'80s Tax Bill Has Lessons For Health Care Overhaul In negotiating health care legislation, lawmakers ought to look back to 1986. That was the year that a Democratic House and a Republican Senate worked together to pass a tax simplification bill. A full-court press by lobbyists is usually enough to stop a bill — but not in 1986.
NPR logo

'80s Tax Bill Has Lessons For Health Care Overhaul

  • Download
  • <iframe src="https://www.npr.org/player/embed/111764470/111764453" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
'80s Tax Bill Has Lessons For Health Care Overhaul

'80s Tax Bill Has Lessons For Health Care Overhaul

  • Download
  • <iframe src="https://www.npr.org/player/embed/111764470/111764453" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript


It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.


And I'm Linda Wertheimer. We're about to dive into an autumn of intensive lobbying over health-care legislation. All the big interests in a multitrillion dollar industry are working to make sure the bill doesn't hurt them.

INSKEEP: And Linda, that's one reason we're glad you're sitting in with us this week, because you've covered Washington for many years. And that includes another year when Linda covered a story where lobbyists flooded the capital. It was another year when Congress passed a bill affecting almost every American.

WERTHEIMER: It was 1986, and the subject was taxes. The tax code was not working for average Americans. Newspapers reported cases of some working people actually writing bigger checks to the tax man than very wealthy people, even heads of major corporations. Although the highest tax rate was 50 percent, few paid it because there were so many deductions or loopholes available to the rich.

The 1986 tax restructuring would eventually lower that top rate to just 28 percent, while closing lots of specialized loopholes through which a few escaped income tax altogether. It took many months, furious negotiation, and it seemed like a miracle when it finally passed. Jeffrey Birnbaum covered that fight for the Wall Street Journal.

Mr. JEFFREY BIRNBAUM (Reporter, Washington Times): Congress, which usually does only two things well - overreact and nothing - can actually pull itself together and write remarkable legislation that will deal with issues. And it did in '86, and it could very well on health-care reform, despite the many doubters. But it would take an extraordinary confluence of events and personalities for something like that to happen again.

WERTHEIMER: Jeffrey Birnbaum now works for the Washington Times. He and his colleague at the Journal, Alan Murray, wrote a book about that tax battle colorfully called "Showdown at Gucci Gulch," named for the hallway where well-heeled lobbyists waited for lawmakers.

A full-court press by those same lobbyists is usually enough to stop a bill, but not in 1986. Former Treasury Secretary James Baker believes the difference was one extraordinary personality.

Mr. JAMES BAKER (Former Treasury Secretary): Ronald Reagan. It was his number one domestic priority. He had a lot of - there were a lot of people, frankly, in his party who opposed that bill. So it was the president. Something like that is not - it can't get done without presidential leadership.

WERTHEIMER: Reagan benefited from the confluence of other powerful personalities as well, such as Baker himself and the chairman of the tax-writing committee in the House, a Democrat, and the Republican chairman of the tax-writing committee in the Senate.

The co-author of "Showdown at Gucci Gulch," Alan Murray, is still with the Wall Street Journal. He remembers another key factor: The goals of the '86 bill were clear.

Mr. ALAN MURRAY (Reporter, Wall Street Journal): You had two big ideas, each of which was appealing to a different party. The Republicans were determined to bring tax rates down. The Democrats were upset about these giant loopholes, many of which went to corporations or to wealthy people, and they wanted to close the loopholes. And so you had a confluence of interest. You do have the same sort of dynamic in health-care reform.

WERTHEIMER: The driving force behind the tax bill among Democrats was Bill Bradley, then a senator from New Jersey. Bradley first introduced this version of tax reform in 1982, and began a campaign to sell it to his colleagues. It was Bradley's very powerful idea that it was possible to lower income tax rates for everyone and pay for it by closing loopholes.

Mr. BILL BRADLEY (Former Democratic Senator, New Jersey): The key thing was the conceptual framework. Once you have a reform that has conceptual soundness, it's very difficult for somebody to challenge you. It just made a lot of sense to cut taxes rates - who's not for that - and to pay for it by eliminating loopholes that allowed different people making the same income to pay different taxes.

