Today We Learn About: Showdown at Gucci Gulch

Tax Reform in the early 1980’s was a sensitive subject as many keys players had their own idea as to the shape the reform bill should take. These key players included citizens, legislators, corporations, lobbyists, the president, and members of White House staff. Though the process of reform had many ups and downs, an agreement was slowly reached that pleased most parties. How is it possible for so many interests to be accepting of a bill that reformed our country’s entire tax code? The atmosphere was perfect, near everything fell into place in a way that facilitated reform as our legislators cooperated, our president took a definitive stance, our congress made concessions, and everyone involved participated in a bold plan for reform.

Ronald Reagan made it clear that he was interested in tax reform when he said, “We need true tax reform that will at least make a start toward restoring for our children the American Dream that wealth is denied to no one, that each individual has the right to fly as high as his strength and ability will take him… “ This statement was made in 1964.1 Almost twenty years later Reagan again stated that our country was in need of tax reform, this time in his first inaugural address.2 Reagan made it very clear to the American public that he would like to see tax reform become a reality. This strong message and show of leadership went a long way in passing tax reform. When his message is matched with the strong guidelines that the Reagan Administration gave in the writing of the new reform bill, such as strict caps on tax brackets, it becomes clear that this was a crusade that Reagan was very interested in seeing through to completion.3 Not only was this strong leadership from Reagan important in the eyes of the American public, but also to members of Congress. The presidents support alone was enough to sway some members to vote for the plan, when previously they had been on the fence.4 Without a strong central figurehead to act as the face for this campaign it is highly unlikely that tax reform would have been successful.

In addition to the support from the president, there was also an immense amount of support from top members of Congress, and the White House staff. These individuals, Finance Chairman Bob Packwood, Ways and Means Committee Chairman Dan Rostenkowski, and Treasury Secretaries Donald Regan and James Baker, “had their hands on the levers of the tax-writing system in Washington”5 These men were heavily involved in the tax reform effort, and were responsible for a large majority of the work that went into drafting the bill. They all held positions of immense power, and were all committed to making tax reform work. This was a tall order, as re-writing a nations tax code was not an easy task, especially considering the amount of special interests6 that had been given breaks in the 1981 tax bill – a bill that these men orchestrated.7 Their tireless support, countless hours and late night meetings, matched with their individual personalities went a long way in making tax reform a reality. Without the support of the people holding these specific positions, tax reform is made even more difficult. Since these men were on board to change the system, tax reform had a fighting chance.

Under the leadership of the Reagan administration and key committee chairmen, the remainder of Congress was left in a precarious situation. They had their constituents, the myriad of special interests within their states and districts, and re-election to worry about in making decisions that could dramatically effect all of these groups. Even still, there were two parties with differing interests that needed to work together to bring about dramatic change that would effect every American. The cooperation between parties, and each party’s willingness to make concessions in the name of this tax reform bill can definitely be viewed as necessary for the success of tax reform. Throughout the final days of negotiating the tax bill, individual members of Congress wished to include their own “pet deductions” into the bill. Members from oil and gas states wanted to add deductions for this industry, timber bearing states wanted to keep their deductions for that industry, and there was no shortage of disagreement about who should get which deductions. Concessions were made in some of these industries, but the biggest concession made was a unanimous vote that required all amendments to the bill to be revenue neutral. That is, if they gave breaks in one area, the money lost in revenue had to be obtained by some other means within the amendment.8 Although it didn’t end the fight for deductions, this requirement made the progress of the bill a lot easier because it meant that the bill would remain revenue neutral. This cooperation between parties and the willingness to make concessions that it displays are but a microcosm of the attitude held by the leaders of our nation. These members of congress knew that tax reform needed to happen, and they displayed early and thoroughly that they had the appropriate attitude to affect change in the nations tax system.

