We need to get back to when politics worked in this country.
Forty years ago this month, Ronald Reagan confronted a Democratic Speaker of the House.
The two figures were polar opposites in politics and ideology. The conservative president openly saw government as “the problem.” Thomas P. “Tip” O’Neill, Jr., was a committed progressive who saw government as a way to help those in need.
Fortunately, both knew how to deal and that made all the difference.
President Joe Biden and Senate Republican Leader Mitch McConnell could both benefit from studying their predecessors’ tradecraft.
It started almost at once. Just a month after the inauguration, Reagan found himself stuck with the perennial need to raise the federal debt ceiling. This wasn’t about spending more taxpayer dollars; it was simply accepting an accounting of what had been spent.
Speaker O’Neill knew the drill. All he needed to do was nothing. That’s what the Republicans had done the year when every GOP member of the House voted against the debt ceiling measure.
Instead, O’Neill threw Reagan a lifeline. He said that his side of the aisle would deliver the votes for passage on one simple condition: that Reagan sends a personal letter to every House Democrat asking them to vote to raise the debt ceiling. Bingo!
Reagan agreed, and 243 letters went out. The crisis was resolved.
This trust-but-verify number set the pattern for more deal-making ahead.
By 1982, it was clear that Reagan’s inaugural-year tax cuts had been excessive. New federal revenues were needed to calm the markets.
The Democratic speaker made an offer. He would lead the charge for a Republican-sponsored revenue bill if the president met a pair of conditions. First, that Reagan himself makes the case for the tax bill on national television. Second, that a majority of House Republicans vote for it. O’Neill kept his promise. The bill passed; the economy began its recovery.
The following year, 1983, saw what many believe was the greatest of the Reagan-O’Neill deals. It was to save Social Security. Both sides knew the electoral risks.
Republicans had been burnt badly in the 1982 mid-term elections for appearing to target the New Deal program. Democrats felt it their job to defend benefits at all costs.
The compromise reflected the politics. Reagan and the Republicans wanted the issue off their backs. Democrats wanted the system fully funded.
To get there, a scheduled cost-of-living hike in benefits would now be delayed; a portion of future benefits for those above a certain income would be taxed.
Fearing that one side would take advantage of the deal, it was agreed to share the blame exquisitely. Reagan would announce the deal, but he would put O’Neill’s fingerprints all over it. “It is my understanding that the Speaker and the Majority Leader (Republican Howard Baker) find this bipartisan solution acceptable. Each of us recognizes that this is a compromise solution. As such, it includes elements which each of us could not support if they were not part of a bipartisan compromise.”
Reagan and O’Neill struck another big compromise on the 1986 tax reform bill.
The legislation offered desirable elements for both sides. For example, it tightened business deductions for meals and entertainment. It also raised rates for capital gains to those for regular income. Those who made money on money would pay the same as those who make money on work.
On the other hand, the reform bill reduced the top individual rate to 28 percent, a feature dear to Republicans.
Yet, even with that latter provision, the giant tax reform was a hard sell to Republican members of the House. When they refused to get behind Reagan’s bill, it went down to embarrassing defeat.
To save the day, Speaker O’Neill made an offer to the administration. If Treasury Secretary James Baker could find just 50 House Republicans to back the bill, O’Neill would go all out for its passage.
The deal worked. Baker scrounged up the 50 GOP votes. O’Neill gave what the Treasury secretary called an “excellent speech in favor” of it. The bill passed, and Reagan was able to sign the biggest legislative achievement of his second term.
The Speaker was impressed by how it all worked out: “After the vote, I was struck by how much could be accomplished when the president and the Speaker, coming from opposing parties but working together, could agree on specific legislation.”
The lesson in this 40-year-old history is that politics can work. But it takes, like all deals, a pair of conditions.
One is concern by the leaders for their country over their party. The second is a decent level of goodwill between them. There needs to be some basic human respect, a sense that in the end, we’re in this together.
I will forever cherish the memory of my boss Tip O’Neill’s visit to Reagan in the hospital after his near-fatal shooting in March 1981.
Max Friedersdorf, the White House aide who helped engineer the deals between Reagan and O’Neill, watched the two men recite the 23rd Psalm together.
