Baucus has already announced that he will not seek reelection next year. | John Shinkle/POLITICO W.H. to pick Baucus as ambassador

Sen. Max Baucus, the veteran Montana Democrat who has served in the Senate since 1978, is expected to be nominated by the White House to serve as the next U.S. ambassador to China, according to several sources familiar with the matter.

Baucus began informing some of his colleagues and his staff about his upcoming nomination on Wednesday evening.


It remains unclear when the appointment would take effect, but Baucus would have to win confirmation from his Senate colleagues. If he leaves before his term ends, Baucus would relinquish his gavel on the powerful Senate Finance Committee at a time when he is still aggressively pushing for a dramatic rewrite of the Tax Code, putting its chances in peril this Congress.

The Montana Democrat, who has been a central figure in battles over trade, taxes and health care for a generation, has already announced he will not run for reelection in 2014. And if he leaves early, Baucus will be opening up a Senate seat in a competitive state where Democratic Gov. Steve Bullock appoints the senator when there is a vacancy.

Already, Lt. Gov. John Walsh (D) is running for the open seat against Rep. Steve Daines (R), the freshman congressman whom Republicans believe is in the strongest position to win the race.

( PHOTOS: Max Baucus’s career)

Indeed, not only does the departure of the third longest-serving senator rattle an institution where seniority is paramount, but it also could very well shake up the 2014 landscape where Republicans need to pick up a net of six seats to recapture the Senate majority.

Bullock is expected to name Walsh to the seat, Democratic sources say, a move that could give him a leg up in a race that could determine control of the Senate next year. That means that Walsh would be running as an incumbent, giving him time to build a Senate office, fundraise in Washington and draw headlines back home, a valuable asset in a hotly-contested race.

Baucus’s expected nomination had been rumored in congressional circles for the last month. It only became clear in recent days that the White House would make the appointment, according to sources.

A White House spokesman didn’t respond to an e-mail requesting comment, and a Baucus spokesman declined to comment. But the president and Baucus both maintain friendly relations. Baucus’s long-time former staffer and close personal friend, Jim Messina, was Obama’s campaign manager in his 2012 reelection effort.

Baucus’s nomination would be considered by the Senate Foreign Relations Committee, which quickly approved another senator to a diplomatic post — John Kerry was approved in one month to be secretary of state — earlier this year.

Baucus’s departure would open up a key spot running the Senate Finance Committee, one of the most powerful positions in Congress given its sweeping authority over tax and health care programs. Sen. Jay Rockefeller, the liberal West Virginia Democrat, is next in line to chair the panel.

( PHOTOS: Senators up for election in 2014)

Rockefeller, too, is retiring at the end of next year, and Oregon Sen. Ron Wyden is widely expected to take the top Democratic spot in the next Congress.

Asked if he wanted the Finance gavel after the news broke on Baucus’s potential departure, Rockefeller was coy.

“I love Commerce,” said Rockefeller, who chairs the Commerce, Science and Transportation Committee. “We just finished a fantastic hearing. I love Commerce.”

The decision to appoint Baucus stunned his colleagues at the tail end of a day where senators are sparring over wrapping up legislative business for the year. Baucus would be chief envoy there at a sensitive time for relations with China, forcing him to balance rising tensions with Japan, China’s growing economic might and thorny diplomatic issues involving tensions with North Korea and other regional hotspots.

“I did not know that,” Sen. John McCain (R-Ariz.) said when told of the Baucus news. “I’m sure he’d do a fine job. He has a long and extensive background on China.”

McCain later chuckled in amusement.

In some ways, Baucus’s move is similar to that of the Montana icon, Mike Mansfield, the late Democrat who became ambassador to Japan after his two-decade-plus career in the Senate.

Baucus has served on the Senate Finance Committee since 1979 — making him the longest-serving senator on the committee of any in history. And also unlike any other senator today, Baucus boasts of walking the entire 820-mile length of Montana in 1995 and 1996.

As a centrist Democrat from a Mountain West state, the 72-year-old Baucus has been an ally and adversary to presidents in both parties.

In 2001, Baucus gave crucial support in enacting the sweeping Bush tax cuts. Not to be outdone, two years later, Baucus was critical in cutting a deal with Republicans over President George W. Bush’s signature Medicare plan, making him a chief ally of Sen. Chuck Grassley (R-Iowa) but a nemesis of the powerful Democratic leader, Sen. Tom Daschle of South Dakota.

After President Barack Obama took office, the Montana Democrat took the lead role in shepherding his health care law through the Senate. But after Baucus spent months negotiating with Republicans, Democrats lost control of the message and helped the GOP win the public relations war over the issue. Baucus’s liberal critics faulted him for dropping the public health insurance option in the Finance Committee proposal to win the backing of Maine GOP Sen. Olympia Snowe, who later opposed the health care bill on the floor.

Still, without Baucus’ support, the Affordable Care Act would have not become law. Unlike Daschle, Senate Majority Leader Harry Reid (D-Nev.) and Baucus have maintained closer ties. Baucus’s opposition to the 2003 Bush tax cuts on capital gains and dividends was cheered by the left, and he helped Reid kill Bush’s 2005 Social Security overhaul.

In the past several years, Baucus has struck up a close accord with House Ways and Means Chairman Dave Camp (R-Mich.), and the two men cut a deal to extend a payroll tax cut to millions of American workers last Congress.

And in this Congress, Baucus and Camp have been methodically been pushing for a tax reform proposal — but the window on their efforts appears to be closing, given the short legislative calendar, 2014 midterm politics and the deep division between the two parties.

Now, with his confirmation looming to be U.S. ambassador to China, Baucus’s goal to of rewriting the Tax Code for the first time since the Reagan administration may never be realized.

Seung Min Kim and Emily Schultheis contributed to this report.