There are bright signs for President Reagan and equivalent danger signals for his party, in the tax-overhaul measure that the House dramatically approved last week.
While the bill has as many flaws as a pothole-filled road, its approval was a victory for Reagan and the Democrats. The Republican Party, its leadership solidly aligned with dominant elements of the business community in opposition, was the loser.
Reagan's embrace of the anticorporate Democratic version of his tax proposal follows a peculiar but consistent historical pattern. In his salad days, Reagan was a New Dealer who ardently believed that President Franklin D. Roosevelt had saved the free enterprise system. He voted for FDR the maximum four times. Like the boy that one gets off the farm but can't get the farm out of the boy, Reagan took New Deal impulses with him when he switched parties.
His New Deal streak emerges during the full moon of convivial superpower summits and on such domestic issues as free trade and tax legislation. When Reagan was a novice governor of California, he accepted a measure drafted by Democratic legislative committees that boosted tax rates of banks and corporations, converting a highly regressive state income-tax system into a progressive one. Revenue generated by this bill helped Reagan and the legislature to improve social services and increase welfare grants.
As president, Reagan was stung by the accusation that his budget cuts disproportionately hurt the poor. The "fairness issue," as it came to be known, damaged Republicans in the 1982 midterm elections but flopped when used against Reagan in the climate of economic prosperity that existed during the 1984 campaign. Nonetheless, the issue rankled because Reagan sees himself as fair-minded and humane.
By redressing some of the legitimate grievances that the working poor of this nation have against the administration, the House-passed tax bill would give Reagan actions to match his feelings. A family of four with income at the poverty line has suffered a fivefold increase in federal income taxes since 1979. The House bill would drop 6 million families with near poverty-level income from the tax rolls and shift tax burdens from individuals to corporations, a longtime Democratic goal.
It is true that neither Reagan nor the bill delights the tidy-minded. In the process of appealing for the votes of Republican House members last week, Reagan startled some members by saying, with a smile, that he still favors abolition of the corporate income tax. Who but Reagan could get away with this during a plea for legislation that raises corporate taxes? But Reagan recognizes the political utility of proclaiming shared values while abandoning them, and such seemingly silly talk may have helped convince wavering Republicans to give their president a hand.
Republicans opposed to tax revision have two problems: Reagan won't be able to run again, while other Republicans can. Although Reagan's popularity has soared to unprecedented heights for a second-term president, the GOP's image is on the decline. A Gallup Poll last week found that the number of Americans who consider themselves Republicans is slipping after having reached near parity with the Democrats earlier this year.
Many House Republicans who opposed the tax bill have valid concerns, particularly the worry that badly troubled smokestack industries are penalized by limitations on investment credits. This could be taken care of with relative ease in the Senate, however, especially if Reagan relaxes his adamant opposition to any form of tax increase. By converting their concerns into an all-out attempt to kill the legislation, Republicans conceded Democrats the political high ground.
For three decades before Dwight D. Eisenhower's presidency, Democrats ran against "the party of Herbert Hoover," while Republicans worked hard at being the minority party that favored corporate interests over popular ones. Memories of a time when the Republican Party was seen as defender of the privileged still linger, and Reagan's victory over his party on the tax bill has helped to revive them.
Reaganism of the Week: Speaking at a White House ceremony on the deficit-reduction bill Thursday, the president said: "Tax reform is alive and well and kicking. What's that I heard about lame duckery?"