As Speaker, Ryan Could Put Tax Reform Higher on House Agenda

Rep. Kevin Brady

WASHINGTON – If House Ways and Means Committee Chairman Paul Ryan, R-Wis., becomes Speaker of the House, tax reform would become a higher priority in the chamber, tax and municipal bond experts said.

But the timetable almost certainly would not change -- tax reform would still be unlikely until 2017 after the next presidential and congressional elections, they said. The muni market will need to continue to educate Congress about the importance of the tax exemption, they added.

Ryan is believed to be House Republicans’ first choice as a successor to House Speaker John Boehner, R-Ohio, who plans to leave Congress at the end of the month. Colleagues have been pressuring Ryan to take the post ever since his first choice, House Majority Leader Kevin McCarthy, R-Calif., withdrew from consideration.

Late Tuesday, Ryan released a list of conditions that would have to be met for him to become Speaker, including that the House unite behind him. He asked to hear back from House members by the end of the week.

Ryan has been “intellectually committed to the concept of tax reform,” said Micah Green, co-chair of Steptoe & Johnson's government affairs & public policy group. If he were to become Speaker, it would be unlikely that Ryan would put that commitment “on the shelf,” he added.

Howard Gleckman, a senior fellow at the Urban Institute, said that tax reform “can’t be lower on the agenda” than it is under Boehner. When asked by reporters in February 2014 about the expected comprehensive tax reform plan from then-House Ways and Means chairman Dave Camp, R-Mich., Boehner said, “blah, blah, blah, blah.”

If Ryan becomes Speaker and remains in that role in the next Congress, he’ll have a “huge impact on the legislative agenda,” which likely means that tax reform would be on the forefront, said Chuck Samuels, a member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. If tax reform gets a boost, munis are in play, he added.

Susan Collet, president of H Street Capitol Strategies, said Republicans are interested in addressing the “three-legged stool” of tax reform, entitlement reforms and spending cuts, and Ryan is seen as someone who is capable of bringing people together around those issues.

If Ryan becomes Speaker, it will be because he can more greatly unify the party, and a more unified party could be more effective in carrying out its agenda. The muni market will need to make sure Congress knows that “rocking the boat” on munis would hurt infrastructure, shift costs to state and local governments and therefore not help with fiscal reform, Collet said.

Regardless of who is Speaker, changes to munis at the margins are still at risk of being used as an offset in a bill. Nothing about a change in speakership changes the country’s budget challenges and the temptation to attempt to solve budget problems by reaching into someone else’s pocket, said a tax lobbyist who did not want to be named.

Despite Ryan’s interest in tax reform, as Speaker he would still face obstacles to passing legislation in that arena.

Because of the lack of consensus among Republicans and between political parties and because of a lack of time, it’s “so hard to imagine anything happening under any circumstances,” Gleckman said. And Ryan, as Speaker, would be distracted by other issues and wouldn’t have the focus on tax reform that he would have as Ways and Means chairman, Gleckman added.

Frank Shafroth, director of the Center for State and Local Leadership at George Mason University, said that tax reform will be set back because the politics within the Republican Party that led Boehner to resign “are going to overwhelm” Ryan.

As Speaker, Ryan would “have to be a kindergarten teacher over anything else,” Shafroth said. He would have to deal with competing factions in the Republican Party as well as pressing issues such as the debt limit and appropriations.

All House members are up for re-election in November 2016. There will be no serious action on tax reform until after then because no member of Congress will want to do anything that hurts campaign contributions, Shafroth said.

Additionally, there needs to be consensus between Congress and the White House in order to enact tax reform, and that consensus doesn’t exist right now, he said.

Asked who might replace Ryan as Ways and Means chairman, some experts mentioned Reps. Kevin Brady, R-Texas, Pat Tiberi, R-Ohio, and Dave Reichert, R-Wash., as possible candidates. None of these members have been active on munis or taken clear positions on them. Brady, who challenged Ryan for the committee chairmanship last fall, has been a big supporter of the state and local sales tax deduction. Shafroth said Brady may be supportive of munis because his home state of Texas has a lot of infrastructure needs.

Jessica Giroux, general counsel and managing director of federal regulatory policy for the Bond Dealers of America, said that aside from those who have already taken a pro-muni stance, members of Congress aren’t going to take a position on munis early in the tax-reform process to avoid pigeonholing themselves, especially if they’re going to fight for a leadership role.

While it’s positive that no potential Ways and Means chairman is taking a hard-line stance against munis, “we still have our work cut out for us,” Giroux said. BDA and the Municipal Bonds for America coalition have been educating committee members and their staff about munis.

Because House elections are only a year away, a new chairman would have to work on tax reform “underground” to avoid political risk, Shafroth said.

The tax lobbyist said that it will take time for a new chairman to be elected and to establish his staff and priorities. If there was any doubt that tax reform was dead until 2017, a Ryan speakership “absolutely puts the nail in the coffin,” the lobbyist said.

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