The Making of a Miracle

• Share

They said it couldn't be done . . . couldn't be done . . . couldn't be done. Scrap the gargantuan federal tax code and write a simpler, fairer one? How naive! Drastically reduce top tax rates to their lowest levels in 58 years by throwing out the special breaks and deductions that have accrued over the past four decades? No way! Let the free market determine how people spend and invest their money rather than allow shills for favored industries to use the tax code to tinker with the economy? Get real! Such a drastic overhaul would amount to putting the public interest ahead of special interests -- in this case nearly every interest with enough clout to hire a lobbyist. And everybody knows the political process does not work that way.

Except that once in a great while the process does work that way. Thus it was with tax reform, a political miracle that was brought to the verge of fruition by an amazingly varied group of conservatives and liberals, Republicans and Democrats. Some, like New Jersey Democratic Senator Bill Bradley and New York Republican Congressman Jack Kemp, were longtime crusaders. Others, like Ronald Reagan, who supported a 1981 tax bill that was laden with special breaks, were late converts. But eventually, though the public at times seemed skeptical, most politicians came either to favor the idea or to fear the consequences of opposing it.

And so last week what couldn't be done cleared its last major hurdle. In a series of tense meetings that began Tuesday night and wound up shortly before 5 a.m. Saturday, Senate Finance Committee Chairman Bob Packwood and House Ways and Means Chief Dan Rostenkowski compromised on the last significant differences between the versions passed by the House last December and the Senate in June. Then came a day of nerve-jangling negotiations selling the deal to the other 20 members of the House-Senate conference committee (ten from each chamber). Finally the full committee gave its stamp of approval Saturday night. Though messy details remain to be filled in, and some elements of the compromise may be renegotiated after Congress returns from its three- week recess on Sept. 8, there seems little doubt that both houses will pass a final bill by overwhelming margins, and Reagan will be happy to sign it into law, no doubt with great fanfare.

"A top individual rate of 28% will be one of the lasting legacies of Ronald Reagan's presidency," Treasury Secretary James Baker exulted late last week. "During his time in office, he has brought the top individual rate down from 70%. That is an extraordinary achievement." There was enough credit to go around. Said an exultant Rostenkowski: "The political process works. This tax bill brings a sense of justice to the way we tax income."

Befitting a miracle, the story of tax reform's triumph is a tale of repeated resurrections: almost every week over the past two years somebody has pronounced the idea dead. Indeed, there were many times during its tortured course that the bill really did seem ready for burial. It was repeatedly brought back to life by both Democrats, who control the House, and Republicans, who rule the Senate. Neither party dared to risk resisting an idea that seemed to develop a momentum all its own -- nor to hand the other party a powerful issue in an election year.