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Document 1 of 96.

December 23, 2000

SECTION: CONGRESS; Pg. 3958; Vol. 32, No. 52-53

LENGTH: 5086 words

HEADLINE: Taxing Times

BYLINE: Richard E. Cohen and Marilyn Werber Serafini

HIGHLIGHT:

New leaders are taking over at the House Ways and Means and
Senate Finance committees, but can they restore the power that
has slipped away?

BODY:

Sen. Charles E. Grassley, R-Iowa, wasted no time preparing to
take over as the new chairman of the Senate Finance Committee in
January. During November and December, he hurried to put his own
plans in order, and also held a telephone conversation with
George W. Bush and met at the Capitol with Dick Cheney to get a
sense of their expectations. "I have a responsibility as chairman
of the Finance Committee to make sure that organizational issues
are worked out ahead of time," Grassley told National Journal.
"This is a tremendous opportunity to help a lot of people."

Grassley is keenly aware that the President-elect and his
running mate aren't the only ones in Washington who have their
work cut out for them. But as he and fellow Senators brace for
big changes at the Finance Committee, they at least have one
advantage over their tax-writing counterparts in the House: The
House Ways and Means Committee will not even learn who its new
chairman is until Jan. 4. On that date, House Republicans are
scheduled to resolve a bruising contest among three ambitious GOP
lawmakers who want to lead the panel.

It is an unusual confluence for new chairmen to be taking
over at both the Finance and Ways and Means committees,
historically the most powerful panels on Capitol Hill, just as a
new President is assuming office amid highly uncertain prospects.
The two tax committee chairmen will be at the forefront because
more than half of the agenda that Bush plans to press-including
tax cuts and prescription drug benefits-falls under their panels'
purview.

The chairmen will face considerable pressure to deliver
results, now that their party will control the White House and
Congress for the first time since 1954. But they will have to
deal with a 50-50 partisan split in the Senate and a bare five-
seat Republican majority in the House-and with Democrats who at
different turns are intent on beginning a new era of
bipartisanship and on running a permanent campaign for the next
election.

Amid all of these pressures, the leaders of Finance and
Ways and Means face another daunting task as well. The roiling
partisan tides of recent years have considerably weakened their
committees, and they hope to restore them to the power they once
enjoyed.

The level of upheaval is so high that "George W. Bush
shouldn't make plans" to do much at the tax committees, warned
former Rep. Dan Rostenkowski, D-Ill., whose more than 13 years as
Ways and Means chairman taught him something about the territory.
"He should test the waters." Rostenkowski complained that Ways
and Means has "surrendered its authority" to party leaders in the
House and said that surrender has added to its legislative
difficulties.

But congressional Republican leaders and the Bush team
don't believe they have the luxury of waiting for normalcy to
return to the two committees. Plans already are under way for
quick passage of two politically attractive tax cut proposals-an
easing of the "marriage penalty" and a repeal of estate taxes.
Both bills received considerable support from congressional
Democrats during 2000, but were vetoed by President Clinton.

Also on the doorsteps of the two committees are broader
elements of Bush's $ 1.3 trillion tax cut proposal, even though
key congressional Republicans are leery of it; as well as
legislation providing prescription drug coverage to senior
citizens, possibly in the context of Medicare reform.
"Prescription drugs is the wild card," said a well-placed House
Democratic source. "Republicans need to act on that or they will
get slaughtered in the 2002 election." And, should Bush
eventually pursue Social Security reform or international trade
legislation, those, too, fall under the jurisdiction of the Ways
and Means and Finance panels.

"Ways and Means and Senate Finance will be very busy,"
said Rep. Rob Portman, R-Ohio, a key member of the House panel
and a close policy adviser to the Bush team. "They will be
pulling together coalitions of Democrats and Republicans to
handle a majority of President Bush's legislative priorities.
Having talked with Democrats on some of these issues, I'm very
optimistic that we can find common ground."

