More Tax Cuts Coming
There's more to this years reduction than meets the eye: Behind-the-scenes, basic policy changes will affect future
You can expect bigger and better cuts in your federal taxes in the future. That's the word from the top level of government officials. It's the belief, especially, of Walter W. Heller, the President's top economic adviser. He ought to know. He put together the economic theory that both underlies this year's $11.5 billion tax cut—history's largest, so far—and will also bring future reductions. The new round of income tax cuts isn't coming within the next year or so, to be sure. The next major assault on the present tax structure is likely to be revision of federal excise taxes, possibly next year.
Probably more important, the new tax cut and its basic theory must prove itself by giving the economy a new push upward. You and other businessmen have a hand in that. The manner in which you foresee the current tax cut's impact and respond to it will help determine whether or not business continues to boom.
What's more, government spending increases must be checked. Here's how Mr. Heller puts it: "In the long run: Yes, taxes will need to be cut again if the advance of federal expenditures—cash expenditures, including the social security and other trust funds—does not keep pace (with expected increases in tax receipts in the future) . This won't apply for the next year or two, when we're working off the effects of this year's tax cut. But in the long run, if expenditures do not keep pace, then there will be an increasing fiscal drag. Federal budget operations will be taking more money out of the economy than they're putting back in. And at that time, it will certainly be appropriate to consider another tax cut."
Why do such men as Walter Heller, with a basically New Deal outlook, and other, more conservative political economists see further cuts as assured? The answer lies in the recognition of what Congress, a Democratic Administration and the nation did when they approved this year's taxcut. These three political institutions agreed on a tax cut that was far from routine even when its mammoth size and technical revisions are left out. They embraced a concept of government-economic relationships which likely will affect your business, the economy and national policy for years into the future when the immediate effects of this year's tax cut is history.
The newly endorsed, double-barreled concept is this: First, high federal income taxes drag down business growth during prosperity as well as recession; and, second, high economic activity at lower tax rates brings in more money to Uncle Sam than do high tax rates in spongy business conditions. It took a major turnabout in congressional and even public thinking to accept the proposition that you could cut taxes without having money in the Treasury to cover federal spending. It required overcoming what Mr. Heller termed th? Puritan ethic of many opponents of tax cutting at a time of deficit spending.
Endorsement of the tax cut also brought, for the first time since the depression of the 1930's, agreement by a Democratic Administration that big spending is not necessarily the best remedy for the country's ills. The Administration has, as a result, committed itself to hold down government spending and reduce the national debt. Whether this or future Administrations will stick to this commitment remains to be seen. But, as a practical political matter, the commitment may be difficult to break. White House officials are already squirming under vigorous reminders of President Johnson's economy pledge from congressmen objecting to pressure in support of pet Administration schemes.
The tax cut's successful journey through our checks and balances system also provides new understanding of the importance of private enterprise and business investment in a prosperous economy. What Rep. John Byrnes, Wisconsin Republican, observed to NATION'S BUSINESS recently about the manner in which the big tax bill passed the House of Representatives demonstrates what has happened. Mr. Byrnes is the ranking Republican on the House Ways and Means Committee, which shaped the tax measure. "The history of the tax bill," he said, "is one of compromise on both philosophy and theory by all sides."
The compromise, essentially, was that the White House got its tax cut, and whatever political advantages come frcm resulting better business. And the country got government endorsement of the longer term principles which should bring future tax cuts and, hopefully, restraint on federal spending. When major political forces are at work, compromise implies that someone changed policies. And that's exactly what President John F. Kennedy did when he proposed the current tax cut.
He entered the White House on January 20, 1961 urging citizens to ask what they could do for their country, a theme in the liberal economic thinking of the day that ruled out a major tax cut. Even before his inauguration, in fact, President-Elect Kennedy indicated that the road to tax reduction would be a rocky one. In December 1960, Mr. Kennedy had Mr. Heller at his red brick house in the Georgetown section of Washington, D. C, for one of his famous preinaugural appointment sessions.
Mr. Heller, then a University of Minnesota professor who was about to become Chairman of the President's Council of Economic Advisers, brought up a possible antirecession tax cut. JFK indicated that it would not fit well with his inaugural theme of sacrifice. Despite this turndown of Mr. Heller, some politicians, including influential Democratic Senators, believe the President planned all along to whittle taxes for either economic or political reasons. If so, he didn't act that way.
