, a liberal tax group.
The changes that have swept the committee recently are best shown by contrasting the panel with what it was only a few years ago. Under Mills, who left Congress in 1974, the Ways and Means panel operated as a private club of insiders. Mills would approach members privately to sniff out a consensus, confer with his Republican counterpart, Rep. John W. Byrnes (R-Wis.), float a few trial balloons, and then lock the panel in a closed session to emerge with a deftly engineered compromise. Some members didn't even bother to vote: They just left their proxies with Mills.
In 1974, however, that dynamic was upset by a series of shattering changes. Mills, the major power center of the committee, resigned in disgrace (over a bout with alcoholism and a striptease-dancer). House reformers forced the panel to begin holding open meetings. The Democratic caucus expanded the committee to load it with more liberals. And the panel got a new chairman, its frist-ranking Democrat, Rep. Al Ullman, a moderate from Oregon, whose appointment "reformers" greeted as a breath of fresh air.
Almost immediately, Ullman began to make changes: The panel established its first subcommittees, to handle trade and other non-tax matters. Democrats began working together as a caucus. And Ullman consulted frequently with every member. The committee even set up special rules to force full disclosure of benefits to special interest groups (a step it was embarrassed into taking after a Wall Street Journal reporter revealed that the panel, in its wisdom, inadvertently had approved a $15 million tax break for millionaire H. Ross Perrot). For the first time, democracy began to flourish in the House Ways and Means Committee. Seers began predicting a New Era for the tax "reform."
By Millsian standards, the committee now is a bastion of enlightenment.Debate is out in the open, and - for a congressional panel - is sophisticated and articulate. The power base has shifted slightly: Moderates and liberals now can count on as many as 21 votes (out of 37 now on the panel) compared with 17 out of the old 25. And insiders report that industry lobbyists no longer have quite the hammer-lock on members that they used to have. "The votes are close enough these days so you have a chance of winning once in a while," says one tax "reform" advocate. "It's a night-and-day change from before."
But the panel also has acquired problems, which have slowed down its first year's dynamism - and dampened reformers' pipe-dreams of a New Era as well:
The open sessions and subcommittees unquestionably have brought more "democracy" to the panel. But they also have sparked more posturing by members - both for the press and for interested lobbyists. And some observers complain they also have made it more difficult for special-interest groups to accede to compromises. "The energy bill was a perfect example," says Tax Analysts' Reese. "There are those who think the committee would have come out with a better bill if the industry had been allowed to accept less than it wound up fighting for. But everything was out in the sunshine, so there was no room to give in."
The infusion of new members has proved less exhilarating than some had predicted. Although the liberals stuck together during the first year the panel was expanded, they lately have begun behaving more like plain old politicians - function some observers believe reflects a natural settling down in the life of any elected official.
A big surprise recently was the assertion by Rep. Abner J. Mikva (D-Ill.), the leader of the panel's liberal bloc, that eliminating the special tax treatment of capital gains "isn't real tax reform" - a startling pronouncement because the move has been the centerpiece of most loophole-closing proposals. Observers note drily that Mikva's district, comprising the rich North Shore suburbs of Chicago, probably contains as many taxpayers who claim the capital gains exclusion as any area in the nation. The congressman, they point out, eked through last November's election by only a scant margin.
Because of their experience in the first few months this year, many panel members have come to resent what they regard as double-dealing by the Carter administration - a situation that does not bode encouragingly for the President's new tax package. "Ullman (and other committee members) stuck their necks out for the White House both on the $50 rebate and the energy bill last summer," says one official close the panel. "And then he pulled the rug out from under them later by backing away from both. Now everybody is wary to support his tax reform package."
Perhaps most important, the panel has developed no new dynamic to replace Mills' old method of operation - a situation that often makes it seem chaotic and bereft of direction. While MIlls' big sin was running the committee from his back pocket, critics say Ullman's main failing is tha the doesn't want to wear the pants. Says one veteran observer close to the scene: "Al sort of searches for the middle ground, trying to stake out what is possible, but he never seems to have any clear idea of where he himself wants to go. Then he agrees to a concession with the last guy he ran into on the street."
Ironically, in a way, critics of the panel blame much of its present ills on Ullman. While most - both liberals and conservatives - credit him with being "serious" and "well-intentioned" in his job, there's a good deal of grousing that he's ineffectual as chairman. For one thing, some observers fault him for not having a firm knowledge of the substance of tax issues - an expertise that, for whatever his other shortcomings, Mills turned into a virtual legend.
For another, liberals complain that Ullman "hasn't really pushed for tax reform" - the one issue on which they all thought he'd be aggressive. Indeed, some reformers complain that he's been almost hostile. After Ullman warned the Carter administration two weeks ago to pare back its draft tax package, liberal lobbyists hit the ceiling. "We've been particularly distressed by his remarks on tax reform in recent months," says Bill Pietz of Ralph Nader's Tax Reform Research Group.
To be sure, some of the complaining is overdone a bit. Even critics concede it's unfair to compare Ullman's performance with Mills-. "The new committee is expanded and harder to deal with than in Mills' time," says Tax Analysts' Reese. "Mills could just sit back and line up his votes from the office. But when Ullman took over, half the members were new and the rest never knew any other chairman than Wilbur. There's a lot more pressure now to produce, but it's a lot more difficult, too." (The chairman's post also carries far less actual power than in Mills' day. Mills also was chairman of the Committee on Committees, which controlled the committee assignments of everyone else in Congress.)