Grassley and Sen. Max Baucus of Montana, the Finance
Committee's new senior Democrat, voice hope that their takeover
can re-energize the panel in the wake of the departures of
Chairman William V. Roth Jr., R-Del., who lost his re-election
bid in November, and of ranking member Daniel Patrick Moynihan,
D-N.Y., who retired. Grassley and Baucus point out that they have
a lot in common: Both are advocates for the concerns of rural
states, both are self-described centrists, and both are critical
of how the Senate has handled issues facing their committee in
recent years. But even if they work together-as Roth and Moynihan
frequently did-success is not guaranteed.

In the House, where revenue legislation traditionally
begins, the Ways and Means Committee will face pressure to move
an agenda close to what the Bush White House desires. But the
three Republicans vying to take over for departing Chairman Bill
Archer, R-Texas-Reps. Philip M. Crane of Illinois, Bill Thomas of
California, and E. Clay Shaw Jr. of Florida-have very different
substantive and stylistic approaches.
Those Were the Days
The word powerful is still often used to describe the Ways and
Means and Finance committees, but they and other congressional
panels have seen their power slip away. These days, top House and
Senate leaders, or committee chairmen and their senior aides,
frequently craft major bills in private. Committee hearings and
markups are often just for show, and few real attempts at deal-
making or consensus-reaching are made at the committee level.
(See NJ cover story, "The Crackup of the Committees," 7/31/99,
pp. 2210-17.)

It wasn't always this way. Capitol Hill veterans still
tell compelling decades-old stories about influential chairmen of
the Ways and Means and Finance committees who asserted strong
leadership, usually with the assent of party leaders. Both
committees have rich histories and significant bipartisan
traditions.

Over the years, lawmakers have jockeyed to win seats on
Finance and Ways and Means, and those who have been successful
have been viewed as among Congress's most influential members.
Eight Ways and Means members-from James Madison to George H.
Bush-later became President, and eight served as Vice President.
It was "the Cadillac of committees," boasted Rostenkowski, who
oversaw publication of a 526-page bicentennial history of the
panel in 1989.

At the start of the 20th century, the Ways and Means
chairman in many cases also served as House Majority Leader. When
Rep. Oscar W. Underwood, D-Ala., held both posts in 1911, a
reporter asked him whether his authority was more sweeping than
that of Speaker Champ Clark, D-Mo. "It is," Underwood responded,
according to committee lore.

Another extremely powerful Ways and Means chairman during
the 20th century was Rep. Wilbur D. Mills, D-Ark., who led the
committee from 1957-75. For many years, Mills' decisions were
rarely challenged, let alone overturned-in committee, on the
House floor, or by Presidents. Among his many accomplishments was
his role in building the consensus necessary to win enactment of
the 1965 law setting up Medicare.

Sen. Russell B. Long, D-La., also played a key role in
passing the 1965 Medicare law, and he went on to chair the
Finance Committee later that year. Long, who led the panel until
1981, is remembered for his power and for reaching out to members
of both parties. Former Sen. Dave Durenberger, R-Minn., recalls
that he was "blown away" by his first introduction to Long.

"Within a week of my picking the Senate Finance Committee
(as a freshman in 1979), I had a beautiful three-page letter from
Russell Long telling me what an honor it was for him to serve on
the committee, and reminding me of the rich 145-year-old
tradition that was enjoyed by Louisiana and Minnesota-connected
by a river," said Durenberger. "It said the chairman was
interested in the kid from Minnesota who knew nothing about what
he was getting into.... This was a Democrat speaking to a
Republican. That's the old Finance Committee."

Dominant figures also led the two committees during the
1980s and into the early 1990s: Sen. Bob Packwood, R-Ore., who
chaired Finance from 1985-87 and then again for less than a year
in 1995, when Republicans regained the Senate majority, and
Rostenkowski, who chaired Ways and Means from 1981-94. "When Bob
Packwood was chairman, he told the leadership what was going to
happen," recalled a former Senate Republican aide. "He didn't
say, 'What's it going to be?' "

Packwood had a strong relationship with Sen. Bob Dole, R-
Kan., who served as Senate Majority Leader and had preceded
Packwood as Finance chairman. Dole went out of his way to avoid
interfering with Packwood's control of the committee, said the
aide, who noted that it was Packwood's decision to aggressively
move ahead with the 1986 Tax Reform Act pushed by President
Reagan, despite some Republican misgivings.

