Treasury Transition Won't Impact Tax Policy
When word surfaced Wednesday that
Treasury
Secretary
Robert Rubin
would announce his resignation, supporters of broad-based tax cuts had a brief glimmer of hope. Rubin, a backer of
President Clinton's
targeted tax policies, was a huge roadblock for these groups.
But the optimism died when it was announced that Deputy Secretary
Lawrence Summers
would take Rubin's spot. "So much for that. It's business as usual," says Pete Sepp, vice president of communications for the
National Taxpayers Union
in Washington, a non-profit advocacy group that pushes for lower taxes. Both Rubin and Summers are very much in step with the Clinton administration's belief that tax relief should be "modest and targeted" to lower-income workers, says Sepp.
Tax-policy specialists at the major accounting firms agree that Rubin's departure will not cause any sudden shift in tax policy. Even though Rubin is perceived as God-like on the international finance front, he really didn't have much of an effect on tax policy, notes Tom Ochsenschlager, a tax partner at
Grant Thorton
in Washington. "Rubin has never really been down in the trenches on lots of tax issues," he says.
Summers, on the other hand, has been "very involved and interested in tax" policy, says Clint Stretch, director of tax policy at
TheStreet Recommends
Deloitte & Touche
in Washington. "He definitely was much more interested in tax issues than Rubin."
Summers has been the point man for Donald Lubick, assistant secretary for tax policy. He "has been their access to the front office when they need the attention of top guy," says Stretch.
But now that Summers
is
the top guy, it will be harder to get his attention, says Stretch. "His new positions will take him away from tax issues."
But while tax policy wasn't always on Rubin's front burner, he still had the stature to sell the Clinton's administration's policies to the business community, even when those policies weren't welcomed. And in that regard, Summers is no Rubin. Businessmen "got comfort because
Rubin came out of the corporate community," notes Stretch.
For Summers, a former
Harvard
professor, it will be a harder sell. "It's like someone who has never been a reporter going to your editor saying you did something wrong," says Stretch.
In addition, Summers is inheriting some unfinished business in the banking industry, says Gene O'Kelly, vice chairman and head of
KPMG's
financial services practice. The decision as to which division of the government should regulate the banking industry is on the table. Fed Chairman Alan Greenspan, naturally, believes the Fed should be in control, while Rubin wants the office of the comptroller, a part of Treasury, to regulate the industry.
Rubin's departure could potentially delay this decision, says O'Kelly. "Congress will be more leery now because Summers is not as experienced in the issues."
No matter who is at the helm, don't expect to see any major tax changes for the rest of the Clinton tenure, says Bob McIntyre, director of the
Citizens for Tax Justice
, a Washington-based tax advocacy organization. As the newly appointed Treasury secretary, it will take Summers some time to develop any kind of political muscle.
By that time, the 2000 presidential election will put tax legislation on hold until the next Congress. So it's status quo in the tax policy world.
