Biden’s Tax Hike Push Will Depend on This ‘Insider’s Insider’
(Bloomberg) -- President Joe Biden’s push for the first major federal tax increase since 1993 now rests on the shoulders of Richard Neal.
It’s a career moment that comes full circle for Neal, who chairs the House committee responsible for writing the legislation. He joined the key tax-writing body during the battle for that last wave of increases.
Neal says he learned a key lesson during the 1993 effort: Ensure that the tax increase that you vote for actually gets enacted, or you’re left politically all the more vulnerable, with no result to point to. When he and other House Democrats back then voted for an innovative tax on energy, it ended up dying in the Senate.
“It was this vacuous endeavor,” Neal, 72, recalled in an interview in his office at the U.S. Capitol this month. “We were stuck with a tax-increase vote and no policy achievement.”
The episode serves as background to Neal’s current work figuring out what tax increases he can shepherd through a Democratic caucus that has razor-thin control of the House and Senate. While progressives are determined to boost levies on wealthy Americans and corporations to fund more spending on social programs, moderates, including Senator Joe Manchin of West Virginia, have expressed concerns.
It’s hard to argue that Neal, a 32-year veteran of the House from Massachusetts, isn’t suited to the task. Dubbed “an insider’s insider” by New England’s newspaper of record, the Boston Globe, he has spoken with pride about focusing on committee work and staying out of the limelight -- quoting fellow Bay Stater John McCormack, the House speaker for most of the 1960s: “You never have to explain anything you didn’t say.”
A moderate, he represents a Massachusetts district that extends from Springfield west to the Berkshires and has faced down progressive challengers in the past two primaries. He cites his work with Manchin on pension issues, but he’s also made allies among progressives. He was the first member of Congress to endorse Senator Elizabeth Warren, also from Massachusetts, in her run for the party’s presidential nomination.
“I don’t think he has any enemies,” said Barney Frank, who served with Neal in the House’s Massachusetts delegation for more than two decades.
Frank, who led the House Financial Services Committee before he retired, said of the tax increases: “What’s needed is a bill that gets the votes of Joe Manchin and Kyrsten Sinema in the Senate and that’s then sellable to the more militant left in the House.” Sinema, an Arizona Democrat, is, like Manchin, a moderate in the 50-50 Senate.
“Richie will know how to do that -- he’s got good political judgment, he knows the tax code like the back of his hand and he has credibility with more moderate members,” Frank said.
The process will kick into higher gear on Friday, when the Treasury Department releases the so-called Green Book, a document that will detail the administration’s tax proposals.
Neal already has been making the rounds with colleagues, and his staff have pitched variations on Biden’s tax hikes, which range from a higher top marginal tax on income to a dramatic expansion in the levy on capital gains for America’s rich to a rollback of some of former President Donald Trump’s corporate tax cuts.
Biden has proposed the tax increases to finance some $4 trillion in longer-term economic programs -- including child and earned-income tax credit expansions that Neal’s committee will also oversee.
Those credits are a particular passion for Neal.
“Our economy is premised on the idea that some workers are worthy of ‘perks,’ like paid leave or affordable child care that works for their schedules, while the majority are forced to fend for themselves,” he said in April, when he released his own plan for paid leave, guaranteed access to child care, and permanent worker and family-related refundable tax credits.
Neal worked with Republicans on pandemic-relief bills last year and has teamed up with them on issues including retirement savings and drug pricing initiatives. Kevin Brady of Texas, the lead Republican on House Ways and Means, calls Neal “sincere” and views him as an honest negotiating partner.
But united GOP opposition to higher taxes will make the coming package a Democrat-only affair.
“One of the nice things about the Democratic caucus -- I think there’s about 222, 223 of us -- 222 of them have already offered their tax plans to me,” Neal quipped. “I’m getting a lot of advice on it, but we have to draft a plan that can get a majority in the House.”
Tax bills, according to the Constitution, must originate in the House, and the Ways and Means Committee is the panel in charge of drafting them. It took 26 years of service on the committee before Neal ascended to chairmanship.
Before that, his long tenure had earned him the leadership of both the House delegation from Massachusetts, known as a commonwealth, and that of the broader New England region.
“It’s a role he takes very seriously,” said Lori Trahan, a Massachusetts representative who first met Neal while working as an aide on Capitol Hill in the 1990s. “He is so key in ensuring that the commonwealth continuously punches above our weight in the House of Representatives,” including through ensuring Massachusetts has representation across key committees, she said.
Neal coached Trahan on securing a seat on the influential Energy and Commerce Committee, and used his influence to help get that result, she said. Representatives from across New England, especially newer office-holders, seek out Neal’s guidance on dealing with obstacles or pushing legislation, Trahan said.
Neal brings guest speakers to delegation gatherings, such as a Federal Reserve official, or a recent sit-down with Charlie Baker, the Republican governor of Massachusetts.
Back before the pandemic, the delegation used to frequent a Washington outpost of the Boston-based Legal Sea Foods to meet less formally. During the lockdowns, he stepped up the meetings -- held in virtual form -- for members to compare notes on the needs of constituents as Congress enacted unprecedented assistance packages.
The nine-member delegation has been doing the same with regard to infrastructure, a subject to which Neal brings the perspective of a former mayor. In the 1980s, he oversaw the city of Springfield, a period that included the development of Monarch Place, a commercial-and-retail office tower that’s still the tallest building in the state outside of Boston.
A former history teacher, Neal’s often seen carrying a book, and speaks with colleagues about historical challenges the U.S. has faced and pulled out of. It helps bring perspective to know that “we’ve been here before,” Trahan said. “He uses history sort of as a lens to being optimistic: we have work ahead, for sure, but we are going to get through it.”
As for deal-making, Neal said he learned a lesson from the late, Edward Kennedy, the longtime Massachusetts senator “We don’t turn down a good deal because you can’t get the perfect deal.”
Frank, who also knows something about deals, having marshaled the Dodd-Frank overhaul of financial regulations after the 2008 crisis, said Neal has a powerful impetus behind him in pressing the tax overhaul Biden envisions.
“Covid has changed the political universe,” reversing the Ronald Reagan era of antipathy toward big government in favor of an expanded role for public policy that’s “substantially paid for” through higher taxes, Frank said. “Public opinion is more supportive, or tolerant, of higher taxes than any time I can remember.”
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