The Clandestine Congress

by John Lawrence

Occasionally, an idea emanates from the hallowed halls of Congress that is so boneheaded, so insulting, and so at odds with the concept of democratic government that even a thick-skinned Capitol Hill veteran has to gape in amazement.  Surely, no more inane idea has appeared in recent memory (and that is saying a lot) than the Senate Finance Committee’s scheme for developing a “reformed” tax code.

Here’s a word of advice to the uninitiated, fashioned from 38 years on Capitol Hill: when Members of Congress profess that secrecy will enhance the quality of a legislative product, pay careful attention. If that legislation relates to tax policy, be particularly forewarned: evil is threading its way through the corridors of power like the smoky Angel of Death through the Hebrew slave camp in The Ten Commandments.

By all reports, the Congress is working on changing the tax code (I say “changing” rather than “reforming” because, as an historian, the term “reform” typically connotes an intention to making politics more open and equitable).  Several weeks ago, Chairman Max Baucus and senior Republican Orrin Hatch announced their intention to scrap the entire tax code and require senators (and others) to make an affirmative case for adding back specific tax breaks and other expenditures.  

There may never have been a better plan for ensuring that senators will be able to vacuum up crates of campaign money.  This aspect of the Baucus-Hatch strategy means that every single interest must now worm its way into Senate offices to reassert the value of whatever provision of the tax code it cherishes.  I can’t imagine how they might help pry open the doors to those Senate offices, or which interests will find it easier to schedule appointments.

But that wasn’t good enough for Baucus and Hatch, who recently proposed that senators’ specific recommendations for deductions, credits, loopholes and giveaways be kept secret.  For 50 years.  Buried in the National Archives, with each special interest-generated loophole given its own identification number and locked away in tightly restricted servers and impregnable safes.

No chance for special interests to influence the lawmaking process there!  No way constituents or the press could be kept from knowing if a senator is trading off tax proposals for contributors or cronies.  All we need to do is wait until 2064 and hold the rascals accountable.

The author of this plan, Max Baucus, incidentally is the same senator who held up passage of the Fiscal Cliff law last New Year’s Eve by insisting, at the last stages of the negotiations, on a massive and unjustified giveaway for a handful of immensely wealthy constituents.  While most Democrats were content to rescind the Bush tax cut for the wealthy and extend the cuts for the rest of Americans, Baucus demanded that the $10 million threshold for the estate tax not only be continued, but indexed for inflation.  So each year, those with estates worth $10 million will enjoy a cost of living bump in the level at which taxes kick in.  (Incidentally, House Democratic Leader Nancy Pelosi’s effort to secure an identical inflation adjustment for poor, working families claiming the Child Tax Credit was summarily rejected.)

To Baucus and Hatch’s credit, they did not keep their proposal as secret as senators’ tax proposals will be.  A Committee aide sent a memo noting that Baucus and Hatch are going out of their way to “assure their colleagues they will keep the submissions in confidence.”

That same aide reportedly justified the clandestine tax cuts plan by asserting that such a process is “standard operating procedure for sensitive materials, including investigation materials.”  No it isn’t!  I served as staff director for two committees of the House, for a total of nearly 13 years, and I do not recall a single instance where we invoked any such protection for Members offering amendments.  A material’s “sensitive” nature typically relates to its implications for national security or law enforcement, not because its disclosure might embarrass legislators who are fronting for special interests.

In fact, the records of committees, unlike those of personal offices, are considered official public records and are the property of the Archives, not the chairman or individual members of the committee.  This distinction highlights the need for the public to be able to scrutinize the files and correspondence of committees to evaluate how particular provisions of law were fashioned.  The Baucus-Hatch secrecy arrangement would frustrate this goal by disguising the authors  of policy recommendations.

According to The Hill newspaper, Baucus has implied that those senators who participate in the secretive process will have “greater influence” in the design of tax legislation.  Senators, I suppose, should be on notice that those who insist upon offering their amendments publicly, and justifying them to constituents, may incur the wrath, or at least indifference, of the powerful committee chair.  Of course, if some senators do conduct themselves with transparency, as virtually every other committee must, those who choose to take the clandestine route may be judged more skeptically by the public, and with good reason.

To his enormous credit, Sen. Harry Reid, the Majority Leader, has said he will not participate in the surreptitious Baucus/Hatch scheme. “I’m not going to do it,” Reid declared. “I’m not even going to consider it.”

Let’s be clear: tax breaks (or loopholes, to be more pejorative) constitute spending just like appropriations or entitlements.  In all, the tax code contains a trillion dollars worth of tax breaks, some unquestionably good because they reward constructive behavior, many bad because they were enacted as the price some legislator (like Baucus) extracted for a vote on a crucial issue.  In a perfect world, we would start from a completely blank slate and build up the exemptions and breaks from scratch. Capitol Hill is not quite perfect, however, and this approach creates an opportunity to milk lobbyists and contributors desperate to retain their provision in the code.   Add the secrecy overlay Baucus and Hatch propose and you have an almost perfect congressional Petri dish for misbehavior to flourish.

The proposal is especially revealing in what it says about the senators’ view of their constituents right to know.  A quick reading of the historical literature will demonstrate that the Founders believed that the elected representatives of the people should actually be accountable to those they purport to represent.  Voters should be able to evaluate the performance of officeholders based on their votes, on the bills they submit, and the amendments they offer.  A process that is devised to keep knowledge of a legislator’s specific policy proposals and recommendations secret from the electorate is completely antithetical  to the concept of representative government. 

Transparency is especially important in dealing with tax policy, where provisions confer millions and billions of dollars in benefits, often with little fanfare.  Tax writers and lobbyists long ago became adept at writing provisions to camouflage the beneficiaries of a credit or deduction, sometimes referencing only the date on which an unnamed company was incorporated as creating eligibility for a particular benefit.    Tax language, which is designed to be indecipherable to a non-expert, can easily serve the very narrow and lucrative interests of a particular beneficiary, providing windfall benefits or an unfair competitive advantage.  Add Baucus and Hatch’s special sauce – secrecy – and you have one of the best opportunities for inequity and infamy ever conceived, with a total absence of accountability.

So if this “no fingerprints” process is such a stupid idea, where did it come from?  According to one report, the secrecy process was created “to alleviate the concerns of senators.” There’s a surprise: senators don’t want to be held accountable for the tax breaks they promote, or fail to promote.  From such secrecy, we are supposed to believe, will come better, more taxpayer-friendly laws. 

It goes without saying that legislators would love to live in a world where they did not suffer consequences for the votes they cast or the legislation they propose, but such a scheme is simply inconsistent with the most basic concepts of good government.  If you can’t cast an unpopular vote, explain your rationale, and live with the consequences without cringing before an disapproving electorate, you probably are in the wrong business.  Voters cannot make intelligent decisions about candidates if they are kept in the dark about the policies advocated by their representatives.

At least give Baucus and Hatch credit: they have found one way to restore bipartisanship in an age of intemperate interparty conflict.  Not surprisingly, the two senators found common ground with a plan that insulates all senators, enables special interests, and insults taxpayers.  Maybe they think it is necessary to destroy democracy in order to save it.