Douglas Dillon also talked tax changes with Mr. Kennedy when Mr. Dillon was being sounded out for his present position as Secretary of the Treasury. But the context was always structural changes —called reform by the Administration—carefully balanced so the government lost little tax revenue. "The tax cut plan did not originate before President Kennedy took office," Myer Feldman, an aide to Mr. Kennedy before and during his presidency, and now counsel to President Johnson, says flatly. Nor did Mr. Kennedy launch his presidential policies like a man dedicated to a tax reduction and to the restraint in federal spending needed to make the tax cut work. Quite the opposite. He raised federal expenditures during his first full fiscal year in office—the year ended June 30, 1962-to $87.8 billion or practically $8 billion above President Eisenhower's outgoing recommendations for that year. Budget deficits ran to $6.4 billion in fiscal 1962 and $6.3 billion in fiscal 1963.
Mr. Kennedy chose to follow what political economists in the capital like to call the Galbraith school, after John Kenneth Galbraith, the Harvard professor. This group of economic theorists contend that government can cure unemployment and keep the economy going upward by steadily raising spending, taxes and deficits. Mr. Kennedy, like most politicians, had based his economics largely on what he thought would attract votes as opposed to the practical economics of businessmen or the theoretical economics of academicians. So he reached out for advisers, mainly from the university ranks, to fill this gap. A task force of advisers headed by Paul Samuelson of Massachusetts Institute of Technology told the newly elected President the best way to spur the economy and cut unemployment was to pump more money into the economy via increased government spending rather than through tax cuts.
"Mr. Kennedy opted for an increase in spending," sums up one of his former tax advisers. His tax policy steered clear of big cuts and aimed at restructuring the tax system without loss of revenue. "The Treasury was gung-ho for reform and so were we at the White House, philosophically," says a Kennedy aide.
Besides Mr. Dillon, the key treasury advisers were Under Secretary Henry H. Fowler, a New York lawyer who recently resigned, and Assistant Secretary Stanley S. Surrey, a Harvard professor with aggressive ideas for restructuring the tax system. Increasingly urgent danger from the loss of gold to foreigners was a major consideration.
"President Kennedy would have liked to stimulate business by lowering interest rates when he came into office," asserts one key Democratic senator on tax matters. "But he couldn't because of the balance of payments situation and because he couldn't control the Federal Reserve Board." FRB Chairman William McChesney Martin, Jr., and other officials feared lower interest rates would encourage more American investors to send money to Europe in search of higher returns, thereby increasing potential pressure on the value of the dollar.
So the Treasury and the President came up with their 1961 proposal of a tax credit designed to encourage new investment by business in plant and equipment. The planners reasoned this would help the economy by encouraging installation of more efficient machinery. Companies could then compete better with foreign competitors here and abroad, went the reasoning. The plans called for enactment of the investment credit law in 1961, easing of depreciation rules after that and, in 1962, submission of a top-to-bottom reform of the complicated tax structure. The Treasury's brass was ready to give up $2 billion to $5 billion in revenues for their tax reform but nothing close to the $11 billion enacted this year.
This, then, was the economic policy of the Kennedy Administration during its first year and one half. By late 1962, however, Mr. Kennedy had reversed himself. This man who had started out talking about sacrifice and opposing tax cuts was telling the nation that high federal income taxes can drag down a recovering economy. He even took steps toward holding down spending.
How the President came to change his mind in the course of less than two years is the crucial chapter in the change of federal economic policy dramatized by the tax bill. The man most responsible for this change of thinking was Mr. Heller. Anyone who calls Mr. Heller "the father of the tax bill," must be ready for an argument in Washington these days. Many deny his key role and claim it for themselves.
Talk to practically any New Frontiersman about the tax cut and you'll hear the adage in vogue this season: "Success has a thousand fathers but failure is an orphan." Certainly other vital roles were played by business spokesmen, Treasury officials, Chairman Wilbur D. Mills of the House Ways and Means Committee and other congressional leaders. They helped originate thought, shape the tax cut, refine the Administration's policies and sell the measure to the country. But it was Mr. Heller and his associates at the Council of Economic Advisers who accomplished the indispensable first step of convincing the President he should propose the tax cut.
