In His Own Words

The following are edited excerpts from an October 30 interview with House Ways and Means Committee Chairman Charles Rangel, D-N.Y. NJ: Tax reform is hard, isn't it? Rangel: Of course it is. The way not to do it is to do nothing. That's clear. The criticism doesn't bother me at all. As a matter of fact, I welcome it. People who criticize will have to identify the area where people will pay more taxes [the high-income brackets]. I welcome that. This [tax reform proposal] is establishing the debate and begging the administration to come forward. When they do, they would validate large parts of my bill that are unpopular [with Republicans] because it increases taxes on people who are getting unfair advantages in the [tax] code. I will force them to come forward. If they believe that people can take billions of dollars and invest it offshore and avoid paying United States taxes, let them step up. If they believe that corporations should get better treatment for investing abroad instead of investing here, let them step up. I agree with the president that people know what to do with their money better than does the government. But that doesn't mean that you have to be rich to know what to do with it. Damn it to hell. Give a hand with the standard deduction. Remove a large part of your gross income from taxable income, so that you have a breather before you get into taxes. Or if you are still below the poverty level, have an Earned Income Tax Credit. NJ: So you are not waiting until 2009 to pursue tax reform? Rangel: I am too old to wait until 2009. I wouldn't think that it would be easier [with a Democratic president]. I hope that if 90 million people want their tax cut now, what would stop me? NJ: Do you view tax reform as your legacy? Rangel: Hell, no. It's important. But if the country is on life support, I want to live. If I could stop the [Iraq] war, that would be my priority. If everyone could have health care and a place to live, that would be a priority. My legacy is to take advantage of my chairmanship, and to challenge people whom I couldn't previously see on a regular basis in the past [in the minority]. It never entered my mind that I would have a wish list other than playing my role, and making this a better committee and a better Congress and a better country. If I had a wish list, I wish that we wouldn't have this war, loss of life, and loss of revenue, and the budget crunch that I am under. I wish that my country would not be so aggressive in projecting our values on Castro [in Cuba], on Chavez [in Venezuela], and on Iraqis, Iranians. I wish that the State Department would play a more important role in that area. NJ: As chairman, have you been able to play a more important role in dealing with those issues? Rangel: No, unfortunately. The Democratic-controlled Congress has been a big disappointment to people who thought that we could make dramatic changes as it relates to the war. NJ: Has it been a disappointment to you? Rangel: Yes. NJ: Is the problem with the Senate and the president? Rangel: You don't blame the administration. They have been honest in their need to expand the war, and completely disregarding the death toll [and other aspects of the war]. They keep this away from Americans. [I blame] the fact that [congressional] Republicans are lockstep in support of the war. The fact that the Senate Democratic leadership seeks bipartisanship rather than filibusters. I would like to see more filibusters. You can't hide behind a filibuster. You have to stand up, and there is no compromise with a filibuster. Bipartisan agreements [in the Senate] mean that no matter what we do in the House, a handful of people in the Senate really make the laws. NJ: What has been the significance that you are an African-American chairing the most important House committee? Does it matter? Rangel: God damn, it really doesn't make a difference. I do know that there is a sense in my community that they have supported me, and I am doing something for them. To that extent, it's OK. But you can only demonstrate power when you have the votes. That means consensus, and that means the sharing of whatever political power that is. I admit that I get some satisfaction vicariously from African-Americans. I was in South Carolina recently, and a guy brought me his grandson and said he was so excited to have the kid shake the hand of the chairman of the powerful Ways and Means Committee. And the kid grabbed my hand and asked, 'What was the Ways and Means Committee?' And the grandfather said, 'I don't know, but it's awesome.' So, [the chairmanship] doesn't add anything to my quality of life. As I wrote in my book, I haven't had a bad day. They just get better.

By Richard E. Cohen, National Journal
© National Journal Group Inc.
Friday, Nov. 2, 2007

When House Ways and Means Committee Chairman Charles Rangel, D-N.Y., unveiled his $1.3 trillion tax reform proposal on October 25, it was widely seen as a resounding salvo in the 2008 election campaign. Although legislative action isn't expected any time soon on the sweeping proposal, it will be a focus of Democratic discussion -- and Republican potshots -- for the next 12 months in the presidential and congressional races and in the halls of the Capitol. But Rangel wasn't looking only to jump-start a political debate or to lay the groundwork for potential policy changes in 2009. He was also making a major bid to burnish his legacy as the chairman of what many have considered Congress's most powerful committee.

