The Invisible Bridge: The Fall of Nixon and the Rise of Reagan

by Rick Perlstein

  The Rockefeller Commission report dropped on June 10. The Times expressed partial satisfaction at the 350-page “trenchant, factual and plain-spoken document.” It revealed that the CIA’s campaign against domestic dissent, Operation CHAOS, opened files on more than three hundred thousand individuals and organizations, including Martin Luther King’s Southern Christian Leadership Conference and the staid establishment Negroes of the Washington Urban League; concluded that the CIA had no role in instigating Watergate, and none in the assassination of President Kennedy—and buried deep within, made the eye-popping revelation that the CIA had tested LSD on people who weren’t told of the tests, and that at least one person died in 1953 as a result. But it punted on passing judgment on the “incomplete and extremely sensitive” question of assassinations of foreign leaders. The president promised to pass the assassination files on to the Church Committee, which promised a month of closed-door hearings on the subject. And the reforms it suggested were timorous. The Times didn’t expect much would come of them. The report also said the CIA had taken steps in 1973 and 1974 that “have gone far to terminate the activities upon which this investigation has focused.”

  But if the White House thought that would put the CIA story to rest, they were mistaken. Like the great white shark in Jaws, the stories kept on crashing to the surface, day after day after day.

  Like the fact that the chairman of the House’s intelligence inquiry, Lucien Nedzi of Michigan, had been briefed about the CIA’s domestic spying, and the possibility it had been involved in assassinations, more than a year earlier and did and said nothing about it—a perfect emblem of precisely the congressional failure of oversight Nedzi’s committee had been impaneled to investigate. Another fox guarding the henhouse.

  Like the fact, as reported in Time the next week, that the New York Times had known of the assassination allegations for months but had chosen not to print them. And the news, on June 19, of the suspicious murder of Sam Giancana, the very mafioso reputed to have been the CIA’s man in Havana. Five days later, Time reported in detail about the agency’s bizarre Murder Inc. schemes there: “The medical section of the CIA produced some exotic pills and even ‘fixed’ a box of fine Havana cigars . . . the pills were turned over to the Mafia. The would-be assassin was to have been paid $150,000 if he succeeded; some earnest money, ‘a few thousand dollars,’ was turned over to him. Giancana and Roselli expected something more important than money: both were under investigation by the Department of Justice and hoped to escape prosecution.” The next week, Time reported that in an interview, the man who had been the CIA’s general counsel from its 1947 founding through 1973 and “a confidant of one director after another” said Robert F. Kennedy knew all about the plotting by the CIA and “didn’t seem very perturbed.” (“And what do you do for a living?” the musical political humorist Mark Russell asked, posing as a Church staffer, in his nightclub act, a few nights after Roselli’s closed-door testimony. The answer: “I’m a notorious gangster and hit man.” “And how long have you worked for the government?”)

  And then there was the fact that in 1953 a twenty-two-year-old Army biochemist named Frank Olson, an unwitting participant in a CIA study in which his drink was spiked with LSD, jumped out a window to his death. The president publicly invited his outraged family to the Oval Office and apologized for the “inexcusable and unforgivable” incident—perhaps to head off their plans to sue the government for wrongful death. Meanwhile two left-wing congressmen, Bob Kasten and Ron Dellums, claimed evidence of “years-long CIA penetration of the White House itself,” without any president’s having known. “Vicious nonsense,” the CIA director responded—but these days, who knew?

  An article by the Times’ Tad Szulc in New York magazine, called “The Politics of Assassination,” recorded suspicions that one of the things the Rockefeller Commission was actively covering up was a CIA plot to murder China’s premier, Chou En-lai. It noted that the Rockefeller Commission members worked under such intense paranoia they weren’t allowed to leave their shoes outside their hotel rooms to be shined lest recording devices be planted inside. Soon after, one of the Democratic heroes of the Judiciary Committee’s Watergate investigation, William Hungate, announced he was retiring from Congress in disillusionment. He said “politics has gone from an age of ‘Camelot’ when all things were possible to the age of ‘Watergate’ when all things are suspect.”

