Back in the classroom

Economist Scholz applies what he learned during Washington leave

John Karl Scholz

Scholars bridge the divide between campus and the world in many ways, and economist John Karl Scholz made the leap through a leave, spending nearly two years in the capital of the nation – and the capital of his specialty.

Scholz rejoined the UW–Madison Department of Economics faculty this fall after a stint in Washington, and what a stint it was: A professor who focuses on policy-relevant economics plunges into a crucible of tax policy and comes out 20 months later not only whole and unbroken, but exhilarated.

“It was a great experience, one that vastly exceeded my expectations,” says Scholz. “I got to see a federal tax bill develop from start to finish.”

He watched policy-making not from afar, but from inside the fray, as deputy assistant secretary for tax analysis in the U.S. Treasury Department. That post is traditionally held by an academic economist and involves the supervision of 45 tax economists.

“They were extremely professional and fun to work with, and I learned a lot,” says Scholz. “My job was to interject staff work into the policy process, so I felt I had a big responsibility to represent them well.”

He did that through congressional testimony and frequent briefings of Assistant Secretary for Tax Policy Don Lubick, who has worked for Democratic administrations since Kennedy, and Treasury Secretary Robert Rubin. Scholz also met President Clinton several times.

“I needed persuasive powers in those settings,” he says, “similar to the skills needed in the classroom.”

Thrashing out options with policy-makers at the cabinet level was a sharp departure from Scholz’s previous work in Washington. In 1990-91, he served as senior staff economist with the Council of Economic Advisers. “I was distant from the decision-makers,” he says, “and the job was less fun.”

Getting up close in the policy process gave him an important insight. “It was a chance to see how important personality and politics are in policy-making,” he says. “These factors are typically stripped away in academic economics.”

It also gave Scholz a crack at what he calls “making things better than they otherwise might have been.” The tax bill that passed in August 1997 and took effect Jan. 1 features tax incentives shaped partly by Scholz and his colleagues. Those include:

• A new $500 credit per child, designed to be especially helpful to lower- income families with three or more children

• Two new education credits: a HOPE Scholarship of up to $1,500 for every child enrolled in the first two years of college, and a “lifelong learning” credit of 20 percent of tuition and fees, up to $1,000, for undergraduate or graduate students

The pace of writing and massaging a tax bill was relentlessly frenetic. Sometimes Scholz would enter his office at 8:30 a.m., not to emerge until 3 the next morning. He credits his wife, Melissa, for her understanding and her support for their two little daughters, Kate and Elizabeth. (Melissa has now resumed her work in Madison as an attorney with La Follette & Sinykin.)

Back in the classroom, Scholz brings with him what he learned and honed in Washington. “For one thing, I can provide context and colorful examples of how government makes decisions,” he says. “I also have increased confidence in teaching policy economics because I’ve seen it in operation.

“In Washington, I had to communicate with different audiences, including colleagues from other federal agencies, political operatives, lobbyists, and members and staff of congressional committees. I had to learn how to structure and package arguments and supporting materials, just as I do in the classroom. In both arenas, rhetoric matters.”