Grassley Seeks Democrats’ Help on Taxes

Posted February 19, 2007 at 1:48pm

In a role reversal, Senate Finance ranking member Chuck Grassley (R-Iowa) has warned that he may block a House-Senate conference on the minimum-wage bill unless he is assured his Democratic colleagues will join him in demanding inclusion of a sizable tax-cut package.

“The contours of the deal should be known if details can’t be,” a Grassley aide said of his insistence that Democrats agree to pursue a small-business tax package that is much larger than the $1.4 billion House-passed proposal.

When they were in the minority, Democrats threatened to block House-Senate conferences on a variety of bills, charging that the Republican majority would shut them out of the process and produce final legislation with no Democratic input.

Anticipating criticism from Democrats, the Grassley aide pointed out that Republicans agreed to “pre-conference” a large corporate tax package in the 109th Congress — assuring Senate Democrats, for example, that the measure would be revenue-neutral, among other things. Once they secured those promises, Democrats finally allowed the measure to be sent to conference with the House. Before that, Senate Democrats had blocked three votes to end debate on the motion to appoint conferees, the aide said.

This time, Grassley is hoping for a similar outcome for himself. The Senate-passed minimum-wage bill included a much more robust $8.3 billion small-business tax-cut package, but in a Democratic-controlled House-Senate legislative conference, Grassley is concerned that the Senate package could be whittled significantly or eliminated entirely, considering that House Democratic leaders originally balked at coupling their minimum-wage increase bill with small-business tax cuts.

Mindful that Grassley could lead a potential filibuster of one of the Democrats’ top legislative priorities, Senate Majority Leader Harry Reid (D-Nev.) has not ruled out the idea of pre-conferencing the minimum-wage-hike bill, and he has been talking actively with Republicans on how to proceed to conference, said Reid spokesman Jim Manley. Reid has said he does not believe a minimum-wage bill could receive Senate approval without a package of small-business tax breaks.

It remains unclear where Senate Finance Chairman Max Baucus (D-Mont.) stands on the question of reaching a deal with Grassley on the scope of the bill before a formal House-Senate conference is convened. A Baucus spokeswoman would not speak directly to the notion of pre-conferencing the bill but said, “Chairman Baucus is going to work with all his colleagues — Senate and House — to craft final legislation that can move through the Senate and get a minimum wage increase.”

House Ways and Means Chairman Charlie Rangel (D-N.Y.) likely will react coolly to Grassley’s gambit, given that Rangel generated the smaller House tax package only under pressure from House Democratic leaders after vigorously arguing that majorities in both chambers would support a “clean” minimum-wage increase.

Even after drafting his tax bill, Rangel accused Grassley of “hold[ing] the minimum wage bill hostage unless we passed $8 billion in tax cuts for business. … If they would remove the threat of filibuster, it would pass both houses without the $8 billion tax cut.” Rangel made the comments Feb. 15 on PBS’ “NewsHour with Jim Lehrer.”

A Rangel spokesman would say only, “He believes that [they] can figure it out in conference.”

Senate Republicans are wary of the political and public relations pitfalls of appearing to block completion of a minimum-wage bill, if they back Grassley in any floor fight.

GOP Senators are still feeling the sting of being blamed for the impasse over that chamber’s Iraq debate, several Republican sources said.

“For Republicans to hold together … there also has to be some political pressure to counter what the press is writing,” said one Senate tax aide. “The merits of what [Republicans] are fighting for just aren’t getting reported.”

The aide added, that “Republican Senators need a sense of how it’s going to play out” if they vote to block conferees.

In addition, lobbyists for small businesses and restaurants need to “step up and keep the heat on Republicans and Democrats to pass tax cuts. … They could be a very powerful grass-roots force,” the aide said.

Given the gamesmanship over the bill, “Republicans need to sit down and figure out where their guys are on the House [tax] bill,” said one source who closely follows the House and Senate tax-writing committees.

Because Republican intransigence on the minimum-wage issue was used successfully against many GOP incumbents in the 2006 elections, politically vulnerable Republicans may feel pressure to accept the smaller House tax package just to get the issue off the front pages, the source noted.

However, the source doubted enough GOP Senators would be susceptible to splitting with the party to reach the filibuster-breaking 60-vote threshold.

The Republican “leadership assumes that maybe five or six would be for the House bill, but not 10,” the source said.