"Ninety million people are going to get a tax cut," Rangel boldly vowed in introducing his plan. "It has been more than 21 years since Congress and the administration rolled up their sleeves to discuss tax reform, and during that time the tax code has become a jumbled mess of outdated and inequitable provisions that cry out for simplification."

Rangel's long-promised "mother of all tax reforms" would fundamentally shift the burden from the middle class to the wealthy. Senior House Republicans instantly denounced the plan as the "mother of all tax hikes." But whether they agree or disagree with the proposal, members of both parties gave Rangel credit for meeting the expectation that the Ways and Means chairman should play the leading role on tax policy.

Rangel has laid out a program that "Democratic candidates will be talking about," said Rep. Joseph Crowley, D-N.Y., a chief deputy majority whip. "His plan is smart politically as well as fiscally." Rep. Artur Davis, D-Ala., a leader of the centrist New Democrats, lauded Rangel for "a responsible and progressive bill that promotes economic growth." The shrewdness of the chairman's bill, Davis added, is that "it moves Democrats toward tax relief for the middle class [at a time when] the Bush tax policies have not been good for wage earners."

Rep. Paul Ryan, R-Wis., the ranking member on the House Budget Committee, also praised Rangel. "Charlie Rangel should be commended for being bold," he said. "I disagree with the substance. But I applaud the chairman for stepping outside the box with civil debate.... I have great respect for him as a dedicated public servant who fights for his beliefs."

At age 77, Rangel often mentions that the clock is running on his chairmanship and that he is eager to make deals. "Charlie has a limited number of years, and he wants to get things done," said former Rep. Bill Archer, R-Texas, who chaired Ways and Means from 1995 to 2000 and now is a senior policy analyst with the Washington office of PricewaterhouseCoopers. "Charlie came in hoping to get something done, and without a veto. I appreciate that he is a creature of Ways and Means and that he wants to protect its prerogatives.... But [tax reform] is such a daunting task. It will be so exceedingly difficult to fix it."

Rangel, in fact, has racked up only limited legislative accomplishments during his nearly yearlong tenure as chairman. He has had to cope with the bitter residue from years of intense partisan warfare at Ways and Means. Although he has promoted a more bipartisan atmosphere, the committee took some time to get fully up and running.

Moreover, Rangel has had to operate within a new kind of Democratic regime in which committee chairmen are no longer the autocratic barons that they were during the party's previous, 40-year House reign. Speaker Nancy Pelosi, D-Calif., has carefully monitored his tax plans, as she has done with the major initiatives of other chairmen. Her tight control has challenged the long-standing tradition of highly autonomous Ways and Means chairmen.

Ways and Means ranking member Jim McCrery, R-La., with whom Rangel has developed a notably close relationship, acknowledged the constraints that his colleague faces. "Charlie is well-intentioned, and he wants to think about tax policy. But to some extent, he is captive to Democratic Party thinking," McCrery said. Another committee Republican, who did not want to be named, said, "Charlie wants to do the right thing on every issue. But it seems that he wants to do X, and the Democratic leadership wants to do Y."

"I respect Charlie as a savvy politician," said Rep. Tom Reynolds, R-N.Y., who sits on Ways and Means and relishes his connection with Rangel through the old-school New York State Assembly, where they both served. "But this is a different style than when Bill Thomas, Bill Archer, or Dan Rostenkowski was chairman. When they spoke, you could take it to the bank. That's no longer the case."

In an October 30 interview with National Journal, Rangel disputed the notion that Pelosi has clipped his wings, and he called her "100 percent supportive" on his tax reform effort. "I could never expect more cooperation from any speaker than I get from Nancy Pelosi," he said. "I can't blame her for what we were working on [on the House floor]. If you want me to say that I wish that we could have done it earlier in the year ... yes, but we had a lot of things to do. That's not her fault. She knew what I was doing, and she encouraged us."

In response to a fusillade of GOP criticism over his tax plan, Rangel remained upbeat -- and even encouraged. "At the end of the day, I don't see how anyone could be opposed to it," he said. "Until the president proposes something, [Republicans] welcome the opportunity to allow the [Bush] tax cuts, the unfair distribution of tax benefits.... The middle class hasn't received the benefits of the Bush tax cuts."

"I am so pleased that the [Republican] critics have painted such a broad brush that I can now ask, 'Who are these people who you claim are getting a tax hike?' " Rangel said. "All that I am doing is leveling the field."

