Left for dead in a shallow grave, mocked by passers-by and then summarily forgotten, now the body has been exhumed and a pulse detected.

The patient? Tax reform. It still faces many hurdles, but developments have put this issue back on the agenda.

A year ago, President Bush celebrated his reelection and put Social Security reform and tax reform at the top of his agenda. Tax reform, however, was quickly relegated to second-class status, sloughed off on a commission. The president then focused his efforts on Social Security reform, which failed miserably.

This failure and the steady decline in public support for the war in Iraq began the president’s descent, which was hastened by scandal, a lackluster response to Hurricane Katrina and conservatives’ willingness to criticize their own president over spending and Harriet Miers. The president now finds himself with a 40-percent job approval rating, his political capital not so much spent as wasted, his two big initiatives seemingly dead.

But now a glimmer of hope for tax reform is emanating from the president’s commission, which has proposed big changes in the tax code that invite bipartisan support. Taxes on investment (capital gains, interest, etc.) would be scaled back to encourage growth in the economy. But even with these reductions, the overall tax burden on rich, middle class and poor would not change because of a few progressive income-tax brackets.

To accomplish these goals, many deductions would be eliminated or scaled back, including the mortgage-interest deduction and the deduction of health-insurance payments. Finally, the measure would be revenue neutral.

What are the reasons for optimism? First, the commission’s recommendations are based on consensus views found in the literature of academic economists. My American Enterprise Institute colleague Kevin Hassett, who advised President Bush’s campaign, and Berkeley economist Alan Auerbach, who advised Kerry’s, demonstrated this consensus last spring by asking nine leading tax economists from across the political spectrum to devise their own tax-reform plans, which were published in Toward Fundamental Tax Reform (AEI Press). While the details differed, on the big points each of the plans resembled what the commission eventually recommended.

Second, tax policy is susceptible to compromise. Deals can be cut, money added here and taken away there. It is also possible to do tax reform on a grand or a modest scale. Even a simplification of tax forms could be called “tax reform” if larger reform is not possible.

Third, tax reform has a better chance for success than other major initiatives. By contrast, consider immigration reform, where the need to balance concerns of business needs for workers, suburban angst in border states, national security and questions of permanent citizenship make this a Solomonic task. Add to this that the immigration issue splits the Republican Party and tax reform looks like child’s play by comparison.

Of course, tax reform will face major obstacles. Reducing deductions means taking on health insurers and homebuilders. There will be big fights over whether this revenue-neutral plan will include extending the tax cuts passed in the first term. Also, in the 1986 tax reform, control of Congress and the presidency was divided between the parties, so both sides had to buy into the compromise. With Republicans in complete control, with their fortunes waning and with the midterm elections on the horizon, this may not be the time for a bipartisan deal.

Despite these difficulties, tax reform is anything but dead. It may in fact be the most significant domestic initiative of the president’s second term.

Fortier is a research fellow at the American Enterprise Institute.