Power Game (89 page)

The next afternoon, Reagan’s top team—Jim Baker, Dick Darman, Don Regan, and his deputy, Dennis Thomas, and “B” Ogelsby, the top White House legislative liaison, met at Andrews Air Force Base to decide whether to stick with their bipartisan strategy or to pull out.
They picked the air base for secrecy and also because Regan, returning from the president’s speech to the United Nations, was flying on to Augusta, Georgia, for a weekend golf game with Shultz, Bush, and Bush’s friend, Nicholas Brady.

Despite their anger at Rostenkowski, Baker and Darman wanted to stick with him, but they warned the others that this was a turning point. “If we’re going to pull the plug,” Darman said, “we have to do it in the short term.” Translated: If the president pulls out now, the blame for collapse of the tax bill can be put on Rostenkowski; but if Reagan waits, he too will bear the onus for failure—if Republicans revolt. After some talk, the Reagan team decided unanimously to swallow hard and keep on with Rostenkowski. “We’ll stick with it,” Don Regan said. “We’re going all the way. We’re not pulling the plug.”
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To show displeasure, Baker and Darman boycotted Rostenkowski’s committee sessions, which they had been attending. Even so, the administration kept bending. Reagan could not afford to abandon tax reform; he had made it the domestic centerpiece of his second term. Moreover, Baker argued internally that with all Reagan’s other defeats in 1985—the budget, the MX missile, sanctions against South Africa, and trade legislation—Reagan needed a big win. Baker’s strategy was to let Rostenkowski’s bill pass in the House and then “fix it” in the Republican-controlled Senate. For Baker reasoned (correctly) that Rostenkowski’s bill was more liberal than what Congress would ultimately pass.

The High Price of Hesitancy

The political base of any coalition needs careful tending, and Reagan’s coalition was eroding at its base. Rebellion was festering in the Republican back benches. A Republican split had been inevitable, given the distaste of some Republicans for any tax reform. On the 1982 tax increase, only half the House Republicans had followed Reagan. This time, Baker and the White House hoped for respectable Republican support, but rebellion was spreading all across the spectrum, among Republican regulars, Young Turks, and even moderates. It was a far wider revolt than the administration expected, and it was fanned by the Treasury Department’s closeness to Rostenkowski and by his largely partisan redrafting of Reagan’s bill.

House Republicans had been a minority so long and were so frustrated with being ineffectual, that they were acutely touchy about being
treated as bit players. They were not only vexed by the substance of Rostenkowski’s bill, but they were also outraged at being neglected by their own Republican administration. They began sending letters to President Reagan, warning that tax reform had gone off track. Just as Rostenkowski’s version was finally being passed by his committee through the night of November 22, Republican Whip Trent Lott and others pressed the White House not to endorse it. Earlier that afternoon, Reagan had given his approval, but once again he zigzagged with Regan and Dennis Thomas and withheld a public endorsement.

Reagan again paid a high price for hesitancy in backing a coalition partner. In 1981, he had been bold, clear, and constant. But in 1985, he had hamstrung Senate Republicans by welshing on his budget partnership with them. Now his position on the tax bill hung in the balance for several days—while Reagan ducked phone calls from Rostenkowski. Baker at Treasury argued that the president had to stick with his game plan to move the legislative process forward; otherwise tax reform would be killed in its crib. At the White House, Regan and Dennis Thomas equivocated, trying to find ways to placate angry Republicans.

The president’s hesitancy merely fanned the Republican rebellion, undermining the coalition. Tax reform had lost momentum. Congress and antireform lobbyists read Reagan’s delay as a signal that the president was going to reject Rostenkowski’s bill. Young Turk Republicans got hold of a study by the president’s Council of Economic Advisers, concluding that the long-run effects of the tax-reform bill were favorable but warning that in the short run, the bill would hasten a downturn. The study, leaked to conservative columnists Rowland Evans and Robert Novak, provided more ammunition for mutiny.

Full-scale insurrection was declared on December 4 at a two-hour House Republican Conference, presided over by Kemp, as conference chairman. The mutiny had more purpose and unity than the Reagan administration. That day, 112 House Republicans voted to instruct their leaders to go all out to defeat the tax-reform bill. All four top Republican leaders, Bob Michel, Trent Lott, Dick Cheney, and Jack Kemp, were against the bill. Cheney accused the administration of “selling out to Rostenkowski and cutting out our own guys” from writing the legislation.

