I‘M WILLING TO DO A LOT FOR YOU, dear Reader, but I’m afraid I couldn’t quite drag myself to the “Call for Reconciliation” meeting Republicans and Democrats threw for themselves last Thursday at 8:00 A.M. The sight of a bipartisan congressional scrum of high-minded members from both sides of the aisle dedicating themselves to “moving on,” “seeking closure,” “healing wounds,” and “getting back to the business of the American people” so early in the morning would have been socially embarrassing for me, especially if I started gagging in the middle of it. Besides, after spending several days up on the Hill watching the Republicans go about their business, I was beginning to feel good about their prospects, and I didn’t want anything to spoil the mood.
The big thing that’s changed about the GOP is its way of doing business. When Republicans won their majority in 1994, they were used to winning presidential elections but not congressional elections. So they acted as if they’d just won the presidency. They set up a counter-president — Newt Gingrich. They launched a 100 days agenda — the Contract With America. They established a top-down management style — fine in the executive branch. Gingrich and his leadership court set the agenda, and the rest of the members were supposed to go out and be foot soldiers.
The problem was that Gingrich wasn’t as smart as he thought he was. His top-down management style suppressed the ideas and creativity of regular members. And it turned every policy dispute into a leadership crisis. Challenging a policy meant taking on Gingrich. Republicans spent a lot of time in closed-door meetings crying with or challenging their speaker.
That management style might have died last week. It was the week the Republicans figured out how to be a congressional party.
The tottering of the old regime came when Trent Lott tried something Gingrichian. He tried to impose a tax plan on the party and then have the foot soldiers go out and propagandize for it. Lott’s idea was to make an across the board 10 percent tax cut the centerpiece of the Republican agenda. Part of the reason the leadership wanted an across the board rate cut was that after the last few budgets, which produced things like the capital gains cut and the child tax credit, the GOP was afraid of looking like the party of targeted cuts for special interests. Also, across the board rate cuts have talismanic appeal for many in the GOP. Ronald Reagan favored them, you see.
Never mind that Reagan faced an entirely different situation. He cut rates to stimulate growth. Now growth doesn’t need to be stimulated. He cut rates at a time when there was a tax revolt brewing across the land. Now, the polls clearly reveal, voters want to use the surplus for debt reduction — even conservative voters. Despite all this, the fallback position for some Republicans is: No matter what the political problem, tax-rate cuts are the solution.
But it became obvious last week that many GOP foot soldiers didn’t actually support a 10 percent across the board cut. After a series of meetings with members, the leadership was forced to back down. The mainstream media declared this a victory for GOP moderates. (For many reporters, every story about the Republicans has to pit the conservatives against the moderates.) Meanwhile, many of the right-wingers saw this as another example of GOP gutlessness: Clinton had indicated he would attack the 10 percent plan as a tax cut for the rich, so GOP squishes were caving in.
In fact, both the reporters and the wingers were mostly wrong. The rate cut plan failed because there were many different tax cut plans floating around GOP circles — many of them sponsored by true-blue conservatives. And none of the plans had yet won consensus support. Trent Lott’s mistake was to try to impose a single plan on the party in the first place, before the alternatives had had a chance to compete in the marketplace of ideas.
By the end of the week the lesson apparently had been learned. Now there will be a little more time for hearings and debate to allow some consensus to emerge. This is the way congressional government is supposed to work.
Here are some of the tax ideas now floating around:
P Death Taxes. America has some of the highest estate taxes in the world. GOP House member Jennifer Dunn wants to cut them. This is important because as the baby boomers, with their bull-market millions, start dying, the revenue produced by this tax will skyrocket. That’s billions of extra dollars going to Washington.
P Marriage Penalty. Religious conservatives and others have long been pushing to close the anomaly in the tax code that penalizes marriage. GOP representatives Dave McIntosh and Jerry Weller have one proposal.
P Capital Gains. Yes, Congress just passed a capital gains cut. But it has, in true supply-side fashion, generated a lot of revenue. So the argument is to push it lower and generate more. When you’re winning, keep going. Plus, with more and more people in the market, cap-gains cuts poll well.
P IRA Expansion. Americans love IRAs. Bill Clinton has proposed Universal Savings Accounts, borrowing a term that’s been floating around the Cato Institute for years. So Steve Moore of Cato recommends taking the Clinton proposal and driving a truck through it. Allow people to pour more money into IRAs and raise the income cap on the program. That would increase savings, and these IRAs could then be reformed to allow people to use the money for education or long-term health care, thus beginning to privatize benefit programs through the back door. Furthermore, the more people get used to the idea of private IRA accounts, the more they are likely to become amenable to privatized Social Security accounts.
P Bracket Adjustments. To give tax benefits to the lower middle class, some would raise the income level at which earners start paying taxes. Others object, saying we shouldn’t have a large segment of the population that pays no taxes. But we could widen the 15 percent bracket to allow families to earn more before they start paying higher rates.
P Payroll Taxes. For many families, these are the taxes that take the biggest bite. Some Republicans want to cut them — though doing so lands them in the Social Security thicket.
All of this tussling represents maturation on two fronts. In the first place, it means that Republicans will have a broader array of fiscal choices. In the 1980s it was an absolute article of supply-side faith that rate cuts were economically and politically the best tax cuts. They expanded the pie by giving people the right incentives. There’s still a lot of truth to that, but in boom times like this, maybe the menu of options should be larger.
Second, the events of the past week could indicate how the Hastert era will be different from the Gingrich era. No revolutionary vanguard. No maximum Speaker. No paradigm-shifting grand plans. Just a lot of little plans bubbling up from the warrens and cubbies of Capitol Hill. A devolved and laissez-faire management style for a party that is supposed to believe in devolution and laissez-faire.
David Brooks is a senior editor of THE WEEKLY STANDARD.
