The Sleeper of the Senate

At 3:45 P.M. on the first day of the Democratic National Convention, Max Baucus, arguably the most consequential legislator in America, is not preparing for his big speech. In fact, he won't be giving a speech. Nor is he holding court in one of the Pepsi Center's sumptuously appointed luxury boxes. Rather, he's a good 40-minute hike up Denver's main drag, camped out in the back room of a dank little bar called City Grille ("Good Value. American Food. Great Place."). His aides are folded into the booths, swirling the melting ice in their glasses. I'm in the bar for 10 minutes before I even know they're there.

Baucus is chairman of the Senate Finance Committee. Staffers like to say that the committee is responsible for all the money the government raises and half of what it spends -- and that's not too far from the truth. It is the only Senate committee able to construct new funding streams, which gives it incredible authority over the country's social-policy architecture. It has control over taxes and trade, Social Security and Medicare, health reform and unemployment benefits. Even a carbon-pricing bill would probably need its sign-off. "Everyone in Congress always worries they'll end up on the Subcommittee for Acoustics and Ventilation," jokes Sen. Ron Wyden, a Finance Committee member. "The Senate Finance Committee is the opposite. It's the forum where the biggest financial decisions of our day come, and we have to figure [out] how to tackle them."

For that reason, the leadership of the Finance Committee has traditionally produced legislative giants. Russell Long. Bob Dole. Bob Packwood. Lloyd Bentsen. Daniel Patrick Moynihan. These men were darlings of the Sunday talk shows. They rivaled the power of the majority and minority leaders of the Senate, and they were tapped to fill presidential tickets. Max Baucus, however, is not a giant. He is a polite man with sensible silver glasses and a gentle handshake. He is roundabout in conversation, and punctuates his points by raising his eyebrows and smiling slightly, as if pleading with you to agree with him. He has served five terms as a senator from Montana, a state with one of the smallest populations in the union. Insofar as he has any national profile at all, it's as a Democratic apostate. He partnered with Republican Chuck Grassley to craft President George W. Bush's first tax cut and angered the Democratic leadership by refusing to consult them before the bill's markup. He further infuriated his party by helping Republicans pass the Medicare prescription-drug bill even after they had locked the Democratic leadership out of conference committee. He voted for the 2005 bankruptcy bill. For his sins, The Nation has branded him "K Street's Favorite Democrat." This magazine termed him "Bad Max." The New Republic editorialized that he should be stripped of his chairmanship.

These are all facts about Baucus. But these are also facts: In 2005, when Bush seemed all but politically invincible, Harry Reid put Baucus in charge of the Democratic effort to block Social Security privatization. Baucus creamed Bush. Privatization never even came up for a vote. In July, the Senate was gridlocked over how to trim Medicare spending. Inaction would have triggered an automatic 10.6 percent pay cut to doctors and likely have caused many to stop treating Medicare patients, throwing the program into crisis. Democrats sought to slash reimbursements to private insurance companies that were charging 120 percent more per beneficiary than Medicare. The fix was blocked, in part by Grassley, the ranking Republican on the Finance Committee and Baucus' good friend. So Baucus cut Grassley out of the process, taking the bill directly to the floor and setting the stage for Sen. Ted Kennedy's dramatic return to the Senate, where he cast the decisive vote.

This is the uncomfortable reality that will face the next administration. While most reformers have been obsessed with the policy details of the presidential campaign -- health-care mandates or simple subsidies? tax cuts or credits? -- much of the success of the next president's agenda will, in truth, rely on the actions of one of the most experienced, inscrutable, and unpredictable politicians in the country. Over the next two years, Max Baucus could prove a progressive legislative giant. Or he could be Bad Max.


What so unnerves most observers is that Baucus is not a creature they easily recognize. If he were a self-interested dealmaker like Alaska's Ted Stevens or a raw opportunist like former Sen. John Breaux, dealing with him would involve nothing more than an assessment of his interests. If he were an impassioned crusader -- even in the wrong direction -- that would at least be a familiar archetype. But if Baucus is impassioned, he keeps it to himself. In this, he maps easily onto the culture of his committee, which is not traditionally friendly terrain for ideologues. Rather, it has housed many of the Senate's most famous moderates and amassed a reputation as a bipartisan redoubt within an increasingly polarized Senate. "We were there to represent a national constituency," recalls former Sen. Dave Durenberger, who served on Finance from 1978 to 1994. "The agenda was just too big, the jurisdiction too broad, and the agenda was too heavy for one party to carry."

