December 19, 2013

Baucus’ Departure Leaves Looming Questions

Becky Weber, Keith Smith

It was very big news yesterday to learn that Senator Max Baucus (D-MT), current Chairman of the Senate Finance Committee, would be nominated to be Ambassador to China. Being a long-time member of the Senate, his confirmation is virtually assured and he will be leaving the Senate as soon as February. The likely candidate to replace him at Finance is Senator Ron Wyden (D-OR). Senator Jay Rockefeller (D-WV) is more senior, but he has already announced he is not running for re-election, would only have the post for about 10 months and has stated he is happy staying at the helm of the Senate Commerce, Science and Transportation Committee. We believe Wyden will become the next Chairman of Finance, just a bit earlier, as he was already the favorite if Democrats hold onto the Senate in the 2014 elections.

Baucus and his counterpart in the House, Chairman Camp (R-MI) have been working seriously together on tax reform over the last two years, so Baucus’ departure in the middle of that effort will certainly complicate the prospects for this effort next year. However, it is likely to bring legislation on tax extenders closer in early 2014.  Just this morning, Senate Democrats tried to bring up a tax extenders bill on the Senate floor by unanimous consent but Republicans objected. Senator Hatch (R-UT), Ranking Member on the Finance Committee said:  “With regard to tax extenders, Finance Committee staff, from both parties, have, in just the past few days, started the process of developing tax extenders legislation.”  Watch for a potential colloquy between Senator Baucus and Majority Leader Reid on a commitment to do tax extenders before Baucus leaves for China.

Wyden is not known to be as generally pro-business as Baucus, and will not necessarily embrace all of Baucus’ significant tax work to date. Wyden will be particularly interested in the energy tax incentive issues relating to alternative fuel and energy sources. While he has worked across the aisle on a number of bipartisan budget and tax proposals in the past, how well he will work with Chairman Camp remains to be seen. How the change will impact the “Doc Fix” deal worked out between Baucus and Camp also remains unknown. In addition, Ways and Means Republican Members have been withholding introduction of their various tax bills at their Chairman’s request. With prospects for Senate action on tax reform growing more distant, we think pressure will continue to build on Camp to allow Members to introduce and promote their bills and pursue a tax extenders package early in 2014.

The departure also creates a musical chairs scenario on other key Committees. If Wyden takes the helm of Finance, he will give up chairing the Energy and Natural Resources Committee. That would put Senator Landrieu (D-LA) next in line as head of Energy. Landrieu is a much more moderate, pro-big oil Senator, who is facing a tough election. With this move, Landrieu would give up chairing the Small Business and Entrepreneurship Committee, with Senator Cantwell (D-WA) as her likely successor.