Ronald Reagan's preemptive strike on tax reduction, which sent Democratic politicians reeling in confusion, was not, as commonly preceived, a masterstroke of astute strategists but the end product of confused back-room machinations that accidentally wound up happily.
Regan's call for an immediate tax cut was not even contemplated a week before it happened. It began as an end run around his senior staff by one outside adviser, partly to undercut Reagan's tenacious adherence to Rep. Jack Kemp's tax reduction theories. Instead, it wound up supporting Kemp while still placating his enemies, and put President Carter and the Democrats on the defensive.
"This shows the virtues of disogranization," one Reagan insider told us. "If we ever get organized, we may be in trouble." Reagan's accidental master-stroke never could have happened in a tightly controlled campaign, such as Richard Nixon's. But it also showed that Reagan will not be deflected from his course of sustained tax reduction.
The central figure in what happened was Dr. Charls E. Walker, a former deputy secretary of the Treasury and now a Washington super-lobbyist. He had been economic adviser to fellow Texan John B. Connally's ill-fated presidential campaign, but turned up as chairman of Reagan's tax policy committee immediately after Connally's collapse.
Walker's first step in his new role was to criticize the economic speech delivered by Reagan April 8 to the American Society of Newspaper Editors. dThat speech, written mainly by Kemp, was one prolonged cheer for the Kemp-Roth bill to reduce individual income taxes 10 percent a year for three years. Like his corporate clients, Walker tends to traditionalist Republican hostility against such populistic tax reduction.
Walker tried all spring to get Reagan on record in cutting down or stretching out Kemp-Roth -- without success. He also wanted to get Reagan out front for a bill panted after by corporate business, traditionalist Republicans and Charley Walker: faster tax depreciation for new business equipment. This collided with growing determination in Reagan's inner circle not to say anything, to sit on his lead in true Nixionian fashion.
Walker solved that with characteristic audacity. On June 20 in Chicago, Reagan met with big business supporters. Walker turned ritual into policy-making by warning that Carter might well preempt Reagan on tax cuts. So why not propose a one-year 10 percent tax cut, with business depreciation attached? Great ideas, said Reagan. Reagan's principal policy-making staffers were outflanked, taken by surprise.
Dr. Martin Anderson, Reagan's top domestic adviser, was left high, dry and visibly angry back in California. ("That will teach him not to attend meetings," cracked Walker.) Also marooned was Kemp, his long tax-cut courtship of Reagan seemingly wiped away by one afternoon in Chicago.
Kemp was not even aware of what had happened until four days later, when he and his ally, Rep. David Stockman of Michigan, were summoned across the Capitol to Sen. Robert Dole's office. There they found Charley Walker sprawled across the sofa, holding a statement proposed for Reagan's release in Los Angeles the next day.
The Walker-written statement had removed the Kemp-Roth label plus two years of the tax cut, while designating Walker's corporate tax break as "the widely supported Capital Cost Recovery Act." Kemp and Stockman protested. Rather than fight, Walker asked Stockman to try rewriting it.
Stockman did, making clear this was "only the first installment of a permanent program" to cut taxes. In Los Angeles, Reagan immediately agreed. The final version contained Stockman's language, removed the puffery describing Walker's depreciation bill and pledged a three-year tax cut with counter-inflationary tax indexing in the fourth year. "Charley Walker will have a baby over this," one Senate aide predicted.
Actually, Walker was content to "decouple" the first from the second two years of Kemp-Roth; he will fight about the future if and when Reagan is president. Everybody was happy. Kemp had the three-year concept restored; traditional Republicans such as Rep. Barber Conable of New York were happy to support a one-year tax cut purged of Jack Kemp's label. What about Reagan's pledge for two more years of tax cutting? "I didn't read the statement," Conable said blandly, emphasizing the immediate legislation is for only one year.
So the front page of the June 26 Washington Post showed all manner of Republican senators and House members posing together on the Capitol Plaza to endorse Reagan's tax reduction. They had come together on a popular issue, glossed over their differences, overcome the front-running campaign staff's inclination to play it safe and stolen a long march on the Democrats. It was made possible by the loosest of campaign structures and Ronald Reagan's own determination to stick by an idea whose time he thinks has come.