Critics contend that Mr. Heller gets the glory while others did the work. They maintain he simply came up with an economic theory and lots of charts to back up a tax cut decision already made by President Kennedy for political reasons. Officials privy to Mr. Kennedy's thinking during those days swear this isn't so. But these insiders concede that politics did play a major role in the decision to press for a tax cut. The reasoning was this:
Mr. Kennedy won election on the promise that he could get the country moving. But by early 1962, the rate of unemployment still remained above five per cent and the economy looked as if it might slip into a recession. So a hunt went on for new ways of improving prosperity. When Mr. Heller's group showed him that a massive tax cut might do the trick, he pushed for tax reduction as a political goal. "The main thing I remember the President talking about during that period when he was considering whether to propose a tax cut," says a White House aide, "was that the longest postwar recovery to that time had run 37 months and the current one seemed to be tapering off."
"President Kennedy knew the only way he could avoid a recession by November 1964 was to cut taxes," asserts one Democratic senator close to the President's tax thinking. The solution Mr. Heller offered in justification of a massive tax reduction has come to be known as the theory of fiscal drag. Fiscal drag theory Here's how he described it in a definitive article in November 1962:
"It now seems clear that one of the chief reasons for the sluggish behavior of our economy over the last five years or so is the persistent drag exerted by our present federal tax system. . . .
"With our present federal tax system, taxes tend to grow by roughly 30 per cent of any rise in gross national product during periods of economic expansion. With a federal tax system that drains off about 30 cents out of every additional dollar generated by production, a very strong expansionary thrust is required to drive the economy strongly forward.
"As expansion develops, the federal budget shifts strongly from deficit toward surplus, thereby draining larger increments of purchasing power out of the economy than it puts in. The expansion can continue only if consumers, business and state and local governments increase spending faster than their incomes rise, thereby putting more purchasing power into the spending stream than they take out."
He argued that gross national product would rise by two to three times the size of the tax reduction. Higher incomes and profits from improved business would mean the lower tax rates would soon produce more revenue for the government than the old, higher ones did. Mr. Heller pointed out to President Kennedy that the federal tax system would take an additional $6 billion to $6 billion out of the economy each year if normal growth occurred. In order to keep the economy thrusting ahead, government would, therefore, have to offset this drain by either increased spending or tax reduction. Mr. Heller argues that it is unlikely that a year-in, year-out increase of $6 billion to $6 billion in government spending would be practical. He doesn't, of course, take a philosophical stand against spending.
" Y o u may be able to devise ellicient projects for this additional spending over the long run but it is doubtful that it can be done each year," he says.
How did the ex-professor devise his fiscal drag concept? Tracing parentage of economic ideas is tricky business. Some economists contend this line of thought stems ultimately from Adam Smith's belief that the less government intervention in the economy the better. Others say it owes its birth to John Maynard Keynes' proposition that the government budget can and should be used as a major influence on the national economy. Business groups and conservative economists have pointed out for years that high taxes dull the incentive to invest and take away purchasing power from the people.
Andrew Mellon in the 1920's said the tax reductions would gradually bring more revenue to the government because the economy would grow.
More recently Mr. Heller owes much to economists who in the 1950's began to take a hard look at taxes in relation to the level of the gross national product and full employment. A major landmark to many economists was a study issued by the staff of Congress' Joint Economic Committee in the mid-1950's. Credited mainly to James W. Knowles, now executive director of the committee, the study projected economic growth into the future and attempted to show what would happen to national output and unemployment under various federal tax levels.
Drawing on these and other studies, Mr. Heller put together his fiscal drag theory in the late 1950's. Unlike other economists he advocated reducing taxes during prosperity in order to keep a growing economy from leveling off. Many others saw tax cuts as useful simply to pull the economy out of a recession.
As long as President Kennedy followed a policy of high taxes and higher spending, the Hellor theory got little attention. The Berlin showdown in the summer of 1961 brought the first victory for Mr. Heller and the fiscal drag theory.
Threats by Soviet Premier Nikita Khrushchev sent the country into fast mobilization. Simultaneously, Mr. Kennedy debated raising taxes $3 billion to pay for the extra costs. Most Administration advisers favored the tax boost. But the Council of Economic Advisers opposed it on the ground that taxes were already a drag on the economy and that an extra $3 billion would hurt even more. A showdown developed.
It finally came to a head on a Friday afternoon in July. Mr. Heller was in Texas on a speaking trip. A telephone call came through from Washington saying the President had tentatively decided to ask for the tax boost.
Mr. Heller, working through his Council colleagues in Washington, began his counterattack by phone from Dallas. Back in Washington the next morning, he was driving to his office when the two-way radio in his White House car summoned him to the nearest phone. The President was calling from his week-end retreat in Hyannisport. The conversation led to a series of meetings Monday. At an evening session on the second floor of the White House, the President, Vice President Lyndon Johnson and Mr. Heller had a final goround.
