Politics • Bill Archer
When it comes to reducing the federal budget, he knows all the ways and he has all the means.
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THIS IS THE SUMMER of Bill Archer’s content. For 26 years, ever since he won the Southwest Houston congressional seat vacated by George Bush, he has waited through decades of Democratic rule for the time when he would be the chairman of the Ways and Means Committee and the point man for a Republican assault on Democratic taxing and spending policies. At age 69, his moment has finally arrived. He is the author of the first tax cut since 1981, the first year of Ronald Reagan’s presidency. The final product may not be all that he wished for: If he had his way, he would eviscerate the personal income tax. But Archer, unlike some of his more militant colleagues, has been around long enough to understand how grudgingly Washington yields its rewards and how much the GOP Congress has accomplished in a system loaded with checks and balances. They have cut capital-gains, estate, and income taxes and balanced the federal budget, all with a Democratic president in the White House.
What makes Bill Archer important, then, is more than his achievements. It is the kind of politician he isand the kind he is not. Philosophically he is totally in step with the insurgent younger Republicans, but personally he is a throwback to the pre-television era, when the House labored in obscurity and how a member conducted himself was as important as how he voted. He is an unrelenting enemy of the economic policies that make big government possible, and his views, once regarded as fringe, now represent the mainstream of the GOP. He came out against the much-ballyhooed reforms of social security in 1983 and income taxes in 1986, both of which were signed by Reagan. He doesn’t worry much about those who Democrats call “people in need”: He has opposed increases in benefits for social security and unemployment, which otherwise have enjoyed broad bipartisan support for most of his tenure in Washington. At the same time, he has been an unapologetic advocate for cutting capital-gains and estate taxestax policies that favor those who Washington regards as “rich.” He is, in short, the kind of Republican that Democrats love to hate, except for one thing: They like Bill Archer. Everybody likes Bill Archer.
The word colleagues most often use to describe him is “gentleman.” He is serious, thoughtful, decent, polite. Second to no one in his antipathy for big government, he nonetheless displays no antipathy toward its individual defenders. As befits his name, this Archer is a straight arrow. He refuses to accept contributions from political action committees, though PACs would jump at the chance to tithe to the most powerful committee chairman in Congress. He embargoed all contact with lobbyists during negotiations over the tax bill, lest he be accused of handing out special favors (but he was anyway). He fills out his own income tax return so that he can know the joys of the ordinary taxpayer. He neither joined nor encouraged the recent GOP uprising in which two other prominent Texans, majority leader Dick Armey and whip Tom DeLay, got caught playing footsie with rebellious conservatives seeking to unseat Speaker Newt Gingrich. As much as he would like to be the architect of a radical restructuring of the federal government, he knows that an eleven-member GOP margin in the House and a popular Democratic president are not the right conditions for success. Archer is a grown-up among brawling school kids.
I spoke with him on a sticky late June afternoon, just minutes before the balanced-budget bill reached the House floor for its initial vote. He was sitting at one end of a conference table in a small room near the House chamber, a Diet Coke can in his right hand. Rather diminutive, he has a round, open face and a retreating hairline. With his large-lens glasses, he looked like the perfect stereotype of an accountant who was about to figure my taxes rather than the entire country’s. As we talked, an aide popped in and out of the room to whisper in his ear about the pace of the floor action and the time remaining before he was scheduled to make a short speech.
At the time, prospects for a happy ending were not great, or so the Washington pundits were saying. Critics charged that Archer’s bill bestowed most of its benefits on the rich, and not one of the sixteen Democrats on his committee had voted for it. (In contrast, the Senate version of the tax cut had substantial Democratic backing.) A major point of contention was the White House’s insistence that the tax cut somehow benefit workers whose earnings were so low that they did not pay income taxes.
“When the Democrats raise taxes on the upper middle class,” Archer said, “they give the benefits to people who don’t pay taxes. Now they want to give the relief to people who don’t pay taxes.” His tone was mild, closer to bemusement than anger. “They say we’re favoring the rich. Seventy-six percent of the benefits of this bill go to people who make between $20,000 and $75,000 a year.”