Beyond whatever happens down the road to his broad tax reform plan -- and his legacy -- Rangel has an immediate problem to resolve, one that poses perhaps the biggest challenge of his chairmanship to date. Congress faces intense pressure within the next few weeks to pass a stopgap measure revising the alternative minimum tax to prevent nearly 19 million additional taxpayers from becoming subject to its provisions for this year's taxes.

Democrats have delayed action because of several controversies, not least of which is the question of whether their "pay-as-you-go" budget rules should apply, as Pelosi and House Majority Leader Steny Hoyer, D-Md., have insisted. During their 2006 campaign, House Democrats vowed to adhere to "paygo," which requires budgetary offsets for any new entitlement spending or tax cuts. The rules were formally reinstated in the budget resolution conference report that both chambers adopted in May.

The one-year AMT fix could cost about $50 billion, and Rangel -- while professing loyalty to the budget rules -- has made comments to reporters that have left doubts about his true commitment. In the interview with NJ, Rangel acknowledged that the AMT presents a thorny problem for Democrats, and he said he has been holding meetings "every day" on the issue, including with Pelosi and Senate Finance Committee Chairman Max Baucus, D-Mont., to try to resolve it. "The dispute we have on the so-called patch ... is going to be a confrontation," he said. "It's going to be a serious difference of opinion over paygo issues."

Peace At 1100 Longworth?
In Rangel's autobiography published earlier this year, And I Haven't Had a Bad Day Since: From the Streets of Harlem to the Halls of Congress, he recounted the legendary independence and iron rule of former Rep. Dan Rostenkowski, D-Ill., the Ways and Means chairman from 1981 to 1994. "Rosty never tired of coming after me about where my loyalties lay, with the committee or the leadership," he wrote.

Even in his book, though, Rangel was circumspect about asserting his own prerogatives. "I'm reluctant to think that I might have to use some of Rosty's more strong-armed tactics to maintain the loyalty of my members," he said. Since he joined the House in 1971, Rangel added, "no one has ever credibly accused me of demagoguery."

Traditionally, Ways and Means has had great influence in the House. It has jurisdiction over all tax and trade issues, plus a significant say on welfare and many health care matters. And, as House members proudly note, the Constitution gives their chamber the sole authority to originate tax bills.

But Pelosi has kept committee power in check since Democrats won the majority. Early on, for instance, she stifled impeachment talk by Judiciary Committee Chairman John Conyers, D-Mich., and she discouraged a turf grab by Energy and Commerce Committee Chairman John Dingell, D-Mich., against Financial Services Committee Chairman Barney Frank, D-Mass. As the year has gone on, Pelosi has closely overseen major legislation, ranging from the State Children's Health Insurance Program expansion to the energy bill. Her imperative is to try to keep her diverse caucus happy -- from liberal old bull committee chairmen to moderate freshmen from GOP-leaning districts -- while also keeping the party agenda moving.

Rangel, for his part, has shown more deference to Pelosi than other Ways and Means Democrats have sometimes expected -- or wished. Jim Jaffe, who was Rostenkowski's longtime spokesman, speculated that Rangel is disadvantaged because he -- like some other current chairmen -- is from an older generation than Pelosi. Compared with Rostenkowski, who was a peer of the party's leaders during his tenure, Jaffe said, "that [age difference] creates a different power relationship. She can wait them out."

Often profiled in the media as an urban pol and stereotyped by foes as a big-spending liberal, Rangel has sought to prove since taking up the gavel that he can deal with all groups -- including congressional Republicans, the Bush administration, and the business community. The search for more collegiality at Ways and Means is a striking contrast to the previous six years under mercurial Chairman Bill Thomas, R-Calif., who before he retired last year was known for his single-minded and often-confrontational approach. In one infamous 2003 incident, Thomas called U.S. Capitol Police to oust Democrats from a committee room.

Democratic members have joked that even rank-and-file Republicans welcomed Rangel's takeover. "Bill Thomas was the only guy in the room, and he wanted everybody to know it," said Rep. Jim McDermott, D-Wash., who chairs the committee's Income Security and Family Support Subcommittee.

These days, Rangel has a relationship with McCrery like he never had with Thomas. "Charlie and I have collaborated on many issues," McCrery said. "We work together when there is an opportunity, as defined by the challenges in our own caucuses, our personal philosophies, and what can be done."

