For a plan labeled dead on arrival before it had actually arrived, Rep. Dave Camp’s proposal to overhaul the bloated U.S. tax code has caused quite a stir both in Washington and across the country.
The 979-page “discussion draft” put out by the House Ways and Means chairman on Wednesday has little chance of becoming law, with neither party willing to stick its neck out on such a central pocketbook issue, particularly in an election year.
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The fact is, though, that Camp has started a debate that everybody agrees needed to begin, but that nobody else had the guts to initiate.
“The debate about needing to do tax reform is over,” Camp declared on Wednesday at a news conference. “We have already lost a decade, and before we lose a generation, Washington must enact real, meaningful tax reform to get this economy back on track.”
Recognizing that his proposal would trigger howls of protest from various groups seeing pet tax breaks on the chopping block, he said, “You are going to hear a lot about one provision or another provision, or even another provision. But the truth is, people want a simpler, fairer and flatter code.”
It will be an uncomfortable debate for both parties, but more so for Republicans as the proposal came from their side of the aisle. Republicans had planned to coast to victory this fall by avoiding any more fiscal controversies and government crises, but will now have to respond to constituent concerns about the impact of Camp’s plan on their lives.
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Camp, House Speaker John Boehner and a raft of other House and Senate GOP leaders have scrupulously refused until now to point to even one loophole in the federal tax code they would be willing to close, for fear of offending a constituency.
On Wednesday, though, Camp pointed to dozens of tax benefits he would either eliminate entirely or change, including such sacred cows as some personal tax exemptions, interest deductions on home mortgages exceeding $500,000, the Earned Income Tax Credit for the poor, special treatment for investment income, and on and on.
The specificity of his plan left Tax Policy experts, many of whom disagree strongly with some of Camp’s proposals, thrilled about the seriousness of the proposal.
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“Camp deserves a ton of credit,” wrote Howard Gleckman, a resident fellow at the Urban Institute and the editor of the Tax Policy Center’s TaxVox blog. “He’s spent years working on a reform plan. He toured the country promoting the idea and spent countless hours teaching fellow House Republicans what rewriting the code really means.”
Gleckman found plenty to criticize in the proposal, but added, “In the end, the details of Camp’s plan are less important than the fact that he wrote a plan.”
Also thrilled by the plan’s release – though for completely different reasons – were many Democrats, who see Camp’s practically endless list of repealed tax exemptions and credits as a virtual smorgasbord of ingredients for political attack ads during the mid-term elections.
Claiming they had absolutely no opportunity to shape the plan, House Democrats are dismissing it as a partisan broadside at the middle class, and they intend to lash out at it on the campaign trail.
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“It’s a treasure trove” for the Democrats, a senior House Democratic aide told The Fiscal Times. “If you do it in a partisan way, you reap the whirlwind. Camp didn’t have to do it this way. If you put it out in a partisan way, then you better be prepared for a response that’s not all flowers and candy.”
“Frankly, I don’t understand the politics of it,” Rep. Jim McDermott (D-WA), told Politico. “He knows it’s not going anywhere, but it will be used” against his colleagues. “The question will be: Do you support Dave Camp’s bill?”
“This is one step in a long road, and I was a little surprised that the Republican leadership told Camp he could go ahead and unveil this because it’s going to cause heartburn for a lot of Republicans,” said Martin Frost, a lawyer and former Democratic House member and leader from Texas. “It’s a very complicated subject and I don’t think members of Congress want to go on the record on a lot of these provisions that Camp has offered because it will offend a number of their constituents.”
Not everyone was convinced that attacking Republican candidates over a proposal that will likely never even get a vote in the House will be particularly effective.
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“This is just the latest iteration of the Democrats’ spaghetti strategy,” said Andrea Bozek, spokesperson for the National Republican Congressional Committee. “They’re trying to throw any attack at the wall and see if it sticks, but all of the attacks are falling flat.”
Ron Bonjean, a former House GOP communications director and a Washington policy adviser said, “If Republicans don’t distance themselves from the plan, then they are at risk of being attacked by Democrats for threatening its adoption. However, because the plan is only a plan and not likely to be voted on, it would be pretty easy for most Republicans to simply walk away from it.
Even some longtime Democratic operatives are skeptical about possibility of scoring political points on the basis of Camp’s plan.
“I’m sure that some are going to try, but I’m not sure how effective it will be,” said Jim Manley, a former spokesman for Senate Majority Leader Harry Reid. “After all, this isn’t a piece of legislation, just a discussion draft. Very few Republicans even felt the need to respond to it.”
In fact, Democrats really can’t be overly dismissive. Camp spent the better part of two years working closely with former Democratic Senate Finance Committee Chairman Max Baucus in search of a bipartisan approach to tax reform and he enjoys the respect of many of the Democrats on his committee. Moreover, members of both parties acknowledge that there is almost never a good time for tax reform, and at some point someone has try to force the issue.
“We need to be engaged in the big issues of the day, growing the economy, creating jobs, and have specific proposals to do that are what the American people sent us here to do,” Camp told Bloomberg TV's Peter Cook Thursday. “They didn't send us here to warm a chair. So we need to try to make a difference. This is one way to do it and I'm really excited about moving ahead on it.”
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