Mr. Heller did not know of the President's final decision—the decision not to ask for higher taxes—until he received a White House cable the next day in Paris, where he had flown overnight to a meeting of the Organization for Economic Cooperation and Development The turning point The second victory came a year later when Mr. Kennedy decided in mid-1962 to press actively for a big tax reduction. In retrospect, it sometimes appears that the decision was the only logical choice. But complicated economic and political currents were swirling around the White House.
Economically, bellwether indicators shot up deceptively high in the fourth quarter of 1961, causing the Administration's seers to forecast high prosperity, high revenues and a balanced budget for fiscal 1963 despite big spending plans. These forecasters thought the economy might well reach full employment without a tax cut stimulus. But before two months, it was clear the forecasts were haywire.
President Kennedy asked in his State of the Union message for standby authority to cut taxes as an antirecession weapon; he got a fast turndown from congressional leaders. In Ap:il, Mr. Heller sent up a trial balloon for a tax cut when he addressed the Los Angeles Chamber of Commerce. And by June, a Heller-fueled boom for a quickie tax cut to be enacted by Congress was under way.
The economic indicators and misjudged forecasts were confusing enough. But Mr. Kennedy made things even worse for himself by severely undermining business' confidence in the future by his attack on the steel companies and businessmen in general. Then, in May, the stock market plunged. What's more, many businessmen were fighting his proposal for an investment tax credit which the Administration had originally expected to sail through Congress. And organized business was urging a tax cut, accompanied by spending reductions. This political uproar made it impossible for Mr. Kennedy to boost spending still higher in hopes of improving the economy.
If you're President of the United States, what do you do in that situation? If you were John F. Kennedy, you looked for something that would mollify business and get the economy going again. You held all sorts of conferences big and small with economists such as Mr. Samuelson, with top Treasury Department officials, with Mr. Heller and his aides, with Ted Sorensen, the special counsel and top speechwriter, with Larry O'Brien, the chief White House lobbyist on Capitol Hill, and others.
Many meetings were held around the long tapered table in the Cabinet Room. Others took place in the sunlit oval room Presidents use as their office. Participants were mixed and matched. Frequently, Mr. Kennedy brought an unannounced guest, Chairman Mills. His opinion was vital because he must support any tax bill before it has a chance of advancing through Congress. Mr. Mills wanted reform of the tax system so as to provide greater incentives for business investment. He also insisted any tax cut must be accompanied by a hold down in federal spending and the budget deficit. Treasury Secretary Dillon and his aides took roughly the same stand although they sought to go farther with reforms. Mr. Heller's forces wanted a major tax cut as soon as possible with reforms to by enacted later. "A clear consensus developed within the government during May.
June and July 1962 on the need to do more for business," Mr. Fowler points out. He asserts the Treasury didn't oppose a big tax cut as such but wanted the bill to include basic reforms. "To us at the Treasury," he said recently, "there was no value in either greater spending or a temporary tax cut. The economy needed something permanent." The Treasury and Mr. Mills carried the day in opposing the quickie tax cut. But it was Mr. Heller who got the major victory in convincing the President that the Administration should press for a big tax cut the following year—1963—in order to reduce the tax drag on the economy.
"There's no question it was Heller who convinced the President of the economics of a tax cut," asserts one White House adviser. "He and the Council staff first had to educate the President on the economics. Then when he was convinced, they had to provide him with understandable statistics and other demonstrations of the tax cut's effects so he could make a plausible case to the country."
"The analyses were brilliant, imaginative studies which broke ground in the field of tax-cut effects on unemployment," observes one Washington economist. "Of course, many of the studies turned out to be wrong, but they were brilliant, nevertheless." Presidents, Republican and Democrat, are political animals rather than economists. It's one thing, therefore, to convince a President that the economy needs a tax cut and quite another to get him to propose such a step to Congress. In the late spring of 1962, while he mulled the economic merits of the reduction, Mr. Kennedy told his congressional contact men to size up the chances for a tax cut bill in Congress.
"We told the President it was possible to get the cut through Congress but that there would be a fight and it would be long and bloody," says Henry Hall Wilson Jr., specialist on the House of Representatives on the White House congressional relations staff. What went on within the White House during these pivotal months throws interesting light on how President Kennedy made decisions. Political and economic considerations were blended so that it is virtually impossible to determine which was the really motivating factor in Mr. Kennedy's tax cut decision.
