Earlier this year, as House Republicans began strategizing for the November elections, conservatives badgered their leaders to unveil a detailed plan to overhaul the U.S. tax code. The GOP has vowed to lop 10 points off the top tax rate, and many House freshmen were eager to make that promise a centerpiece of their first reelection campaigns.
It fell to Rep. Dave Camp (R-Mich.) to convince them that tax reform, like so many things in Washington, is more complicated than it might seem.
In a series of meetings, the chairman of the tax-writing House Ways and Means Committee gently explained that lowering rates would explode the budget deficit unless Republicans also proposed pruning back expensive credits and deductions that benefit millions of ordinary people. The break for home mortgage interest, for example, or the $1,000 child credit. Or that stalwart of GOP orthodoxy, the 15 percent rate for capital gains.
Releasing such a plan in an election year would invite attack by Democrats, Camp said, and could forever poison the well for reform. His reasoning prevailed. And Camp, a low-key 11-term veteran, managed to unite his often impatient caucus behind his own slow but methodical drive to make a landmark revision of the nation’s tax laws a legislative reality, rather than just another campaign talking point.
Now, as Washington bickers over whether to keep existing tax policy a bit longer, Camp is focused on finishing the job. Leaders in both parties say they want 2013 to be the year Congress finally enacts a simpler, fairer tax code. Last week, Camp unveiled legislation laying out his principles for reform and establishing deadlines to force action sometime next summer.
(On Saturday, Camp announced that he had been diagnosed with a form of non-Hodgkins lymphoma, but said it is highly treatable and will have minimal impact on his schedule.)
Analysts predict this tax reform will be much harder than the last major overhaul, under Ronald Reagan in 1986. Then, there was broad agreement to close obvious loopholes that were abused by businesses and investors and use the extra cash to lower rates for individuals. Today, lawmakers confront a code strewn with popular deductions that serve important social goals and powerful interests.
In 1986, “there were giant loopholes that were just ripe for closing,” said Syracuse University economist Leonard Burman, who worked on reform in the Reagan Treasury Department. Today, “there is again a broad perception that the tax system is broken. But people’s ideas about the right kind of tax system vary dramatically.”
Camp and his Senate counterpart, Finance Committee Chairman Max Baucus (D-Mont.), already are confronting some of the thorniest issues: Should the nation subsidize home mortgages, retirement savings and employer-provided health insurance? Should wealthy investors pay lower rates on their income than working people do? Is it fair that half of all households currently owe nothing to the Internal Revenue Service?
Then there’s the politically explosive question of whether to generate extra cash to help rein in the national debt, as Democrats and bipartisan budget experts demand. Most Republicans are hostile to that idea, but Camp has shown some flexibility. Last fall, as a member of the deficit-reduction “supercommittee,” he entered talks with Baucus over a reform plan that would have raised $600 billion over 10 years in exchange for significant reductions in Social Security and Medicare spending.
According to a senior aide involved in the talks, the men broached the sensitive subject of how to sell the plan to their respective parties. To Republicans, they could emphasize that $600 billion in new tax collections would be far less than most other bipartisan deficit-reduction proposals. For Democrats, they could add various fees, interest savings and other provisions to push the total revenue figure closer to $1 trillion.
Meanwhile, Baucus aides became convinced that they could write a tax plan that would generate new revenue from economic growth — the Holy Grail for Republicans. “We’ve done enough to know it will work,” the aide said.
The supercommittee disbanded without agreement. But “we did come close,” Baucus said. That framework is “still kind of alive,” Camp said, continuing under the radar as policymaking otherwise grinds to a halt to await the election outcome on Nov. 6.
“Dave, all he’s looking for is a solution,” Baucus said. “Revenue is obviously a charged issue. And he’s working with that, given his beliefs and the politics of the House. But he’s a pragmatist. He wants solutions.”
‘A results-driven chairman’
As Ways and Means chairman, Camp is among the most powerful men in Washington, with jurisdiction over taxes, Medicare, Social Security — all the hottest buttons in the budget debate. But after more than a year on the job, the relentlessly collegial Midwesterner casts himself as an almost accidental leader, a nose-to-the-grindstone guy who has benefited from policy smarts, faith in his colleagues and the unexpected 2007 retirement of his GOP predecessor on the panel, Rep. Jim McCrery (La.).