In his interview with NJ, Rangel explained that he launched into bipartisan discussions with McCrery and Treasury Secretary Henry Paulson Jr. after last November's election. "I went to McCrery's office, and I made clear that I was not interested in the histrionics [of Thomas's tenure]. That wasn't helpful for the committee or for the country," Rangel said. He called Paulson "a cut above the normal political appointee. He did not want to have a food fight.... He was looking for middle ground."

The upshot, Rangel said, was that the three agreed that "the AMT should be abolished"; that "there is a need to change the Social Security system," although that's not politically feasible right away; and that "we could find common ground on trade." They decided that "health and Medicare were too complicated," Rangel said, and agreed to hold a committee retreat on those issues next year and to continue discussions.

Rangel conceded he has "not really" tried to do business with President Bush. "It's very interesting how Paulson has insulated me from the entire Cheney-Bush thing," he said. "He's been terrific in making certain that we respect the different branches of government."

With senior Ways and Means Democrats, Rangel tends to be deferential. "Charlie backs the subcommittee chairmen with a light hand," McDermott said. "He uses us as foils. It's like he is driving the Budweiser horses, and he lets us draw the wagons."

McDermott noted, in particular, the lead roles that Health Subcommittee Chairman Pete Stark, D-Calif., has taken on Medicare and the SCHIP bill, and Trade Subcommittee Chairman Sander Levin, D-Mich., has played on trade issues. But in the face of a presidential veto threat, Pelosi largely abandoned Stark's bill during the SCHIP debate in September to embrace the more bipartisan and less costly Senate version of the legislation.

Rangel's first major policy outreach came in May, when he assembled Pelosi, Paulson, senior senators from both sides of the aisle, and others for what Pelosi touted as "a new bipartisan breakthrough for fair trade." Under the deal, the Bush administration agreed to attach environmental and worker protections to several pending trade accords to smooth congressional passage. That trade initiative has since bogged down in the House because of opposition from Democratic free-trade foes, although it has not yet collapsed.

The committee has sent notably few bills to the House floor this year. According to data assembled by GOP aides at the Rules Committee, Ways and Means has moved only four bills of its own; it has worked with other committees on five bills with shared jurisdiction. The Rules panel has acted on several other topics in the jurisdiction of Ways and Means, even though the tax committee itself has not filed the measures.

Ways and Means Democrats dismissed Republican criticisms of the panel's slow pace. "It's a new committee. I would much rather be on the side of doing it right rather than doing it fast," said Rep. Kendrick Meek, D-Fla., one of nine Democrats who joined the panel this year. "Every day we go, the more we learn. What will happen is still a mystery. There are a lot of moving pieces here. And we are in a situation of doing things very differently than the Republicans did."

Without disclosing details, Meek said that Pelosi and Rangel have had "a give-and-take on tax policy." McDermott, who has served on the panel since 1991, likewise said that the speaker and the chairman have had a good working relationship.

"A Ways and Means chairman has a certain amount of bluster or grumbling about a speaker. But a speaker thinks beyond what a Ways and Means chairman wants," McDermott said. "Both Nancy and Charlie are new to this. Charlie is not into confrontations. He's patient and persistent, with inclusiveness. He has that iron ass, and will sit and listen."

'Mother' Or 'Monster MOTH'?
The tax legislation that Rangel unveiled on October 25 was a long time coming. Starting in the spring, he and other Ways and Means Democrats repeatedly issued public promises of tax reform. "Now is the time for a middle-class tax cut," House Democratic Caucus Chairman Rahm Emanuel, D-Ill., a committee member, said in the April 14 weekly Democratic radio address. Two weeks later, the Dow Jones Newswire reported that Rangel wanted the House to consider his reform plan "at the latest, in June." Then in June, when Ways and Means had still not acted, CongressDaily reported that panel members said they expected to file legislation in July.

Various factors were in play as Ways and Means Democrats prepared the bill. Pelosi, for starters, was less focused on sweeping tax issues. And doubts grew among other Democrats -- from politically vulnerable House freshmen to veteran and independent-minded senators -- about tax proposals that might generate Republican attacks.

Rep. Richard Neal, D-Mass., who chairs the Ways and Means Select Revenue Measures Subcommittee, said in an interview that he discussed tax policy options in Hoyer's Capitol office in April and May with about 150 House Democrats, in separate groups of 10 to 20 members, and with Rangel presiding.

