* Montana moderate set to retire at end of next year
* Retirement would boost Republican chances of winning seat
* Ex-Montana governor seen as likely Democratic candidate
By Kim Dixon and Thomas Ferraro
WASHINGTON, April 23 Max Baucus, the Democratic
chairman of the U.S. Senate Finance Committee, said on Tuesday
he will not seek re-election next year, improving Republican
chances of capturing his seat and giving him a freer hand in his
bid to revamp the tax code.
First elected to the Senate in 1978, Baucus, 71, will become
the eighth senator - six Democrats and two Republicans - to
announce plans to retire at the end of next year.
Baucus pledged to serve out his term and focus on fixing the
tax code and other economic challenges.
"I'm not turning out to pasture because there is important
work left to do, and I intend to spend the year-and-a-half
getting it done," he said.
Democrats now hold the Senate, 55 to 45. Baucus, of Montana,
won a sixth term with 73 percent of the vote in 2008. He had
been favored to win a seventh term but could have faced a
competitive race, according to analysts.
"I think he knew that no matter what, he would have to raise
$15 million and that was going to be a slog," said David Parker,
a political scientist at University of Montana, who also noted
some weak approval ratings in polls.
Jennifer Duffy, who tracks Senate races for the non-partisan
Cook Political Report, said she was changing her rating of the
2014 Senate race in Montana from "lean Democrat" to "toss up."
As Senate Finance chairman, Baucus played a key role in
President Barack Obama's overhaul of the U.S. healthcare system,
signed into law in 2010 and known widely as Obamacare. But he
struggled to reconcile his conservative constituency with the
more liberal Democratic caucus.
Obama issued a statement thanking Baucus for his service.
Baucus is working closely with his House of Representatives
counterpart, Republican Dave Camp, on rewriting the complicated
tax code, a project that faces major obstacles.
Still, by retiring, Baucus could free himself from the
political pressures of running for re-election, but that would
not reduce by much the challenges of a tax-code overhaul.
"It may suggest that he is going to devote 100 percent of
his energy to tax reform, so that may be a boost for getting it
done, because both he and Camp are on the same schedule now,"
said Ken Kies, a veteran tax lobbyist.
Camp will lose the gavel of the tax-writing House Ways and
Means Committee in 2014 under House rules.
TAX REFORM OBSTACLES
Regardless, major challenges remain, beginning with
Republican opposition to calls by Democrats to raise new tax
revenue by curbing tax breaks for the wealthiest Americans.
"His leverage will surely decrease as the end of his term
approaches," analyst Jim Lucier of Capital Alpha Partners said.
If Democrats retain the Senate in next year's election,
Senator Ron Wyden would be next in line in party seniority to
replace Baucus as Finance Committee chairman.
Wyden declined to comment on his plans, but the Oregon
Democrat has several tax reform proposals of his own.
The Finance Committee controls tax, trade and healthcare
issues, but the power of committees has waned in recent years as
congressional leadership has taken over major decisions, to the
frustration of many Senate old-timers.
The tax code has not been substantially changed since 1986,
when President Ronald Reagan struck a deal with a divided
Congress to lower rates, and cut exemptions and special breaks.
Obama says he backs a major rewrite, but the disagreements
over the details - which might include clipping popular tax
breaks - make the project politically difficult.
Camp is expected to introduce legislation this year, though
the timeline of that has been postponed before.
The next fiscal deadline will be the exhaustion of the
government's debt limit in July or August, which could give a
boost to tax reform efforts, said Sean West, an analyst at
research firm Eurasia Group.
"The key signpost to watch remains whether House Republicans
make tax reform their debt-limit demand, which would give
President Obama a strong incentive to build public support," he
A MODERATE IN MONTANA
Baucus is a moderate in a rural state that went for
Republican Mitt Romney over Obama in last year's White House
race, 55 percent to 42 percent.
Former Montana Democratic Governor Brian Schweitzer is seen
as a top contender to run for Baucus's seat, while
Representative Steve Daines is among possible Republican
As a moderate, Baucus often butts heads with more liberal
members of Congress, including those in the Democratic
He broke with his party to vote for tax cuts engineered by
President George W. Bush in 2001, and to add a prescription
benefit to the Medicare health plan for the elderly.
Baucus, who is an avid runner and begins nearly every speech
with a quote from a famous person, also opposed the Senate
Democrats' budget resolution last month that sought to raise
taxes and voted against Obama's effort to curb gun violence with
new controls on firearms.
A liberal Democratic group praised his decision to retire.
"Good bye, Senator K Street," Stephanie Taylor, co-founder
of the Progressive Change Campaign Committee, said, using a
shorthand term for Washington lobbyists. "Montana will finally
have a chance to have a senator with its best interests at
heart, and we hope Brian Schweitzer jumps into the race
Baucus also wrestled with defending Obama's healthcare law
he was instrumental in shepherding through the Senate. The law
is unpopular in Montana, and Baucus recently worried at a
hearing that poor implementation would cause a "train wreck."
He has also been a champion for trade agreements, prodding
Obama to push for approval of free trade pacts with South Korea,
Colombia and Panama.
The seven senators who earlier announced they would not run
for re-election are Democrats Carl Levin of Michigan, Frank
Lautenberg of New Jersey, Tom Harkin of Iowa, Tim Johnson of
South Dakota and Jay Rockefeller of West Virginia, along with
Republicans Saxby Chambliss of Georgia and Mike Johanns of