Bill Bradley Knows Tax Reform. This GOP Plan Isn't It.
From House Speaker Paul Ryan to President Donald Trump, Republicans say they're modeling their current tax bill after the landmark tax overhaul of 1986. But the architect of that measure rejected the comparison on Wednesday, saying that today's Republican strategy of rushing through their current legislation is "like handing the American people a Molotov cocktail with the fuse burning."
Bill Bradley, the former New Jersey senator who was a leader of the reform process three decades ago, said that in contrast to the 1986 measure—approved by a Democratic House of Representatives and a Republican Senate and signed by President Ronald Reagan—today's Republican plan is a big revenue loser, doesn't really simplify the code and gives too much to the wealthy and special interests.
He also noted in a conversation with Bloomberg reporters that Republicans plan to rush their bill through Congress in the next month-and-a-half with no Democratic votes.
Bradley proposed in the early 1980s to sharply cut tax rates, which appealed to Republicans, while closing loopholes to prevent loss of government revenue and attract Democratic support. He then worked with the Reagan administration and congressional leaders to enact the last comprehensive reform of the U.S. tax system.
He recalled that Reagan was "committed" to the tax reform concept, and that Treasury Secretary James Baker brought formidable persuasive skills and substantive knowledge to the task of crafting the details and building support.
That's lacking today, Bradley said, adding that Treasury Secretary Steven Mnuchin "seems a long drop down" from Baker.
When asked about Trump's assertion to some Senate Democrats this week that he had to throw in repeal of the estate tax, a benefit exclusively for heirs of the wealthy, because otherwise "the deal is so bad for rich people," Bradley laughed.
"He doesn't know what the hell is in the bill," Bradley said. Repealing the estate tax, he added, "is to save his family from paying taxes; give me a break."
Bradley is a partner at the investment banking firm Allen & Company. Although out of politics since 2000, he remains familiar with tax-reform issues. He predicted that the Republican plan could either blow up or become a $1.5 trillion tax cut with no other real changes to the tax system.
That would have nothing in common with the 1986 overhaul.
"A pro-reform coalition emerged that was at once strange and impressive," Jeffrey Birnbaum and Alan Murray wrote in "Showdown at Gucci Gulch," the definitive account of that achievement. "It linked Ronald Reagan, the most conservative president in modern history, with George McGovern, the Democrats' most liberal candidate in decades. It paired Jack Kemp, the conservative darling of the supply-side movement and a driving force behind the 1981 tax cut bill, with Bill Bradley, a liberal Democrat, and fervent opponent of the 1981 bill."
It also won praise across the political and economic spectrum. But there were dissenters. One was Trump, who called the legislation a "catastrophe." Significantly, it closed some loopholes that had helped real-estate developers like him.
Now, it seems, he's changed his mind. In August, he cited the 1986 measure as a model for the kind of bipartisan effort he wanted this fall, called it a "beautiful bill" and said (not particularly accurately) that after it passed, the "economy boomed."
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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