  THE GIANCANA NEWS WAS REPORTED in an issue of Time whose cover pointed a gun at the reader. It announced an article, at 9,237 words one of the longest investigations in the magazine’s history, documenting a crime wave that was making American streets all but impassable: eleven murders in Atlanta within seventy-two hours, six by gunfire; a four-year-old stabbed to death by a teenager seeking the forty cents in his pocket, outside Detroit; statistics, staggering statistics, including a 20 percent increase in crime over the past twelve months in the supposedly safe suburbs and 21 percent in rural areas—on and on and on, for page after page. The next month Gallup asked city dwellers what they thought was America’s worst problem. Only 5 percent cited inflation and 11 percent said unemployment, though both were at their highest levels since shortly after World War II. Twenty-one percent cited crime—and 75 percent of women said they were afraid to walk near their homes at night. New Justice Department statistics discovered that in 1973 one out of four households had endured a robbery, rape, assault, burglary, larceny, or auto theft—though who knew: Attorney General Edward Levi said a third of all crimes went unreported in official channels. A sociologist interviewed an old Jewish immigrant woman in Brooklyn. She said, “I am locked up like the ghettoes of Europe. . . . I am afraid of people knocking down my door. I am still not free.”

  Elected officials, too, were going to jail—including, most recently, a former governor of Oklahoma. The Associated Press reported the findings of two left-wing economists that a combination of multinational corporations’ drive for profit maximization and an inability to control new ways of rocketing money around the world “could plunge the nation into a depression comparable to that of the 1930s.” In Orangeburg, South Carolina, a faulty job rigging the explosives was the only thing that saved the county courthouse—and a church kindergarten next door—from going up in smithereens: apparently someone was protesting against civil rights activists who for their part had protested the police killing of a black youth. What madness couldn’t be visited on America next?

  Maybe the bankruptcy of the greatest American city, where middle-class civil servants were behaving like criminal anarchists.

  The lurid images began in May, when hundreds of Hunter College students took over the office of the dean of students after Mayor Abe Beame proposed deep cuts in the school’s budget. By June, eight thousand New York City municipal workers rallied on the narrow, twisting downtown streets outside the headquarters of First National City Bank, accusing the bank of complicity in planned austerity layoffs of thousands of their colleagues. Police threatened a wildcat strike, distributing WELCOME TO FEAR CITY pamphlets with a pirate-style death’s head on the cover, advising tourists to stay indoors after dark, skip public transportation, and “until things change, stay away from New York if you possibly can.” The feared-for layoffs arrived. On June 28, garbagemen, reacting to the firing of three thousand comrades, staged a one-day walkout. “Wait till the rats come!” they chanted. WELCOME TO STINK CITY, their pamphlets read.

  On July 1, five hundred laid-off police officers stationed themselves in blockade formation before the Brooklyn Bridge, let air out of random cars’ tires, threatened motorists, and threw cans and bottles at the uniformed fellow cops who were begging them to cease and desist. The next day highway workers blockaded the Henry Hudson Parkway during rush hour. By Independence Day, City Hall and other government buildings came under such frequent siege that cops kept up the crowd-control barriers on a permanent basis—“like part of the city’s furniture,” a historian wrote. It was summer; it was hot. So when garbage col
lection began slowing down with the layoffs, New Yorkers started throwing their trash out in the middle of the street, which some people turned into bonfires—right in time for Independence Day, when a journalist in Miami claimed he could convince only one person out of fifty he asked to sign the Declaration of Independence. “Commie junk,” one called it. Another threatened to call the cops on him. A third said, “Be careful who you show that kind of anti-government stuff to, buddy.” And: “The boss will have to read this before I can let you put it in the shop window. But, politically, I can tell you he don’t lean that way. He’s a Republican.”

