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A placebo that’s good medicine. (Dan Rostenkowski, House Committee on Ways and Means, miscellaneous tax measures)(Washington Watch) (Column)

The Bond Buyer July 20, 1992 | Ferris, Craig T.

WASHINGTON – It’s getting to be a habit, and it may not be a bad one.

Two years ago Rep. Dan Rostenkowski, D-Ill., the chairman of the House Ways and Means Committee, gave his panel members an apparent political placebo by allowing them to try to draft a miscellaneous tax bill containing 198 of the members’ pet amendments. see here christmas tree tax

That “wish list” plan, which contained several measures long sought by the municipal market to simplify and ease the arbitrage provisions in the Tax Reform Act of 1986, never cleared the panel because it stood no chance of enactment by Congress amid the 1990 battle over a budget agreement.

The work on the bill appeared to be a cosmetic exercise designed only to allow committee members to offer their pet proposals so that they could tell constituents and lobbyists that they had tried to get the items enacted.

Rep. Rostenkowski came up with a similar “feel good” measure this year when he allowed the committee to draft and approve over a dozen individual tax measures 10 days ago that have virtually no chance of passing Congress this year.

These include three narrow-interest bond measured for New York City, Texas, and St. Paul – blatant examples of the so-called rifle shots that Mr. Rostenkowski has vowed not to allow into any tax measure – plus a plan to exempt bonds issued for high-speed rail projects from the private-activity volume cap.

This time, however, the panel approved the measures, sending them as separate bills to the full House. But all of them may end up in the legislative waste can because they will go to the House floor under rules that require a two-thirds majority vote for passage.

Even if the measures survive that test, they are likely to die on the Senate side, where any attempt to include them in the urban aid tax measure might touch off a rush to erect a Christmas tree tax bill that would topple under its own weight.

On the surface, the “go nowhere” proposals the panel drafted in 1990 and again 10 days ago appear to be little more than a charade. see here christmas tree tax

But there may be a method in this madness.

The bond simplification proposal pushed by Rep. Beryl Anthony, D-Ark., may not have gone anywhere in 1990, but they got much-needed publicity and crucial exposure in Congress.

As a result, several of those simplification proposals, including one to increase from $5 million to $10 million the small-issuer exemption from the arbitrage rebate requirement, were included in the urban aid bill passed by the House earlier this month and now appear likely to be adopted by the Senate.

Whether any of the latest bond items approved by the House panel ever become reality is up in the air.

But if the process means a good idea eventually catches on, then the charade will have been worth it.

Ferris, Craig T.