Amid Democratic efforts to outbid President Reagan on taxes, one of the party's bright new figures is devising a strategy for the future to free Democrats from sterile liberal orthodoxy.
He is 39-year-old Rep. William M. Brodhead of Michigan, chairman of the liberal House caucus (Democratic Study Group). His audacity has kept Democrats from turning their tax fight into a crusade against the rich, and he has much bolder designs for the future.
Brodhead, a member of the Ways and Means Committee, sees nothing gained economically or politically by Chairman Dan Rostenkowski's efforts to redistribute income through taxes. Instead, Brodhead is thinking about dropping all tax rates down to 35 percent, accompanied by a Democratic caveat: closing important tax shelters.
Here is a rare sign of Democratic innovation which Brodhead believes must be applied to every issue for his party to appeal to individual Americans instead of individual Americans instead of special interest groups. While claiming their heritage as a party of the people, the Democrats have become a party afraid of the people.
Brodhead walked onto the national tax policy stage early this year with his surprise proposal to drop the top 70 percent rate on "unearned" income (dividends and interest) to 50 percent. While failing in its intent to outflank Reagan (who quickly embraced it), Brodhead's move and its acceptance by the Democratic leadership had farranging consequences not yet fully appreciated.
Jude Wanniski, prophet of supply-side economics, wrote Brodhead commending his as the economic Arthur Vandenberg of the 1980s. Indeed, by declaring the rick also need tax incentives, Brodhead moved toward ending the Democratic bias against wealth that has distroted the party's economic policies.
But the distortion continued in Rostenkowksi's frantic efforts to outdo Reagan's tax package. While piling on tax-cutting "goodies" for business, he has performed Democratic ceremonial income redistribution by concentrating tax reductions in lower brackets. Brodhead holds his tongue in deference to his chairman, but sees little value in the emerging Democratic bill.
In early June with Rostenkowski and the White House in a bidding war over tax "goodies," a more rational approach was sought by the House Republican Conference chairman and principal political agent of the supplyside movement: Rep. Jack Kemp of New York. He walked over to Brodhead's office to suggest that they jointly back massive reductions of both "unearned" and "earned" income to the 30 to 35 percent level.
Brodhead was interested, but insisted that deep rate cuts must be accompanied by traditional Democratic "reforms" closing tax shelters. That doomed Kemp's hopes for a quick bipartisan bill, and he has not been in touch with Brodhead since.
However, Brodhead has seen Wanniski, Kemp's old economic tutor. Brodhead is intrigued with the supplyside theory that marginal tax rate reduction will increase growth and, therefore, increase tax revenue for liberal social welfare programs.
Brodhead has carried on without Kemp, seeking not a bipartisan formula for the present but a partisan Democratic strategy for the future. He proposes a maximum 35 percent rate for all taxpayers, linked to "reforms" cracking down not only on real estate tax shelters but hitherto inviolable business expense accounts.
That will encounter resistance from Democrats. But for the first time since the advent of Kemp-Roth, it would seize the offensive on taxes for the Democrats by challenging free enterprisers to give up tax shelters in return for lower rates.
It also belatedly would enlist Democrats in the tax revolution. "I think it's indecent for working people to pay taxes over 35 percent," Brodhead told us. He is after a restored Democratic appeal to ordinary Americans.
That goes beyond tax policy. Brodhead believes his party has become the agent of special interest groups spawned by the Great Society. Although it was using politics to oppose the Vietnam War that attracted young Bill Brodhead to the Democratic Party when he entered the Michigan legislature a decade ago, he now wants a focus closer to the center.
There is no new focus in current Democratic tax tactics designed primarily to save Dan Rostenkowski from floor defeat in his debut as Was and Means chairman. In contrast, Brodhead's tax notions are the first clear signs of unfossilized Democratic thinking since Reagan came to town.