  HERE WAS ANOTHER OF THOSE Predictions for 1974: a “declaration of bankruptcy for New York City”—“the first tangible sign of the collapse of our entire civilization.” A year later, that augury looked to be coming true, too.

  The roots of the Great New York City Fiscal Crisis lay in recession: the economic downturn of 1974–75 hit the Northeast with a speed and force all out of proportion to the rest of the country. New York had always supported a program of middle-class entitlement unlike anything anywhere else, a sort of socialism in one city: subsidized housing and day-care centers; free college at the world-class City University of New York; free museum admission; nineteen municipal hospitals, many of them world-class; free directory assistance—amenities that seemed only natural for a metropolis transforming itself, in the boom years after World War II, into the greatest city in the world. “I do not propose,” Mayor Robert F. Wagner pronounced in his 1965 budget message, “to permit our fiscal problems to set the limits of our commitments to meet the essential needs of the cities.” Neither, indeed, did the city’s investment banks, which all but begged the city to keep borrowing money, because municipal bonds paid high interest rates; were exempt from federal, state, and municipal taxes; and seemed to entail negligible risk. It took two to tangle a city in unsustainable debt.

  It worked, until it didn’t. The city’s manufacturing base had declined, and the unemployment rate, under 5 percent in 1970, now hovered above 12 percent. White middle-class New Yorkers, fearing crime, fled to the suburbs. Federal and state aid leveled off; expectations that Richard Nixon’s national health insurance bills would relieve the city of its massive outlays for Medicaid came a cropper when Congress voted them down, first in 1971, then in 1974 (conservatives opposed them because they were too generous, liberals because they were not generous enough). Bills came due that this newly atrophied level of revenue simply could not cover: by the days of Nixon’s resignation the city’s debt was $11 billion, a third of that in short-term notes soon to come due, and more than 11 percent of the city’s spending went to interest payments on the debt—to banks suddenly reconsidering their lending practices in a recession. Other tax shelters started looking more attractive to those banks. So did other customers—for instance the same resource-rich Third World nations that so irked Daniel Patrick Moynihan. Banks started asking for some of that loaned money back, and started charging more interest to let New York rent more. In September 1973 the Wall Street Journal had reported, “Our cities have by and large weathered their financial crises.” Now the greatest city in the world was going broke. Like the energy crisis, this crisis seemed to come out of nowhere.

  In December 1974 Mayor Beame made a pilgrimage to Washington, D.C., to meet with treasury secretary William Simon. Beame explained the actions he had already taken to correct the city’s fiscal imbalances, including freezing most city hiring and merit pay increases; he then argued that, given that America’s most international city had to pay higher interest rates than any municipality in the country, it would be in the national interest for the Treasury Department to loan New York the money it needed by buying its municipal paper directly.

  The treasury secretary flipped.

  “Mayor,” he said, “if we did that the taxpayers would end up financing the campaign promises of every profligate local politician in the country.”

  There was something very disingenuous in the reaction. Bill Simon had formerly been senior partner in charge of government and municipal bonds at Salomon Brothers, and a member of the investment bank’s seven-man executive committee—that is, one of the very people responsible for lending so much money to New York in the first place. In the late 1960s and early 1970s, Simon had even served on a debt advisory committee set up by Beame back when he had been New York’s comptroller. If New York had been borrowing beyond its means, William Simon was one of the people personally responsible.

  He would later complain that he had been gulled—that the city’s “Byzantine accounts” and “tortuous accounting practices” had been willfully devised to forestall just the kind of fiscal reckoning he was now bravely insisting upon. He wrote, “Even the most sophisticated financiers and the Treasury Department itself were totally unprepared” for such disregard of “the basic legal and ethical pact between the city and its debtors.” And surely, in City Hall, there was plenty of blame to go around. But other motives, other assumptions, lay beyond Bill Simon’s recalcitrance as well. These were ideological.

