After a weekend of intense political trading, the Senate Finance Committee began voting yesterday on a radical revision of the tax code, with key leaders saying they would get the necessary 11 votes today to move the package to the Senate floor.
Finance Committee Chairman Bob Packwood (R-Ore.) held his fingers close together and said he was "that close" to a winning coalition. The prediction came as the committee took up a series of minor amendments last night and planned for final votes today on a package that would almost halve the top individual tax rate, from 50 percent to 27 percent, and reduce the corporate rate by nearly a third while wiping out numerous deductions and credits.
The package was assembled so quietly and swiftly over the weekend that even the lobbying community was scrambling frantically yesterday to find out details and change provisions.
Packwood over the weekend had assembled a surprise coalition of liberals and conservatives, Democrats and Republicans, behind his package. He began with a small core committed to the notion of tax-overhaul, and brought in other senators with politically sensitive concessions.
For Sen. Daniel Patrick Moynihan (D-N.Y), he agreed to protect deductions for state and local income and property taxes; for Sen. David F. Durenberger (R-Minn.), he saved the tax-exempt status of municipal bonds; for Sen. John C. Danforth (R-Mo.), he preserved some tax benefits for defense contractors.
The core group met during the weekend to sweeten the package enough to win over a majority. Depreciation write-offs for business equipment were made more generous -- an overture to Sen. Malcolm Wallop (R-Wyo.), among others. A crackdown on tax shelters was softened in an appeal to Sens. Lloyd Bentsen (D-Tex.) and Sen. Max Baucus (D-Mont.).
To compensate for these measures, tax benefits dear to senators inside and outside the coalition were eliminated. Sen. David L. Boren (D-Okla.) complained at yesterday's hearing that he was not even notified on Saturday when the coalition decided behind closed doors to do away with a benefit he sponsored last month for oil refiners.
"You were not consulted," Packwood acknowledged. "Many of the final decisions, I made [myself]. I make no apologies . . . . In order to make things come out," someone had to lose tax benefits.
A key sweetener was the package itself. "It's dramatic enough that everyone says: I'd like to have the whole package rather than hang onto my own little preference," said Danforth.
"Our earlier approach didn't feel right, didn't sit right, didn't smell right," Baucus said of the committee's votes in March and April to preserve or expand many existing tax benefits. "A lot of us were repulsed. There is now a significant sense of relief that we're doing what's right. It's simple, it goes after tax shelters, and it catches corporations" that currently pay no taxes.
The benefits of the plan were far less clear to lobbyists and corporate executives, who could get few details of provisions important to their businesses. The plan now before the committee was not even put into writing until late Sunday.
Ken Stensby, a Minneapolis real estate executive, had come to Washington for a routine meeting of his office park developers association, only to find himself outside the Finance Committee chamber yesterday lobbying for his financial life.
Like millions of Americans, Stensby learned from yesterday's newspapers that the finance panel was on the verge of approving a radical new tax system containing one feature that would wipe out tax shelters, taking hundreds of real estate partnerships down with them.
So Stensby and a handful of colleagues set out to do something about it, trooping to the Dirksen Building to tell senators of their plight.
They were not alone. Also on hand were lobbyists for countless groups -- from charities to steel companies to trash-to-steam plants -- all confronting a tax bill that was moving like greased lightning through a committee that only days ago seemed ready to kill it.
With the panel working virtually around the clock, lobbyists had little access, except for a few moments with senators as they walked in and out of the committee room.
"Quick, there's Moynihan," said Stensby, as the New York Democrat rounded the corridor. "Quick, who's from New York? Nobody? Should we talk to him anyway?"
In those few seconds, Moynihan had disappeared into the committee anteroom.
"No way, it's too late," muttered one of the developers. "If you were a kid learning civics, wouldn't it break your heart to see this?"
"You see all these heads hanging down?" asked Terry Straub, a lobbyist for U.S. Steel, gesturing at a row of his colleagues in the corridor. "Everyone is in a state of suspended disbelief."
Throughout the Senate, major lobbies huddled in an air of frustration. "Meet the real estate lobby, the most powerful lobby in Washington," one lawyer cracked sarcastically as he and seven other long-faced real estate lobbyists caucused in the Dirksen Building basement.
"Our only hope now is the liberals," he said. "Maybe they'll try to raise the top rate to penalize the rich, and the whole package will go down in flames."
Corporate executives also appeared flustered by all the major changes afoot. "Until last week, all the CEOs [chief executive officers] would ask me what was happening with technical business provisions," one lobbyist said. "This morning they were asking me: What's happening to my shelter?"
The sheer speed with which Packwood was moving the package appeared to have become a liability by late in the day. He agreed to delay a final vote until at least Tuesday, after several supporters threatened to defect unless the plan had what Baucus called "some public airing -- at least minimally."
"This is so new and so dramatic, there have to be a lot of snakes and alligators that we haven't even come across," Baucus said. "We need to air it for a day or so so we can find them and slay them. I'm supporting the bill, but I'm not supporting it tonight."