Perhaps it was because of his good relationship with Dole
that Packwood could take the sole lead on that significant
initiative. It also helped that Packwood involved the entire
committee in the process, without regard to party affiliation,
and that he worked closely with Rostenkowski, who had shepherded
the tax initiative through the House.

During debate a few years earlier on tax legislation,
Rostenkowski demonstrated his renowned hard-nosed tactics. When
then-Rep. Kent Hance, D-Texas, crossed Rostenkowski by agreeing
to sponsor Reagan's huge tax cuts in 1981, the Ways and Means
chairman retaliated. Among other punishments, Hance discovered
that the wheels had been removed from his chair in the committee
hearing room and that he simply wasn't being told about
Democratic Caucus meetings. "It got so unbearable that he ran for
the Senate in 1984 because he knew he had no career in the
House," and later changed parties, recalled a House Democrat. "No
one messed around with Rosty after that."

There is no single explanation for the modern-day loss of
power at the two tax committees. Among the relevant factors have
been the ascension of older and weaker personalities to the top
posts, and the unhappiness of rank-and-file lawmakers with the
eras of exceedingly powerful chairmen.

The traditional committee system had been gradually
declining for several decades, but its death warrant probably
came in 1995, when Republicans assumed the House majority for the
first time in 40 years and Speaker Newt Gingrich, R-Ga.,
instituted a top-down management style.

Gingrich circumvented and deliberately undermined the
committee structure by creating ad hoc Republican task forces and
demanding that they write legislation reflecting his views.
During his tenure, House Republicans also instituted term limits
for committee chairmen in 1995. Still, congressional observers
say that change would have come regardless of Gingrich's
presence. The House had become more partisan in the 1970s and
'80s under Democratic control, and newly empowered Republicans
wanted a larger role in the legislative process.

Even after Gingrich left the House in late 1998, Archer,
who served as Ways and Means chairman from 1995-2000, never
exercised nearly the power that Mills or Rostenkowski did. Archer
has expressed his bitterness over his loss of control at the
hands of Gingrich. One senior House Democrat said that once House
Republicans took over in 1995, with "all this pent-up demand ...
and these grandiose plans" for major tax changes that failed to
win enactment, Republicans lost some credibility.

Meanwhile, Roth, who also in 1995 assumed the Finance
chairmanship, faced several problems: Senate Majority Leader
Trent Lott, R-Miss., stacked the committee with additional
conservative Republicans, making bipartisanship more difficult,
and Lott and Roth sometimes disagreed on legislative strategy.

At bottom, committee chairmen in recent years have been
at the mercy of top House and Senate Republican leaders, who-
given the high level of partisanship and the small size of their
majorities-have resorted to dictating legislation from the top
down in order to maintain some semblance of control. But the
results have often been chaotic.

Take the embarrassing outcome on a big catchall tax bill
that Republican leaders hurriedly put together near the end of
the 106th Congress. It was a hodgepodge of proposals, some of
which had not gone through the regular legislative channels. The $240 billion, 10-year tax package would have expanded the
individual retirement accounts named after Roth, provided tax
breaks for long-term care and the self-insured, boosted the
minimum wage, and eased the tax burden on businesses, among other
provisions.

Archer stunned fellow lawmakers by joining only five
other Republicans in voting against the legislation when the
House approved it in late October. Archer cited several
objections to the package, including the inclusion of new tax
credits for Amtrak (which Roth ardently advocated) and of a
minimum-wage increase. Roth then faced his final legislative
indignity when Senators in both parties blocked Senate approval
of the measure in November. The only tax element of the package
that was approved before Congress adjourned on Dec. 15 was a
popular proposal to provide economic incentives to distressed
communities.
Fixing What's Broken at Finance
Despite Congress's recent history of partisan gridlock and of
leaders trampling on the committees, the new chairman and ranking
member of the Finance Committee express confidence that their
panel can be productive and recapture some of its past glory.

Grassley has raised pigs on his family's farm in Iowa
(he's still a weekend farmer) and jokes that running Finance may
be even messier. He's adamant about the need for change and
intends to reclaim some of the committee's lost influence. "I
will insist that committee action happen in the proper place-the
Finance Committee," said Grassley, 67. "I have to show some
leadership on the committee agenda."