Even the exact timing of the decision is lost to those on whom the President leaned most heavily for advice. The public conceives of momentous presidential decisions as being made, or at least announced to his intimates, in some precise manner—perhaps in a stately fashion at a meeting of the Cabinet or at a gathering around his carved desk of the officials and congressional lieutenants directly involved, or, at least, in some paper of state, if only a memorandum to top aides.
If there was such a clear-cut point of decision by JFK on the tax bill, it has been lost to his associates most closely involved. To them, the decision to push for a tax cut came about by osmosis. In the course of several months, participants simply became aware that the President had accepted the tax cut plan.
"I would submit a memo on a certain point to the President and if after a certain time he hadn't said anything showing he rejected the thought, I assumed he'd accepted it," reveals one Cabinetlevel aide.
Equally involved officials became aware at widely different times that the President had decided for the tax cut. For some officials the first clear-cut sign came on June 7. 1962 at a press conference. Before the press conference, aides inserted into briefing papers prepared by Mr. Sorensen a sentence saying the Administration would ask for a net reduction in taxes the following year. When Mr. Kennedy spoke the sentence, these insiders assumed he had made up his mind. Nobody told them so, however.
Others weren't fully sure until two months later. That's when on August 13 he told the nation in a full-dress television report why he would not ask for a quick tax reduction that summer but why the economy needed an across-theboard, top-to-bottom cut and revision in 1963.
There were practically none of Mr. Kennedy's highly publicized direct phone calls to officials up and down the line involved in details of tax planning. "The contemplative process wasn't canied out over the phone He didn't think out loud over it," Mr. Fowler notes. Mr. Kennedy left the size of the tax bill to negotiation between the two chief contending forces. Mr. Dillon's Treasury, situated to the right of the White House physically as well as spiritually, wanted as little revenue loss and as much tax reform as possible. The Treasury, backed by Mr. Mills, feared congressional passage of a tax cut bill without major restructuring attached would doom such changes for years.
The other force was Mr. Heller's Council of Economic Advisers, operating out of the ornate old Executive Office Building to the left of the White House. Mr. Heller wanted a big tax cut fast, irrespective of reforms, in order to jazz up the economy. He argued for several billion more than the $10 billion finally agreed upon. White House staffers told the President that as long as he was going to have a fight over taxes he might as well ask for as big a cut as he could. Mr. Kennedy himself was mainly preoccupied in this period with a matter of high urgency, the Cuban missile crisis.
The President, by and large, knew little about the major provisions of the tax bill—including the exact size of the proposed cut—until December. That month he made his formal commitment to the proposal and began his full-scale pressure for it in a speech to the Economic Club in New York. He finally learned full details and gave his approval to the detailed Administration scheme at a Yuletide conference in the sun at Palm Beach, Fla.
The shaping of legislation in executive departments can be a nervewracking job. The tax bill was no exception. Stanley Surrey, the assistant secretary in charge of putting together the tax proposal in all its technicalities, recalls working long into the night; steady streams of economists, businessmen, tax specialists, lawyers and special pleaders filing past his desk, and ground-breaking staff studies of problems never encountered previously.
Congress' opinion vital But no matter how much work goes into any Presidential proposal, the thing that finally matters is how Congress treats it. The work of assuring congressional acceptance fell mainly on Mr. Dillon and his aides. Mr. Heller, who had a reputation as a big spender, kept in the background.
This wooing of Congress started with consultations with Mr. Mills throughout the decision-making process. The congressman is deeply conscious of the American constitutional system division of executive and legislative powers so refused to take any positive role in shaping the Administrative proposals. But any indication of coolness or lack of understanding about some tax idea on the part of the Arkansas lawmaker was enough to make the Administration's men restudy their position.
Other discussions were going on with the late Sen. Robert Kerr of Oklahoma, who, besides being the most politically powerful Democratic Senator, held a key role because of his No. 2 position on the Senate Finance Committee. Finance Committee Chairman Harry F. Byrd opposed a tax cut.
Much of the consultation with Mr. Mills and Mr. Kerr was kept as quiet as possible. Mr. Fowler flew to Little Rock for one weekend meeting with Mr. Mills during the fall of 1962. Even more importantly, Secretary Dillon got Mr. Mills and Mr. Kerr together in the senator's home bailiwick in late November for a talk about the bill's main provisions. Senator Kerr helped the Administration by what is described as explaining certain provisions of the plan to Mr. Mills. The two powerful congressional leaders didn't seem too shocked by the tax proposals, as one Administration source puts it, so Mr. Kennedy went ahead with his proposal.
