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GOP Went Big With Tax Deal

Ryan's influence was felt on the tax deal. (Tom Williams/CQ Roll Call)
Ryan’s influence was felt on the tax deal. (Tom Williams/CQ Roll Call)

Big is the word that can best be used to describe the tax extenders package the House will vote on Thursday: big in policy, big in cost, big compared to past efforts and a big win for Republicans.

Lawmakers have not passed a significant tax bill since the 2012 fiscal cliff deal that staved off massive tax hikes. Since then, Republicans have expressed interest in making moves on taxes, but little happened until retiring Ways and Means Chairman Dave Camp, R-Mich., released his plan. After it failed to gain traction, Camp brokered a deal last year with then-Senate Majority Leader Harry Reid to make 10 expiring tax provisions permanent, but the White House threatened to veto the package before it was finalized.

When the tax extenders bill was released late Tuesday, it called for the permanent renewal of 22 tax breaks and several other sweeteners. In doing so, it also provided a down payment on a more ambitious overhaul of the tax code, a priority for Speaker Paul D. Ryan, R-Wis., who started off the year in his dream job by replacing Camp as head of the House tax-writing panel.

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“I think this is one of the biggest steps toward a rewrite of our tax code that we have made in many years,” Ryan said Wednesday. “It will help us start a pro-growth bold tax reform agenda in 2016.”

That’s what Camp had intended, albeit later than planned. “The legislative process is for the persistent; sometimes it takes a while for ideas to take root and flourish,” Camp said in an interview with Roll Call. “We did have a bipartisan legislative agreement last year, so they were able to build on that this year.”

Ryan’s imprint is undoubtedly found in the deal. When he started the year as Ways and Means chairman, it was with the goal of starting the tax code re-write, and the extenders package was to be a big part of that. Although the other major element, a rewrite of international tax rules, never came together — partially because Ryan was thrust into the speaker’s office — the Wisconsin Republican obviously sees the year-end tax package as a major victory.

To begin the process, the House passed a handful of bills earlier this year to renew nearly a dozen provisions, such as the research and development credit, small business expensing, and the state and local sales tax deduction. Those bills, members said at the time, were markers for what they would be seeking in year-end negotiations.

But the final deal includes much more than what was in those bills — several provisions sought by Democrats, as well as Republicans. Overall, though, the package is a big win for the GOP.

“We weren’t optimistic that we could get all these provisions made permanent,” Ways and Means Tax Policy Subcommittee Chairman Charles Boustany Jr., R-La., told Roll Call. “We were hoping to get just a couple. Everybody did a wonderful job in negotiating this package.”

Although the extenders package is expected to pass the House Thursday with some Democratic support, many House Democrats oppose the measure because of its $622 billion price tag and several giveaways to Republicans.

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“I think it gives too much on balance overall,” Ways and Means ranking member Sander M. Levin, D-Mich., said.

Democrats won permanent expansions of the child and earned income tax credits, as well as a permanent credit for higher education expenses. Those provisions, which were first enacted in the 2009 stimulus bill and not scheduled to expire until the end of 2017, were key to buying support from the White House and Senate Democrats.

Some House Democrats may also support the measure despite the opposition from their leadership. House Minority Leader Nancy Pelosi, D-Calif., on Wednesday called the extenders package “practically an immorality.” Last week, she spoke at length about her opposition, saying she didn’t even want to be in the loop on the discussions.

The negotiations were led by bicameral committee and leadership staff, with members offering frequent input, Boustany said, calling it “a team effort.”

One of the lead negotiators, Ways and Means chief tax counsel George Callas, has worked on the effort from the beginning, starting with Camp, then Ryan and now Chairman Kevin Brady. Callas was also representing leadership’s interests, as he will soon rejoin his former boss in the speaker’s office.

Camp said the deal will be helpful as talks begin next year on more ambitious legislation.

“This is really a down payment on tax reform,” Camp said.

The multibillion-dollar cost of the extenders bill is money Republicans won’t have to spend as part of that effort. Camp said having those extra dollars to work with on his revenue-neutral plan “would’ve helped a lot.”

Republicans will feel more empowered in their tax negotiations next year, Rep. Dave Reichert, R-Wash., predicted. “We have an opportunity here to, I think, be a little bit more confident and aggressive.”

The extenders package stands in stark contrast to the omnibus, where Ryan did not have as much leverage to negotiate, Boustany said.

“The extenders shows what can happen when we do have leverage,” he said, “and we got a really good package.”

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