Now serving his fourth Senate term, Grassley is well
liked and respected on both sides of the aisle. His style is to
spend a great deal of time talking individually to Senators and
listening to what they have to say. He can often be found
buttonholing colleagues on the Senate floor between votes. "I
seek help, ask for opinions," Grassley said. "I'm open to
people."

Grassley knows what he wants to accomplish as chairman.
He wants to enhance economic opportunities for families, in part
by minimizing the marriage penalty, repealing the estate and gift
taxes, and lowering marginal tax rates, which he said are
"hurting families, especially those with kids." He wants to
increase trade, create more opportunities for seniors through
pension reform, and provide a prescription drug benefit for
Medicare beneficiaries as part of broader reforms to that
program. Also on his agenda is reuthorization of the 1996 Welfare
Reform Act in 2002.

Grassley has a generally conservative voting record, but
he is no shrill ideologue. He does not hesitate to vote against
his party on issues he thinks are important. He was one of only
two Senate Republicans to vote against sending troops to the
Persian Gulf in 1991. "I'm not afraid to take on Republicans of
my own party, and I'm not afraid to take on a President,"
Grassley said. He recalled going to the White House during
Reagan's first term to crusade against waste in defense: "I told
Reagan he's always talking about 'welfare queens,' but he has
waste and abuse in defense."

Grassley has co-sponsored legislation with even the most
liberal Democrats and has frequently teamed with Democratic
moderates. As chairman of the Senate Special Committee on Aging
the past four years, he has worked closely with centrist Sen.
John Breaux, D-La., who is also a key member of the Finance
Committee.

Meanwhile, Baucus, Finance's new ranking member, also
says he advocates increased openness and bipartisan cooperation.
"We have to get more into substance and away from messages," said
Baucus, 59, who has served as chairman or ranking member for the
past eight years on the Senate Environment and Public Works
Committee. "My goal is to accomplish something for the public
good. That means taking extra time to meet with members of the
committee."

Baucus said he wants to see the committee hold "honest-
to-goodness" hearings and markups, as opposed to those aimed
simply at scoring political points. "I'd like to see amendments
offered in full public view, so it's not all done behind closed
doors," he said. "We've just fallen in the Senate into a very
deep partisanship."

Like Grassley, with whom he entered the House in 1974,
Baucus has made rural needs a focus of his work on trade, tax,
and health issues. Baucus long has been a key player on trade
issues, and he was a strong advocate of granting permanent normal
trade relations to China this year, contrary to the position of
some in his party. Baucus has also expressed willingness to cut
deals on future tax cuts, another area of potential disagreement
with fellow Democrats.

Baucus has an added burden as he assumes his new role. He
may face a tough re-election contest in 2002, possibly against
outgoing GOP Gov. Marc Racicot, in a state that has grown
increasingly Republican. Said one Senate observer: "It's going to
put pressure on him, in that he's going to have to walk a
tightrope between doing what's right for his party and doing
what's right for his political life."

Another long shadow looms over Grassley and Baucus: Both
Lott and Senate Minority Leader Thomas A. Daschle, D-S.D., will
serve on the Finance Committee during the 107th Congress, and
congressional aides say it's not yet clear just how much freedom
they'll give the two new committee leaders.

Lott and other staunch conservative Republicans who sit
on the Finance Committee, including Sens. Don Nickles of Oklahoma
and Phil Gramm of Texas, may not be as conciliatory as the new
chairman is. Grassley does not expect trouble and says his
relationship with Lott is good. "As chairman, I have to balance
the two wings of the party," he said.

Daschle, for his part, said in an interview that he will
defer to Baucus on committee matters. Some congressional
observers suggest that because he is somewhat uncomfortable
making partisan statements, Baucus may welcome Daschle's
participation. "Daschle's presence on the committee is a
strategic decision by the leadership to make sure that there is a
strong, articulate voice that can speak for the committee,
because there are sufficient concerns about Baucus' communication
skills," a Democratic source said.

Baucus says the important thing is that Senate Democrats
speak with one voice: "My goal is to be effective, and sometimes
speaking out helps to be effective. Sometimes speaking out too
much diminishes your effectiveness."

