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Tuesday, October 04, 2016
TIME MACHINE: 1999 - Donald Trump on How Senator Bill Bradley Wrecked US Wealth and Real Estate Values
Bill Bradley's Big, Bad Ideas
By Donald J. Trump, author of "Trump: The Artof the Comeback" (Times Books, 1997).
A l Gore has good reason to look over his shoulder. A recent Time/CNN poll shows that former New Jersey Sen. Bill Bradley has recently shaved 14 percentage points from Mr. Gore's once-commanding lead. That's not a good sign for an incumbent vice president 10 months before the first primary.
To date, the polls reflect Mr. Gore's weakness as a candidate, fueled by the perception that he is the quintessential Washington insider. By contrast, Mr. Bradley, who left government only three years ago after spending 18 years in the Senate, plans to supercharge his campaign by making an appeal as an outsider, one who is unafraid to tackle special interests and, above all, put forward "big ideas." There will be no pomp, no rope lines, no motorcades. Just straight talk and "big ideas."
It's a clever strategy. But it's also deeply unsettling, as Mr. Bradley's last big idea to be enacted into legislation was also one of the worst ideas in recent history.
That idea was an offense against the working man in the form of the Tax Reform Act of 1986. The good parts of that legislation—it cut tax rates in half—can be attributed to Ronald Reagan. The rest must largely be attributed to Mr. Bradley, who went on to vote for major tax hikes not once but twice in the decade that followed the enactment of the act.
Among other follies, Mr. Bradley advocated the elimination of a tax shelter for real estate investments known as the "passive loss" deduction. Now, it is one thing to want to phase out tax shelters. It is quite another to do it overnight.
Businesses make billion-dollar decisions based on the tax code. When sweeping changes are abruptly enacted, as they were by Mr. Bradley, it puts those businesses in a bad spot. It's like being an unbelted passenger in a racecar in which the driver has stomped on the brakes with both feet at 150 miles an hour.
Mr. Bradley's big idea sent the real-estate markets through the windshield. People who were banking their retirement on a condominium or a house saw their dreams destroyed. It was a hard time for developers like me. Many of my competitors, as well as the contractors, builders and workers who depended on them, went under.
Even worse hit were the small savings-and-loans and banks, which had been encouraged by the tax codes to invest in real estate. With the elimination of the deduction, they suddenly found themselves saddled with unproductive assets. As a result, taxpayers were hit with a $130 billion tab, a bill almost the size of the entire Medicare budget.
And that was not all. In his zeal to destroy tax shelters, Mr. Bradley also set his sights on deductions for contributions to individual retirement accounts, eliminating deductions for those whose family income exceeded $50,000 or who were covered by an employee pension plan. The consequences were predictably disastrous. "Half of the decrease in personal savings is directly attributable to the curtailment of the IRA," William Henkel of Merrill Lynch & Co. told Bloomberg Business News in 1996. "The tax bill was an error," another financial planner added. "Now, a whole legion of retirees are marching to age 65 without a safety net."
The reform act did not even keep our taxes down. Over the past 13 years, the number of brackets—reduced to two from 15 in the original act--have crept back up, and the loopholes have proliferated. Worst of all, the tax bill precipitated the 1990-91 recession that culminated in the mass layoffs and firings that Mr. Bradley regularly deplores.
These days, Mr. Bradley spends a lot of time writing and speaking about his years as a basketball great. And no wonder. For in the years he spent in Congress he racked up a legislative record that is as embarrassing as his athletic record is impressive. It's not something he'd want the voters to dwell on.