Key Treasury Tax Policy Post Loses its Luster as Nomination Languishes in the Senate
Policy + Politics

Key Treasury Tax Policy Post Loses its Luster as Nomination Languishes in the Senate

While he awaits Senate confirmation, acting Treasury assistant secretary for tax policy Michael Mundaca has seen his job dwindle from a meaty policy role to a more technical position

Last fall, President Obama picked Michael F. Mundaca, a talented legal mind and political pragmatist, as assistant treasury secretary for tax policy. Former colleagues praised him as a gifted team builder, and many assumed Mundaca would play a central role in overhauling the tax code.

"His skill set is right in the sweet spot of where the activity is going to be," said Mark Weinberger, global vice chairman at Ernst & Young, who held the same spot during the Bush administration and worked with Mundaca at Ernst & Young.

Yet five months later, Mundaca is still waiting for the Senate to confirm his nomination and the administration's agenda doesn't include broad tax reform.

While he serves as acting assistant secretary and a senior advisor on tax policy at the Treasury, his job has dwindled from the meaty policy role seen in previous administrations to a more technical position of defending and implementing policy decisions that are largely made in the White House, according to Treasury observers.

"He won't be doing the job he would've been doing if he had been there in the 1980s," said Michael Doran, a Georgetown University law professor who overlapped with Mundaca when both worked at the Treasury in the Clinton administration. "Over the last several administrations, the importance of the Office of Tax Policy to the formation of tax policy in the executive branch has been diminishing. Increasingly, it's the White House that makes important decisions on tax policy."

Mundaca's situation illustrates the plight of scores of high-level administration nominees who have faced a daunting vetting process only to then be caught up in a political power struggle between the administration and Republican senators. Last month, the Senate belatedly voted on 27 nominations -- but not Mundaca's -- after Senate Republican leader Mitch McConnell lifted a hold.

More and more, policy makers at the National Economic Council and Office of Management and Budget view Treasury tax officials as number crunchers who can put together talking points to defend the decisions they've already made, according to Doran.

In the Obama administration, that divide has intensified because NEC Director Lawrence H. Summers and OMB Director Peter Orszag both have broad experience with tax issues and have the ear of the president. Even within the Treasury Department, Mundaca takes a backseat to another well-connected heavyweight: Gene Sperling, officially a counselor to Treasury Secretary Timothy Geithner but known as an operator with a direct line to the Oval Office.

That said, Mundaca gets high marks from those who know him for his intellectual heft and ability to navigate the government.

"He's really, really cool under pressure," Doran said. "He manages to keep a very level head, to think clearly and he does not get distracted by the things that would distract other people. ... When someone at the White House is exploding because a proposal is coming back costing much more than they wanted, Michael will be able to absorb that explosion and insulate the staff from it."

Mundaca was born in a Staten Island, N.Y., housing project, while his father, a Chilean immigrant, took night classes at a community college and worked for the U.S. Postal Service. He holds a bachelor's degree from Columbia University and a law degree from the University of California, Berkeley, and is married with two children.

Early in his career, he was an associate at the Sullivan & Cromwell law firm in New York. In 1997, he went to work for the Treasury’s Office of International Tax Council, and later spent five years as an Ernst & Young partner.

In 2007, Mundaca returned to government, as deputy assistant secretary for international tax affairs. In his current position, he faces a jumble of competing priorities and ideas about how to spend the federal government’s ever-dwindling resources.

Those conflicting views were on display in his November confirmation hearing, when he fielded questions ranging from corporate tax rules to Internal Revenue Service penalties for small businesses that fail to report certain transactions.

When pressed by Senate Finance Committee Chairman Max Baucus, D-Mont., about the discrepancy between taxes owed and the revenue collected by Treasury, Mundaca said it was difficult to set a specific target for reducing the gap.

"I know it's difficult but we've got to try. We've got to do something about this," said Baucus, who once held up one of former President George W. Bush's nominees as a means of calling attention to the tax gap.

"Yes, Mr. Chairman, we do," Mundaca said. "I know your committee has a number of ideas about how to address it. We have a number of ideas. I pledge to work with you to address the issue. "

A Treasury spokeswoman declined requests for an interview with Mundaca, citing the pending Senate vote.