Later that day, President Reagan finally took Jim Baker’s advice and urged Republicans to back the process of tax reform. But his statement came too late, and it was lukewarm, obviously the product of conflicting
advice and Reagan’s personal uncertainty. He had misgivings about parts of Rostenkowski’s bill, but it was his only practical vehicle.

One axiom of the coalition game is that in the clinch, the leader cannot flinch. Reagan did. He did not push firmly for Rostenkowski’s bill; to keep the process moving, he urged the House to pass that bill or a Republican alternative. In fact, the Republican alternative had no chance. By hedging, Reagan undercut his own appeal and his only chance for a coalition. His appeal did not stanch the Republican mutiny. The next evening, House Republican Leader Bob Michel, a born loyalist, told me, “This is a personal trauma for me to be going against my president, but I just can’t go for this bill.”
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It hurt industry in his Illinois district. For a congressional party leader to oppose a bill his president wants is fatal to the president.

As the message finally sank in at the White House, Reagan and his aides began warning House Republican leaders that the Republican party would suffer badly if they let down the president. Trent Lott, the torchbearer of revolt, was called to the White House and emerged to report defiantly, “I told him, ‘Mr. President, if you’re going to lie down with the dogs, you’re going to get fleas,’ ”
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So much for Reagan’s cooperation with the Democrats. In the final two days before the House vote on December 11, 1985, Reagan personally telephoned Lott and Cheney to urge them not to lead the fight against the bill, even if they voted against it themselves. But both, vying to succeed Michel, wanted to be in the van of rebellion; neither would make Reagan the promise he sought.

That should have been ample warning; nonetheless, the president’s men were ambushed. Somehow they expected Reagan’s final appeals to prevail, but they had started to push too late and they were out-smarted. Lott and Cheney, two very clever legislative tacticians, saw the weak spot. Rather than attack the tax bill directly, they attacked the rule bringing the tax bill to the floor. In the House, every bill requires a rule to set terms of debate. No rule, no vote for the bill, the bill is dead. The White House did not expect an ambush on the rule.

Lott excluded White House lobbyists from the Republican whip meeting, leaving the White House in the dark. Attacking the rule got some extra votes because some House members like to play their votes both ways to appeal to opposing constituencies. They will vote
against
the rule to get credit with foes of the measure for having tried to stop it (but hoping that other members will pass the rule); then these same members will vote
for
the bill, to get credit with its supporters. The Lott-Cheney tactic worked brilliantly. The rule was beaten 223–202.
The jolt to Reagan was that 164 House Republicans had voted against him, and only fourteen for him. The process was dead unless Reagan could revive it.

Speaker O’Neill declared that Reagan would be a “lame-duck president” if he could not muster at least fifty Republican votes for a rule bringing the tax bill to a vote.

The endgame of this bipartisan coalition was striking because, unlike other Reagan coalition operations, the White House could not dole out goodies to buy support from alienated Republicans. Rostenkowski had already used the soup-kitchen approach; now the tax package was fixed. It took moral suasion and appeals to Republican self-interest to save the bill. For six days, the Reagan team—Baker, Darman, Ogelsby, Thomas, and Regan—begged for Republican votes, listening to House members vent their fury, appealing to them not to cripple their president and hurt their party and themselves in the process.

Baker and Darman used one well-tested power-game ploy to lure back some rebels: Lott and Cheney wanted no compromise, but Michel, like other Republicans, was stunned to see Reagan humiliated, and wanted to help him. So did Kemp, who needed tax reform kept alive as the banner for his presidential bid. But Kemp and Michel required some fig leaf to justify Republicans’ switching back to Reagan’s side. The ploy used by Baker and Darman had worked well on other tough votes, such as the AW ACS sale to Saudi Arabia in 1981 and various
contra
- aid votes. With Kemp, they crafted a letter containing pledges from Reagan to placate House Republicans. If they would let Rostenkowski’s plan pass, Reagan pledged to pressure the Senate for a better version. He promised to veto any bill with an individual tax rate over thirty-five percent and lacking a $2,000 personal exemption (a Kemp proviso), and he made some nice-sounding but spongy promises about protecting incentives for capital-intensive industries. In congressional lingo, that provided “cover” for vote switchers.

But the key to reviving the tax-reform coalition was to change the issue—from the contents of the tax bill to saving the president. Not only was Reagan immensely popular with Republicans, but they were counting on him to help them in the 1986 elections. It was stupid for them to mortally wound him now, and the White House played that theme hard.

Reagan himself was the trump card. In a week of relentless lobbying, the final move was Reagan’s journey to Capitol Hill to plead for support. It was a big gamble. Failure to produce the fifty votes O’Neill demanded would have permanently disabled Reagan. But he had no
choice; he was already wounded. Except for Kemp, the House leaders did not really want Reagan at their conference, because that trapped them between loyalties to their president and to their own troops. But the White House insisted, knowing Reagan’s emotional pull on other Republicans. They also knew it was vital symbolically for the president to make a pilgrimage to his members. That gesture helped salve the wounds of neglect.

The fifty-minute session in the Rayburn Office Building crackled with tension. Reagan said little. He made no opening speech—to avoid any appearance of lecturing. Mostly, he listened as House members vented their spleen at Rostenkowski’s bill and at being cut out of the bargaining, and he promised to “keep in better touch in the future than we have in the past.” He admitted disliking parts of Rostenkowski’s bill, but he pointed out that killing it would “doom our efforts.” And if the Senate did not make improvements, he promised to use his veto.

On the spot, Kemp broke with the rebellion and announced he would “vote for the bill to keep the process going.” After the session, a secret poll showed forty-seven votes with Reagan. By that night, Reagan’s men had found their fifty votes.

Events unfolded with surprising swiftness the next day. Seventy Republicans voted for the rule to bring up the tax bill; defeated just six days before, the rule now passed by a large margin, 256–171. That cleared the logjam for consideration of the tax bill, and it passed
by voice vote without any debate
in a moment of total Republican confusion. After the routine voice vote, the normal procedure was for Republicans to demand a roll-call vote. But the Republican leadership was so disorganized after the rule vote, no one made a move. Before Republicans knew what happened, the action was all over. The next day, Republican backbenchers accused their leaders of conspiring to avoid a roll-call vote. Michel denied it, insisting he had voted for the rule to help the president but had wanted a chance to speak and vote against the tax bill because it hurt his district.

Kemp was the target of heavy fire. He had gotten caught in a squeeze—between his dream of using tax reform to bring about political realignment for the Republican party and his leadership position among House Republicans opposed to the Rostenkowski bill. Kemp got squeezed between the inside game of influence in Washington and the outside game of running for the presidency, with tax reform as his banner.

For days, Kemp’s own Young Turks (Vin Weber and Newt Gingrich) charged him with betrayal, and with greater interest in his
presidential ambitions than in his role as a House leader. They charged him with having violated the Republican Conference instructions ordering the party’s leaders to do all in their power to defeat the bill. Kemp parried, saying he had met that obligation by voting against the first rule, and then by getting Reagan’s promise to veto an unsatisfactory tax-reform bill.

“We have to decide whether we’re going to be a business party or a people’s party, whether we’re going to be a party of tax breaks for corporate America or whether we’re going to be a party that is aimed at all the people,” Kemp replied to his Republican critics. Much later, he told me: “That was a key moment in the history of our party. Tax reform has never been popular in the Republican party and I see it as a big issue, a realignment issue.”
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In fact, Reagan had barely won a patched-up victory in the House. This was not the stuff of realignment. The Republican rebellion and Reagan’s obvious dependence on Democratic support, on Rostenkowski and O’Neill personally, had undercut claims that tax reform was a Republican-created boon to the middle class.

For coalition building, the long-term lesson was that the original base must be protected, in this case a bipartisan base. Knowing the risk of losing hard-line probusiness and supply-side Republicans, Reagan’s team should have been doing more to stroke and satisfy Republican moderates earlier in the game. But Rostenkowski made it tough, because he insisted on Reagan’s noninterference and because his idea of the coalition game was actually creating two separate partisan coalitions: his on the Democratic side and Reagan’s on the Republican side. The problem was that Rostenkowski’s way of winning Democrats made it harder for the White House and Treasury to hold many Republicans. Rosty did not appeal to some higher good to rally both sides; in only a few cases did he really draw Republicans into the process, and provisions used to gain Democratic support went down hardest with most Republicans, especially Reagan’s partisans.