Baucus is, in many ways, a throwback to this lost era of bipartisan civility. Like Durenberger, he arrived on the Finance Committee in 1978, when it was chaired by the legendary Russell Long (when Republicans took control in 1981, Bob Dole, the new chair, quipped: "So who's going to tell Russell Long?"), and served among moderate dealmakers like John Chaffee and Lloyd Bentsen. This bipartisan tradition is why, though the committee has not proved immune to the polarizing trends that have seized Congress, it remains a relatively functional institution.

But the committee's bipartisanship is the result of more than simple high-mindedness. The reality is it cannot indulge gridlock. Elsewhere in the Senate, the battles are over new legislation. If bills are killed, the downside is that something doesn't happen, and no one really notices. But the Finance Committee deals in mandatory money, expirations, and reauthorizations. These are bills that must be passed. If they fail, something stops happening -- say, 35 million children get kicked off the State Children's Health Insurance Program -- and the voters cry out.

Moreover, on Finance, progress is often profitable. Elsewhere in Congress, there's a certain political logic compelling the minority to obstruct legislative progress. Doing nothing is preferable to handing the other side an accomplishment. On Finance, however, the symbolic politics dissolve. When you're responsible for raising massive revenues and passing necessary legislation, modifying the process is more attractive than grinding it to a halt. As one former Baucus staffer puts it, "In the health world, it's often a good-versus-evil battle over the role of the government. The tax world is more like whoever's at the table, we'll make a deal and get you something." That can mean wresting a small benefit for a home-state interest, or it can mean ensuring attention to a cherished issue.

That's also what gives the finance chairman his power. Like other chairmen, he has the normal levers of committee control: He can schedule hearings, markups, and votes. He can write the first draft of legislation. But the breadth of the committee's jurisdiction means it goes further than that. The chairman may pick a vote for the Medicare bill because the member is desperate to protect a priority in the tax bill. "Baucus is very good at that," says one top former committee staffer, "at going to members and finding out what they need and what they want. He gets bombarded by members with pet issues. Every time he walks on the floor he comes back with 12 sticky notes. And he looks at that as a key way of putting legislation together. By the end, he has his staff assemble what everyone wants together on a single piece of paper so he can see it all."


But managing all those sticky notes, and preventing bills from getting bogged down in the deal-making, demands a lot from the chair. "The adjective that every chairman wants in front of their name is 'tough,' and it is rarely true," says Lawrence O'Donnell, who served as Daniel Patrick Moynihan's chief of staff. Baucus is not known as tough. In fact, he's generally been understood as scared -- a senator paralyzed by an acute awareness of his own political mortality. Montana has voted for the Republican candidate in nine of the last 10 presidential elections. In 2000, Bush took the state by 25 points. For much of that time, Baucus was the only Democrat elected statewide. Survival was rarely assured, and so he has developed a political style suited to appeasing a skeptical electorate with a conservative bent.

His appetite for pork -- and his skill at wresting it for his state -- is so legendary that The Washington Post branded him a "High Plains grifter." As one former Baucus staffer put it to me, "He's like the city councilman for the state of Montana." And, he's well known for his tendency to break with the Democratic Party. In 2001, he was so instrumental in passing Bush's tax cut that he stood behind the president at the bill-signing ceremony, a visual that featured prominently in his 2002 campaign ads. (In 2003, however, Baucus voted against the second round of tax cuts.) He voted to repeal the estate tax and earned a 70 percent approval rating from the Chamber of Commerce.

Also helpful is the fact that Baucus never enters an election underfunded. "One of the rewards I was told about before I selected the committee," says Durenberger, "was someone said, 'You have to run for re-election. This is the best place to raise money.'" Much of Baucus' cash comes from the industries most affected by his committee's legislation. According to the Center for Responsive Politics, this cycle has seen Baucus raise almost $800,000 from securities and investment firms, $565,000 from the insurance industry, and $462,000 from the pharmaceutical industry. Ninety percent of his funds have come from out of state. In total, he's raised more than $10 million. (Some of which has gone to the Democratic Senate Campaign Committee; Baucus bragged to me that he had more than doubled the target contribution set by Sen. Chuck Schumer.)