"Not anyone said they were opposed," Neal said. "I told Steny that we should do a tax bill" before the House took up other legislation, such as the energy and farm bills, which had their own revenue add-ons. At the same time, Neal said, he recognized the importance of building caucus-wide support. "If you centralize authority in the speaker's office, it's harder to get consensus," he said. "But it's also harder to get members to support legislation if it's not going to pass."

In early October, Pelosi told reporters that action on broad tax reform would require discussions in the Democratic Caucus. Then finally, a few weeks later, Rangel had his rollout in the House Radio-Television Correspondents' Gallery. The chairman, who appeared alone before about two dozen reporters, didn't need any notes.

Rangel said his plan would restore "equity and fairness" to the tax code by shifting more of the burden to the rich. He said that the proposal would cut taxes for 90 million taxpayers by repealing the AMT, increasing the standard deduction, and boosting the Earned Income Tax Credit. But much of the benefit of the AMT repeal would be taken back for wealthier taxpayers through a surtax of 4 percent on incomes of at least $200,000 for married couples, and 4.6 percent on couples' income over $500,000.

Rangel also proposed to cut the top corporate tax rate from 35 percent to 30.5 percent. In exchange, businesses would lose some of their targeted benefits, including foreign tax credits and a specialized accounting method. "We also close loopholes that cause disparity," he said.

Rangel pledged that his package is "entirely revenue-neutral." To meet the Democrats' paygo rules, he said, one major offset should come from taxing the earnings, or "carried interest," of hedge-fund and private equity-fund managers as ordinary income, rather than continuing the "unfair and unwarranted benefit" of taxing their earnings at the 15 percent capital-gains rate.

Ways and Means Democrats termed the proposal a political 10-strike. "We are trying to reduce the squeeze that many people feel from rising energy costs, health costs, and education costs," said Rep. Chris Van Hollen, D-Md., who chairs the Democratic Congressional Campaign Committee. "I don't know why Republicans are not interested in providing tax relief to more than 90 million American families."

Pelosi was more circumspect in October 25 comments to reporters. She responded "no" when asked if Democratic leaders endorsed Rangel's specific proposal, but she embraced its principles and said that the caucus will discuss it.

Speaking in the same studio less than an hour after Rangel's presentation, House GOP leaders reacted as though they had received an early Christmas present. "The last thing the American people need is to be paying higher tax bills," said Minority Leader John Boehner, R-Ohio. Politically, said Minority Whip Roy Blunt, R-Mo., "it's a great plan for us and a bad plan for them. We know now what happens" if Democrats win the 2008 election. Reynolds, a former chairman of the National Republican Congressional Committee, called Rangel's proposal "Monster MOTH," playing off the acronym for "mother of all tax hikes."

McCrery contended that Rangel was able to call his proposal revenue-neutral only by using the Congressional Budget Office baseline figure, which assumes the expiration in 2010 of Bush's 2001 and 2003 tax cuts and, therefore, translates into "huge tax increases."

Although Rangel's proposal is certain to generate debate next year and probably beyond, it's not clear whether and when the House will move on it. At his October 25 session with reporters, Rangel cited the lack of "landing room" on the House floor this year but said he expects House debate and action on his plan next spring. He added, with a chuckle, "I am willing to work with any president, no matter who she is."

For the most part, the Democratic presidential candidates have had little to say about comprehensive tax reform or how they would handle the 2010 expiration of Bush's tax cuts. Asked about Rangel's plan at the candidates' October 30 debate, Sen. Hillary Rodham Clinton, D-N.Y., called herself "a great admirer of Chairman Rangel," who has endorsed her, and added that he is "very courageous in moving forward." Clinton said she is particularly "in favor of doing something about the AMT.... How we put the package together everybody knows is extremely complicated. It's not going to happen while George Bush is president." But pressed on whether she'll campaign on Rangel's proposal, she replied, "No, no. That's Charlie Rangel's plan. And, as I say, I support and admire his willingness to take this on."

Rangel allies want Democrats to turn up the volume on tax reform. "We have reclaimed the mantle of fiscal responsibility, as Republicans have abandoned it with the costs of the Iraq war, the fact that they don't care about middle-class tax relief, and their indifference to their notions of government responsibility, notably earmarks," Davis said. "The Democratic Caucus needs to harp on what our bill will do. It will resonate with the American people."

