by Alan Murray
Other pro-IRA senators refused to admit defeat, however. On Wednesday, June 11, D’Amato and Dodd took the floor to promote their own IRA amendment. They were much smarter about paying for their proposal than was Roth. Instead of going after other interest groups, they chose to slightly raise the rates in the corporate and individual minimum taxes. The provision left intact the top 27-percent rate for individuals and the top 33-percent rate for corporations. While the increased minimum tax would hit some capital-intensive industries such as steel and mining, the D’Amato-Dodd tack was much easier to explain to constituents: It simply raised taxes on those who were not paying their “fair share” to Uncle Sam.
Packwood was prepared. His block of thirty-two senators opposed to all amendments was solid. He needed to convince only nineteen other senators to vote against the IRA amendment in order to defeat it. President Reagan had also been pitching the no-amendment strategy every chance he got. With all that in his favor, Packwood cavalierly predicted that the D’Amato-Dodd amendment would be defeated.
The risk of failure was high. Packwood staked the success of his bill on his ability to beat back major amendments, and this was the most dangerous amendment he had to face. If it passed, the no-amendment strategy could backfire, and senators with gripes about the bill would be emboldened to propose other big changes. “We need to defeat this amendment so we don’t start an unraveling of the bill,” Dole concluded.
When the clerk of the Senate started to call the roll on a motion to “table,” or kill, the IRA amendment, Packwood’s boast about easy victory began to look premature. For every aye from Packwood’s coalition, there was a nay from the IRA advocates. The well of the Senate, which was in front of the presiding officer’s chair, was quickly filled with anxious senators curious about the outcome. Packwood was more than curious. He became extremely anxious.
In desperation, Packwood sought out a trio of Republican senators with whom he knew he could work in a pinch. Senators Slade Gorton and Daniel Evans of Washington State and Phil Gramm of Texas were ripping mad over the Finance Committee’s repeal of the sales-tax deduction; their states had sales taxes and no income tax at all and stood to suffer immensely from the change. The hair-thin vote on the IRA amendment, however, gave them new and unexpected clout.
As Packwood sought their support, the sales-tax senators issued him a challenge. They said they would vote to kill the IRA amendment if he guaranteed them his support for their amendment to partially reinstate the sales-tax deduction. With the credibility of his no-amendment strategy on the line, and the votes mounting rapidly, Packwood made an instant decision. “OK,” he said. “I’ll buy it.”
The three senators walked to the well, got the attention of the clerk who was recording the votes, and lent their names to the list of those who wanted to table the IRA amendment. A few minutes later, the importance of those three votes became evident. The D’Amato-Dodd proposal was tabled by a vote of 51-48. Had Gorton, Evans, and Gramm not struck a deal, Packwood would have been dealt a major defeat, and other senators would have been encouraged to take a run at changing the bill. Packwood managed to avert that disaster only by secretly selling out his own coalition.
The Senate then went on to approve Roth’s IRA resolution. Dodd called the nonbinding resolution a “charade” and a “ploy” that meant “absolutely nothing.” Senate Minority Leader Robert Byrd, Democrat of West Virginia, asserted that the resolution was designed to “make people believe that something indeed is being done,” while, in fact, “the sense of the Senate resolution doesn’t accomplish anything.” Dole himself had previously referred to such nonbinding resolutions as “get-well cards”—a nice thought with no practical effect.
The next day, June 12, the sales-tax-state senators tried to collect on Packwood’s promise of support, but Packwood had double-crossed them. Packwood had not called off his no-amendment coalition and they ran into a buzz saw of opposition. The senators’ plan would have allowed taxpayers the choice of deducting either their state and local sales taxes or their income taxes, and paid for that change by closing a loophole in the bill that permitted the taking of second mortgages to finance consumer purchases.
