Q: How did you get into this business?

A: Define "this business" and I'll go on from there. I do a lot of things besides lobby.

Q: You represent a collection of some of the biggest companies in the United States. And your clients come to you and expect you to help them. . . . How did you get into this lobbying business?

A: Well I started out as a college professor -- money and banking -- and moved on into the Federal Reserve System and there I was asked to come to Washington to be an assistant to Secretary of the Treasury Robert Anderson in 1959 and 1960. And there developed a liking for working with Congress and working legislation and particularly working legislation in the tax area having to do with business investment. When I left there in 1961, I became executive vice president of the American Bankers Association in New York City for eight years. Even though I did very little direct lobbying for the bankers, I did register as a lobbyist because I didn't want to be in any way actually or seeming to break the law. I went back in the Treasury in 1969 as a deputy secretary and had major responsibility for economic and tax legislation in the first Nixon administration. So when I left Treasury in early 1973 I decided to try to establish this consulting firm.

I had knocked the dickens out of my estate when I came into government and I needed to catch up a little bit. So several of us got together and said let's hang out our shingle and see if anybody comes in. And, sure enough, a few mom-and-pop clients came in....

Q: Those first companies....

A: There was GE, and Ford, and Procter & Gamble. I just want to name the ones that are still with us. GE, Ford, Procter & Gamble and there were three others, six. We now have 14 that are year-in and year-out retainer clients on corporate taxes across the board.

Q: You have a lot of friends in Congress.

A: Well, I hope so. Yes, I think so.

Q: If you were to rate your power -- influencing, of course, legislation -- are you as influential as, say, some senators?

A: No. This goes into basics as to what causes a bill to go through Congress or not go through Congress and what the lobbyists can do to affect that. It's not a matter of power and even influence. This is a matter of persuasion. What you've got to do -- it's very simple to state -- you've got to convince a member of Congress that what you are for is good for his constituents and what you are against is bad for his constituents. Do you want me to develop this as I develop it when I'm telling a class in political science? I mean things were different when I came to town when there was Sam Rayburn and Lyndon Johnson and so forth. Then you could do a great deal through convincing just a few people. If you could convince the chairman and ranking member of Ways and Means and Speaker Rayburn on a tax issue, you were a long way toward having your work done. Now with 36 members of the committee you've got to be sure 19 are convinced, because you don't have the degree of discipline that you had back 20 or 30 years ago. So, what you do is try to convince the member who is marching to the drum of his or her constituents. Believe me, no matter how against our business a given member may be, he or she is going to listen and listen very carefully if you're talking about -- in his or her district or state -- jobs, payrolls, economic growth. This is why I'm fundamentally optimistic about the problems now with business taxation. As the smoke clears here a little bit and people start looking at the fine print in the various tax measures, they're going to say "What does this mean to me and the people in my particular district?"

The fundamentals of the situation politically now are, number one, that the political clout in this country is not big business, not big labor, it's shared between the special interests group and, more importantly, the great American middle class. (That is,) middle-income Americans defined in their own image, a family income not of $20,000 a year, (that the) the statisticians (call middle) income, (but) $50,000 to $60,000 or $70,000 a year. They are the cock of the political walk right now. Those people are basically oriented towards the idea of a growing pie and more capital formation. They're concerned about capital gains taxes and so forth.

Q: Have you been a proponent of the flat tax?

A: No. In a very general sense I can see the advantage of a flat tax. . . . (Our) system is still too progressive, it's still too progressive.

Q: What do you mean the system is too progressive?

A: The marginal tax rate thing is still too progressive. Too many people are working away on a $30,000-a-year income or whatever and they get zapped at very high rates when they move into the next tax bracket. Having said all that, I don't think that our system is ready to move away from progressivity -- let's say ability to pay. Progressivity is a means of trying to redistribute wealth. It never has worked and never will. But getting rid of the credits and deductions, (would) be a very, very difficult thing to do because once you start letting the (camel's) nose under the tent. . . . Well, you gonna disallow deduction of state income taxes? Well, no. Charitable contributions? Well, no. Mortgage interest and property taxes? Then you start letting 'em in under the tent, and you find that the whole ball game is lost.

Q: You're head of the American Council (for Capital Formation lobbying organization) and for a while you were head of the (Reagan transition team) task force on tax policy. Is there any conflict there?

A: I don't think so. The basic thrust of the task force which the Reagan people put together, and the council, and the firm -- given our clients -- (is) basically pro-capital formation, pro-expansion, pro-productivity. So I've never had any problem on that score. The reporters have tried to make a problem out of it, but I'm working for exactly the same things now that I worked for when I was deputy secretary of the Treasury in 1971 and 1972 when I was working for accelerated depreciation and reinstatement of the investor tax credit. No problem or conflict there.

Q: You don't think it was improper for a principal lobbyist also to be the principal tax adviser?

