Effort to reform IRS loses steam in Senate GOP dawdled on bill, now must share credit

May 03, 1998|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- On the second day of the second round of incendiary hearings on the Internal Revenue Service last week, the witness list promised to please a crowd: Three honest taxpayers were to detail how gun-wielding IRS agents had attacked them.

Inside a cavernous Senate chamber reserved for occasions sure to attract a crowd, long tables had been set aside for the press. Yet only half the seats were filled. And though the tales of IRS hubris and incompetence were as compelling as those spun during jaw-dropping hearings in September, Capitol Hill was remarkably subdued.

By the time the hearings came to a quiet end Friday, Democrats -- and even some Republicans -- were marveling at how Republicans had apparently fumbled an issue that that had seemed a sure-fire way for them to win the hearts of an IRS-hating public in an election year.

"I'll try to be diplomatic," grumbled Rep. Rob Portman, the Ohio Republican who drove IRS reform legislation through the House in October only to see it stall in the Senate. "I wish we'd finished this [legislation] a lot sooner."

The Senate is expected to pass a sweeping overhaul of IRS management and oversight this week. But the fervor over the issue has dimmed significantly since a Republican-led push for IRS reform took the capital by storm last year. Now, some Republicans say, they may well have to share credit with Democrats for the passage of legislation.

"We don't feel like we lost this issue completely, but we're certainly striking while the iron isn't quite as hot," conceded Terry Holt, a spokesman for the House Republican Conference. "You can draw something out excessively."

Last September's Senate hearings -- and the furor they incited -- had caught Democrats in Congress and the White House by surprise, knocking even the sure-footed President Clinton back on his heels.

With House Democrats abandoning Clinton's position in droves, White House advisers dispatched a reluctant Treasury Secretary Robert E. Rubin to Capitol Hill on Oct. 21 to abruptly announce the president's support for an IRS bill that the White House had previously denounced as a dangerous way to give big business influence over tax policy. The bill would pass the House by an overwhelming 426-4.

For Democrats, it was a humiliating setback, for Republicans a rare triumph. Congress was about to pass popular legislation with little fear that Clinton could take the credit.

But when Senate leaders announced that they would take their time with the bill, Portman bet House leaders that Clinton would not only claim credit for the bill but also beat up Republicans for dragging their feet on it.

Sure enough, at his State of the Union address, Clinton exploited the delay: "Like every taxpayer, I am outraged by the reports of abuses by the IRS," he intoned. "We need new citizen advocacy panels, a stronger taxpayer advocate, phone lines open 24 hours a day, relief for innocent taxpayers. Tonight, I challenge the Senate as your first order of business, pass our bipartisan package of IRS reforms -- now."

Within days, Senate Democrats audaciously threatened to attach the IRS bill to other legislation in order to speed passage, claiming the reform mantle for themselves. They even took to ridiculing Republicans for stalling action.

This week the Senate is likely to pass its bill to create an independent IRS oversight board, improve worker training, give top managers more control, strengthen the agency's taxpayer advocate and give taxpayers new rights, including the ability to sue the agency for wrongful audits.

"The Senate guys have their heads stuck in the sand if they think they're getting a gold star for this now," fumed a House Republican aide who worked on the bill. "The Republicans really missed an opportunity here."

Once-silent Democrats have found a voice on the issue, seeking to take credit for the legislation while also tarring the hearings as political overkill. Where last year they barely raised a peep at the hearings, this time Democrats complained that the proceedings were one-sided, that the audience was not allowed to hear the IRS' side of the tales of abuse, and that a defanged tax collector would encourage tax cheats, saddling honest citizens with a larger share of the tax burden.

Confident that they had established their bona fides as IRS reformers, Democrats had decided they could also stick up for those taxpayers who feared that a drumbeat of IRS bashing might encourage tax scofflaws.

Senate Democratic Leader Tom Daschle was emboldened to denounce "the tyranny of the committee" for withholding the hearings' witness lists and testimony until just before the curtain raised. He even asserted that Republicans were "afraid someone will find out some of these witnesses are not that credible."

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