As with other committees, Finance is awaiting a decision
by Senate leaders on how to organize in an evenly divided
chamber. Baucus wants the partisan ratio on the Finance Committee
to be equal, while Grassley has demanded a one-seat Republican
advantage because of the tie-breaking role that Cheney will play
in the Senate during the 107th Congress. The conflict over the
ratios must be resolved before vacancies can be filled on the
Finance Committee, where four Democrats and two Republicans have
left the Senate.

As the Finance Committee-and the Senate at large-grapples
with a 50-50 split, a key force may be the chamber's ever-growing
group of moderates. An early December organizing session of the
Senate Centrist Coalition, a group founded in 1994, drew 26
Democrats and Republicans. "Either you find ways to bring people
together, or you spin wheels," said Sen. Ron Wyden, D-Ore., a
member of the centrist group who is also seeking a seat on
Finance. "If we go to a committee and say, here is a nucleus of
something that can get 60 (Senate) votes, it strengthens the hand
of the people at the committee."

The centrist group-led by Breaux and Sen. Olympia Snowe,
R-Maine-potentially could assist the Finance Committee in finding
middle ground on key issues. The centrist group could also rally
support for these compromises among the rest of the Senate,
including party leaders. But the centrists might also siphon
power away from the committee.

Breaux, who met with Bush at his Texas ranch in mid-
December, said he wants the Centrist Coalition to start on an
issue for which agreement may be relatively easy. "We had better
work on things that are less difficult or controversial, and get
a win and a victory-like education," Breaux said.

Although many want quick action on prescription drug
legislation, Breaux says he wants to wait until Bush's second
year in office, to allow more time to consider broader Medicare
reforms. "The question is how to get it done," he said. "It's
going to be difficult to show we can work in a divided Congress,
but it will help if we can get a victory under our belt."

Grassley already is contemplating how to balance all of
these competing pressures and pass legislation, and he
acknowledges that he may need to alter his perfectionist style.
"There may have to be some give on my desire to be this thorough
and have it all worked out before moving forward with
legislation," he said. "If we're going to accomplish some major
issues that Bush wants, we're going to have to have things done
by Labor Day."
New Ways and Means
Historically, the Ways and Means Committee has been the place
where action begins on tax and entitlement matters, and it's
likely to remain the starting point for important Bush
initiatives.

Lawmakers will respect the constitutional dictate that
revenue legislation originate in the House. But starting things
out in the House also holds key strategic advantages for the GOP:
Ways and Means will have a more heavily Republican tilt-something
closer to its 23-16 party advantage during the 106th Congress-
than the Senate Finance Committee.

Moreover, House Republicans have far greater power than
their colleagues in the Senate to control the agenda and the
outcome on legislation. This advantage arises from differences in
the two chambers' operating procedures and from the size of the
GOP majorities.

House Republican leaders expect that legislative strategy
will emerge from discussions with the Bush team, and that many
Democrats will join "an offer they can't refuse," as a senior GOP
aide put it. Now that the Republicans have taken over the White
House, they hope that congressional Democrats will soften their
hard-line opposition to many GOP initiatives. House Republicans
believe that their self-confidence will increase with their
seasoning during the Bush presidency, and some see a return to
traditional, more mature ways of conducting legislative business.

"You are now beginning to see the committees re-establish
themselves," said Thomas of California, one of the three
Republican contenders for the Ways and Means chairmanship. "The
pendulum will continue to come back with the new chairmen."

The selection of the Ways and Means chairman will play a
vital part in that process, not only because of who is selected
but also the tone that party leaders set. The job is vacant
because Archer, who chose to retire, would have been forced out
by term limits that House Republicans imposed on committee
chairmen in 1995.

The House Republican Steering Committee, a 26-member
group that is expected to pay deference to Speaker J. Dennis
Hastert, R-Ill., interviewed prospective committee chairmen in
December and is scheduled to nominate its choices on Jan. 4, the
day after the 107th Congress convenes. This slate of nominees
will then be voted on by the entire House Republican Conference,
whose approval is usually routine. Although active contests have
been under way among prospective chairmen at about 10 House
committees, few have been as intense as the one at Ways and
Means.