Meanwhile, Montana itself is changing. Where Baucus was for two decades the only Democrat elected statewide, his Senate colleague Jon Tester and Gov. Brian Schweitzer were swept into office in the last two cycles and both are considered models of a new type of outspoken, politically confident Western Democrat. Where Republicans used to view Baucus as a vulnerable target, this year they couldn't even find a credible opponent to challenge him. Instead, he will face 85-year-old attorney Bob Kelleher, a 16-time candidate who has sought office as a Republican, a Green, and a Democrat, and seeks to replace Congress with a parliamentary system, nationalize the oil and gas industries, and institute a single-payer health-care system. He has raised so little money that the Center for Responsive Politics doesn't even have data on his war chest. This will be Baucus' sixth campaign for the Senate, and it is his first in which he faces no real threat. And did I mention he has $10 million?


Baucus is a fifth-generation Montanan. His grandfather helped bring aviation to the state. His father owned a 125,000-acre ranch outside Helena. His desk features a plaque that reads "Montana Comes First." But ask Baucus what pushed him into public service, and you find the answer half a world away. "I took some time off from college to hitchhike around the world," he recalls. "I met interesting people, and I learned that there were challenges everywhere that showed the need for people of goodwill to go to work. So when I came home, I determined to try to do what I could to help address some of the challenges that we face, here in America."

After finishing law school at Stanford, Baucus spent three years as a lawyer at the Securities and Exchange Commission. He moved back to Montana in 1971 to serve as the executive director of the state's Constitutional Convention. The resulting charter was one of the most progressive in the nation, including, among other things, the right to "a clean and healthful environment" and a guarantee of educational equality. In 1972, he was elected to the Montana House of Representatives. In 1974, he won a close primary and election for the Unites States Congress by putting in the shoe leather: He walked 600 miles up and down the district, knocking on doors. By 1978, he was a U.S. senator. He was 36.

At the time, the progressive tradition in Montana politics was still a live force. But not long into the Reagan years, early in Baucus' career, Montana began to look like just another right-wing Western state, in which Baucus' tip-toe survival was the single exception. Now that Montana Democrats have roared back, Baucus is the sole figure who connects the earlier progressive era with that of Schweitzer and Tester. But in being of so many political periods, Baucus is not quite of any of them.

Rather, at this point, Baucus is of the Senate. With about 30 years of seniority, Baucus is one of the more experienced members of the chamber. But though he has many relationships, he has only a handful of friends. "Max was not an easy person to get real close to," says Durenberger. "I remember we traveled to South America with [Sen. Lloyd] Bentsen for two weeks and Max had his nose in a Tolstoy book the whole time and then when we got off the plane he went jogging. He's his own person." ("It actually wasn't Tolstoy," says Baucus. "It was The Iliad.")

Baucus does have one incredibly important relationship: his partnership with Chuck Grassley, the Finance Committee's ranking Republican. Even on a committee known for its bipartisanship, the relationship between Baucus and Grassley is surprisingly close. Observers talk often of their unofficial co-chairmanship, where each makes the other a central player no matter who actually holds the gavel. Many credit their closeness to a certain symmetry of temperament and self-conception. Both have a reputation for that slight shadow of insecurity and resentment that comes from not being the flashiest or most graceful or most eloquent guy in the room. Musing on their relationship, Baucus says, "We're both from sugar states, you know, farm-ranch backgrounds. And sure, everyone's got [an] ego in the Senate, but I tend to think we don't wear our egos on our sleeve, like some others do. That makes it easier for us to work together."

And they often do, frequently to powerful effect. Baucus and Grassley worked together on the State Children's Health Insurance Program reauthorization and expansion (like Baucus, Grassley has a tendency to break with his leadership, and he crafted the S-CHIP compromise against party opposition and his own president's veto threat) and were able to construct a bill with hefty bipartisan support. They joined together to build Bush's first tax cut and to craft the Senate version of the Medicare prescription-drug benefit. Their partnership creates a workable process in a committee that can't afford gridlock. "Go back to the made-up subcommittee on the Committee on Acoustics and Ventilation," says Wyden. "If the chair and the ranking member were not able to reach common ground then, in the broad sweep of Western civilization, not much would suffer. But on the Finance Committee, the issues are different, and a good relationship takes on special value."