WERTHEIMER: Bradley sees strategic similarities between taxes then and health care now. Then, as now, the business interests were split, creating an opportunity for a persuasive president to press for change. In the case of health care, the two big ideas are cover everybody and cut the costs. But Bradley says it's not possible to know yet whether President Obama made the right decision in letting the Congress create health-care legislation. Former Treasury Secretary James Baker thinks that was a mistake.

Mr. BAKER: Well, the most important thing we did was, we set up our own proposal. We didn't vest one party or the other in the Congress with the authority to write the bill. We knew going in that it was going to - if it was going to fly, it would have to have broad, bipartisan support. And by that, I mean not just one or two votes, but broad support from both parties. And then it passed, I think, with almost as many Democratic votes as it did Republican votes.

WERTHEIMER: In 1986, the House was controlled by Democrats, the Senate by Republicans, with a Republican in the White House who made cutting income tax rates his first priority. So bipartisanship had to be the order of the day. Jeffrey Birnbaum again.

Mr. BIRNBAUM: The Democratic-controlled House passed the bill and therefore, the Republican-controlled Senate couldn't afford not to pass the bill, and there was real bipartisan consensus in a way that we can't even imagine having currently, and that's one of the real problems, I think, moving the health-care reform bill forward.

WERTHEIMER: Birnbaum's colleague, Alan Murray, points out that there is an entire generation of members of Congress with no experience of working with the other party - just not in their skill set, he says. But there is another lesson here. When a big change gets rolling, it can be hard to stop. That does not mean the way was smooth for tax reform. In fact, the tax bill set records for resurrection. Here's Alan Murray.

Mr. MURRAY: It was like "The Perils of Pauline"; the thing kept coming to the edge of a cliff and almost falling off. You know, the motivation that kept that bill alive and moving was less a positive motivation - oh, we have to fix thetax code - than it was a negative motivation. It was the people in Congress saying, I can't be the person who killed it; you know, don't let the dog die on my doorstep.

WERTHEIMER: That, Murray reckons, is the best chance health care has - if members of Congress are afraid to let overhaul die. I asked former Senator Bradley about that. He said the issue has to get to yes or no on health-care overhaul; get past the details. Pass one bill in the House, another in the Senate, then sit down with the White House to work something out for the president to sell.

Mr. BRADLEY: That's why the final bill is so critical, because you can't say, well, oppose taxing employer benefits or don't do the public option, because those are just narrow aspects of the system, and the president can't really mobilize what he has the ability to mobilize for something so narrow. But he will have the capacity to do that once the bill comes out of conference, and that's why I think it'll pass.

WERTHEIMER: A big legislative battle like health care is exciting, Bradley says, because if you can do one big thing that everyone thought was impossible, perhaps you can do another. President Obama recently told the Washington Post that with a success on health care under our belts, end quote, managing even the deficit begins to look possible.

INSKEEP: So that's a big battle from the 1980s that still has relevance today, that Linda Wertheimer witnessed. And Linda, I have to ask, that book title, "Showdown at Gucci Gulch," what was Gucci Gulch?

WERTHEIMER: Well, the lobbyists who were trying to make things happen their way in the bill are very highly paid people, and they were crowded into the hallways outside of the relevant committees. Senator Bob Dole of Kansas, a funny guy, came out and looked at it and he said, they're packed in Gucci to Gucci.

(Soundbite of laughter)

WERTHEIMER: And that's where it came from.

INSKEEP: Well, let me just ask, though, those well-dressed lobbyists, in the end, is this a case where the special interests lost because the bill passed?

WERTHEIMER: I think it is a case where they lost, and it was partly because they were divided. Each one was looking at their own particular tax deduction, and they weren't looking at the whole. They could not oppose the whole. The Congress, on the other hand, was united. It's the sort of thing that Bradley is saying, whether you - can you say no to the whole bill?

INSKEEP: NPR's Linda Wertheimer, who witnessed that tax battle in 1986, which ended with the bill that President Ronald Reagan could sign. She's with us this week on MORNING EDITION from NPR News.

Copyright © 2009 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.