By the standards that prevail in city hall and state capitol politics, legislators should have waved their arms in joy over the opportunity to vote for a tax cut. But Congress doesn't work that way. Members knew the people had stronger feelings about federal fiscal responsibility than many supposed political experts believed. Making matters worse, the Administration's bill included a number of structural changes which would have hurt many businesses and individuals more than the rate cuts would have helped. As a result, businessmen, congressmen and many members of the House Ways and Means Committee objected strongly. The whole bill was endangered until Congress made the necessary improvements.
Mr. Mills firmly insisted in his courtly southern fashion that the Administration must curb spending if it wanted his help in cutting taxes. His stand re flee ted fears by many legislators, businessmen and others that Mr. Kennedy would try to couple the Heller tax-cut thesis with the Samuelson-Galbraith bigspending recommendations, thereby spending the country into inflation. The turning point for Mr. Mills came when President Kennedy gave him an advance look in late 1962 at the Administration's budget proposals for the fiscal year which will end this June 30.
The spending figures showed a rise. But Mr. Mills was impressed by the fact that total spending other than that for defense, space and interest on the national debt had leveled off and Defense Secretary Robert S. McNamara promised Pentagon spending would level off the following year.
The rest of the country didn't convince as fast. The structural changes were highly objectionable to business. And it didn't seem to make sense for the government to reduce taxes when it was already running a deficit. Strong demands for federal economy arose. Many people simply didn't believe—and still don't—that the Administration would willingly hold down spending at a time when it was pushing the Area Redevelopment Administration, the Accelerated Public Works program and other big-spending schemes.
"I am convinced that in the early stages of the tax bill, the White House wanted only to throw fuel on the fire so as to cause inflation," says Mr. Byrnes, the Republican tax leader in the House.
Spending holddown a key Mr. Kennedy made it hard for himself by refusing to pledge to hold down spending since labor and other liberal groups were complaining that he wasn't spending enough. Failure to make a public pledge until nearly the final moment gave Administration forces trouble all through the House. But this pledge by Mr. Kennedy and, later, by President Johnson not only assured passage of the tax bill but could well help hold down federal spending and deficits into the future.
"President Johnson's signal contribution to the tax bill was to cut his budget spending proposal for fiscal 1965 to S98 billion," says an influential Democrat in the House. Mr. Johnson's pledge came when the hill seemed stuck in the Senate. Much opposition among conservative Democrats melted became of it. Not all, however. "I don't care what they say in the newspapers," asserts Sen. Russell Long, the Louisiana Democrat who managed the tax bill in the Senate. "We and the Administration were scared to death about the bill." The Administration had to turn to Senator Long, a more or less unknown legislative quantity, for its tax leadership in the Senate when Senator Kerr died suddenly on January 1, 1963, just when the tax fight was starting.
"We were really worried," says a Kennedy strategist. "Senator Byrd had made clear he couldn't work for a tax cut without a balanced budget and nobody else in the Senate knew anything about taxes except our opponents." He makes clear that the opponents were the Democratic liberals on the Senate Finance Committee such as Senator Albert Gore of Tennessee and Senator Paul Douglas of Illinois.
Despite Senator Byrd's formal opposition to the tax cut, the Virginian was instrumental in letting the bill pass Congress. The key was an advance look at President Johnson's fiscal 1965 budget which showed lower spending. At that point, Senator Byrd permitted it to be reported out of his committee Then, reports Senator Long, Mr. Byrd supplied key votes for the Administration against amendments that might have killed the bill.
"Without Senator Byrd," says Louisianan Long, "that ol' frog might have been so loaded with buckshot it never could have got off the ground." Businessmen, too, helped boost the frog off the ground. The Administration also had support from labor, professional and academic economists and other economic groups. But it was businessmen who swayed key votes in final House and Senate voting. "The history of the tax cut in Congress proved to me," says a presidential adviser, "that labor is influential when it opposes something. But when you want to get something positive passed, it is support from businessmen which influences congressmen."
Possibly this lesson will he re membered when political leaders total up the results of the tax fight. But the final assessment may be many years in coming. For, if this year's reduction works, it may be many years before the country sees an end to the direct effects of future tax cuts stemming from the principles underlying the tax cut of 1964.
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