Power Game (50 page)

Packwood was deliberately violating one of the unwritten tribal codes of Congress—that every significant action should appear to be taken by senators and congressmen, and that staff can have strong influence on the substance of policy only if it remains unseen and unheard. Like priests entering a holy order, staffers must take an oath of anonymity: not to be seen, not to be quoted, always to push the Big Man in front of reporters and cameras. Yet here, at a moment of great importance for the tax bill, Packwood was intentionally walking away from microphones and TV cameras, turning them over to David Brockway,
tacitly acknowledging Brockway’s power and importance in a way that members of Congress rarely do.

Brockway is a bright, straight-shooting, fast-talking, chubby-faced congressional civil servant in his early forties from an Ivy League milieu: history at Cornell and tax law at Harvard. His title is chief of staff of the Joint Committee on Taxation—Joint Tax in congressional lingo. With a touch of whimsy, someone tacked on Brockway’s door in the dismal Dickensian basement of the Longworth House Office Building, a sign:
CHIEF TAX DRONE
.

Brockway, who can be playful as well as serious, kept the sign, but he is much more than a green-eye-shade drone. In ten years, with Joint Tax, he has earned the trust of both houses and both parties; he is recognized not only for knowing tax law cold, but for his diplomatic touch with prideful politicians. As boss of forty highly regarded economic forecasters and tax lawyers, Brockway makes $73,600 a year. He could be earning four times that much with a private tax law firm. He tried that for five years in New York, but gave it up for public service. He also rejected academic life, fearing it would be too narrow.

“I didn’t want to wake up at fifty-five and find myself in East Podunk having written a monograph on hoe-handle production in Bratislava,” he explained. “If I could come up with some conceptual breakthrough and make a contribution, I might have done it. But I didn’t want to be an also-ran. I wanted to be on the first team. You want to be somebody, do something. This is a very hands-on thing. You’re here because it’s what’s going on. What you’re dealing with every day is interesting. The problems are important. You sort of like the excitement. What you can do in jobs like this is infinitely more than you could ever hope to do in the private sector. You have a lot of influence, even if it’s at the margin. Some of us are a little more crazy about it than others are. I mean, power—the exercise of power.”
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Normally, Dave Brockway talks so fast that he trips over his own syntax. His tongue cannot keep up with his racing brain. He rattles off figures and arcane legislative provisions at breakneck speed, then twists them this way and that, looking for new patterns like a ten-year-old playing with a kaleidoscope. The volume of material that he and his staff must master is staggering. Senators and House members cannot hope to learn it; they have to depend on staff experts. Brockway’s desk is covered with ocean swells of paper, great waves of computer printouts—tides of fat folders rolling in from subordinates while Brockway juggles phone calls from conservative Republicans or moderate Democrats.

Joint Tax is a nonpartisan committee staff which serves both House
and Senate. In 1986, Brockway was flanked by wall photographs of his two rival bosses: Packwood, the Republican Senate Finance Committee chairman, and Democrat Dan Rostenkowski, chairman of the House Ways and Means Committee. Each man had has his own committee staff, more political, more partisan, closer to its single boss, than Joint Tax, which serves both houses, both parties. But Brockway’s staff has the top technical expertise. For example, it was Joint Tax that put flesh and blood on the skeleton Democratic ideas for tax reform proposed by Senator Bill Bradley of New Jersey and Congressman Dick Gephardt of Missouri in 1982. Later, Joint Tax did the spadework for Republicans—the rival package of Representative Jack Kemp and Senator Robert Kasten of Wisconsin. In fact, when the outline of Reagan’s tax plan was sent to Congress in 1985, Joint Tax did weeks of work converting it from general proposals into actual legislation.

