Caucus Split on Tax Plan

Democrats Wary of Hike

Posted July 17, 2007 at 6:30pm

House Democrats are set to launch their first significant attempt to raise taxes, but the idea is already dividing the Caucus and seems headed for a presidential veto.

Republicans have argued for months that Democrats were planning a tax-and-spend binge, despite Democratic protestations to the contrary. But with a 61-cents-a-pack cigarette tax proposed in the Senate to pay for children’s health care and a similar plan being floated in the House, Democrats are finding resistance among conservatives in their own party who are concerned about raising any tax and others concerned in particular about such a large hike to the tobacco tax.

“I think 61 cents is far beyond the pale,” House Majority Whip James Clyburn (D-S.C.) said of the package proposed by a bipartisan group of Senators.

Clyburn predicted at a U.S. Chamber of Commerce breakfast Tuesday that many Southern Democrats would have a problem with an increase that large. Clyburn said he could support a smaller hike but said tobacco shouldn’t shoulder the whole burden for expanding the State Children’s Health Insurance Program. “There’s got to be some shared sacrifice,” he said.

Rep. Jim Cooper (D-Tenn.), a fiscally conservative Blue Dog, said he’s very troubled by the idea of any tax hike. “I don’t think Democrats should mention the T-word for two or three years,” he said.

But Ways and Means Chairman Charlie Rangel (D-N.Y.) said he has floated to leadership a 61-cent cigarette levy as part of a broader $100 billion-plus health package that would provide $50 billion for SCHIP, $35 billion to prevent a scheduled cut to Medicare payments to doctors, $15 billion for health programs for low-income seniors and $5 billion for rural health care.

But Rangel added, “There is nothing set in stone.”

Rep. Henry Waxman (D-Calif.) said the tobacco tax hike in the House probably would end up somewhat smaller than the Senate package, but he said he supports it, noting that a tobacco tax was part of the package to fund the original SCHIP program.

House Budget Chairman John Spratt (D-S.C.) said he and Clyburn were trying to come up with an alternative that would result in a significantly smaller tax hike.

Clyburn added that the Senate plan failed to cover enough children and suggested the five-year reauthorization be trimmed to three years in an effort to free up money to cover more children.

A House GOP leadership aide took aim at the Democrats’ plans.

“I find it ironic that the Democrats’ first step toward government-run health care is going to be taken on the backs of the disadvantaged people they claim to want to help,” the aide said. “Between the tobacco tax and the Medicare Advantage cuts, low-income families are going to be the ones paying for middle-class health care.”

Democrats have a sense of urgency to pass the SCHIP package given that the program is set to expire Sept. 30, and they met Tuesday as a Caucus to discuss the legislation. In addition to the tobacco tax debate, some lawmakers have raised concerns about plans to slice billions in subsidies for the privately run Medicare Advantage program, which Rangel said would provide much of the savings needed to fund the bill.

Rep. Artur Davis (D-Ala.) said cuts to Medicare Advantage probably would hurt his district in the short run, but he told the Caucus the paramount issue was that Democrats stayed united.

“I think this Caucus is going to be unified,” he predicted.

The Senate Finance proposal already has seen a presidential veto threat. The Bush administration has argued the plan would unnecessarily expand government-run health care and objected to the tobacco tax.

Davis, however, ripped the veto threat.

“If the president vetoes a bill and the result is that children lose health care, it will be as irresponsible an act as he’s committed in his tenure,” Davis said.

On a separate legislative front, Clyburn said Tuesday that the House energy package announced before the July Fourth recess might not reach the House floor before the August recess.

“I don’t think we should rush this legislation out there to meet a deadline,” Clyburn said, adding that he was concerned about the potential for a floor fight over vehicle mileage standards unless they can reach a consensus.

House Majority Leader Steny Hoyer (D-Md.) predicted that at least a bill containing tax-related energy measures would move before the August recess. “I expect to do that before we leave,” he said.

It’s also unclear just how many bills the energy package will end up being.

“It may be in two bills, it may be more,” Hoyer said.

Rep. Ed Markey (D-Mass.), who has advocated swift action on vehicle mileage standards, said he’ll be comfortable with whatever Speaker Nancy Pelosi (D-Calif.) decides to do.

“I’m going to leave it to the Speaker to make that decision,” Markey said. “I know she’s working very hard on it.”

A separate energy package is planned by Energy and Commerce Chairman John Dingell (D-Mich.) this fall, including increases to vehicle mileage standards and other controversial issues, although Pelosi has been under increasing pressure to act sooner.

Rep. Rick Boucher (D-Va.), chairman of the Energy and Commerce Subcommittee on Energy and Air Quality, said that second package would be ready by early October.

“Whatever schedule she decides for these two bills is fine with me,” Boucher said. “She has a lot of things to weigh.”