Policy & Politics
Heinz School, CMU
Prof. Nelson
Spring 1999
STUDY GUIDE FOR SHOWDOWN AT GUCCI GULCH
Introduction
The subtitle of the book is "...the Unlikely Triumph of Tax Reform." Why, according to the
author of the introduction, were "most political scientists, lawmakers, and informed analysts
convinced that radical change [of the federal income tax] was impossible?" (p. xi).
Chapter 1
1.1: Identify some of the larger, older exemptions in the tax code prior to the Tax Reform
Act of 1986 (TRA).
1.2: What are the rationales behind tax exemptions?
1.3: Why did (does) Congress' Joint Committee on Taxation call such exemptions "tax
expenditures"? Is this an accurate term?
1.4: Why do economists and other policy wonks worry about the existence of tax shelters?
What economic ills are they responsible for?
1.5: The authors explain the low probability of tax reform in terms of the likelihood that
various groups will mobilize for and against it. Specifically, they write that
[t]he groups with an interest in the existing tax system were well-organized and ready
to defend their tax breaks at a moment's notice; the populace who stood to benefit
from lower rates was unorganized and diffuse (p. 13)
Why would supporters of the status quo be more likely to mobilize than supporters of
reform?
1.6: The authors state that business lobbyists often justified tax breaks with arguments about
"capital formation" (see p. 16). Be prepared to articulate this line of argument. Do you find
it persuasive?
1.7: What was the stated economic rationale for the Kemp-Roth tax cuts of 1981? How
would the TRA of 1986 (if passed) compare with Kemp-Roth?
1.8: Why do the authors judge the major players in tax reform -- Rostenkowski, Packwood,
Regan, Baker, Reagan -- unlikely reformers?
Study Guide for GUCCI GULCH
Chapter 2
2.1: The authors discuss (p. 29) three central "political decisions" made by tax reform
advocate Senator Bill Bradley in crafting his proposal. What were those decisions and why
did Bradley expect those decisions to increase the likelihood of his bill's passage in
Congress? Did the proponents of national service/loan reform make any similar
concessions to political reality in the formulation of their proposals?
2.2: Where did the idea for tax reform come from? Compare the origins of tax reform with
the origins of national service/loan reform.
Chapter 3
3.1: Describe some of the conflicts among Treasury Department officials over the form of
tax reform.
3.2: To what extent did Treasury Department officials have clear direction from the White
House? What about the persons who developed national service/loan reform?
3.3: Why did Treasury Secretary Regan insist on keeping his department's deliberations
about tax reform secret? Would others (in the press, Congress, etc.) have been interested in
learning what went on during those discussions?
3.4: It is often said that subordinates in organizations "manage up." That is to say,
subordinates use their expertise to influence the views of their superiors, perhaps getting
superiors to do things contrary to their interests or those of the organization. To what
extent did Treasury officials manage up vis-à-vis the White House in Gucci?
Chapter 4
4.1: On balance, did the job swap of Baker and Regan help or hurt the prospects for passage
of tax reform? Explain your answer.
4.2: Compare the qualifications (technical and political) of Reagan's tax reform team with
those of Clinton's national service/loan reform teams.
4.3: Describe the political tactics of veteran's groups and the insurance industry as described
in this chapter.
4.4: The authors describe an important split in the business community's views on the tax
reform proposal. Describe that split. Do you expect that the split eventually helped or
harmed the bill's chances of passage? Explain.
4.5: The authors claim that "revenue estimates provide a critical discipline to the tax-writing
process." Explain this comment.
2
Study Guide for GUCCI GULCH
4.6: Compare the Treasury team's bill with the proposal announced by President Reagan at
the end of the chapter. What might have accounted for the differences between the two?
Chapter 5
5.1: Interpret the following statement by House Ways and Means Committee Chair Rep.
Dan Rostenkowski: "I'm not a reformer. But I'm a Democrat. And if the Democrats are
for reform, then I'm a reformer" (101).
Chapter 6
6.1: Based on the authors' account, describe the source of Rep. Rostenkowski's influence on
the Ways and Means Committee.
6.2: On page 136 ff. the authors describe how Rostenkowski assigned members of his
committees to 'working groups' on particular aspects of the reform bill. How did he decide
which members would serve on which group groups? What implications might these
decisions have had on the ultimate fate of the reform?
6.3: Note the discussion of "transition rules" (p. 146). How could such rules -- and the
distribution of them -- serve as a leadership tool for Rostenkowski?
6.4: Why did Rostenkowski seek a "closed rule" for the tax bill from the House Rules
Committee (p. 146)?
6.5: Explain the following statement by Rep. Rostenkowski: "We have not written a perfect
law. Perhaps a faculty of scholars could do a better job. But politics is an imperfect
process" (p. 151).
Chapter 7
7.1: In this chapter, the authors give some attention to the actions and the White House
staff. On balance, did the White House Staff increase or decrease the likelihood of tax
reform? Explain.
7.2: Describe some of the tactics of "whips" in Gucci Gulch.
7.3: Why did President Reagan agree to meet with Republican legislature at the Capitol?
What impact did the meeting have? How would you explain or account for that impact?
7.4: The authors write that "...under the right circumstance, the special interests could be
defeated" (175). What were/are some of those circumstances?
Chapter 8
3
Study Guide for GUCCI GULCH
8.1: Describe and evaluate the role of campaign contributions from interest groups in the
tax reform debate. Are such contributions effective in changing members' choices? If so,
then how?
8.2: To what extent and in what specific ways was the desire for reelection a factor in the
decisions of members of Congress?
Chapter 9
9.1: How important were congressional staff in the formulation and passage of tax reform?
What about national service/loan reform?
9.2: Why do members of Congress engage in "staff bashing" (e.g., p. 213)? Why do the staff
put up with it?
Chapter 10
10.1: The authors discuss some of the differences between the House and Senate. What are
some of those differences?
10.2: What effect did television coverage of congressional proceedings have on the behavior
and choices of members of Congress?
10.3: How did the bill writers "camouflage" some of the tax breaks remaining in the bill?
10.4: Why did Senate Finance Committee Chair Packwood seek to prevent any amendments
to the tax reform bill on the floor of the Senate?
Chapter 11
11.1: What considerations guide selection of members to conference committees?
Epilogue
The epilogue presents some explanations for the success of tax reform. What are those
explanations? Would you like to add any of your own, or amend an explanation given by the
authors?
4