Nonetheless, Brockway’s public appearance on April 25, the day that Packwood called him before the cameras, was a rare, dramatic, even amusing event. Dramatic because just eight days before, Packwood had ordered a halt in the Senate Finance Committee’s handling of Packwood’s first doomed tax package. So many special interest provisions had been written into that bill and so much government tax revenue lost, that it was way out of balance. Packwood had shut down business for a week and huddled with his top political adviser, Bill Diefenderfer, Finance Committee chief of staff. With Diefenderfer’s encouragement, Packwood had decided to attempt a radically new approach. He wanted to slash individual tax rates from 50 percent to 25 percent and close lots of tax loopholes. But neither Packwood nor Diefenderfer knew whether this approach would work—either financially or politically. First, they had to ask Brockway to devise an actual plan and run his computers to see if the tax books would balance. Brockway’s answers and options made him more important as an author of the ultimate tax bill than most senators. On April 24, he had spelled out some ideas to the Finance Committee in a secret session, creating a great stir. But Packwood was not yet ready to embrace the new approach. That was what made the next day’s press conference so amusing.

For close to half an hour, Packwood and Brockway did a political ritual, a Kabuki dance, in front of TV cameras. Packwood warmed up the press with preliminary remarks and then invited Brockway to the microphone for the main event, an explanation of the radical new approach to tax reform. Reporters kept trying to question Packwood, but he ducked. “Dave, where are you?” he called out. Then he admitted Brockway’s expertise to reporters: “I think it’s easier for Dave to
answer your questions, and I’ll answer a few if I can. But he knows the subject better.” Brockway moved toward the lectern as Packwood danced away. The reporters called Packwood back and Brockway, who at five eleven is a shade taller than Packwood, deferentially gave up center stage. But Packwood bobbed away.

Their little seesaw game went on for about five minutes until Packwood firmly established Brockway as ringmaster. It was a deliciously ironic little byplay, a total role reversal. Normally, it is the staff aide who comes out to introduce the committee chairman and then quickly retires to the wings. This time, Packwood spent the press conference on the sidelines, leaning against a fireplace mantel, watching Brockway’s performance, and wearing a lopsided, wistful grin. Even when Packwood was drawn back, he reminded the press that “these are the options that
Dave brought us
” and “this is
what Dave came up with
on his chart [emphasis added].”

Indeed, Brockway was the star that day. He handed out a three-page memo, showing what tax deductions would have to be canceled to bring the top individual income tax rates down to twenty-five, twenty-six, or twenty-seven percent. His memo contained political dynamite, for among other things it proposed eliminating tax deductions for interest on home mortgages, charitable contributions, state and local taxes, individual retirement accounts, the passive-loss loophole, and killing the special low tax rate for capital gains. It was a tough package for wealthy and upscale voters who use tax loopholes heavily.

In front of the cameras, Brockway came across as accomplished, cool, and easy to follow. He was as smooth as a performer as he was with the arithmetic of the tax code. The new plan, Brockway said, had the same thrust as the administration’s proposal, as Bradley-Gephardt, and the House bill, “but it goes more completely to a simplified tax system with lower rates.” On business taxes, Brockway had left the Packwood bill as it was. On personal taxes Brockway had made big changes, emphasizing that his chart “was simply trying to illustrate how you might accomplish” low tax rates. When reporters asked Packwood whether there would be a higher rate for the rich, the senator parried: “Don’t know. Dave is working on that now, and he’ll come back with an answer on Tuesday.”

By so openly and dramatically acknowledging how much he was leaning on his staff, Packwood was letting the public in on the secret of staff power which is well known in Washington. Although Packwood was actually very knowledgeable about tax legislation, he was admitting for all to see that Brockway and the Joint Tax staff were his brain trust.
Months before, on the House side, Danny Rostenkowski had also leaned heavily on Brockwav and on Rob Leonard, chief tax counsel of the House Ways and Means Committee, to produce a draft tax package which he candidly called the “staff option.”

Although leaning on staff for substance is hardly a new phenomenon, it is more prevalent today than it was a decade or two ago. As issues have become more intricate, complex and technical, and as members of Congress have grown busier, their staffs have become more indispensable. That is especially true of tax bills, budget bills, and high-tech aspects of defense.

