Meanings

What were the political lessons of the tax battle?^[91] Ultimately Reagan won all but two of those who had voted with him on the reconciliation rule. His lobbying and the public outcry picked up a few moderates, like Glickman and Biaggi. He showed that a president can successfully appeal to the people or to some of them. The tax cut was popular when it passed; in mid-August a Gallup sample approved it by a two to one margin.^[92] Reagan was helped, in a way, by the Democrats, who created a package they had trouble defending because they did not much believe in it. "All the Democrats achieved by compromising was to undercut their own arguments against our position," commented a Reagan adviser.^[93] But the president also sold the package by continually down-playing its radicalness.

It was hardly a tax cut at all, he argued, much as the spending cuts had not really been spending cuts. There seemed, to be sure, some truth in these arguments. The Kemp-Roth tax cuts would serve in some sense to offset previously established tax increases from social security and bracket creep. Yet while Reagan invoked brilliantly the residual American suspicion of "the guvmint"—always speaking of government as if it were some strange creature with a mind of its own, separate from the people who voted, lobbied, demanded and complained, paid taxes, pocketed the benefits, and staffed the bureaucracy—he did not make his case against the welfare state on its merits. He had some desire to try, as with social security, but was talked out of the attempt.

In short, Reagan's great victories were not truly revolutionary. He did not change the minds of the American people. But he did rouse existing beliefs to a point where many people petitioned their senators and representatives. Reagan used all the powers at his command to obtain, in only seven months, a major redirection of the priorities of the American government. Yet he had not won the public over to "Reaganism."

Congress passed the conference report on the tax bill on August 4. Conferees compromised on various benefits attached to the package

during the bidding war. Some miscellaneous special-interest provisions—pecan trees, "the gong show amendment," the freeze of the oil depletion allowance, tax credit for wood-burning stoves—were removed. The mild cleanup of the tax bill was just as traditional as the previous Christmas-treeing of the package.

The bidding war was the most dramatic aspect of the 1981 tax battle. Yet the fact that Reagan won all but three of the votes on taxes that he had won through reconciliation should remind us that the basis of his victory was a coalition created by the 1980 election: Republicans held together by party unity and a minority of conservative Democrats from conservative districts. There was uncertainty, so members of Congress exploited the situation to demand benefits for their districts. Yet the auction proved not that the president had to dominate Congress but that even he had to lobby it. As surely as he raised a political windstorm, just as surely he knew there were limits to how hard he could push. When Charles Wilson was committed to his party on the tax bill, the president ceased his personal lobbying.^[94] When Claudine Schneider opposed him on the final Gramm-Latta 2 vote, he called her the next day to pledge his support against unhappy Republicans in her district.^[95]

Stockman drew another conclusion; Greider quotes him:

"I now understand," he said, "that you probably can't put together a majority coalition unless you are willing to deal with those marginal interests that will give you the votes needed to win. That's where it is fought—on the margins—and unless you deal with those marginal votes, you can't win"^[96]

He added something that meant more then he perhaps realized: "Power," said the disappointed budget director, "is contingent."^[97] The oil auction was a wonderful example. Oil interests, relatively weak in the late 1970s, took full advantage of the new contingencies. If power is contingent, however, so is weakness. The oil interests exploited the bidding war, but that was possible only because the bidders chose to play. The game could change very quickly and with it the seeming distribution of power.

Some legislators exploited the need for their votes in late July for personal ends. But to party leaders, and (we hope by now) to our readers, the "situation" meant more than the tax battle of July. That battle was set in a larger context—economic crisis, Democratic party disarray, elite confusion, a dramatic election, Republicans enjoying the prospect of governing, a new president at the height of his power. Those were the circumstances Reagan used, not only for short-term ends but also to shape the long-term results.

The attention paid to the special-interest battle also should not be

allowed to obscure the fact that if that battle had not occurred and the president had won his original cleaner bill, deficits would still have been huge.^[98]

The fiscal crisis that followed had far more to do with the original plan than with the add-ons. Estimates at the time projected that big differences would not show up for five years (in FY86, $46 billion). There was plenty of time to fix up those differences, if they were significant. The original $221.7 billion revenue loss for FY86 was far more intractable.

From the beginning of the battle, both sides knew that the real stake was constraining government in the future. The Speaker and his allies fought to prevent constraints; they did not believe in the supply-side boom. The president believed in both the boom and in spending cuts. Taxes were the worst part of government, so cutting taxes would cut government, reversing what Reagan believed to be the pernicious momentum of the federal machine. The tax and authorization changes were now part of the law. Attempts to change these would have to overcome not the president's popularity but his veto. He held the key to later action. In that sense, he had set the agenda for coming years.

But the agenda would depend as much on the economy as on Reagan's victories. The crucial consideration was raised by veteran Pennsylvania Republican Representative Joe McDade shortly after he voted for the Hance-Conable bill: "Pray God it works. If this economic plan doesn't jell, where are we going to get the money for anything?"^[99]