- The Washington Times - Wednesday, January 3, 2001

One of the most important votes the House of Representatives will take all year will occur tomorrow (Jan. 4), when it decides who will chair the various committees in the 107th Congress. There is an unusual amount of turnover among chairmen this year because Republicans instituted a 6-year term limit for them when they took control in 1994. The most bitterly fought contest is over chairmanship of the powerful Ways and Means Committee.

Historically, the member of the majority party with the most seniority automatically chaired a committee in the House of Representatives. But in 1974, Democrats rejected seniority on their side of the aisle, elevating junior members over more senior ones on some key committees. When Republicans took control, House Speaker Newt Gingrich explicitly rejected seniority as well. For example, he elevated Bob Livingston of Louisiana to chairmanship of the House Appropriations Committee over members with greater seniority.

For this reason, the senior Republican on the Ways and Means Committee, Phil Crane of Illinois, does not have an assured path to the chairmanship. He is being challenged strenuously by a more junior member of that committee, Bill Thomas of California.

A few weeks ago, insiders thought that Thomas had locked up the contest. His strongest argument was that Crane has had a drinking problem, and consequently not been a very effective legislator for some time. Considering the huge importance of the Ways and Means Committee — it oversees all legislation dealing with taxes, trade, Medicare and Social Security — Thomas said that it needed a more vigorous and alert chairman.

Crane responded that he has successfully undergone treatment for his drinking problem, and now abstains from alcohol. Furthermore, he argues that there is an important question of political philosophy involved in the chairmanship fight. Thomas, he says, is a “moderate,” too quick to cut deals and insufficiently willing to stand up for conservative principles. By contrast, Crane has been a “movement conservative” all his life, having once chaired the American Conservative Union. Indeed, he even ran for president in 1980 to the right of Ronald Reagan!

There is no doubt about Crane's intellectual ability. He holds a Ph.D. in history from Indiana University, where he had one of the finest academic records that institution has ever seen. I recall reading his book, “Democrat's Dilemma,” in college, and being very impressed with the depth of his research on how the left captured the Democratic Party.

Among the ways in which Crane has said his leadership would differ from Thomas is in managing Congress' Joint Committee on Taxation (JCT). The chairmen of the House Ways and Means and Senate Finance Committees alternate in chairing this powerful, but virtually unknown agency.

The JCT was established in the 1920s in order to improve coordination between the Ways and Means and Senate Finance Committees on tax legislation. It also provided basic staff support on highly technical aspects of tax law. The staff director of the JCT is one of the two most powerful tax policy officials in Washington, the other being the assistant secretary for tax policy at the Treasury Department.

It is hard to explain to outsiders precisely why the JCT is so powerful. It comes from the massive complexity of the tax law, the extremely high monetary stakes in tax legislative battles, and a virtual monopoly on key information. This last takes the form of revenue estimates and distribution tables. No tax provision can be considered by Congress without an official estimate by the JCT of its impact on federal revenues. Hence, the JCT can often kill a proposal simply by refusing to do an estimate. It is only required to provide them for the chairmen and ranking minority members of the Finance and Ways and Means Committees.

For about 25 years there has been an ongoing debate among economists on the proper method of calculating the revenue effects of tax changes. The JCT historically has used what is called “static scoring,” which means that tax changes are assumed to have no impact on macroeconomic variables such as the gross domestic product, unemployment and inflation. The contrary view is called “dynamic scoring,” and it seeks to incorporate into revenue estimates any impact tax changes might have on the economy.

This obscure controversy has important implications for tax policy, because static scoring tends to make the budgetary cost of tax cuts seem larger than they actually are, and also overstates the revenue that will be raised by tax increases. Thus there is a bias in the JCT methodology against tax cuts and in favor of tax increases.

The ultimate absurdity of the static scoring method was once highlighted by former Senate Finance Committee Chairman Bob Packwood (R-OR), who asked the JCT to score an increase in tax rates to 100 percent. Although common sense tells us that zero revenue would in fact be collected, because no one would work or realize taxable income when it all would be confiscated by the government, the JCT dutifully reported that such a tax change would nevertheless raise considerable revenue.

Past efforts to get the JCT to incorporate dynamic scoring into their methodology have failed, due to resistance by its staff. However, Crane has vowed that he will demand changes in JCT scoring methods once and for all, and fire any staff members who refuse to comply. Thomas has made no similar commitment.

In my opinion, Crane's pledge to get control of the JCT is a sufficient reason for House Republicans to support his elevation to the chairmanship of the Ways and Means Committee. If he does nothing else during his chairmanship, that will be an important legacy which will pay dividends for decades to come.

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