Actually, Packwood was playing up Brockway’s role for his own political purposes. He was using Brockway for another classic staff function: political buffer. This is an ancient ploy in the Washington power game. A president will have a staff aide leak an idea to the press as a trial balloon and then disavow the idea if it gets a negative reaction. A senator or congressman will send staff aides to take the political heat from lobbyists or unhappy constituents. A committee chairman will use his staff director to deliver bad news to members or to do some early bargaining. In this case, Packwood was using Brockway as a public fall guy, in case this tentative shift in tax strategy backfired. By having Brockway float the idea, first to Packwood’s own committee members and then to a wider public, Packwood left himself more room to walk away from it if it flopped. For those first couple of days, Packwood wanted the scheme labeled “Brockway’s options” rather than “Packwood’s plan.” His gambit worked. As the new package took off politically, Packwood came back out front, leading the charge and harvesting acclaim for his gutsy strategy.

Even so, Brockway’s rare day in the sun exposed the reality of the “shadow government” that stands behind senators and congressmen. Other staffers, vicariously enjoying Brockway’s prominence, kiddingly called him “Senator Brockway.” Schooled in the ethic of staff anonymity, Brockway was suitably shy in public but privately admitted the kick of having his picture in the newspapers and seeing the Joint Tax staff get public credit.

This episode illustrates one vital facet of power in Congress—namely, that the power of a committee and its chairman quite frequently rests on the quality of its staff. Packwood had been in a terrible political jam; he could not have produced a radical new tax package without the talent of Brockway’s Joint Tax staff.

Back on April 17, Packwood had known that his original tax plan was doomed, and that it would be fatal to his committee chairmanship for
tax reform to die on his doorstep. He was desperate. Packwood and his aide, Bill Diefenderfer, told me they had toyed months earlier with trying to lower tax rates dramatically, but that package had seemed unattainable because they could not figure out how to raise tax revenues to compensate for revenues lost by cutting tax rates. Suddenly they saw little to lose in gambling on such an effect.
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Packwood needed concrete alternatives and in a great hurry. Diefenderfer’s Finance Committee staff lacked the technical expertise to produce a package fast enough. Joint Tax, and Brockway especially, was more capable and politically freer to dream up the options and do rapid computer runs. Without Joint Tax, Packwood would have been dead in the water. With it, he could regain political momentum.

Packwood kept control of the ultimate decisions, but delegated substantial authority to Brockway. To Brockway, who had studied tax law under Stanley Surrey—a former assistant secretary of the Treasury whose name is synonymous with knocking loopholes out of the tax code—this sudden opportunity was like a dream come true. While Brockway is politically neutral, he is not without an ideology: the ideology of reform. His professional bent is to eliminate tax credits, incentives, preferences, shelters, and loopholes and to use the tax code to collect revenues “on a level playing field”—the same for all—not to use the tax code as an instrument of social and economic engineering or to favor certain interest groups or to promote various policy goals. Indeed, the “nonpolitical” ethic of Joint Tax makes it an inevitable adversary to many special interests.
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Most senators and congressmen praise Brockway as a talented, honest staff chief who does not push his own agenda. But once Packwood offered him an opening, Brockway pulled his own pet ideas off the shelf. Like a halfback given a key block, he suddenly had running room in a broken field.

“You have a situation you can play,” Brockway remarked later. “You try to get the most you can get, but you’ve got to read the field right to see what will go. You’ve got to make decisions that make sense to your bosses, the committee members.”

When Brockway came back to Packwood with new options, he knew some were only theoretical because they would not fly politically. But two Brockway features were terribly important in cleaning up the tax code, and neither had been boldly pushed so far by the Reagan administration or by the tax-writing committees.

One key Brockway proposal was eliminating the special low rate for capital gains, which was worth about $150 billion in taxes to the
government over five years. This idea, borrowed from the Democratic Bradley-Gephardt bill, had never really gotten a chance in either the House or Senate committee deliberations. But now, with the prospect of dramatically lower personal income tax rates, it commanded new attention when Brockway raised it.

A second Brockway idea became a cornerstone of the Packwood plan: closing the passive-loss loophole in the existing tax law. Passive loss was the gimmick by which promoters sold tax shelters to the rich, to generate passive or paper losses (often at several times the cost of their investment) in real estate deals, cattle herds, timberlands, art investments, and oil-and-gas programs. Wealthy investors would then write off these paper losses against actual cash income from other business, thereby drastically reducing their taxes or escaping the IRS entirely. Joint Tax estimated that killing this loophole would generate about $52 billion in tax revenues over five years.