How "Mailman" Bill Thomas Delivers for Bush

Behind the big tax cut -- and the flap over tax breaks for the poor -- is the California rep and his volcanic personality

George W. Bush got the glory for winning his third major tax cut in his first three years as President. As he signed the $350 billion measure on May 28, the man most responsible for shaping and passing it stood smiling only inches away, largely unknown and unheralded. Still, Bush knew, and he paid House Ways & Means Committee Chairman William M. Thomas (R-Calif.) the ultimate compliment as he marked his latest political victory. "He got the job done," said Bush.

Thomas, 61, a wonkish and mercurial former community-college prof from Bakersfield, has developed into the most powerful boss of the key committee since the days of top-dog Democrats Dan Rostenkowski and Wilbur Mills. In addition to leaving his imprint on the President's first two tax cuts, Thomas engineered House passage of so-called fast-track -- the Trade Promotion Authority that allows the President a freer hand in negotiating international trade pacts. Thomas' record for delivering legislation is so reliable that on Capitol Hill he is known as "The Mailman." Says Charles N. "Chip" Kahn III, head of the Federation of American Hospitals: "The President has a secret weapon in the House, and that is Bill Thomas."

The next packages the Mailman will have to handle won't be any easier than the bruising battle over Tax Cut III. Thomas is already neck-deep in the politically charged debate over the future of the Medicare system and the long-simmering fight over taxing American multinationals, an issue that splits Corporate America. To put his policy prescriptions into law, Thomas will have to go toe-to-toe with Republican House leaders who have spent the past eight years centralizing power at the expense of committee barons. What's more, he'll have to overcome a tense relationship with his Senate counterpart, Finance Committee Chairman Charles E. Grassley (R-Iowa), with whom he feuded in recent months over the size and content of the '03 tax bill.

Thomas insisted on dropping a number of Senate items in the bill, including two that subsequently unleashed a political firestorm. One provision would have cracked down on corporate tax shelters (although Thomas has signaled he will revisit that issue later this year). What has attracted more attention is the exclusion of millions of low-income families from receiving an expanded child tax credit. The Senate has passed a provision to extend the credit to those 6.5 million families who pay little or nothing in income tax. But Thomas and other GOP House leaders have said they will only provide the child tax subsidy as part of a larger package that would benefit higher-income families and extend some of the '03 tax cuts until the end of the decade. That approach is causing headaches for the Bush White House, which has pressed for a quick resolution to what has become a public relations debacle.

Thomas' intransigence on the issue is probably no surprise to lawmakers who have encountered his infamous temper. While the conservative chairman is widely praised by colleagues as a strategic thinker and a master of detail, his fuse is shorter than a lobbyist's code of ethics. The blowups are legendary. Thomas so incensed former Ways & Means boss Sam M. Gibbons (D-Fla.) over Medicare cuts that Gibbons literally tried to wring his neck. And at a recent hearing, Representative Charles B. Rangel (D-N.Y.), the top Ways & Means Democrat, capped a chilly exchange with Thomas by announcing: "My one consolation is that you are just as inconsiderate of your Republican colleagues."

While there is no dearth of Terrible Thomas tales, the image of a savvy legislator prone to fits of pique obscures the reality that he is a calculating strategist who sometimes leverages his volcanic reputation to enhance his influence. "I think he encourages his reputation of having a temper," says Representative Nancy Johnson (R-Conn.), who nonetheless allows that it "can be painful when you're not on the same side as him." A tax lobbyist puts it more succinctly: "He's a pain in the ass, but he gets bills passed."

If Thomas has employed a bad-boy reputation to his advantage on occasion, it's not the only or most important way he has carved out an unusually independent platform. For example, rather than taking the Senate's approach of temporarily phasing the dividend tax cut down to zero -- as the White House preferred -- he insisted on cutting both dividend and capital-gains tax rates to 15% for most taxpayers. "I wasn't going to go for the symbolism of [taking the dividend tax cut] down to zero for political purposes," Thomas says.

One key to his success is that, unlike most other chairmen, he doesn't focus exclusively on what will pass his committee but maps strategy for pushing his bills through the Congress as a whole. A fierce partisan, Thomas will reach out to Democrats on occasion -- if it's absolutely necessary.

Faced with GOP defections last year over fast-track, Thomas struck a deal with three Ways & Means Democrats. To win their pivotal votes, he inserted provisions in the bill to prod the Administration to take worker rights and the environment into account when negotiating international trade pacts. While the White House was none too pleased, his bill formed the blueprint of what passed the House by a one-vote margin.

To build a winning package, Thomas has occasionally negotiated directly with maverick Senate Republicans. On the tax bill, for example, he consulted with Senators Susan M. Collins (R-Me.) and George V. Voinovich (R-Ohio). "I can't think of any other congressman who has done that," says Collins.

Now, fresh from his tax triumph, Thomas has some challenging tasks ahead. He's in the process of rewriting the corporate tax code for U.S. companies that operate internationally -- as part of an effort to scrap a $4 billion tax subsidy for U.S. exporters that the World Trade Organization has deemed illegal. Thomas has talked about leveling the playing field in the tax code so it doesn't penalize U.S. companies, such as Ford, that manufacture in foreign markets. Companies that profit from the current export subsidy, such as Boeing and Caterpillar, have opposed Thomas' legislation. Of course, corporate taxes pale next to the biggest item on the congressional agenda: revamping Medicare and adding a prescription-drug benefit -- a top Bush priority heading into the 2004 campaign.

Thomas, widely regarded as a leading Hill expert on health-care issues, will play a prominent role in the Medicare debate. While Senate and House Republicans appear to be coalescing around the basic contours of a drug benefit, Thomas' independent streak could create tension with the Senate and White House. In particular, he is vocal about introducing "means testing" into Medicare -- requiring seniors who are relatively affluent to pay for more of their health-care services, a proposal that has been controversial in the past.

Still, Thomas is eager to leave his fingerprints on big-ticket legislation. The GOP leadership has imposed a six-year time limit on committee chairmen, so he has only three years left atop Ways & Means. But he seems driven by deeper forces as well. The son of a plumber who did not finish high school, Thomas is acutely aware of his working-class roots. "Do you know how intimidating it is to deal with people who are Harvard-educated, whose parents went to college?" says the San Francisco State University graduate.

Thomas acknowledges that as he seizes his moment, he can be impatient with his colleagues. "I'm very conscious of the downsides of being short with people," he says. Then, as he talks about the end of his tenure, he chokes up. "But all of that is secondary," he says, "because when you're through, you're through."

By Alexandra Starr in Washington

    Before it's here, it's on the Bloomberg Terminal.