The method of payment was, again, the amendment’s Achilles’ heel, and the coalition members attacked it brutally. Senators ranging from Democrat Wendell Ford of the high-sales-tax state of Kentucky to Bradley of New Jersey asserted that the proposal damaged the most sacred tax break in the code—the deduction for mortgage-interest payments. That preference, as they painted it, was almost an American birthright. The mere thought of tampering with it was unpatriotic.
During this barrage, Packwood was nowhere to be found, and the trio of senators was left without any recourse. At the urging of Dole, they withdrew the amendment to avoid certain defeat. Instead, they backed yet another meaningless resolution. “To put it mildly,” Gorton said, “we were not happy with Packwood.”
The defeat of the sales-tax proposal added steam to the drive of the no-amendment coalition. The operation was working like a clock. Packwood appeared able to defeat any amendment at will, and his resources seemed vast. He stationed his own personal army of lobbyists, the 15-27-33 members, in the Finance Committee hearing room. They were provided with telephones, television sets tuned to the Senate floor, and coffee. Whenever Packwood or his minions detected a wavering senator, they dispatched a pack of 15-27-33 lobbyists to plead for support.
On Friday the thirteenth, Packwood unloaded these big guns in an unusual effort to approve an amendment. While it appeared to run counter to the no-amendment strategy, the move actually proved to be a fierce display of force to show the consequences of not adhering to the Packwood line.
The Finance Committee chairman had placed into his committee’s bill a transition rule for Union Oil Company of California (Unocal) worth about $50 million. The Unocal provision was sought by Senator Pete Wilson, Republican of California, but on the Senate floor, Wilson proved to be no friend of the Packwood bill. Despite the special favor, the California lawmaker voted against Packwood on several big issues, including IRAs and sales taxes.
With the help of the Commissioner, Packwood got his revenge. Metzenbaum argued that the Unocal rule had nothing to do with “transition” at all, but was a “fresh-off-the-shelf loophole” and an example of “simple greed.” Many members of the no-amendment coalition could not help but agree. The provision was a tax break designed to help offset the extra debt Unocal amassed in the previous year to fight off a takeover attempt by corporate raider T. Boone Pickens. The rule was not only an exception to the committee bill, it also was an exception to existing law. Packwood, sensing the agitation of his no-amendment allies with some of the committee’s special-interest transition rules, and angered by Wilson’s votes on the floor, urged coalition members to support Metzenbaum’s Unocal amendment. “When we asked Packwood how we should vote” on the Unocal matter, a coalition member told The New York Times, “he said, ‘Sock him.’” The result was a rout. Wilson’s Unocal rule was dropped from the bill by a vote of 60-33. It served as a warning to other senators not to defy Chairman Packwood.
In succession, Packwood disposed of every other major issue. He defeated an effort by Republican Senator Paul Trible of Virginia, a state heavy with federal workers, to ease the Finance Committee’s tax increase on federal pensions. Packwood and his coalition also slaughtered the effort by George Mitchell of Maine to cut back benefits to wealthy individuals by imposing a 35-percent top rate. So daunting was the no-amendment bloc that advocates of the preferential treatment of capital gains chose not to even offer their nonbinding resolution. They feared that the margin of their victory, if they could even manage one, would be so paltry that it would kill any chance for better capital-gains treatment in the all-important House-Senate conference.
The fight dragged on for more than two weeks, with the sessions at times lasting until midnight. More than one hundred hours were devoted to the debate. When there were no amendments bein
g contested, or when Packwood and Dole were trying to resolve problems off the Senate floor, a “quorum call” would be requested to kill time. The clerk would slowly and monotonously read through the names of the one hundred senators until someone asked that the quorum call be dispensed with so that debate could resume. At other times, Packwood would recite his version of the history of the tax code and tell why tax reform was so important. During this period, Packwood constantly paced around the chamber. He did this in part to stretch his legs, which were always tight from his almost daily games of squash, but he also walked so that members would be less inclined to stop him and ask questions.
Gradually Packwood’s no-amendment strategy began to show some cracks. He was making enemies of those who resented his heavy-handedness. His manner chafed some members, but Packwood’s actions were even more grating on matters of substance.
