What We're Thinking

April 19, 2017

Jeffrey H. Birnbaum

BGR Public Relations

POLITICO Pro Q&A: 'Gucci Gulch' author Jeff Birnbaum

By Colin Wilhelm
04/17/2017 03:42 PM EDT

Jeff Birnbaum literally wrote the book on comprehensive tax reform. A former reporter for The Wall Street Journal, Fortune and Time (among others), one of Birnbaum’s claims to fame is co-authoring the quintessential behind-the-scenes look at the last successful effort at comprehensive tax reform, “Showdown at Gucci Gulch.” Birnbaum, who is now president of public relations at the BGR Group and does work with the Coalition for Fair Effective Tax Rates, which advocates lower business tax rates, chatted with POLITICO about parallels between the current tax overhaul effort and the one he documented.

This interview has been edited for length and clarity.

How does the environment for this tax reform effort compare to the one that existed in 1986?

What is the same is that there appears to be, at least rhetorically, an agreement among the top leaders in official Washington that tax reform is a good idea. That is necessary, especially the endorsement and active support of the president.

Something else that is similar is that there is wide distrust among the public for the current tax systems. A majority of voters are eager to fix what they see as a broken tax code.

That combination is necessary, especially presidential leadership, to have any chance of passing something as difficult and painful as an overhaul of the federal income tax. Because there are by design winners and losers and so that makes it a difficult political sell.

Among Republicans it seems like there’s still a lot of disagreement over whether to keep this revenue-neutral or do a tax cut regardless of its effects on the federal deficit. Was there similar intra-party tension during the ’86 effort?

There was a lot of tension, many times during 1985 and 1986; within the parties there were geographical differences, there were factional differences, there were different economic interests that fought each other. Partisanship is only the beginning of difficulties that potential reform faces. There is a fight between high-tax states and low-tax states, between industries that currently pay a high effective tax rate vs. those that pay a low effective tax rate.

That is actually the real challenge of tax reform for advocates of tax reform, to persuade different interests, economic interests in particular, to look beyond the possible loss of the favored tax break, and look at the bottom line and see how the lower tax rate compensates for the loss of that benefit.

Was there a similarly aggressive public outreach effort by industries that want to fight different provisions or for keeping deductions like there is now?

Oh yes. There are many more ways today to promote opposition to a piece of legislation, but there were lots of efforts in ’85-’86 to do exactly the same thing with more limited tools. There were call-in campaigns, postcard campaigns. One of the first major hurdles that the tax bill had in the House Ways and Means Committee was a huge and very successful campaign to kill the state and local tax deduction provision that almost brought down the entire enterprise.

Do you see the same sort of engagement on this issue from President Donald Trump that President Ronald Reagan made in 1986?

I don’t think we yet know how vigorous President Trump will be in supporting comprehensive tax reform. He has said he wants tax reform but he has also often used the phrase “tax cut.” And there’s a very big difference between the two.

If he means comprehensive tax reform, lowering rates, eliminating tax breaks, that is a very big fight. One of the important gauges of that, at least traditionally, is for the effort not to raise or lower federal revenues at the end of the day. That was very important back in 1985 and 1986.

The president has to be very clear about what he wants and then the Congress will usually try to provide that for him, at least in concept. But exactly what concept he wants isn’t obvious because his Treasury Department hasn’t produced a proposal yet nor has either the president or the Treasury endorsed the leading congressional proposal.

What do you predict the chances are of comprehensive tax reform happening?

I think there’s a decent shot. There is, I think, a real problem with the tax code. It does not really support international competitiveness and economic growth the way it should.

To really give a legitimate assessment of how it will go, we need to know more particulars. What kind of tax reform? Will it be revenue neutral? Will it be comprehensive or just partial? Will it just be a tax cut, as the president at times has hinted?

In my view there’s a good start to the possibility of tax reform. But no one should imagine that once this gets going, and I believe that it will get going, it will take a long time. It’s not going to be simple or quick.

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