Let's Make a Deal, Washington-Style


By Howard Gleckman "Politics is the process of determining who gets what, when, and how."

-- House Ways & Means Committee Chairman Bill Thomas, Mar. 1, 2003Throughout his tenure as the panel's chairman Representative Bill Thomas (R-Calif.) has built a reputation as the go-to guy on some of Washington's biggest -- and most complex -- policy issues. The massive tax cuts of George W. Bush's first term, the 2003 Medicare drug law, and landmark trade legislation all have the Thomas' stamp on them.

Now, the Californian is the man to see in the House on Social Security. He vows his committee will draft a bill by the end of June. And if Bush ever gets serious about trying to retool the federal tax system, Thomas will be a key player in that effort as well.

BROADER VISIONS. Famously prickly and short-tempered, Thomas is smart and a hard worker. He's steeped in his committee's long tradition of dealmaking. And he has built a reputation as a legislator who can get things done. But critics say the legislation he produces often falls short of his lofty goals and is loaded with costly special-interest giveaways.

The Thomas method is built on a two-step process. It's old-style legislative logrolling -- but with an important twist.

Step One, which Thomas has made a fine art, is to broaden a narrow issue into a grand concept. Time and again, he has turned a relatively limited problem into a vehicle for more comprehensive legislation.

WOOING SUPPORT. In 2003, for example, he was asked to help create a new drug benefit for Medicare. Instead, he aimed to replace government-provided Medicare with a system of market-based insurance. Similarly, when Congress needed to fix a problem with the way some U.S.-based exporters were taxed, Thomas tried to turn the repair into a complete redesign of the international tax system.

He's already using the same recipe with Social Security. To Thomas, Social Security is just a slice of the much bigger problem of retirement security. He has made it clear that Bush's plan to create personal accounts may be just one small piece of a much larger package of savings, pension, and long-term-care measures. Says a spokeswoman: "Chairman Thomas takes on challenges with the intent of making law. He looks at issues in a broad, comprehensive, integrated way -- not narrowly or in isolation."

Step Two for Thomas is to deal. One by one, he'll identify potential supporters of a bill, find out what it takes to win their backing, and add whatever sweetener he needs to lock them in. The beauty of the Thomas Method is that the complexity that comes with his grand concepts gives him many more levers to pull in his search for votes.

BIG IDEAS, BIGGER COMPROMISES. His strategy of attracting votes one-by-one is based on a long tradition at the Ways & Means panel. Past chairmen such as Dan Rostenkowski (D-Ill.) and Wilbur Mills (D-Ark.) were masters of the art. While both lawmakers left Washington under ethical clouds, it had nothing to do with their legislative skills.

If the standard is getting bills passed, Thomas has been a huge success. But there's a downside: The Big Idea can get lost in the legislative meat grinder. And what starts out as a creative reform sometimes ends up as a costly jumble of special-interest giveaways.

That's what happened with the Medicare drug law in 2003. Thomas started with a big -- and extremely controversial -- idea. His theory was that seniors could get better and less-costly care through private insurance rather than through traditional fee-for-service Medicare. As a result, he tried to design a law that would encourage seniors not only to buy drug insurance in the private market but also purchase all their health coverage through private insurers.

AMBITIOUS START. The result, however, was very different. The 2003 Medicare law became a fabulously expensive jumble. Big Pharma will get big money to sell drugs to seniors. The elderly will get federal subsidies to buy the drugs, and insurance companies will get huge subsidies to offer managed care to wary retirees. But the real private market won't even begin for a decade, if at all. And the price tag for it all will approach $1 trillion over 10 years.

In 2004, after years of effort, Thomas muscled a major foreign tax measure through the House and, eventually, worked with Senate Finance Committee Chairman Chuck Grassley (R-Iowa) to get a bill through Congress. At the start, Thomas laid out an extraordinarily ambitious idea -- nothing short of completely remaking the way the U.S. taxed multinational corporations.

His idea was to tax all goods and services at the border so that a company would pay tax in the country where it earns its money, no matter where it is headquartered. That plan, while controversial, represented tax policy at its best: It was a straightforward, responsible plan that would have cleaned up one of the messiest bits of the Tax Code.

SNOUTS IN THE TROUGH. But business lobbyists balked, afraid their clients might lose out. And to win the support of lawmakers worried about those interests, Thomas started making deals. In the end, he got a bill passed. But he had to abandon nearly all of his original idea.

As a result, the measure turned into an orgy of corporate giveaways. Movie studios, farmers, bow-and-arrow manufacturers, and energy producers all dipped at the trough. The law's true cost could be hundreds of billions of dollars over the next decade, although much of the price tag was hidden behind phase-outs and phase-ins. It was, say many critics, the most grotesque tax bill in memory.

Of course, this isn't all Thomas' fault. The legislative process is always messy. And no one legislator deserves credit -- or blame -- for the outcome. But if Thomas' buy-me-love history holds, Bush may well get a Social Security bill this year or next. Just don't be shocked when you see the bill. Gleckman is a correspondent in BusinessWeek's Washington bureau


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