One of the most important aspects of passing this tax reform bill has surely got to be the legislators innovative thinking. Bill Bradley wrote a tax reform bill co-sponsored by Richard Gephardt that was called The Fair Tax Act of 1982. This bill was the beginning of four years of work to enact tax reform in the United States, but at the time it went largely unnoticed.9 The Bradley-Gephardt Bill was an innovative idea because it completely re-wrote the taxation system of the United States in a time when the largest concern of the country was the growing deficit.10 Without someone to lay the groundwork for reform legislation, there may not have been any legislation at all. Further, without Bradley’s willingness to cut deductions from special interest groups and start completely from scratch, there may never have been a Tax Reform Act of 1986.

I believe that conditions similar to those described above are currently in place in the United States, as to facilitate the passage of the Health Care Reform Act. There is currently tremendous support from the president, key members of the administration, and crucial members of congress. In addition, these parties appear to be committed to reform and willing to think outside the box in getting this reform passed. There is a key conditions that is not currently met however, and the lack of cooperation between parties in Congress could prove to be a roadblock in passage of the bill. Even with the current Democratic majority in Congress, there still needs to be greater cooperation in order to ensure Health Care Reform gets passed.

President Barack Obama has made no secret of his support for health care reform stating, “now is the time to act” in one of many public speeches that he has given on the subject.11 In addition he has given interviews to some of the medias largest outlets including major news networks and magazines. The president has taken actions similar to Reagan in that, not only does he support health care reform, he also has given specific guidelines to Congress as to what shape health care reform should take.12 This leadership will be crucial in getting health care reform passed during the Obama presidency.

There is additional support for health care reform from various key members of Congress and the Obama Administration. The Chairman of the Finance Committee, Max Baucus, is in support of reform.13 Nancy-Ann DeParle, the head of the Centers for Medicaid & Medicare Services, is a supporter of reform.14 Rahm Emanuel, White House Chief of Staff, along with ranking Republican Senator on the Finance Committee Charles Grassley, Peter Orszag (Office of Management and Budget director), Senate Majority Leader Harry Reid, Speaker of the House Nancy Pelosi, Republican Senator Olympia Snowe, and House Energy and Commerce Committee chairman Henry Waxman can all be counted as important members of government who are willing to discuss and reach a compromise on health care reform.15 There are numerous other department heads and influential figures who support health care reform, such as Health and Human Services Secretary Kathleen Sebelius.16 Much like tax reform under Reagan, this sort of broad support is very important to the progression of this bill and a crucial ingredient in the bill’s success.

A major problem facing health care reform is the lack of a bipartisan commission to assist in getting reform passed. This is recognized as an important ingredient for success by many in government and media17. It is also an ingredient that was present in the tax reform talks of the early 1980’s, but is currently absent. This could very well prove to be the biggest roadblock in the passage of the Health Care Reform Bill.

I believe that the current political atmosphere is ripe for health care reform. There are enough qualities in place to succeed, with very few drawbacks. The reason for my confidence however, lies in the fact that the major drawback, a bipartisan committee, can easily be fixed. This matched with the commitment of our president, and key members of Congress offers enough evidence to convince me that in time, we will have a health care reform bill passed in the United States. There will likely be a tremendous amount of debate, as there should be with any important decision our government makes, but I do not believe that this will hold back the progress of reform. The bill may take four years to construct, much like the tax reform bill of the 1980’s, but the bill will be passed in one form or another. After all, change rarely comes easy.

3Showdown at Gucci Gulch – Birnbaum & Murray – p. 173

4Showdown at Gucci Gulch – Birnbaum & Murray – p. 171

5Showdown at Gucci Gulch – Birnbaum & Murray – p. 19

7Showdown at Gucci Gulch – Birnbaum & Murray – p. 19

8Showdown at Gucci Gulch – Birnbaum & Murray – p. 228

9 Showdown at Gucci Gulch – Birnbaum & Murray – p. 31

10 Showdown at Gucci Gulch – Birnbaum & Murray – p. 31

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