“Up until about three years ago,” Camp said over lunch in Washington, “this was not a position I thought of myself in.”
Universally described as “nice,” Camp, 59, is the antithesis of the brash, iron-fisted chairmen of the past. For example, Bill Thomas (R-Calif.), head of the committee from 2001 to 2006, “was a brilliant chairman who managed to accomplish things while irritating almost everyone in the process,” said former Minnesota congressman Vin Weber, whom Camp called a mentor. “Dave has got a different style.”
Mild-mannered and careful in public, Camp is a listener and consensus-builder in private, lawmakers in both parties said, with an ability to cut through bluster and drive toward agreement. Conservatives who might otherwise chafe at his plodding pace appreciate his habit of soliciting their opinions and explaining his tactics. Democrats appreciate his refusal to engage in partisan sniping. When former Ways and Means chairman Charles B. Rangel (D-N.Y.) was censured two years ago for underpaying taxes, Camp called it “a sad day” and mentioned Rangel’s “tremendous record” as a war hero.
But Camp is no pushover.
After McCrery’s retirement, he campaigned aggressively for the Ways and Means post, blowing past a more senior member of the panel after raising nearly $3 million for himself and other GOP candidates in the 2008 cycle, according to data compiled by Opensecrets.org. He is close to House Speaker John A. Boehner (R-Ohio) and Majority leader Eric Cantor (R-Va.), maintaining the trust of both men, aides said, despite their sometimes difficult relationship.
And though House Budget Committee Chairman Paul Ryan (R-Wis.) gets credit for shaping the party’s big-picture vision, Camp is more often the guy in the trenches thrashing out policy — or deciding when to back away. Last spring, when Ryan’s controversial plan to privatize Medicare was under siege, Camp helped quiet the uproar by announcing that his committee would not advance the Medicare plan, which had zero chance of passing anyway.
Camp later held hearings to emphasize the bipartisan roots of the Ryan proposal, laying the groundwork for a more productive debate when the political moment is ripe.
“Dave is a results-driven chairman,” said Cantor, a personal friend. “And he’s been able to navigate all the personalities in a really impressive way.”
In a Congress infamous for gridlock, Camp also has managed to get things done.
In December 2010, as part of a deal to extend the George W. Bush-era tax cuts for two years, he engineered the demise of dozens of temporary tax breaks — a rare achievement his office touted as a first step toward tax reform. Later, he pushed through a trio of free-trade agreements that had languished for years, in part by advancing assistance for trade-displaced workers, a Democratic priority. This year, he helped Boehner back out of a difficult corner that had Republicans blocking extension of a payroll tax cut for nearly every American worker.
All told, Ways and Means has had two dozen bills signed into law under Camp, aides said, more than any other committee in the Republican House.
Cantor predicts that the election will determine the difficulty of Camp’s job going forward. If Republican Mitt Romney wins the White House and the GOP takes control of the Senate, Camp would be free to rewrite the tax code without raising more money. But if Democrats hang on to either base of power, Cantor said, “taxes are going to go up. That’s just reality. . . . And Dave knows very well the challenges we’re going to face.”
Camp says he is ready whatever the outcome. He and his staff have close ties to Romney, a fellow native of Michigan, who is also calling for comprehensive reform. And he meets weekly with Baucus, who shares his desire to enact legacy-making legislation in 2013.
“There are times when issues are ready to be addressed. After 26 years, it’s time to take another look at the code,” Camp said. “If you can get the right policy, it usually has broad appeal. And most members are here because they want to be legislators.”
Laying the groundwork
Even before he took control of Ways and Means last year, Camp was focused on tax reform. As a member of the fiscal commission led by Erskine Bowles and Alan Simpson in 2010, Camp led a working group on taxes with Senate Budget Committee Chairman Kent Conrad (D-N.D.).
Camp declined to support the Bowles-Simpson proposal for stabilizing the national debt. But while his House GOP colleagues cited the plan’s failure to tackle soaring health-care costs, Camp said he was opposed to the recommendation to let tax collections rise to 21 percent of the nation’s economy — “the highest level ever,” Camp said. “I told them early on that was a problem for me.”
Still, Camp said, Bowles-Simpson laid the groundwork for paring back a profusion of tax breaks, known as tax “expenditures,” that cost the Treasury more than $1 trillion a year, and using the extra cash to lower tax rates. That framework is now almost universally embraced. Camp has since added a few specifics.
