by Gene Steuerle

Economic Perspective columnist Gene Steuerle suggests that one can identify future budget, tax, and expenditure issues by paying attention to the speeches of Ways and Means Committee Chairman Dan Rostenkowski, D-Ill.

Date: May 2, 2-94

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How would you try to identify the major budget, tax, and expenditure issues just around the corner? Listen to campaign speeches? Read the pamphlets of lobby and advocacy groups? I suggest a better way: pay attention to the speeches of Ways and Means Committee Chairman Dan Rostenkowski, D-Ill.

In April, Rostenkowski made two major speeches, one on the need to revamp and bolster the Social Security system (April 18) and one on the possible need for "broad tax increases" to finance health care (April 22). (See Tax Notes, April 25, 1994, p. 383 and p. 393, respectively.) Earlier this year, he argued that private pension reform was perhaps the major issue to be tackled by the Ways and Means Committee next year -- after health reform is over.

These declarations are far more than random musings of a politician. They are useful predictions of the future direction of policy. If history is any guide, Rostenkowski began preparing his committee for health reform at least three years ago -- long before the latest presidential election. He pushed and cajoled President Bush into a deficit reduction agreement in 1990. When many were ready to abandon tax reform, he remained a believer and convinced President Reagan to leave him and his committee alone until it produced a bill. His leadership on other budget and tax bills, as well as Social Security reform in 1983, also was instrumental.

After the recent speech on Social Security reform, several reporters asked me the "Why now?" question. Social Security has not been making the headlines, the president is avoiding both his trustees' reports on Social Security and any mention of taxes to pay for health reform, there is no congressional primary coming up, and many other politicians have remained quiet. How to explain the Rostenkowski factor, I believe, is fourfold: opportunity or need (which often go hand in hand), an implicit understanding of fiscal balance, staff, and leadership.

Social and government systems develop over long periods of time. At times, however, the direction of these systems begins to become apparent to more and more people. Sometimes an event is forcing -- the inability to write Social Security checks if the law isn't changed. More often, there is a series of events that indicate that a current path is not sustainable or undesirable, such as the increasing threat of tax shelters to tax policy and administration, a decline in health insurance coverage rates, or a leveling out in the numbers of individuals who can ever expect to receive substantial private pension benefits.

Closely related are those needs that arise from trying to keep a system in financial balance. These are the types of needs often presented first in budget and tax debates. Reports begin to note the imbalances in Social Security. Estimates of health care expenses are substantially in excess of any amount of revenues projected to be available in the future.

Sometimes the imbalances are tolerated by advocates who do not want to pay the price of restoring balance. Perhaps if we delay paying for retirement and health policy, one argument goes, then we can get Congress to enact or sustain even higher benefit levels. The problem with misinformation, however, is that it often takes on a life of its own. Restoration of balance, for instance, is now required to calm the mistaken fears that there will be no Social Security in the future. Similarly, many of the problems of health reform cannot be tackled until there is somewhat more willingness to tell the people that there is a relationship between what they want to receive and what they want to pay.

When one works on budget and tax issues for years, as has Rostenkowski, one starts to understand implicitly the nature of these budgetary balances between what is promised and what is delivered, and between taxes and expenditures. One often can project well ahead of time where proposals will break down because of the imbalances they create or fail to redress. When the public, the press, or the politicians debate one expenditure or one tax at a time, they often fail to understand how all taxes and expenditures intermingle and add together. For someone like Rostenkowski, these relationships become second nature.

Of crucial importance also is the information system with which a leader surrounds himself. Rostenkowski obviously relies on the staffs of the Ways and Means Committee and the Joint Committee on Taxation. Around Washington there are those advisers who serve mainly as kibitzers and those advisers who base their suggestions on having to work on the product itself -- producing numbers, analyses, brochures, and draft language for bills. The former often dominate the political discussion, the latter the production of workable policy. That there are so few bipartisan staffs such as the Joint Committee shows how poorly this lesson is understood in Congress. That presidents and Cabinet secretaries often separate themselves from knowledgeable staff by layers of kibitzing advisers shows how poorly this lessen is understood in the executive branch. It really doesn't matter whether Rostenkowski gets good advice because he has the sense to seek it, or whether it has fallen into his lap due to the efforts of many individuals in the past to make strong institutions out of Ways and Means and the Joint Committee. Either way he is served well. As I so often try to teach my children, what you say and know will largely reflect what you read and hear.

Finally, one cannot dismiss the leadership factor itself. Rostenkowski loves trying to lead a committee, a Congress, even a president and a people to a course of action. If one wants to lead well, moreover, he or she understands the power of the first statement that sets the agenda, the first draft whose core cannot easily be abandoned, and the "chairman's mark" that determines what will be discussed and under what rules it will be amended. That Rostenkowski is in a position to put forward first statements, drafts, and marks doesn't hurt either.

Gene Steuerle is a senior fellow at the Urban Institute and an economic consultant to Tax Notes.

Tax Analysts Information

Code Section: No Code Section Applicable
Jurisdiction: United States
Index Terms: tax policy
Author: Steuerle, Gene
Institutional Author: Tax Analysts
Tax Analysts Electronic Citation: 94 TNT 88-42
Cross Reference: