Power Game (66 page)

There were not many other political foundation stones for Reagan’s domestic agenda; top Reagan aides privately admitted to me they were out of fresh ideas. Back in 1982, Reagan had tried New Federalism, a program to transfer major federal programs and revenues to the states, but it had flopped. Meese’s domestic staff wanted to push welfare reform, Reagan’s big achievement as governor of California, but it did not get off the ground. The Jack Kemp wing of House Republicans wanted tax reform, but given Wirthlin’s polls showing lack of public enthusiasm, that was not a big favorite at the White House after the election.

Treasury Secretary Donald Regan wanted to bull ahead. On November 27, Regan put out the long-awaited Treasury Department proposal, later known as Treasury I, which called for significant cuts in individual tax rates and a bigger tax burden for business. It got a cool reception, both in Congress and from the president. Given Democratic strength in the House, Ken Duberstein, chief of congressional liaison, and Dick Darman, manager of the Legislative Strategy Group, advised negotiating privately with House Democratic leaders to insure bipartisan support before surfacing any presidential package.

“I’m not so sure the president himself was so enamored with tax reform,” Ed Rollins, White House political director, told me. “I’m talking about December ’84, January ’85. My sense is that if Jim Baker hadn’t gone over to Treasury [as secretary in January 1985], it may never have had all the weight it had.

“Treasury I became the first thing out of the box after the election,” Rollins recalled. “Nobody was focusing on anything at that time. The bill was so disastrous from a political perspective, it created this tremendous wave of opposition.… It had never come to the White House for sign-off. It had never basically been discussed. You know, the
two-month period after the election, everybody was just sort of in a letdown stage. And I think with Baker going over to Treasury, knowing that was his claim to fame for the year, they worked it, tried to make it more politically salable. [For] Don Regan going in the White House, clearly tax reform was the most important thing to him.… So that the two principal staff leaders certainly provided an impetus.”
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President Reagan liked the idea of lowering rates but as he saw how tax reform would hit business, it took several months to sell him on the specifics. “I mean, he had to be convinced, day by day, of the merits of the whole thing [by] Baker and Regan,” Rollins told me. “My sense is that the President thought it was a good idea, but as he started going through it piece by piece, and he started seeing whose ox got gored, you know, it had less appeal to it.… His friends were in the corporate world, and what you basically were doing was shifting your tax burden off of the individual taxpayers onto corporate America. Corporate America is who Ronald Reagan’s friends were.”

With Reagan lacking a game plan, Congress took the lead—a real oddity in the wake of a landslide presidential election. Congressional Democrats, and even some disgruntled Republicans, filled the vacuum left by the president. Overall, the spring of 1985 was a curious jumble of setbacks for the White House, a political minefield instead of a postelection springboard.

One reason is that while Reagan had soared to a personal victory in 1984, he had been unable to lift his party. The contrast with the big Republican gains of 1980 was dramatic—a portent of things to come. In the 1984 election, the Democrats gained two seats in the Senate, narrowing the Republican majority to 53-47. In the House, the Democrats held Republicans to a net gain of fourteen House seats. What was crucial—and everyone who understands the power game saw this at once—was that the Republican gain was not enough to restore the conservative coalition that had generated Reagan’s legislative triumphs in 1981. Perhaps deliberately, the voters left a governmental deadlock, endorsing Reagan without buying all of his policies.

What is more, Congress was less cowed by Reagan than it had been in 1981, and so it cuffed him about. The Lilliputians began cutting up Gulliver. In one early vote, left over from an unsettled battle before the 1984 election, Congress cut in half Reagan’s request on MX missiles, limiting him to fifty where he had wanted one hundred (and Carter had planned two hundred). Reagan was hog-tied over his long-delayed nomination of Edmund Meese for attorney general by farm-state senators, who were filibustering Meese’s nomination in order to force an
early vote on emergency farm credit. It was a no-win battle politically for the White House; either Reagan had to back down or, if he won, he offended farm state leaders and voters, while thousands of farmers faced foreclosure.

These were not good issues for Reagan. White House damage control should have disposed of them, but the second-term team was not that skilled. The smart move would have been to work out a private deal on farm credit before Meese’s nomination got tangled in a public fight. However, the farm-credit bill passed, and Reagan, angered by the cost, vetoed it. The problem got worse, for the Senate wrote the same provision into an omnibus spending bill which Reagan signed. Eventually, he had to swallow a mammoth, budget-busting, five-year, $57.5 billion farm program. In 1986 alone, that program wound up costing $25.6 billion—five times its cost in the year before Reagan took office.

In sum, Reagan’s hesitancy and his team’s disarray threw away the golden moment of his reelection landslide. “The period of January to May of 1985 will be viewed as a time when we could have set in place an agenda which could have been driven by the mandate—and which really wasn’t,” lamented Richard Wirthlin. “We walked away from it, and I think we paid the piper.”
⁴¹

“Reagan had momentum and the high ground,” agreed Kirk O’Donnell, Speaker O’Neill’s political adviser. “He blew his opportunity to dominate the agenda by not going after the tax bill in February. Had he gone after it, he would have dominated the political horizon and the agenda the same way he did in 1981.”
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Late Shake-Up, Slow Start

Reagan compounded these problems by reshuffling his top political team long after the elections—a contrast to the fast start of his first team. After his 1980 victory, Reagan installed Baker, Meese, and Deaver within a day or two of his election and added Stockman within a month. But in his second term, Reagan let things drift for a couple of months and then suddenly, on January 8, 1985, announced a major job swap: Chief of Staff Baker becoming treasury secretary and Treasury Secretary Regan taking over as chief of staff.

This signaled a complete—and belated—changing of the guard at the White House, throwing into turmoil efforts to formulate Reagan’s agenda. Reagan made the mistake of letting the personal ambitions of his staff—Baker, Meese, and Deaver—take precedence over his own objectives. Meese wanted a policy domain all his own at the Justice
Department. Deaver, with financial problems, wanted to leave government and set up a public relations firm. Baker’s departure was the most costly to Reagan. Baker had been the linchpin for Reagan’s first term, facing down right-wing charges that his pragmatism had corrupted Reagan and factional clashes with Meese, William Clark, and William Casey.

Baker was bone-tired and wanted a top cabinet post. He had been chief of staff for four years and two weeks. (Only two other men had held the job longer: Sherman Adams, Eisenhower’s chief of staff, who had to resign because of the taint of graft; and Bob Haldeman, Nixon’s chief of staff, who went to jail for the Watergate cover-up.) A senior cabinet post would let him show substance and gain prominence, possibly to run for high office. For a couple of years, he had quietly lobbied for a top cabinet job: secretary of State, Defense, Treasury, or attorney general. Treasury was the only real possibility.

Treasury Secretary Donald Regan, knowing of Baker’s ambition, invited Baker over to lunch in his Treasury office on November 30, close to a month after the election.

“I read in the paper where you sort of feel like you’d like to do something different,” Regan told Baker. “So would I. I’m going to make you an offer you can’t refuse: Let’s switch jobs.”
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“That’s very interesting,” Baker replied. “I’d like to think about it.”

Baker and Regan talked again before Christmas, but not until early January did Baker agree. Deaver sold the job swap to the president and Mrs. Reagan. After one night’s thought, Reagan agreed and announced the shifts on January 8, 1985. What is stunning is how passive Reagan was in all this, as if uncaring who was his chief lieutenant and unaware that revamping his staff two months after his election would play havoc with his game plan.

The president had just broken a cardinal rule of the Washington power game: Time personnel changes
offensively
. The start of a second term is a good time to make switches, provided the president acts briskly and decisively right after the election. That conveys freshness and purpose. But waiting two months and then reacting to a deal his aides had concocted made Reagan look like a puppet manipulated by lieutenants. The episode tarnished the gloss of his electoral success. More important, it threw his administration into disarray for weeks while Regan put together a new White House staff.

Regan’s first seven or eight months were a period of very rough on-the-job training. He lacked Jim Baker’s well-developed political antennae and established networks. His experience as Treasury secretary
and as a Wall Street corporate maverick were not adequate grooming for an inside job that is as much political as managerial. He was nowhere near as good as Baker at spotting troubles on the horizon or protecting Reagan from unnecessary confrontations. Moreover, Regan had a penchant for thrusting himself into the limelight that made him a target for criticism, especially in those early months.

