The Phantom Tax Bill

Sen. Charles Grassley last Tuesday cavalierly rejected a summons to meet in the Oval Office with George W. Bush about tax legislation. Grassley, Senate Finance Committee chairman, said he could not make it because of visiting constituents from back home in Iowa. The real reason is that Grassley is playing his own game on tax legislation without interference from anybody, even the president.

Grassley did not want to attend partly because House Ways and Means Committee Chairman Bill Thomas would be there, and Grassley cherishes any day he avoids being in the same room as Thomas. But Grassley has blocked the tax bill extending dividend and capital gains tax cuts that is essential to the economy. Until now, he has held it hostage for a "second bill" on taxes containing unknown private deals cut by Grassley with other senators.

In short, high-priority tax legislation is delayed by a phantom bill. While lobbyist reform legislation extols transparency, tax legislation is kept secret — from the public and press, and also individual members of Congress. The contents of the second bill have been locked in the recesses of Chuck Grassley’s mind.

Grassley arrived in the Senate 26 years ago describing himself as "just a hog farmer from New Hartford," a straight-dealing Iowa conservative. But long years walking the paths of power changes even hog farmers. In last week’s Senate consideration of emergency appropriations, Grassley did not join 21 economy-minded Republicans who voted against the pork-filled bill that President Bush has warned he will veto.

Grassley also has been engaged in fierce personal conflict with his House counterpart. Thomas, a former college professor, comes over as smarter and quicker than Grassley in personal encounters. Grassley is reportedly concerned that Thomas is mocking him. Apart from disliking Thomas, there are other reasons why Grassley avoids sitting across from the Ways and Means chairman. Thomas is a world-class negotiator, and Grassley would rather move independently on his own agenda.

The tax bill vital to investors is ready for final action under the "reconciliation" procedure that requires only a simple majority in the Senate and does not permit a filibuster. But the Senate-House conference report needs Grassley’s signature, and he has declined so far to give it. He has not even attended meetings discussing it. Before he rejected the Oval Office invitation, he did not show for an 8:30 p.m. meeting in Speaker Dennis Hastert’s office. The word on Capitol Hill late Friday was that Grassley might finally sign the report and permit floor action this week, suggesting a secret deal struck on the second bill.

While Grassley is mum on the record, he has made clear he insists the second bill be ready for passage. Grassley declined to discuss the issue, and it was impossible for me to find what is in this measure. The capital’s most astute tax lobbyists are equally uninformed. Even influential members of Congress are kept in the dark. Only Grassley knows.

The "second bill" is described in the news media as containing routine extenders of tax benefits, but it is surely more than that. The assumption on Capitol Hill is that Grassley has made specially tailored promises to individual senators to get enough votes for the tax reconciliation bill. If so, these tax goodies will have to be compensated for in the same bill by revenue raisers. Any lethal combination of tax pork and tax increases would naturally be concealed as long as possible.

Grassley’s critics among reform-minded Republicans refer to tax pork in the second bill, but they cannot be sure about something that is hidden. It is impossible to conduct a meaningful debate on a phantom bill, and that is precisely the way Grassley has constructed the situation.

May 13 marks the 49th anniversary of my arrival in Washington as a reporter for The Associated Press. In 1957, tax bills were written behind closed doors, but nearly everything done was soon made public. In 2006, the tax-writing sessions are open to the public, but what is really being done is a mystery even to members of Congress. As a result, economically beneficial legislation was held up at one senator’s fancy.