“That’s not what I read in the papers,” I said.
“No, it’s not. That’s because the Democrats are using the Treasury’s values for calculating income. Do you think you’re rich?”
“Absolutely not.” It occurred to me that thousands of lobbyists in Washington would kill for the opportunity to tell the chairman of Ways and Means, face to face, what I had just said.
“Well, I bet the Treasury does. Do you own your home?” I nodded. “The Treasury imputes to you the rental value of your home as part of your income. If you have mutual funds that have appreciated, the Treasury counts the increase as if it were income.
“And this just boggles my mind: The Treasury says, ‘We know that you’re not reporting part of your income, so we’re going to add a cheating factor.’ By the time they get through, their version of your income is almost double the adjusted gross income on your tax return. Then the Democrats say, ‘Look, the tax benefits are going to the rich.’”
Our discussion illuminated just how much the writing of tax bills has changed since Archer came to Congress. Under the benevolent dictatorship of Wilbur Mills of Arkansas, whom Archer still regards as his mentor, Ways and Means was a committee in which party labels meant little; the balance between Democrats and Republicans remained constant, regardless of the size of the Democrats’ majority in the House. “There were fifteen Democrats and ten Republicans,” Archer recalled, “and three of the Democrats were as conservative as the Republicans. There was a lot of working back and forth across the aisle. As a member, you could get something you wanted, as long as Mills got what he wanted.” Everything changed after the Democrats swept the post-Watergate election of 1974 and enlarged their majority on Ways and Means. By 1981 Mills was gone, Dan Rostenkowski of Chicagohis current residence is a federal penitentiarywas chairman, and Archer more or less went into hibernation for a long winter. Although he was the ranking Republican on Ways and Means, Rostenkowski often treated him with contempt; one story is that Archer was so frozen out of the negotiations on the 1986 tax reform that he learned what the final version contained by reading about it in the newspaper.
As chairman, Archer tried to copy Mills by offering to cater to the individual concerns of opposition committee members. But this is the nineties, not the seventies, and partisanship is far more intense. One committee Democrat told me, “I wasn’t going to sell my soul for the price of not being able to participate in the larger issues of the tax bill.” The Democrats wanted to be dealt with as a bloc, but Archer, like Mills, would not go that far. Nor would he agree to have White House representatives in the discussions. By any measure, though, he was a fairer chairman than his predecessor had been. Rostenkowski often met in closed caucuses with his fellow Democrats and emerged with a done deal.
“I let the committee work its will,” Archer said. “The major amendment was by a Democrat. It put a billion dollars into tutors. I was for the taxation of Indian gambling, but another amendment eliminated it. Contrary to the way the committee used to be run, I did not tell the members of my party how to vote.”
A door swung open behind Archer, and the aide showed up again: The time for his speech had arrived. I raced up to the gallery to watch. The House chamber was almost empty; these days, even on major issues, almost all of the members watch what’s going on from their offices on C-SPAN until it is time for a vote. Gingrich was not occupying the Speaker’s dais. This was not a big moment; that would come laterin negotiations at the White House, where no TV cameras could reach. “We stand ready to vote on a bill that brings the American people together like no legislation before us,” Archer told the unseen audience. “With this vote, we can balance the budget to save the next generation from the crushing burden of debt.” He ended with a story about seeing his newborn grandson in an incubator last year, a two-pound premature baby, and thinking about the share of the budget deficit that the infant would have to pay over his lifetime. It was an unfortunate anecdote to choose. The Democrats were fighting his tax bill, which would be voted on the next day, because, among other things, they said it would increase the budget deficit after the first five years.
