How times have changed – Reagan vs Trump on major tax reform

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As Republicans talk about the need to act on major tax reform, the preparation for that mammoth undertaking pales in comparison to the last effort during the Reagan Administration, an exercise that took time to first develop legislative proposals, and then to wind their way through the House and Senate, as the bill went through several near-death experiences before finally achieving victory in the fall of 1986.

Here are some thoughts on the differences between 1986 and 2017.

1. Reagan vs Trump – 489 pages vs 1. The White House efforts on tax reform were much different when you look at President Ronald Reagan, who called for tax reform in his 1984 State of the Union Address. By November of 1984, the Treasury Department had finished a comprehensive study of different ideas on tax reform, and presented that to Mr. Reagan. In late May of 1985, the President spoke to the nation from the Oval Office, as he sent Congress a 489 page document, “The President’s Tax Proposals to the Congress for Fairness, Growth and Simplicity.” While President Trump mentioned tax reform in his first speech to a joint session of Congress back in February, the only thing produced so far by the Trump Administration is one page of bullet points on what he hopes to achieve with tax reform. Read through the Reagan document linked above – it is filled with excessive amounts of detail on what the President’s proposal would change, and the impact. None of that is available on even the limited goals of the Trump tax reform plan.

2. Treasury 1986 vs Treasury 2017. President Reagan had two main figures serve as Treasury Secretary during the development and passage of the Tax Reform Act of 1986. One was Don Regan, who left Treasury to take the job as White House Chief of Staff, trading positions with James Baker, as Baker took over the Treasury post for the drive to enact tax reform into law. Baker was a political operative who had worked for Gerald Ford and George H.W. Bush, while Regan was a Wall Street chieftain brought on by Reagan to serve in his administration. While you could maybe equate Regan to Trump Treasury Secretary Stephen Mnuchin – because of their Wall Street backgrounds – Mnuchin has yet to prove that he belongs in the same sentence as Regan, who went on to become White House Chief of Staff to Reagan. Mnuchin predicted earlier this year that tax reform would be done by August. Reporters in the Capitol chuckled at the legislative innocence of that prediction.

3. Congress 1986 vs Congress 2017. Just as we can compare the players in the administration, we can look at the rosters in Congress to see what might happen on tax reform. There were some big names involved in 1986 – Rostenkowski, Packwood, Tip, and Dole. Those are four major players in the modern history of Congress. Of the 2017 roster of Brady, Hatch, Ryan and McConnell, maybe only Mitch McConnell would be considered an equal of those 1986 lawmakers. When Ways and Means Chairman Kevin Brady emerges from H-208 in the Capitol, he is a jovial fellow, but he isn’t the old bull that Dan Rostenkowski was at the time of the 1986 tax bill. Maybe in 20 years, Speaker Paul Ryan will be an equal of former Speaker Tip O’Neill. This battle over taxes could go a long way to establishing reputations of these key GOP lawmakers.

4. Much more bipartisanship in 1986 than in 2017. One thing that is certainly hampering tax reform efforts this time around is how things have changed politically in the Congress. Back in 1986, tax reform was done with a big bipartisan effort. The final bill received 292 votes in the House and 74 in the Senate. That seems highly unlikely this time around, as it simply wouldn’t be acceptable to large blocks of voters in either party to have a bipartisan bill (even though it should be the goal). I talked with the son of a former big name GOP Congressman the other day, who lamented the vice that politicians are in nowadays, as he argued they don’t have the political leeway back home to make a bipartisan tax deal work. I’m not sure I agree with that. I still think experience is a big deal, and most Republicans have never been in this position on a major issue like tax reform. We just saw the difficulties that the GOP encountered with health care. Stay tuned.

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5. This is far bigger than the fight over health care. I cannot stress this enough. Yes, we had some well-heeled lobbyists involved in the health care fight. But it will go to another level when we get on to tax reform. 1100 Longworth and H-208 are room numbers that mean something very important in the context of the House of Representatives, and those rooms will be two very powerful destinations for lobbyists who want to impact the course of tax reform in coming months. Back in 1986, they called it “Gucci Gulch,” and reporter Jeff Birnbaum wrote a book about it, which is still important reading today.

So, when you hear Republicans talk about tax reform, focus on one thing for now – when will we see a real bill? Once that happens, then the GOP can talk about actually passing legislation through the House and Senate, and getting that to the President’s desk.

Before the first vote can be taken, Republicans also need to figure out if they are doing tax reform via budget reconciliation (no filibuster in the Senate) or by the regular legislative process, where a filibuster is possible.

A lot of work remains to be done – it seems unlikely that will happen before the end of 2017, but stay tuned.


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