Video: Rep. Rangel steps down from tax committee

updated 3/4/2010 12:47:39 PM ET 2010-03-04T17:47:39

Rep. Sander Levin of Michigan took over Thursday as chairman of the powerful tax-writing House Ways and Means Committee Thursday after Democrats decided they wanted a consensus builder rather than a firebrand going into the midterm elections.

Levin, a liberal, replaces Rep. Charles Rangel, D-N.Y., who stepped aside Wednesday while the House ethics committee continues to investigate his fundraising and finances after concluding last week that he violated House rules forbidding lawmakers from taking trips paid by corporate sponsors.

Rep. Fortney "Pete" Stark, D-Calif., was next in line for the post and held it a day, until Democrats decided they didn't want one of their most confrontational members — Stark once accused Republicans of wanting to send troops to Iraq "to get their heads blown off for the amusement of the president" — in such a high-profile job when their party already is under assault from voters.

The Ways and Means Committee is arguably the most powerful and influential in Congress. It originates all tax laws and has jurisdiction over trade, Social Security and benefit programs that pay about half the cost of Americans' health care.

In choosing Levin, Democrats went with a soft-spoken leader whom Democrats hope will help move them past Rangel's ethics problems and provide a steady hand as Congress tries to pass a health care bill this month.

Once health care is addressed, Levin will have to turn his attention to billions of dollars in tax cuts set to expire at the end of the year — a thorny issue that will only get more complicated and politically charged as congressional elections approach in November.

Levin, 78, represents an auto industry district outside Detroit and is the Democrats' foremost expert on trade, an issue that has been on the back burner since President Barack Obama took office. He gives up his chairmanship of the Ways and Means subcommittee on trade to head the full committee. His younger brother by three years, Sen. Carl Levin, also a Michigan Democrat, is chairman of the Senate Armed Services Committee.

Levin said he hopes to work on health care, economic development and job creation. On the latter, Obama has wanted more focus on giving businesses tax incentives to increase their payrolls, an approach rejected by many Democrats in the House. In his new role, Levin could help bridge that gap.

But the biggest issue that he and perhaps the entire Congress face once health care is out of the way will be the billions in tax cuts initiated by former President George W. Bush in 2001 and 2003 that expire at the end of this year.

If Congress doesn't act, taxes at every income level would increase, with the top income tax rate rising from 35 percent to 39.6 percent. The top capital gains tax rate would rise from 15 percent to 20 percent and the top tax rate on dividends would increase from 15 percent to 39.6 percent. The $1,000 child tax credit would be reduced to $500.

Obama has said he wants to extend most of the tax cuts, allowing taxes to increase only on individuals making more than $200,000 a year and couples making more than $250,000. Republicans argue that increasing taxes on high earners would hurt small businesses.

Democrats on the committee were still trying to get used to Levin as chairman on Thursday, saying the future was uncertain for big issues like trade and tax reform.

"What we need to do is to take the temperature of what's happened in the committee and at least proceed with some discussions and give the interim chairman some room to make some suggestions," said Rep. Richard Neal of Massachusetts, a senior Democrat on the committee.

Image: Sander Levin, Timothy Giethner
Jonathan Ernst  /  Reuters
Levin, left, talks with U.S. Treasury Secretary Timothy Geithner, center, in Washington Wednesday.

Levin, first elected in 1982, is in his 14th term. He will serve as the committee's acting chairman until Rangel's ethics case is resolved or a new Congress convenes next year.

The ethics committee admonished Rangel last week for breaking House rules by accepting corporate-financed travel. He has called his exile temporary, but he still faces inquiries over late payment of income taxes on a rental villa he owns in the Dominican Republic, his use of House stationery to solicit corporate donations to an educational institution that bears his name and belated disclosure of hundreds of thousands of dollars in previously unlisted wealth.

Rangel, who has said he didn't want his ethics case to damage fellow Democrats, said of Levin, "It's the best thing for the country, the Congress and the committee under the circumstances. I love him. He's good. He's thorough. He's got a reputation, and he'll do us well."

Levin told reporters: "I think you know my close relationship with Charlie. At this point, I'm acting chairman."

Stark stepped aside Thursday, saying he wanted to keep his chairmanship of the Ways and Means subcommittee on health, a position he would have had to give up if he had taken over the full committee.

The chairmanship then fell to Levin who is the next most senior Democrat.

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