The bill Archer had passed put him on a collision course with Bill Clinton. It provided a $500-per-child tax creditbut not for low-income workers. (“Today’s vote is about providing tax relief to the people who pay taxes,” Archer said in his speech.) It gave investors a huge tax break; in addition to a lower capital-gains tax rate, the bill exempted from taxes any profit that was a result of inflationa provision the White House regarded as a budget-buster. It raised the exemption for the “death tax,” which is Archer’s name for the estate tax. Now he would have to negotiate not only with the White House but also with the leaders of his own party, Senate majority leader Trent Lott and Speaker Gingrich, who for their own reasons were eager for almost any deal that bore the balanced-budget stamp (Lott has presidential ambitions in 2000; Gingrich just wants to keep his job).
Compromise has never been Archer’s style. In 1988 the Almanac of American Politics said of him, “Archer evidently feels that he has the luxury of opposing grand compromises on principle and can leave to others, including Republicans in the Administration and the Senate, the messy business of putting them through.” The profile concluded, “[T]hrough most of the 1980’s he seems more interested in being a critic than a doer.” Sometimes, as with the 1983 social security reform, he has worked for years on an issue, only to turn against it in the end. (Archer’s behavior, a tax lobbyist told me, “was like getting in an argument with the waiter at the end of the meal so you wouldn’t have to tip him.”) He hadn’t compromised with the Democrats on Ways and Means this time. “Maybe he has an endgame strategy,” one of them said to me, “but that’s not his history.”
But Archer had never been chairman before. Now he had a lot more than his own philosophy to consider. The GOP needed an agreement before the August recess. If the negotiations stalled, Congress and the president would start blaming each other, and that was a road the Republicans didn’t want to go down. Twice beforeon the government shutdown of 1995 and again on the disaster-relief bill this springthey had found themselves in a finger-pointing contest with Bill Clinton, and twice they had lost. The economy was good, and Clinton’s approval rating continued to defy the law of gravity: They would surely lose again. An agreement would also soothe the turmoil within the House Republican ranks. Clinton needed a deal too, one that would bolster his approval ratings and overshadow his manifold personal troubles.
Along with Gingrich and Lott, Archer was deeply involved in the talks with the White House. His negotiating position was strengthened when Gingrich promised the GOP membership that he would not make any agreement on taxes that his Ways and Means chairman did not approve. Except for medicare reductions, Archer was disappointed in the spending provisions of the final package (which were not in his negotiating area), but he voted for them anyway, something he never would have done in years past. Why? Because the tax cuts totaled more than $90 billion, exceeding the $85 billion stipulated in the budget agreement. He had become a doer, not a critic.
The details of a tax bill can be mind-numbing, but suffice it to say that Archer got most of what he wanted. In addition to tax credits for children and education and estate and capital-gains tax cuts, the package includes a new kind of individual retirement account, which Archer helped devise, in which contributions will be taxed but earnings will not. The GOP did give in on the fairness issue, allowing workers who do not pay income taxes to receive the $500-per-child tax credit (which will be applied against their payroll taxes). Archer also had to abandon his idea of shielding from taxes any capital gains that are the result of inflation, but a tweak in the tax rates will provide some protection against inflation for long-term investors.
As Congress began its summer recess, Archer was the toast of his colleagues, the one prominent House Republican who left town with his reputation intact, even enhanced. Now the question is whether he can build on his newly won influence. If the economy remains strong, he told me, he intends to pass another tax cut next year. He professes optimism that he can still achieve his dream of getting rid of the income tax (he would replace it with a national consumption tax), and he wants the GOP to make it the central theme of the 1998 Congressional elections.
But any fundamental change in the way America pays for its government will almost certainly have to wait for the election of a Republican president, and that can’t happen until at least the year 2000. Meanwhile, House GOP rules limit chairmen to serving three terms, and Archer will reach his limit that year; anyway, he has already said that he will not seek reelection to the House then. For the remainder of his career, he will have to deal with Bill Clinton. Even a tax cut in 1998 will be hard to come by. As much as Archer was able to accomplish this year, it is still a long way from a revolution.