Comparisons with the Senate Finance Committee also fall flat. While there's no real argument that that panel's chairman, Sen. Russell B. Long (D-La.), is a more skillful strategist, anyone who has watched the committee in action knows it's often so chaotic as to be mind-boggling. And some observers muse that Long may have boxed himself in so by loading it with conservatives that he can't push through anything "progressive" even if he wants to. "The energy bill is an example," a lobbyist says. Indeed, Ullman's track record at House-Senate conference committees recently has improved.
Still, Ullman does often seem to be reluctant to exercise his prerogatives as chairman. Those who watch the committee regularly complain he shows no clear ideology of his own, frequently seems to draw his own proposals out of the blue, arrives at hearings usually without much idea of how a proposal will go over, allows the debate to ramble without any real effort to lobby for votes, and caves in too early at the slightest threat of opposition from conservatives. "Temperamentally, he just isn't constituted to talk to other members," grumbles one otherwise admiring observer. "About the only thing you can say is that he does get to the administration's proposals promptly."
Reformers also were upset when Ullman failed to name their favorites to six vacancies on the panel earlier this year. "That's the time the whole ball game is played out," says Reese, who along with other tax-revision advocates had hoped to see liberals such as Rep. Robert J. Cornell (D-Wis.) appointed to the committee. Instead, Ullman picked a slew of moderate-to-conservative newcomers - an "easier group to deal with," as one critic describes them.
Admittedly, the chairman did lose some face last year when the panel flatly rejected his badly politicked proposal for an "appreciation tax" on assets held to a taxpayer's death, had to be restrained from giving away the store in last spring's debate on a "plowback" clause in the energy bill, and left onlookers gaping when he failed during an earlier energy vote to push for votes in support of a gas-guzzler tax.
On the other hand, defenders point out that the massive tax-revision bill passed in late 1976 emerged largely in line with the chairman's initial recommendations. And the energy package last spring was far from a total disaster. Moreover, industry lobbyists aren't nearly as upset about the Ullman performance as the liberals are. "It's just that he's turned out to be more conservative than they'd hoped for," chuckles one well-placed business representative.
Nor are the liberals themselves free of any blame. Even beyond Mikva's latest straying from "reformist" dogma, the liberals' performance on the ocmmittee has been a disappointment to left-of-center lobby groups. Onlookers complain they simply don't work as hard as their conservative counterparts and aren't as attentive to detail - a crucial shortocming int he panel's tangled parliamentary maneuvers. "When a key vote comes up, the conservatives all have their proxies ready and waiting," grumbles one disgruntled reformer. "But the libs almost always are left high and dry."
Then, too, some of the liberals appear to be mellowing - or even reversing themselves - on key tax issues. Rep. Charles A. Vanik (D-Ohio), a long-time reformist and inveterate free-trader, recently has come out for gradualism on overhauling the tax code and endorsed import restrictions for steel. Another liberal, Rep. Joseph L. Fisher (D-Va.), has busied himself with worrying about tax credits for home insulation."They're beginning to become more responsive to constituents," one lobbyist laments.
Like most other committees, Ways and Means has its small group of prime movers: Along with Ullman, there are Rep. Barber B. Conable (R-N.Y.), the panel's brainy, conservative minority leader; Rep. Dan Rostenkowski (D-Ill.), a moderate, and longtime wallflower who blossomed last year to become the committee's latest "comer"; Rep. Joe D. Waggonner (D-La.), crafty, conservative, and probably the most skillful legislator on the committee, the force behind most of its successful pro-industry amendments; and Mikva, the leader of the committee's small liberal bloc, knowledgeable and extremely adept.
Republicans on the panel usually vote as a bloc, as in other committees, but their debate almost always is articulate, and based on substance. Ullman hasn't developed the bipartisan-team relationship with Conable that Mills used to have with Byrnes, but he has taken some steps to mollify GOP members, who last year were irked by what they considered the panel's overly partisan character. Ullman and Conable now have come to an understnading. Says Conable, cautiously: "The big thing is that neither of us should surprise the other."
The panel's legwork is done mainly by the staff of the Joint Committee on Taxation, which serves the Senate Finance Committee as well. That panel suffered a setback last January when its staff chief, Laurence N. Woodworth, left to become Assistant Secretary of the Treasury for tax policy, but its work has gone on intact. Although the staff work sometimes is spotty, it's still considered among the ablest in Congress. The staff has been somewhat less assertive in the face of the new open-meetings policy. But its recommendations still carry substantial weight.
As the committee stands now, the outlook for Carter's tax-revision package is not auspicious. Ullman himself is lukewarm to the proposal, the conservatives oppose it flatly, and the liberals have begun shying away from anything substantial. And while the delays the President announced last week may not change much in substance, there's little real doubt it will blunt some of the proposal's sense of argency. "We're in serious trouble," one reformer concedes.
To be sure, the tax-revision initiative still may not be lost. A conservative lobbyist who is noted as an astute observer speculates that "Carter still could turn this committee around with a little massaging." But he notes in the next breath that it will not be easy: By any policymaker's ouija board, the prospects are that the tax proposal will be pared back sharply - first by the administration, then probably by the committee. As one analyst puts it, "Jimmy Carter can't expect Ways and means to ratify tax reform uncritically as it did on his energy bill," he says. "It's going to be a tough ball game."