Policy: Budgets & Deficits

Unlikely GOP tax plan the result of changing politics

By |
Congress,Taxes,Tea Party,David M. Drucker,PennAve,Economy,Dave Camp,Budgets and Deficits,House Republicans,Tax Reform

The tax reform plan from Michigan Rep. Dave Camp was unimaginable as a Republican document just a few years ago, the result of a shifting political landscape that has seen the triumph of President Obama's tax message and the influence of conservative populism.

The House Ways and Means Committee chairman sought a blueprint that was impervious to charges that it would benefit the wealthy and burden the middle class. That was a direct reaction to the beating Republicans took on the issue in the 2012 presidential contest, with Obama's “fairness” pitch to increase taxes on the so-called wealthy resonating better than GOP nominee Mitt Romney's traditional Republican proposal for across-the-board cuts to stimulate economic growth.

Breaking with GOP orthodoxy, Camp also wanted a plan that, while lowering tax rates for all income brackets, received a “revenue neutral” score from Congress' nonpartisan accounting agencies. Camp wanted to avoid potent Democratic attacks that tax cuts increase the deficit and cost Washington money it needs for cherished programs. Republicans had long dismissed the concept of paying for tax cuts on the grounds that they create jobs and boost revenue, while asserting that the government's money belongs to the people and reducing their tax load shouldn't require offsets.

Camp's draft has received perhaps the most attention for proposing to simplify the tax code by scaling back typically politically sacred exemptions, such as the mortgage interest deduction popular with voters and the housing industry. For years, Republicans -- including Camp -- promoted these carve-outs as crucial economic drivers. But in a nod to the Tea Party's sway with House Republicans, Camp was liberated to target a host of breaks the conservative grassroots deride as “crony capitalism.”

“We have to recognize the [political] environment we’re in today, and the fiscal circumstances we’re facing, and take all that into account,” said Rep. Charles Boustany, R-La., a senior member of the Ways and Means Committee who had a hand in writing the Camp plan.

Added one Republican House member, who spoke on condition of anonymity: “When I got here in 2005, under a GOP president and majority in Congress, no one ever said we had to pay for a tax cut.”

Camp wrote his tax reform proposal over a couple of years, working in close consultation with his Democratic counterpart in the Senate, the Finance Committee chairman. In Ways and Means, Camp divided committee members into bipartisan working groups and gave each responsibility for aspects of the tax code overhaul.

As part of managing the drafting process, Camp made a point of gauging the politics of the proposals the committee was considering, via polling and consultations with tax advocacy groups. For instance, Camp has been criticized for proposing changes to the home mortgage deduction. But in the polling he reviewed to test the changes that were included in the draft he released last week, the response was positive.

One survey, conducted by the American Action Network in May, tested “base GOP” House districts, “swing” districts and “lean Democrat” districts and found support for Camp’s mortgage deduction changes, respectively, at 68 percent, 68 percent and 65 percent. The same poll asked likely voters in those districts whether they could support changes to other popular deductions, such as those affecting education costs and state and local taxes, in exchange for cuts to federal income tax rates. Support clocked in at 67 percent, 60 percent and 55 percent, respectively.

Camp wanted his plan to serve as the basis for legislation that could win support in a Republican House, a Democratic Senate and Obama's White House during a period of hypersensitivity about a historically high national debt. That helps explain his emphasis on pushing conservatives' preference for a growth-oriented, flatter, fairer tax code in a way that could not be immediately rejected by the Democrats or spark concerns about busting the deficit.

“The goal was to always try to get Democrats on board and to try to get this done,” said Rep. Devin Nunes, R-Calif., chairman of the Ways and Means trade subcommittee.

Neither Obama nor Senate Majority Leader Harry Reid, D-Nev., has shown any appetite for pursuing Camp's tax overhaul. Add to that House Republican leaders, who are eyeing the 2014 elections and don't want to invite blowback from voters or the GOP's traditional supporters in the business community who could be hurt. Even supportive House Republicans are emphasizing that the proposal is a “discussion draft” to make clear that it's not going anywhere this year.

Yet for a plan designed partly to attract Democratic support, it has received considerable support from the Tea Party-aligned groups, including Club for Growth and Heritage Action for America, that are usually critical of House GOP legislation. According to Congress' nonpartisan Joint Committee on Taxation, Camp's plan would create up to 1.8 million jobs, lighten the average family's tax burden by $1,300 annually and increase the gross domestic product by $3.4 trillion.

The conservative groups’ praise was qualified. But overall they lauded Camp’s draft as a positive step for economic growth, and his willingness to be “bold” and confront “special interests.” That is a result of a shift of the center of gravity among the party’s grassroots since the 2010 Tea Party wave sent so many new Republicans to Congress who were less tied to business and more focused on paring down the debt and reducing the size and scope of government.

“There is an eagerness for the GOP to put their cards on the table, as opposed to running away from their ideas,” said Dan Holler, a spokesman for Heritage Action.

Correction: The original version of this article incorrectly identified the organization that did the polling, due to incorrect information provided to the Washington Examiner. The article has been updated to reflect that American Action Network conducted the polls.

View article comments Leave a comment