Senate Finance Panel Chair Max Baucus to Retire - UPDATED

Senate Finance Committee chairman Max Baucus, D-Mont., announced Tuesday that he will not seek reelection next year.

Baucus, who was first elected to the U.S. Senate in 1978, would face a difficult reelection in the increasingly red Montana.

“Deciding not to run for reelection was an extremely difficult decision,” Baucus said in a release. “I will serve out my term, and then it will be time to go home to Montana. But, I’m not turning out to pasture because there is important work left to do, and I intend to spend the year and a half getting it done.”

Baucus, 71, was instrumental in helping push through President Obama’s 2010 health care overhaul, which likely would have proved controversial in his reelection campaign. This isn’t the first time the top Democrat on the tax writing committee has faced a challenging election, but because he has served on the powerful Senate Finance Committee since 1981, he has been able to raise large sums of money.

In 2008, he raised $12 million from securities and investment firms, which helped him secure his seat in Congress. Federal election campaign reports indicate that he currently he has raised nearly $5 million.

Baucus is one of 35 Senators up for reelection in 2014. Twenty-one of the 35 are Democrats. He will likely be succeeded by former Democratic Montana governor Brian Schweitzer, several media outlets reported.

Baucus has been working with House Ways and Means Committee chairman Rep. Dave Camp, R-Mich., on comprehensive tax reform. Last month Baucus released a white paper detailing plans for developing tax reform proposals.

“I’m ready to roll up my sleeves and get to work,” he said in the release.

Camp said that he looks forward to continuing work to fix the tax code with Baucus until he retires.

“Max has made clear that his commitment to comprehensive tax reform that lowers rates and makes the code simpler and fairer for our families and job creators remains a top priority,” Camp said. “I couldn’t agree more and I share his vision for enacting real tax reform this Congress.”

While Baucus said that he will work on simplifying and improving the tax code, tackle the nation’s federal debt and expand affordable health care for Americans at the national level, he also said he would “double down on legislation” that directly benefits Montana.

That could imply that he might put tax reform on the back burner, said a source who did not want to be identified.

“If Baucus was embracing tax reform as a revenue raiser to reflect the consensus of the Democratic caucus and not his own personal beliefs, then his decision might free him to more actively work with Republicans on a revenue neutral tax reform plan,” the source said.

But several Washington observers view Baucus’ retirement as an indication that he will aggressively push for tax reform before leaving the Senate.

Micah Green, a partner with Patton Boggs LLP, said Baucus will “no doubt view his desire for tax reform with greater urgency, given his now, self-imposed time limit with the announcement of his retirement.”

“The combination of the time limits that both chairman Camp and now chairman Baucus have to deal with can be expected to manifest itself in such leadership by both chairmen,” Green said. “So tax reform, although not a certainty, is definitely not dead because of chairman Baucus’ announcement today.”

If Democrats maintain control of the Senate in 2014, it will be another Democrat who takes the helm at the Senate Finance Committee and Sen. Ron Wyden, D-Ore., would be next in line to take over as chairman since Sen. Jay Rockefeller, D-W.Va., has said he will retire next year.

However, if Republicans take back the Senate in 2014, ranking member Sen. Orrin Hatch, R-Utah., would be in line to become chairman of the committee. Hatch called Baucus’ retirement a “real blow to the Senate” and said he will miss his leadership.

Wyden is “daddy tax credit” so if Democrats were to retain control, he would be much more amenable to proposing tax credits, said Matt Fabian, Municipal Market Advisor managing director, adding,  “Tax credit financing would have a better chance at advancing in the Senate with Wyden as chairman of the Finance Committee.” 

Wyden has proposed transportation and regional infrastructure project, or TRIP bonds, which would be traditional tax credit bonds issued through state infrastructure banks.

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