“Don is not accustomed to being a staff man,” one close associate remarked. “He likes to be out front, visible, in charge. He’s the Al Haig of the second term.” A lieutenant to Regan blurted out, “Don doesn’t like to share power with anyone.”

Regan, proud of his financial independence and not afraid of being fired, was fond of telling people, myself included, that he did not need to kowtow to anyone—meaning the president—because “I’ve got plenty of fuck-you money.” Nonetheless, he became known as a yes-man to Reagan, unable or unwilling to press bad news on the president.

Accustomed to the power hierarchy of the corporate world, Regan lacked a natural feel for the interconnections of political issues and strategies. And he lacked the natural instinct for one central rule of the power game: Don’t make enemies, because today’s adversary may be tomorrow’s ally. He was insensitive toward the easily bruised egos of other politicians. Even diehard Republican allies of the president bitched that Regan was inaccessible and treated their ideas with arrogant disdain. “He doesn’t understand that elected officials are different from appointed officials,” one Reagan intimate said. “They have their own interests, their own constituencies, their own agendas.”

Regan’s brash, Irish directness won him a reputation for take-charge toughness within the White House. But his real problem was that he was unsure of himself politically. Congressional leaders complained that Regan vacillated so much on issues and tactics that they could not count on him to set a presidential game plan and stick to it.

“Don Regan is a person of very considerable personal integrity,” said a top administration official. “The problem, however, is that he hasn’t thought through his own position in sufficient depth for the position to be stable. It’s not because he is trying to be deceitful.… He has gotten himself into a fair amount of trouble by being unstable, for which you can read ‘unreliable.’ If one day of the week you’re a
monetarist
and another day of the week, you’re a
supply-sider;
if one day you say the problem
can’t be solved
without Social Security, and another day you say it
can be
, that’s really not duplicitous in its motive. He tends to be too quick to articulate. He’s actually a victim of his own directness.”

In 1985, the president paid the price for Regan’s political inexperience. Regan talked initially of a confrontational strategy with Congress patterned after the President’s 1981 blitz? not fully appreciating that the Democrats were too strong in 1985 to be rolled over. Regan zigzagged: In spring, he joined forces with budget-cutting Senate Republicans, encouraging them to take politically risky votes on Social Security; in midyear, he reversed tactics, cutting the ground from under them, which left them infuriated. Regan bowed to national security officials pressing for an early House vote on military aid to Nicaraguan
contras
,
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but left too little time to prepare for the vote, setting up a defeat for Reagan. Much later, the president won more aid, but he had to settle for half a loaf. $27 million in nonlethal aid.

Regan was given to talking about “a scorched-earth veto strategy,” slapping down Congress on every issue, without reckoning that would destroy the bipartisan partnership needed to pass the president’s tax-reform bill. Some presidential intimates talked Regan out of that strategy before it boomeranged. But Regan’s combative streak was reinforced by Pat Buchanan, the right-wing columnist and former Nixon aide, who became director of communications. Buchanan enjoyed savaging Democrats on Nicaragua. He encouraged Reagan to face down Congress over economic sanctions against South Africa. Buchanan’s sallies left Regan putting out political bonfires.

Over time, Regan turned to more experienced hands to compensate for his own lapses. By mid-1985, he had brought in Dennis Thomas, an experienced Senate aide, and Mitchell Daniels, former Republican senatorial campaign director. And he got strategy advice in private sessions with a coterie of old Reagan hands outside of government: Stuart Spencer, Ken Duberstein, Lyn Nofziger, Bill Timmons, and others. But in the meantime, Reagan’s agenda took a battering.

Bitburg: No Damage Control

No event more epitomized the disarray at the start of Reagan’s second term—or played greater havoc with White House efforts to forge the 1985 agenda—than the president’s visit to the German military cemetery at Bitburg in early May. It was a political nightmare—haunting, distracting, enervating the president and his staff with week upon week of searing controversy. It dominated the news. It threw the president off stride. It engulfed his staff in constant worry.