LULU GARCIA-NAVARRO, HOST:
At the center of the health care drama last week was Senator John McCain, who unexpectedly voted against the Republican bill at the midnight hour. When he returned to the Senate after his brain surgery, he shared this hope.
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JOHN MCCAIN: Let's trust each other. Let's return to regular order. We've been spinning our wheels on too many important issues because we keep trying to find a way to win without help from across the aisle.
GARCIA-NAVARRO: Once upon a time, members of both parties really did work together. So let's go back to one memorable moment of bipartisanship, 1986 tax reform.
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GARCIA-NAVARRO: Professor Ron is our guide. You know him as NPR's senior Washington editor and correspondent, Ron Elving.
RON ELVING, BYLINE: They said it couldn't be done. And they were usually right. Reforming the tax laws was just too hard. But President Ronald Reagan made it one of his priorities.
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RONALD REAGAN: I'd like to speak to you tonight about our future, about a great historic effort to give the words freedom, fairness and hope new meaning and power for every man and woman in America. Specifically, I want to talk about taxes.
ELVING: Personal tax rates could be as high as 50 percent in 1985 when Reagan gave that speech. The tax code was also shot through with loopholes for big business and favored industries from real estate and construction to energy and agriculture. And Reagan, a Republican, found allies in both parties.
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LINDA WERTHEIMER, BYLINE: A group of the capital's most glamorous young leaders is leading the tax charge.
ELVING: That's NPR's Linda Wertheimer, who was covering Congress at the time.
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WERTHEIMER: The Democratic Fair Tax is sponsored by Senator Bill Bradley of New Jersey and Congressman Richard Gephardt of Missouri.
ELVING: Bradley in particular emerged as a key figure on the Democratic side.
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BILL BRADLEY: Tax simplification is not an issue that lends itself to the traditional labels. It's not Republican or Democrat. It's not liberal or conservative.
ELVING: Bradley said it was all about one big tradeoff, lowering the tax rates for the many while eliminating a lot of the tax shelters and write-offs for a few.
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BRADLEY: It simply isn't fair to burden tens of millions of American taxpayers with needlessly high tax rates so that the narrow special interests can retain their favorite loophole.
ELVING: Bradley was best known for his years as a pro basketball player with the New York Knicks. But he was also a policy wonk of the first order. He used both skills to get colleagues in both parties onboard, playing pickup games in both the House and Senate gyms so he could talk about policy in the locker room. All through 1985 and '86, high-powered lobbyists swarmed the Hill and filled the committee rooms, most of them intent on protecting provisions.
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BOB PACKWOOD: The committee will come to order. This afternoon, the committee begins two days of hearings, during which we will hear from major business groups.
ELVING: Weeks of committee work in both the House and Senate led to bills that looked a lot like the status quo. But in the spring of 1986, the chairman of the Senate Finance Committee, a Republican from Oregon named Bob Packwood, decided to try a new approach.
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BOB EDWARDS: This is Morning Edition. I'm Bob Edwards. Members of the Senate finance committee anticipate a battle today over a radical revision of the nation's tax code.
ELVING: Packwood wanted to lower rates into the 20s and go after even some of the most popular deductions. And that's when the bipartisanship really kicked in.
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ELVING: Packwood and Bradley got a small group of Republicans and Democrats to strategize together and defend the bill on the Senate floor. They knew both parties would introduce tempting amendments that would weaken the bill. As a Senate staffer watching those debates from a couch on the chamber floor, I could hear the senators agonize over votes they knew might come back to haunt them.
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PACKWOOD: Question is on final passage.
ELVING: But they stuck together.
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EDWARDS: The ayes and nays have been ordered. The clerk will call the roll.
UNIDENTIFIED MAN: Mr. Abdnor, Mr. Andrews...
ELVING: The Senate passed the bill.
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PACKWOOD: On this vote, there are 97 ayes, three nays. H.R. 3838 is declared passed.
ELVING: And after a last round of negotiations with the House, the final bill was signed into law by President Reagan.
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REAGAN: Flatter rates will mean more reward for that extra effort. And banishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.
ELVING: Of course, over the intervening 30 years, loopholes have crept back into the code like kudzu. And partly as a consequence, the top tax rates have crept up again. That's why many people think the tax laws need another comprehensive overhaul. And it's why the Republican leadership in Congress has promised to do that this fall. They might try to do it the way they did health care, one party only, behind closed doors. Or they might look for another model, possibly the one that worked the last time the job got done. I'm Ron Elving, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