But Baucus' habit of coming to agreement with not only his committee's ranking Republican but also the Republican Party has often led to sharp tensions with the Democratic Caucus. Baucus has always been moderate, but no more so than red-state senators like Blanche Lincoln of Arkansas or Ben Nelson of Nebraska. When Baucus ascended to chair of the Finance Committee, however, his tendency to cut a deal with the Republicans rather than stand with the interests of the Democratic Party caused no small amount of controversy. In particular, Baucus found himself butting heads with Majority Leader Tom Daschle, who also served on the Finance Committee.

The key event was the 2003 Medicare vote. The original Senate bill had broad bipartisan support, including from such progressive luminaries as Ted Kennedy. But the version of the bill passed by the House of Representatives was a demonstration of Tom DeLay's ability to wield raw partisan power. The two chambers met in conference committee to come up with a final bill, but Republicans largely locked Democrats out of the process. Only Baucus and John Breaux -- two Democrats known and mistrusted for their moderate tendencies -- were allowed in. It was a slap in the face to the bipartisanship Baucus and Grassley had worked so hard to maintain. Bill Thomas, then chair of the Ways and Means Committee, controlled the process, and he larded the legislation with health savings accounts, private insurers in Medicare, a prohibition barring the government from bargaining down drug prices, and much else on the conservative wish list.

The Democratic leadership in the Senate judged the situation a cruel farce and urged both Breaux and Baucus not to legitimize the process with their presence. As conservative congressional analyst Norm Ornstein said at the time, Democrats with any loyalty to their party would have said, "If you don't let in Tom Daschle -- our leader, elected by the Senate to be in the room -- then we're not going in the room." But Baucus and Breaux participated, and the bill passed.

The aftermath of the fight was rough. Many in the Democratic Caucus felt betrayed by Baucus, and there was talk of stripping him of his position on the Finance Committee. Daschle mused publicly about the need to impose more party discipline. But others I spoke to sided with Baucus. Their argument went something like this: The resulting legislation may have been deeply flawed, but it was also the largest entitlement expansion since the Great Society. It took government surpluses -- most of which were being funneled toward tax cuts -- and channeled $400 billion toward enshrining a permanent drug benefit into Medicare. Restricting government from bargaining down drug prices and boosting payments to the private insurers in Medicare Advantage were grave but correctable failings. (Indeed, Baucus managed to slash payments to Medicare Advantage earlier this year.) By contrast, there's no promise that Democrats could have gotten the basic drug benefit later. Nor is there a promise that the absence of Breaux and Baucus would have killed the bill. And their participation in the negotiations did lead to some genuine concessions, namely the preservation of fairly generous subsidies for low-income seniors.

"Did I like the way that Bill Thomas conducted the conference committee?" asks Baucus. "Of course I didn't. But John Breaux and I went into that lion's den. We were fighting for a better result for widows and low-income Americans. And it's hard to pass up $400 billion on the table for an entitlement expansion. Certainly, we wouldn't have the same opportunity today with our current deficits. And now we have the 2003 law as a start on which to build." The Medicare prescription-drug benefit is now a broadly popular bill, and though many Democrats speak of its reform, none speak of its repeal.

Meanwhile, the past few years have seen Baucus and the Democratic Caucus reknit their relationship. First, after Daschle was defeated in 2004, the mantle of leadership passed to Harry Reid. Where Daschle and Baucus had a tense relationship, Reid and Baucus have long been close. Both are reserved Western Democrats with a centrist streak. Baucus calls Reid an "excellent leader" and "one of my best friends." Reid, for his part, is less hands-on than Daschle was and tends to delegate a fair amount of responsibility to his committee chairman. A prime example came in 2005, when Reid named Baucus the Democratic point man in the fight against Social Security privatization. Baucus turned in an unwavering performance. "It would've been easy at the onset to fudge that issue," says one Democratic senator. "But Max went out and said we weren't going to unravel the Social Security safety net in any shape or form."

