Facing ethics probes, Rangel drops tax leadership

WASHINGTON (AP) - Buffeted by ethics inquiries, 20-term Rep. Charles B. Rangel of New York stepped down Wednesday as chairman of the tax-writing House Ways and Means Committee, delivering a heavy new political jolt to a Democratic Party already facing angry voters.

The action also muddied the congressional picture on taxes, coming as the House moves toward difficult debate over large automatic increases that lie just over the horizon. The outcome will affect tens of millions of American taxpayers.

Rangel's relinquishing of the gavel spared colleagues from having to vote on a Republican-sponsored resolution to strip him of his post. But it also focused attention on ethical lapses by a top leader of a party that had promised to end a "culture of corruption" when it regained control of Congress in 2006 from Republicans.

That could spread far beyond Rangel. Ethical problems can be politically toxic for the party in power, particularly this election year with so much anti-Washington sentiment in the air.

Rangel stepped aside just days after being admonished for breaking House rules by accepting corporate-financed travel.

He called his exile temporary. But he still faces serious inquiries by the House ethics committee 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.

Some of these cases could result in rebukes more serious than last week's admonishment, and that could make it difficult for Rangel to reclaim his chairmanship.

Rangel, 79, has been a key player in the health care overhaul debate, and whatever legislation finally emerges from Congress will bear his and the committee's stamp. Even more importantly, for the next few months Ways and Means will play a central role in shaping tax policy.

Billions of dollars of tax cuts put in place by former President George W. Bush are due to expire at the end of this year. The tax committee's chairman will have great influence over which of these tax cuts are permitted to expire and which are extended.

Veteran Rep. Fortney "Pete" Stark of California will serve as acting chairman, according to Rep. John Salazar, D-Colo., who was presiding over the House when Republican lawmakers posed the question on Wednesday.

Stark, the next most senior Democrat on the panel, is a health policy expert and one of the most liberal members of the House. He has a reputation for being temperamental and sharp-tongued, not a consensus builder.

Rangel, who has represented his Harlem district since 1971 and is the first black member to be Ways and Means chairman, stepped aside in the face of increasing pressure from fellow Democrats after the House ethics committee admonished him last week for accepting trips to the Caribbean that were sponsored by several large corporations, a violation of congressional gift rules. Rangel blamed the lapse on his staff.

"In order to avoid my colleagues having to defend me during their elections, I have this morning sent a letter to Speaker Pelosi asking her to grant me a leave of absence until such time as the Ethics Committee completes its work" on remaining accusations against him, Rangel said at a hastily called session with reporters.

He said later that his stepping aside "should take care of the political problem" that other Democrats might have as a result of his ethics problems.

For all the ethical issues that have dogged the gregarious and sometimes irascible New Yorker over the years, Rangel has played a major role in tax policy, health care overhaul and in shaping other major issues that have come before his committee.

If Stark's leadership doesn't work out, House Speaker Nancy Pelosi might maneuver to award the post to another senior Democrat on the committee, such as Sander Levin of Michigan, Jim McDermott of Washington, John Lewis of Georgia or Richard Neal of Massachusetts

Pelosi issued a statement acknowledging Rangel's request for a leave. "I commend Chairman Rangel for his decades of leadership on jobs, health care and the most significant economic issues of the day," she said.

Republicans had been calling for Rangel to step aside since last year, and those demands increased after the ethics panel released its report last Friday admonishing him.

Since the report, support for him among Democrats has been evaporating, with Rep. Artur Davis, D-Ala., on Tuesday becoming the first member of the congressional Black Caucus - which Rangel helped found - to call for him to step down from his chairmanship.

So long as Rangel remained chairman, an ethical cloud hung over Democrats who will be on November's ballots, a cloud that would darken with any additional rebukes by the ethics committee.

Republicans were pressing for a vote this week, one expected to draw more than just token Democratic support. Rangel's announcement let his Democratic colleagues off the hook.

But it also presented new headaches for Pelosi as the committee prepares to decide the fate of the Bush tax cuts.

Due to expire are lower overall income tax rates that have been in effect for nearly a decade, the so-called marriage penalty relief. The $1,000 child credit will drop to $500, and maximum tax rates on dividend income and capital gains will rise sharply if Congress does nothing.

President Barack Obama and his congressional allies want to keep many of these lower tax rates in place for all but those whose household income is above $250,000.

"These are very contentious issues. You want somebody running the committee who's going to have a firm hand on the gavel," said Ross Baker, a Rutgers University political scientist who studies Congress. "This is a real crisis for Pelosi on top of the health care stuff. It's a distraction I'm sure she did not welcome."

Rangel has raised considerable money for fellow Democrats. His leadership political action committee raised $2.2 million in the 2008 election cycle and spent $2 million, according to the Center for Responsive Politics. He also raises money through a Rangel Victory Fund.

Republican campaign officials have started criticizing individual Democrats for holding on to chunks of campaign contributions that resulted from Rangel's fundraising.

As an example of his eroding support, Rep. Ann Kirkpatrick, D-Ariz., is giving campaign funds linked to Rangel to charity, her spokesman said.

The congresswoman will donate $10,000 from the National Leadership PAC and $4,000 from Rangel for Congress that was contributed in the 2008 cycle, said Joe Katz, her spokesman.

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Associated Press Writers Sharon Theimer, Stephen Ohlemacher, Alan Fram and Ann Sanner contributed to this story.