"We must make sure that we tell our story," Meek added. "The presidential election will set the tone of policies for the masses, not the few." And Crowley contended, "I want to be on the side of the 90 percent who will pay less taxes. This is not at the expense of the wealthy. It's at the expense of the mega-wealthy, who will pay more. Democratic candidates will be talking about this."

Republicans are skeptical that Democrats will seek a House debate next year that focuses on tax specifics. Chief Deputy Minority Whip Eric Cantor, R-Va., an outspoken foe of proposals to raise taxes on hedge-fund managers, said that Democrats "missed an opportunity to start over with taxes" and instead "are going back to the 1970s and big taxes." Rangel's proposal, with the high political decibel levels already surrounding it, he added, is "the precursor of what 2008 will be about."

The AMT Time Bomb
Here and now, Rangel is under the gun to produce a short-term AMT patch, or his party could risk a sharp public backlash come April 15. The alternative minimum tax, enacted in 1982 and revised in the 1986 tax reform law, initially covered a relative handful of wealthy taxpayers who might otherwise escape taxation because they make heavy use of tax breaks. But without congressional action, the number of Americans who must pay the AMT is projected to jump from about 4 million in the 2006 tax year to 23 million in the 2007 tax year.

The Treasury increasingly relies on AMT revenues, which grew from $1 billion in 1988 to $19.8 billion in 2006, according to the Joint Taxation Committee. If the law, which Congress has amended several times in the past two decades, is not revised again in the next few weeks, the report estimated, taxpayers will pay $65.8 billion in AMT for the 2007 tax year.

The Treasury Department has already complained about the tardy congressional response. In an October 23 letter to Capitol Hill, Paulson warned that Congress must make the AMT changes by early November so that the Internal Revenue Service can properly adjust tax forms. Otherwise, he raised the specter of chaos, and suggested that as many as 50 million taxpayers could see their 2007 tax refunds delayed.

It is not unusual for Congress to extend temporary tax breaks late in the year. But the Joint Tax study reported that since 2001, the four AMT "patches" were each enacted more than six months before the end of the tax year. McCrery and Senate Finance Committee ranking member Charles Grassley, R-Iowa, have lambasted the Democrats' delay. "We are looking at a filing fiasco in April," Grassley warned.

Behind the scenes, Democrats have been grappling for months with the problem, and emotions are running high. Davis, of the New Democrats, emphasized the need for fiscal discipline, and he praised party leaders for their consistent support for offsetting the cost of the AMT fix under the paygo rule. Senate Budget Committee Chairman Kent Conrad, D-N.D., a staunch budget hawk, declared in an impassioned October 18 floor statement, "The notion that we eliminate the alternative minimum tax and not pay for it I find breathtaking." He called it "wildly irresponsible" for colleagues to suggest that the AMT rollback and other tax cuts should not be paid for.

Rangel's tax reform proposal included a $47 billion, one-year fix to shield taxpayers from the AMT in 2007 and about $21 billion to extend expiring tax provisions for one year. To pay for the short-term legislation, he would raise tax rates on hedge-fund managers' profits, or "carried interest," and curtail their ability to defer offshore compensation. Ways and Means was scheduled to mark up the temporary AMT patch on November 1.

Rangel has acknowledged that his offsets might be unpopular in the Senate, where aides say that the plan has little chance of garnering 60 votes. Reflecting worries on Wall Street, Senate Democratic Conference Vice Chairman Charles Schumer, D-N.Y., and Sen. John Kerry, D-Mass., have voiced reservations about raising taxes on carried interest. Baucus's intentions on paygo had been ambiguous. But on October 25, he said that the AMT legislation will be offset. "We'll find a way to pay for it," Baucus told CongressDaily. "We have a whole long list of loophole closers to pay for it."

Republicans did not offset the AMT patches they made when they were in the majority. As McCrery has said, "The fix is not a new tax cut, it is preventing a tax increase." Nevertheless, Republicans are relishing the Democratic divisions over the issue. "They are flirting with disaster because they have waited so long to even attempt" to resolve the problem, said House Republican Conference Chairman Adam Putnam, R-Fla. "I am curious to see how they pay for it," Putnam added, "or if they justify abandoning" their budget rules.

Although aides expect that Congress will ultimately resolve the AMT issue before closing up shop this year, some predict that the controversy will linger into December. Expect plenty of Christmastime mudslinging, in what likely will foreshadow a nasty partisan fight over tax policy in 2008 and beyond.

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