When I meet with Baucus at the City Grille in Denver, he is eager to emphasize this chapter in his story. "When Reid put me in charge of stopping the privatization of Social Security, man that was fun. That was the right thing to do," he says. "I remember President Bush came to Great Falls, Montana, and I set up a meeting with seniors at the same time, just across town, just right in his face. I relished the opportunity just to beat down privatization flatly and squarely." His message is clear: I can fight.

Unbidden, Baucus then launches into a retelling of his fight in July to block the 10.6 percent cut in Medicare physician reimbursement. Here too, the message is clear. "I walked away from Senator Grassley," he says. "I tend to work with Senator Grassley. But there comes a time when you just gotta say, 'Sorry.' These things get watered down too much, it's just not right, so I just broke with him on that and pushed through a Medicare bill that finally got 60 votes. We had to work hard to get those 60, because Grassley didn't agree, but that was the right thing to do. So when Ted Kennedy walked on the floor to cast the 60th vote, that's a moment I'll always treasure."

Later in the conversation, I mention to Baucus that some health reformers believe that the only way Democrats will ever pass health reform is to wall the process off from minority obstruction -- in particular, from the filibuster. The way to do that would be to invoke the budget-reconciliation process, which allows legislation dealing primarily with the health of the federal coffers to be fast-tracked through 20 hours of debate and passed with a simple majority. The Clintons hoped to do this in 1994 but were blocked by Sen. Robert Byrd, the self-appointed guardian of the process. Bill Clinton has said that his gravest error in that battle was not recognizing what a blow he'd been dealt when he was denied access to reconciliation.

But there's fair evidence that Byrd couldn't stop reconciliation now. Moreover, Congress in the Bush years normalized the procedure, using it for everything from tax cuts to drilling in the Alaska National Wildlife Refuge. But reconciliation remains an aggressive tool for something as controversial as health-care reform. (It's also an uncertain one: Republican opponents could use the rule that bears Byrd's name to mount a parliamentary challenge.) So I ask Baucus whether he could imagine running health care through the budget-reconciliation process. "Yes, I can," he says without hesitation. "The goal here is to get results. And not just results for the sake of results but principled results. And that means working with the other side where you get principled results and means maybe going to reconciliation to get principled results."


Next year, Baucus' committee will have to accommodate a new president hungry for an early accomplishment. And Baucus is hoping to convince him to make it health reform. In June, Baucus assembled his whole committee in the Mumford Room of the James Madison Building for a daylong health-care conference called "Prepare for Launch." The event began with Baucus standing before a projection screen that showed a space shuttle firing its way into orbit. "I think that video captures the essence of what we're trying to do today," said Baucus proudly. "Which is prepare for the launch of health reform."

In this, he is proving the opposite of the finance chair who last presided over a major attempt at health reform: Daniel Patrick Moynihan, who aggressively opposed Clinton's health-care plan in 1994. Moynihan went as far as to appear on Meet the Press to accuse Clinton of using "fantasy numbers" and declare that "there is no health-care crisis." By contrast, Baucus has spent the last year holding a series of hearings meant to convince his committee and the country that there is a health-care crisis. He's staffed up his health-policy team, consulted with outside experts, and held individual meetings with his members. And if Barack Obama wins in November, Baucus, unlike Moynihan, is likely to enjoy a good relationship with the incoming administration. The Obama campaign's chief of staff, Jim Messina, was hired out of Baucus' office. "If you asked what would Baucus be doing this summer," says one liberal health reformer who's long been skeptical of Baucus' commitment to the issue, "I could not have mapped out a better strategy for him to follow. He's doing it."

That assessment is widely shared. But some reformers remain skeptical about Baucus' commitment to the issue. "The thing you have to understand about Max Baucus," says one longtime observer, "is that he's a good guy. His heart really is in the right place. But the worry is that if health reform fails, he'll still be able to sleep at night."

I relay the concern to Baucus. "In life," he replies, "you try to be as effective as you possibly can be. Would I not sleep at night, having tried my hardest? I wouldn't that first night, but for how many nights after that, I just don't know."

Later in our interview, Baucus returns to the question, concerned that he didn't answer it fully. "Is it okay if we don't reform health care? It's not okay at all. But will I sleep at night?" And here, he laughs. "I mean, hell, I'm a pretty good sleeper."

Then he sobers up. "It's not okay, though."