  As he wrote three years later in a book modestly titled A Time for Truth, which was published by Reader’s Digest Press and which spent some twenty weeks on the bestseller list: “The philosophy that has ruled our nation for over forty years had emerged in large measure from that very city which was America’s intellectual headquarters, and inevitably, it was carried to its fullest expression in that city. In the collapse of New York those who choose to understand it could see a terrifying dress rehearsal of the state that lies ahead for this country if it continues to be guided by the same philosophy of government. . . . Nothing has destroyed New York’s finances but the liberal political formula. . . . Liberal politics, endlessly glorifying its own ‘humanism,’ has in fact been annihilating the very conditions for human survival.”

  He spoke for his class. As a staffer wrote in a memo proposing language for First National City Bank’s president to use in discussion with the mayor, this crisis was an opportunity: “many things”—he cited higher subway fares, cutbacks in the city workforce, and budget cuts generally—“can be done even if they are not technically possible.” Technically possible, he meant, if interest groups like the municipal unions, the board of education, or municipal hospital administrators were afforded their traditional political deference. Well, they had been deferred to long enough. “The time,” the staffer insisted, “is now.” Now it was the capitalists’ turn to be deferred to. Investment bankers and the mayor’s Council of Business and Economic Advisors should “work in concert,” he suggested, “to prepare a unified analysis which would clearly demonstrate the absolute inviability of the City if it continued on its present course.”

  Such language signified another front opening up in the right’s political war: the corporate front. During the postwar boom, business had signed on as partners to the New Deal order, which seemed to be delivering an all but permanent broad-based American prosperity. They honored its core intellectual proposition, Keynesianism, which held that a key to building and sustaining prosperity was to harness the power of government to put money into ordinary consumers’ pockets. More or less, they acceded to (or at were powerless to stop) the escalating pace of marketplace regulation—which reached its pinnacle under a president from the party of business, Richard Nixon. The New Republic called a tax bill he signed in 1969 “far and away the most ‘anti-rich’ tax reform proposal ever proposed by a Republican President in the 56 years of the existence of the income tax.” Much of the new government revenue was spent on new regulatory agencies, like the Environmental Protection Agency, the Occupational Safety and Health Administration, the National Transportation Safety Board, the Consumer Product Safety Commission, and the Mine Safety and Health Administration (created by the most stringent federal mining legislation in U.S. history). In Washington, it felt like liberal lobbies were in the saddle: environmental groups like Friends of the Earth, the Natural Resources Defense Council, and Environmental Action; g
roups associated with the consumer advocate Ralph Nader; aggressive legal advocates like the Center for Law and Social Policy—with “brilliant young staff members who mistrust or totally disbelieve the attributes of the enterprise system,” Barry Goldwater complained in 1974, but who now raced up Capitol Hill to testify before congressional committees and often as not tied up their business adversaries in knots.

  It felt endurable when Keynesianism was working. Now, however, it was not. Rates of profit were declining. Labor was more militant than at any time since the 1946–47 strike wave. It was time, the men in their leather-backed chairs and wood-paneled conference rooms began reasoning, to fight back—to create a political opposition, red in tooth and claw, to fight back against liberalism on the national stage.

  Lemuel Boulware of General Electric had been saying the same thing for years, of course, going so far as to organize political strategy retreats for executives in all sorts of fields in the late 1950s on Gasparilla Island, off the Florida coast. After the Arab oil shock of 1973–74, he had many more frightened allies. The Conference Board, the venerable publisher of economic indicators like the Consumer Confidence Index, held a series of conclaves through 1974 and 1975 on the social responsibility of business. Discussion soon turned to the question of the survival of business, and how “social responsibility” was sabotaging same. One executive worried, “One man, one vote has undermined the power of business in all capitalist countries since World War II.” Another complained, “The have-nots are gaining steadily more political power to distribute the wealth downward.”