On Tuesday, June 17, the day he beat the Trible amendment, Packwood caved to pressure from his coalition to accept an amendment that stung two of his own committee members, Wallop and Bentsen. The amendment, cleverly crafted by Metzenbaum, restored the withholding tax on foreigners that the committee bill had repealed and used the $1.2 billion raised by the tax to pay for a special tax break for hard-pressed farmers and a medical-cost deduction for the elderly. The combination of taxing foreigners and helping farmers and senior citizens was irresistible to most senators. Wallop had been a loyal supporter of the tax package, and on the last night of markup he had even helped Packwood out of a jam by offering to amend the repeal provision so it would cost less revenue. But under pressure, the chairman turned his back on the steadfast Wyoming senator. He made his second exception to the no-amendment strategy and released the coalition members to pass the Metzenbaum proposal. A visibly wounded Wallop protested at length from his seat in the rear of the chamber. The more reserved Bentsen simply left the floor.
The sales-tax senators were also still fuming about Packwood’s double-cross. Packwood defended himself by telling them that he had pledged only his vote for their amendment, not the votes of his coalition—a story that was hard to swallow. Contrite nonetheless, Packwood began to meet Gorton, Evans, and Gramm privately, often in Dole’s office, to work out some sort of face-saving compromise.
At about the same time, D’Amato, the leader of the save-the-IRA drive, was beating the bushes to find support for another major amendment. He wanted to tie together several big issues that had been defeated by the coalition. He thought that lumping the most popular issues into one package would be so attractive that senators would be loathe to vote no. “I was working on an amendment that would have taken care of the IRAs and the pension problem,” he said later. “There was some consideration, too, of the sales-tax problem.” D’Amato and Trible were holding serious talks about how best to combine forces.
Word about D’Amato’s triple-play “killer amendment” worried the members of the coalition. They feared he might well win. Frustration with the no-amendment strategy was beginning to bubble, and could come to the surface as support for the D’Amato-Trible package.
Senators were becoming increasingly resentful of Packwood and his Finance Committee for preventing them from altering this very important bill. Many members did not believe Packwood’s claims that the package was so fragile that it would disintegrate if amendments were adopted. They were itching to assert their role as lawmakers, to take care of the interests of their own folks at home, and they disliked the sometimes sanctimonious way that members of the coalition advocated their no-amendment strategy.
These feelings erupted on the night of Wednesday, June 18. Senator Paul Sarbanes, Democrat of Maryland, derided Senator Danforth for giving a virtual “sermon” to his colleagues on the no-amendment strategy the night before. Sarbanes even read back into the Congressional Record Danforth’s offending speech:
If you believe that the point of taxation is to take care of every group, and I am not putting down those interest groups, but if you believe that the point is to take care of them one after another as they come through the door, vote for this amendment and then the next amendment and then the next amendment and then the next amendment and then the next amendment, because there is no end of it. Once you say yes to one group you can never say no again.
Danforth had gone on to praise the 15-27-33 lobbyists and described their commitment in ringing terms:
We do not agree with every detail in this bill. We do not agree with some of the things you have done. We do not agree with what you have done with real estate or what you have done to the state sales taxes. We do not agree with this, that, or the other things in the bill, but the bill is right, the bill is right. For once you are doing the right thing in the Congress of the United States. This bill is right and we will stick with you.
Sarbanes was visibly disturbed by the sappy self-righteousness of this language. After all, he noted, Danforth’s own special interest—Missouri-based military contractors—had been fully protected in the Finance Committee bill. Sarbanes, like Trible, represented a large number of retired federal workers, and was frustrated by the Trible amendment’s failure the night before. He did not want to leave the debate with his protest unstated. “We were being put down last night because we were offering what I thought was a perfectly reasonable amendment with respect to twenty million Americans, who are going to, in effect, be subject to double taxation,” he said. “Their concerns about the impact of this legislation were perfectly reasonable concerns and ought not to be dismissed as special interests.”