Crane of Illinois, the next-senior Republican after
Archer, has sought to emphasize his seniority, his strong
conservative credentials, his ability to be a team player, and
his experience in working across the aisle as chairman of the
Ways and Means Trade Subcommittee. "Republican legislative
success will demand close coordination and cooperation among all
concerned," Crane, who is 70, wrote in a brochure prepared for
his presentation to the Steering Committee.

Although Crane was not available for an interview for
this article, he said earlier in 2000 that he was counting on
support from Hastert, who represents a neighboring district in
suburban Chicago. "Denny believes in seniority," Crane said.
"He's an old-timer who adheres to the rules of the game."

Among the key questions surrounding Crane's bid is the
impact of the monthlong treatment for alcoholism that reduced his
activity in early 2000. Some Republicans remain unconvinced that
Crane is up to the demanding chairmanship. On the other hand, a
relatively weak chairman conceivably would leave Bush and House
Republican leaders-and, perhaps, K Street lobbyists-better
positioned to control Ways and Means.

For his part, the aggressive 59-year-old Thomas makes his
case by pointing to his six years crafting legislation-often with
bipartisan support-as chairman of the Ways and Means Health
Subcommittee and the House Administration Committee. "This is not
a contest when people come in on their resumes," Thomas said.
"Leadership can look at our experiences."

Thomas touts his experience in resolving partisan
conflict on high-profile health care issues. "As a majority, we
addressed issues that we thought were important and we passed
meaningful legislation," he said. Thomas was largely responsible
for bipartisan bills passed in 1999 and 2000 that "gave back"
some payments to hospitals, health plans, and other Medicare
providers that had been cut. He also co-chaired the National
Bipartisan Commission on the Future of Medicare in 1999, during
which time he worked closely with Breaux to produce a Medicare
reform proposal that has set the stage for current discussions.

Although Thomas has a conservative voting record, his
conservatism is not as hard-line as Crane's. Thomas said he feels
"very good" about his chairmanship prospects, and added that
Steering Committee members "know my ability to deliver.... I
don't need to put together a brochure." He has cited a letter to
Hastert signed by 13 Ways and Means Republicans-and verbally
endorsed by others-urging his selection as chairman. As for
criticisms of his sharp tongue and occasional independence,
Thomas responded: "Without intensity and commitment, it's hard to
move legislation."

The dark horse in the race for the Ways and Means
chairmanship is Shaw of Florida, the next-senior Republican after
Crane and Thomas. Unlike his two competitors, who have been
running for the job behind the scenes for more than a year, Shaw,
61, did not announce his bid until after the Nov. 7 election-a
highly competitive re-election contest he barely survived. "I'm
the long shot of the three," Shaw conceded, but he voiced hope
that he would emerge as most members' "second choice."

Shaw, the most moderate of the three candidates, has made
his pitch on the basis of his ability to craft bipartisan
legislation, notably welfare reform in 1996 and the repeal of the
Social Security earnings limit in 2000. "It will be very
important to have a chairman who can work through the process,"
Shaw said in an interview. "If we can get Democratic support in
the House, that will help us in the Senate.... I have the best
record (of the three candidates) in building consensus." Shaw
continues to tout his proposal for Social Security reform, which
he said House Democratic leaders killed in the 106th Congress.

Whoever is chairman will be seated next to the panel's
crafty and veteran ranking member, Rep. Charles B. Rangel, D-
N.Y., who is 70. Although Republicans may not need Rangel's vote
on Ways and Means, where most Democrats are party loyalists,
their dealings with him may be crucial in winning Democratic
votes on the House floor.

Rangel contended that the selection of a Ways and Means
chairman will prove less important for the committee than the
"atmosphere created by" the new President. "Bush knows that a lot
of healing needs to be done," Rangel said. "House Republicans
haven't given a damn about anything other than preserving their
majority.... There are bitter and hurt feelings on both sides. If
they are not dealt with early, the genie can't be put back into
the bottle."

Setting the tone early in 2001 will obviously be a key
goal for Bush and for the leaders of the Finance and Ways and
Means panels. And what happens in those two committees during the
next few months probably will be a good early indicator of the
prospects for future productivity in Washington-and of each
party's chances in the next election.

LOAD-DATE: January 9, 2001

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