A: I do not. I mean I would assume that the candidate examined that. One of the candidate's aides was asked that. He said well, that's no problem, we know up front what Charlie's position is, he's very frank about his position. That's a non-problem, I think. It seems to assume that the only people that you can have in those sorts of positions are either college professors or monks. When you look at the picture of the aides that were around Reagan in Middleburg (that) September (of 1980), you see the president of a major bank, president of a major construction firm, the president of a major economic consulting firm, the president of a major lobbying firm, and a congressman from New York. Now, if you coulda had four or five monks instead, or professors....

Q: How big a firm is this?

A: We have seven professional-level people. I guess we got about 16 or 18 in all.

Q: What's the volume of business?

A: We don't disclose that.

Q: What's your salary?

A: We don't disclose that.

Q: Did you ever think about running for office?

A: Yes, I did at one stage. A little bit. I had some feelings when I came to town in 1969 that I might try to go back and run for the Senate sometime but I wasn't in town very long before I saw that wasn't my cup of tea.

Q: Why not?

A: At the end of the day I like to go home and put my feet up and have a Jack Daniels and play a little Atari. I wouldn't mind at all the work part of it but in terms of the social demands and in terms of the campaigning I'd go bonkers right quick.

Q: How did you and (former secretary of the Treasury John) Connally get along?

A: A lot of people thought he was going to get rid of me -- some of the White House gang that I had trouble with, (John) Ehrlichman and so forth. From day one I told (Connally) that I'd enter into an understanding with him, if he liked. You and the president obviously can run me off anytime you want to, that's your prerogative. But you've got to get your feet on the ground -- get to know all the staff and all the problems. I will promise to stay till May 1. Then we'll talk. In early April we had gone down to a bankers' meeting and we were flying back in the JetStar and I said, Mr. Secretary, I've made up my mind as to what my feelings are. He said what are they? I said I'd like to stay. He looked at me and said 'I'm damned glad.' And that was the end of it. We hit it off very well. It was sort of a ham and eggs relationship.

Q: Do you have similar styles?

A: Actually, that was one of the problems we were worried about, that we were too much alike.

Q: Were you a Republican all your life?

A: No, not where I was born. In fact there were only one or two Republicans in town.

Q: What town was that?

A: A place called Graham, Tex., usually referred to Possum Kingdom Lake, a lake up in north central Texas, west of Dallas about 125 miles. The congressman from there now is one of the Boll Weevils -- Charlie Stenholm.

Q: What did your family do?

A: Well my father died when I was very, very young. He was sort of in this and that. He had what we called a poster advertising thing where you go around and put the billboards up in several counties around Graham. He had a chick hatchery, he had some agricultural land and this and that and we had a rooming house.

Q: Was your family affluent?

A: No.

Q: Poor?

A: By Graham standards at that time we were okay. We'd be considered in the middle part. By people's standards today we were poor.

Q:How did your family get on after your father died (when Walker was 4 years old)?

A: Very rough. He was a very fine man, wasn't all that good on business, and he left a very large volume of debts. For about four or five years my mother was carrying us all, running a rooming house. (We)came back in the mid-30s with a little oil income. He had left a little property in an isolated place in East Texas. In '33 it came in (that is, oil was found on the land) and it got us through.

Q: How did you become a Republican?

A: I became quite an admirer of President Eisenhower when I came to town to work for Robert Anderson, the Texan who was Treasury secretary in 1959 and 1960. In Texas you never had to register or anything like that and when I left to work at the American Bankers Association in 1961 I moved to Connecticut and you had to register up there. So I registered as a Republican. It was quite clear that in terms of basic policies I was a Republican -- as many people in Texas were who were nominally Democrats.

Q: Would you have liked to have become secretary of the Treasury?

A: At one stage or another I felt that, yes, I would like a chance to see if I could do the job. But it's never been a burning ambition, in part because I just don't think I'd like the lifestyle of a cabinet officer, number one, and number two, at this stage of the game I'm not that anxious to work that hard. I'm not anxious for 15-or 16-hour days.

3 Q: You say you don't want to work that hard -- how hard do you work now?

A: My body or my brain?

Q: Whichever.

Q: I work hard but I don't work this 15- or 16-hour thing. The beauty part of this job is that when Congress is not in session our business is very, very slow and very, very relaxed. So I can spend six weeks to two months of each year in Texas at Possum Kingdom Lake.

Lake.

Q: What happened (to your lobbying efforts) politically, (this year). Last year you were on top of the heap, this year you're taking it on the nose.

A: We're still net ahead, and I think we'd be able to move ahead next year. And our cleints didn't do all that bad. These weak companies are still able to use the tax leasing device into 1984, and the job of anybody is to look to the future. But it's not for me to evaluate me.

Q: But you have to sell yourself.

A: Let the market work its will. I'm a market man.