Sarbanes was far from alone in his disaffection. As a sign of the growing protest, other senators began proposing more and more amendments in defiance of the no-amendment stance. Shortly after eleven on that same evening, Dole appeared on the floor to announce that “the number of amendments seems to grow rapidly. At eight o’clock there were twenty-some. Now we are up to fifty-some.”
Tension mounted. Shortly before midnight, one of the Senate’s crustiest members, Ted Stevens, Republican of Alaska, took the floor and embarked on a lengthy speech about the way the rest of the Senate was being treated by the elite Finance Committee and its chairman. Stevens attacked the surreptitiously composed transition rules. His complaints were similar to those of Metzenbaum, but his point was the complete opposite. He wanted some Alaskan transition rules in the bill. If constituents of so many other states were to be so blessed with favors, he argued, why not give more special breaks to the good people of Alaska too? In a tone that amounted to a growl, Stevens began to address himself directly to Packwood:
I would like to have my friend tell me who they are. Who are these people that have these projects that we do not name in the bill? … When we appropriate money for a project in Louisiana, we say where it is, who owns it, and if there is going to be a contract let for it, we say who the contractee is. We are not saying this is a project that is described in this paragraph that could fit almost anything. But you all know who they are. I do not know who they are. I do not know why I cannot try to fit some of my own projects into these exemptions already in this bill. If I can, I am going to try, okay?
In Packwood’s defense, Senator Alan Simpson, Republican of Wyoming and the assistant majority leader, rose to take on the cantankerous Stevens. Simpson, a tall, balding man with intelligent eyes and a ready smile, was sometimes referred to as a modern-day Abraham Lincoln: His wit was quick and dry. He had a talent for indirection and exaggeration to make a point. He had tangled before with Stevens; the two lawmakers were not friends. Stevens’s complaints about the way giveaways were handled in the tax bill were simply too much for Simpson to take without reply.
“Mr. President, I am very interested in this debate, and it is very fascinating—and a little heavy,” Simpson began.
I have been here seven and a half years. I have watched with total admiration as the senator from Alaska does his work in the U.S. Senate. It should leave us all absolutely envious. Because I have seen him with his extraordinary skills insert more piece
s of legislation into various bills for his state than any person that I have ever met in this place. I think the people of Alaska should be proud of that; that is why they return him here, only one of the reasons.
I have seen him work hard on the Appropriations Committee. I am not on the Appropriations Committee, but I have seen pieces of legislation come from that committee which were literally larded with material that had to do with the state of Alaska.
I am not going to get into one with the senator from Alaska because he is a pretty feisty cookie; but I can tell you if they wanted a bear to represent them in Alaska, they hired a grizzly. That is Ted Stevens.
I think that is great, but I do not think you can come in here and have a debate that has to do with talking about things and costs and so on, when I have seen things come here under the direction of the senator from Alaska which were of tremendous cost—railroads, unified commands. There is no limit to the extraordinary ways—he is the envy of us all.
I have seen him produce the most novel legislation. I have seen condition upon condition come from wherever this remarkable gentleman plies his trade, project after project, waiver after waiver.
The Simpson speech was a stunning put-down, but it was not enough to stop the growing dissent against Packwood and his no-amendment strategy. The snarling and sniping continued, and as the session came to an end in the early-morning hours, the floor leaders knew they needed to act quickly to quash the rebellion. They decided, in the words of Bradley, “to cut the core out of any growing interest in a bigger amendment.”
On Thursday, June 19, Packwood took the floor to say that he had worked out an amendment with the three senators from Washington and Texas to ease the effect of eliminating the sales-tax deduction. Evans and the others introduced it, and it was adopted without objection. The provision allowed taxpayers to deduct 60 percent of their sales-tax payments, but only to the extent that the payments exceeded the amount of their state-and-local income tax liability.