Tax collections should be permitted to rise, he argues, but only to their historic average — around 19 percent of the economy. That would be less than the 20 percent level the Congressional Budget Office predicts would result from full expiration of the Bush tax cuts. But it is higher than current tax collections, which stand at around 16 percent of GDP.
If that amounts to “raising taxes,” Camp has a ready defense. Ryan, a tea-party hero, has enshrined the 19 percent target in his budget blueprint, known as “A Roadmap for America’s Future,” which has been praised by Romney and twice passed the House. Even anti-tax activist Grover Norquist has given his blessing, aides to Camp said.
“Camp is a great friend of the taxpayer,” Norquist said when asked about it. “He isn’t going to raise taxes.”
Meanwhile, Camp has proposed collapsing the six existing tax brackets, which top out at 35 percent, into two: a 10 percent rate and a 25 percent rate, with the latter applied to both individuals and corporations.
Democrats and many tax experts say that would be impossible to achieve without increasing the deficit or wiping out every deduction in the code. In that case, even with the lower rates, middle-class taxpayers could wind up paying substantially more than they do now.
“He deals basically in generalities,” said Rep. Sander M. Levin (Mich.), senior Democrat on Ways and Means. “The rate is 25 percent, but he doesn’t say what would be eliminated to reach that goal. He doesn’t say that in order to get there you have to eliminate some key provisions for manufacturers in Michigan. He’s never specific.”
Camp says that analysis is wrong. But he acknowledged that the 25 percent rate, while mathematically possible, may not fly politically when lawmakers get down into the weeds. For example, tax breaks for retirement savings, such as 401(k) accounts, rank among the largest tax expenditures. But during a recent hearing, witnesses called by both parties testified that tax policy should encourage people to save even more.
“There’s no question that the debate needs to be what do we want in the code,” Camp said. “And if we want to keep certain things, then our rate is going to be higher.”
Despite his campaign to forge compromise with Democrats, Camp has kept the trust of conservatives. Even those who pressed hardest for quicker action on tax reform declined to criticize his tactics.
Ryan begged off when asked about the disagreement, saying he was late for a House vote.
Rep. Jeb Hensarling (R-Tex.), a supercommittee leader and former chairman of the conservative Republican Study Group, also waved away questions. “Listen, I got lots of confidence and faith in Chairman Camp,” he said. “He’s a smart guy and a personal friend, and I’m going to follow his leadership on this one.”
Nor has Camp drawn any serious challenge back home in Midland, Mich., where he grew up in a big family, met and married his wife, Nancy, and practiced law after college. The sprawling, mostly rural district is conservative but tipped for Obama in 2008, and people there seem less impressed by partisan point-scoring than by civility and good sense.
“If he has to be tough, he can do it. But he’s a gentleman. You don’t hear the nutsy stuff we hear out of Washington coming from David,” said Donna Morris, a retired probate judge who recalls appointing a young Camp to represent abused children. “Everybody likes David. I’ve never heard one person [disparage him]. And, you know, it’s a small enough town. I hear a lot.”
Michigan political analyst Bill Ballenger notes that Camp’s tenure and voting record parallel that of Rep. Fred Upton, another Michigan Republican who chairs an important committee (Energy and Commerce). But while Upton has come under fire from the tea party and faces a serious opponent in the August primary, Camp, as usual, has drawn no Republican challenger and only token Democratic opposition.
“It’s baffling. It really is. Camp is like Teflon,” Ballenger said. “He doesn’t take cheap shots. Doesn’t try to grab headlines. Doesn’t do a thing to get himself in trouble. And he’s able to keep everybody, if not happy, then at least mollified.”
Until now, the highlight of Camp’s long career came in 1996, when he led a brief revolt against Newt Gingrich, then the speaker of the House. Gingrich was angling to force President Bill Clinton to veto welfare-reform legislation. Gingrich sensed a political advantage for Republicans if Clinton killed the bill. But Camp believed it was more important to actually get the measure passed.
Then, he emerged as a hero. This time, his turn in the spotlight may not be so easy.
But Camp said, “I just don’t dwell on” the obstacles. He said he is focused on creating “a process that brings everybody along, and makes sure that we have a bill that will get a political consensus. A majority.
“In order to move anything,” he said, “you have to get a consensus somewhere.”