Former US Sen. Bill Bradley has long known that he can be a bit of a broken record when it comes to tax reform.
An oft-repeated joke he tells, including during a recent one-man-show, is that during his time in the Senate in the 1980s his own daughter rightly knew that if her dad was on TV “all he’s going to talk about are loopholes.”
That’s hasn’t changed much in the subsequent decades. Bradley — also a Rhodes Scholar, an NBA champion with the New York Knicks, and a former presidential candidate — recently spoke with Yahoo Finance about the state of America’s tax code, the “bangles” that he said President Trump wants to add to the system, and America’s out-of-control debt.
Bradley’s successors in the Senate continue to labor to put together a tax bill with a framework unveiled and passed this past week that could eventually allow lawmakers to add trillions to deficits in the coming decades.
The runaway debt, Bradley said, could soon lead to “an economy that’s in trouble.”
Former Sen. Bill Bradley testified before the Senate about taxes in 2015, alongside former Senator Bob Packwood, left, who was another leader in passing the Tax Reform Act of 1986. (Win McNamee/Getty Images) ·Win McNamee via Getty Images
The Democrat also discussed the role of tariffs after President Trump unveiled his “Liberation Day” tariff plans with some pushback from some Republican Senators.
Asked whether tariffs could pay for tax cuts, he was emphatic: “No, that’s ridiculous.”
When Bradley represented New Jersey in the Senate from 1979 to 1997, he made taxes his centerpiece issue. He says his interest was piqued during his NBA-playing career when he read Milton Friedman and realized as a player he was, for tax purposes at least, “a depreciable asset.”
He unveiled a tax reform plan in 1981 soon after taking office and then helped lead a years-long effort that culminated in a landmark reform in 1986, simplifying the tax rate schedule and eliminating a vast number of Bradley’s hated loopholes.
He joked this past week that his spearheading of the effort around some real estate tax deductions earned him a spot on the “enemies list” of a then-rising real estate developer named Donald Trump.
When Bradley made a return visit to the Senate in 2015 to talk about taxes, he said any good reform effort needed “a zealot,” adding “that’s the role I played in 1986.” He still embraces the zealot label.
Here are excerpts from the wide-ranging conversation:
Bill Bradley holds his young daughter on the day of his swearing in as a Senator in 1979, alongside figures like Vice President Walter Mondale, second from right, and Bradley’s wife Ernstine, at center. (AP Photo/Harrity) ·ASSOCIATED PRESS
Yahoo Finance: I wanted to start on your overall sense of the tax system in the 1980s versus now. That 1986 effort was clearly fueled by this sense of unfairness about how the tax system was then. How do you view the system then versus now?
Bill Bradley: The system itself now is still riddled with loopholes but not as many as existed back in the 1980s. What has happened is that the burden of the system has moved downwards, and the benefit has moved upwards.
I still believe the lower the rate, the better. I still am not supportive of distorted investments represented by loopholes. You have to ask yourself, what’s the purpose of a tax system? Is it to do things that you should do through appropriations? Or is it to raise revenue for the government in the most economical, simplest, and fairest way for the broad base of American people. And I think it’s the latter.
What’s your level of optimism that any kind of improvement [toward your long-held principles of broadening the base, increasing fairness, and simplifying the code] is possible in the short term?
I do not think this kind of system has a chance with [Trump] as president. The fact that Ronald Reagan was president made a big difference [in 1986]. And as important: Don Regan who was then Treasury Secretary and then Chief of Staff Jim Baker.
When it became game time these were people of real substance and you could trust them. And Trump does not have that kind of team. Plus, I don’t think he’d want to do it. A person who believes the way you should finance the government is through tariffs is not a person who would say I think the market should allocate resources in a tax system in accordance with all the principles that I just laid out for you.
Bill Bradley is seen in 1973 during his playing days at Madison Square Garden in New York. (Ross Lewis/Getty Images) ·Ross Lewis via Getty Images
The few of the things Trump has talked about adding to the tax code are a series of campaign-trail promises. No taxes on tips, no taxes on overtime, no taxes on social security payment, automobiles interest deductions …
They’re just like bangles. They’re political gifts to people. Anytime Trump says anything, the first thing you should say is what constituency is he trying to buy off? It’ll all be based on narrow political calculation.
He tends to view the world bilaterally, right? Me versus this country or me versus this company. His deals are bilateral, and the world is too complex to view bilaterally. If you look at many of the successes since World War II, they are all multilateral: multilateral trading systems, multilateral financial systems, multilateral defense systems.
To link these two conversations together on tariffs and taxes: Can tariffs help pay for tax cuts?
No, that’s ridiculous. It’s totally ridiculous. With tariffs, you have put the tariff on, and then, of course, the other country responds with a tariff. And your trade drops and your economy drops.
The reason we have tariffs is there are some times when a country needs some relief for a period of time. And then after that, once you put all the tariffs on, it becomes just another cost that’s passed on, which is inflationary. Or some companies won’t raise prices, but they will lay off workers, so unemployment goes up.
Learn more: What Trump’s tariffs mean for the economy and your wallet
Some of the leaders of the 1986 tax reform effort confer. From left, Senator Bill Bradley of New Jersey, Senator Russell Long of Louisiana, and Senate Finance Committee Chairman Bob Packwood of Oregon. (Getty Images) ·Bettmann via Getty Images
On the flip side of it, I wanted to ask you about the world of congressional bill scoring. My sense of the 1986 effort from your comments — and also I should say from the book “Showdown at Gucci Gulch” — is that score-keeping was a very frustrating experience at the time, but it helped force discipline.
Oh yeah. It was a discipline, no question. It had to be revenue neutral. So how did you wanna pay for it? You paid for it by closing loopholes. Because otherwise, politicians unrestrained tend to give too much away.
It seems to me, as someone that covers it closely, that a lot of those restraints are sort of coming off now. We have something called the current policy baseline, which makes it so you can say we’re going to extend tax cuts, and we’re going to consider it free for the purposes of scoring. And we have a Senate framework this week that could authorize $5.8 trillion in new deficit spending with some offsets. What’s lost when the brakes are off as they seem to be today?
Truth and discipline. To the extent that you don’t give a damn about deficits, you’re inviting a run on the dollar. And if you have a run on a dollar, you’re then going to have much higher interest rates and much higher unemployment. Basically, they think they got it fixed for today, or maybe this month, but it’s not fixed for the long term.
Also, who the hell is doing the contingency plan? If indeed the world’s investors decide the game is up on the dollar, we don’t have a plan to repay the debt. What do we do then?
Is there a way that moment of truth can come and not be incredibly dramatic for the United States?
No. How much of our Treasury bonds do we sell to non-US parties? And take that number and say, “If we lose that, how high will interest rates have to be before people will put the money back?”
That then ends up with an economy that’s in trouble.
Bill Bradley received the Presidential Citizens Medal from then-President Joe Biden at the White House in January. (CHRIS KLEPONIS/AFP via Getty Images) ·CHRIS KLEPONIS via Getty Images
Ben Werschkul is a Washington Correspondent for Yahoo Finance.
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