Don't get the wrong idea. The rich and the powerful don't always come up short in contemporary Washington
We have the nation's bankers to thank for supplying a pointed reminder this spring, if any was necessary, that monied interests still can sashay rather grandly up to Capitol Hill.
They produced the Hydrogen Bomb of modern-day lobbying, an effort whose firepower was awesome, whose carnage was staggering (in one fell swoop, down went the chairman of the Senate Finance Committee! down went the chairman of the House Ways and Means Committee! down went the secretary of the treasury! down went the president of the United States!)--but whose self-inflicted wounds are yet to be counted.
The issue was a scheme calling for tax withholding on dividend and interest income. It was to have gone into effect this month, having been slipped into law in 1982 by a revenue-panicked Congress that was in one of its infrequent let's-all-close-our-eyes-and-jump-off-the-cliff-together frames of mind.
Withholding, the politicians surely knew, is just about the least popular idea out there since Prohibition. The last time it was suggested (by President Kennedy, in 1962), Congress found itself buried beneath more mail than it had seen on any issue since President Truman fired General Douglas MacArthur. Withholding died a speedy death.
Two decades later, along comes Sen. Robert J. Dole (R-Kan.), troubled by runaway deficits, concerned about tax compliance (some 11 percent of all such income goes unreported and untaxed), and looking to run one day for president. In the last hours of his Finance Committee markup last summer, Dole snuck withholding into an omnibus tax bill.
Bankers' move. Do they take it, or do they fight?
"We really had no choice," said Loyd Ator Jr., the American Bankers Association tax lobbyist. "For our members, particularly the smaller banks, withholding is our gun control." Not only would it rile the customers, it would cost the banks they claim a couple of billion dollars a year to be the government's tax collector.
So they fought.
And it wasn't pretty. And it wasn't close. And it was, it was--well, it was damn near humiliating is what it was, the way they rolled the whole town. "There was nothing subtle about it--sort of like an elbow in the eye," Ator said.
What the bankers did was naughty--everyone in Washington said so. They just went right over the heads of every Important and Thoughtful Person here and took their case straight to the people, of all people. They tattled on Congress. To their constituents.
"They had gone out on a limb," Ator said. "We sawed it off."
Their saw was the monthly bank statements that go to the 80 million or so burghers who collect interest and dividend income. The bankers simply stuffed into each statement (it was so easy!) a mildly incendiary note (certainly no hotter than a routine political campaign flier) that told their customers this was one lousy idea and why don't you write your congressman and here's a postcard to do it on.
An estimated 22 million people took them up on the suggestion. That's better than a quarter of everyone who voted for president in 1980.
Well, it was all over before it ever really began.
But ahhh, the wages of victory.
Congress is bent on revenge. Dole is spitting out reports that show what a pittance banks pay in taxes. The treasury secretary is beside himself. The president is outraged.
And even--this is not a lie--even the other Gladiators are in high dudgeon!
"If the bankers had come to me or to a lot of others of us in town, we'd have shown them the door," said lobbyist Robert McCandless. "Lobbyists have a responsibility to not just one-shot. You've got to look at the bigger picture. And there are times you have to tell your client, 'Look, it's your turn to ante up.' "
"Sooner or later, in one form or another, they'll have to pay it all back," agreed lobbyist Loyd Hackler.
"Demagoguery" huffs Robert S. Strauss, lawyer-lobbyist and Democratic wise man.
Ator listens to this litany of second-guesses and smiles bravely: "If you don't take your best shot, it gets around that you're a wimp of a lobby. That doesn't help you in the long run, either."
Good parry! But now ask him if he thinks the effective tax rate on banks is going to go up or down the next time Congress gets around to a big revenue bill.
And watch him sweat.