Showdown at Gucci Gulch.

• Author: Glastris, Paul

Showdown at Gucci Gulch.

Jeffrey H. Birnbaum and AlanS. Murray. Random House, $18.95. Publication date: June 29.

Saturday, May 3, 1986. Tax reform isbogged down in the Senate Finance Committee. A group of committee members who support the reform plan crafted by Chairman Bob Packwood are gathered in the committee room of the Dirksen Senate Office Building. It is a secret meeting; the hall outside, dubbed "Gucci Gulch,' for the lobbyists who normally lurk there, is empty.

The goal of the meeting is to eliminate $35billion in tax breaks. As rewards to themselves for supporting the controversial measure, the members of the group, in choosing cuts, make sure certain of their most favored tax preferences are protected. But to reach $35 billion, each senator must pony up some cherished breaks. Packwood offers to eliminate the preferential treatment on capital gains, which is important to his state's timber industry. Sen. Daniel Patrick Moynihan sacrifices the sales tax deduction.

As others follow suit, an inside joke develops:the senator giving up the break his constituent lobbyists expected him to fight for asks for "a note from the chairman.' This means that when the plan is revealed and the lobbyists descend, the senator has permission to claim to have struggled fiercely for the break, only to be defeated by the chairman, to whom the lobbyists can then complain.

These and other subterfuges in the name ofshared sacrifice are marvelously told in a new book* by two Wall Street Journal reporters, Jeffrey H. Birnbaum and Alan S. Murray, that chronicles the ups, downs, and ultimate victory of tax reform. In terms of offering insight into and conveying the drama of the Hill, Showdown at Gucci Gulch rivals Eric Redman's The Dance of Legislation. It is an important story. Tax reform was the first dramatic confrontation in more than a decade in which the special interests, and the politics of selfishness they represent, lost to the public interest.

No one seems to be eager to go through thesame exercise again. Reforming the tax code meant forcing the political system to work against some of its most powerful tendencies. The success of tax reform is seen by many as an anomaly--a sort of political solar eclipse that required a peculiar political arrangement and is unlikely to repeat itself for a long time. It was not heavenly bodies, however, that made tax reform happen, but people--politicians, bureaucrats, reporters, and others, only a small minority of whom were idealistically committed to the goal. Solutions to many of our most pressing and seemingly intractable problems, such as the federal deficit, also depend, at least in part, on getting government to adopt policies that run counter to the demands of narrow, moneyed interests. The larger these problems loom, the more tax reform, with all its setbacks and imperfections, may become the paradigm for dealing with them.

Lobbyists' relief act

Retrospective searches like this, which try toisolate the powerful forces propelling history, can leave you with a sense that what happened was inevitable. Plenty of seasoned Washington observers talk about tax reform as if its victory was not at all suprising. It's healthy, then, to recall just how unlikely tax reform looked to insiders at the time. When Sen. Bill Bradley, the "godfather' of tax reform, was peddling his "Fair Tax' plan to eliminate most exemptions in exchange for low rates, Sen. Russell Long derided the bill as "an attractive conversation piece.'

The odds remained bad even after the Reaganadministration adopted tax reform and the legislators began formally considering it. Rep. Richard Gephardt himself abandoned the issue, preferring hotter subjects such as trade protectionism and his own budding presidential candidacy. In the summer of 1985, Gephardt encountered a reporter who was still covering taxes: "That's not a good story,' the congressman advised.

After tirelessly driving tax reform throughthe House, Ways and Means Committee Chairman Dan Rostenkowski gloated over his success, content in his belief that the Republicans would be blamed when tax reform died in the Senate.

The cynicism was perfectly reasonable. Attemptsat reforming the tax code had an impressive record of failure even before the growth of special interest PACs. On this recent effort, the special interests poured resources into the fight to save their tax benefits. PAC contributions to House Ways and Means and Senate Finance committee members in 1985, the year the tax reform legislation was being considered, were $6.7 million, two and a half times the 1983 amount. Chairman Packwood was the Hill's number one recipient of PAC contributions. Industries and...