Reagan’s people, especially Jim Baker, were eager to have Social Security be a nonissue as the 1984 campaign started to get under way. Once again, an election had produced two kinds of verdicts, depending on which side was receiving it. The most recent contest for voter loyalties had told the Republicans they needed to call it quits when it came to targeting Social Security as a way to reduce the federal deficit. For Tip O’Neill and the Democrats, the message was, “Never be blamed for hurting the system.” Both parties needed to keep Social Security sound. That meant making adjustments in the present to assure its solvency for future generations.
Back in September 1981, President Reagan had created the bipartisan, fifteen-member National Commission on Social Security Reform. It was chaired by Alan Greenspan, known, at that time, for having been the Ford administration’s head of the Council of Economic Advisers. The group was preparing a report expected to be ready at the very end of 1982, but, as January 1 approached, the struggling commission asked for and received an extension, which made it now due on January 15. That fell amid Congress’s annual two-week break between swearing-in day and the onset of legislative business. It was the period when the Speaker and his pal Dan Rostenkowski enjoyed splitting their time between Palm Beach and Palm Springs, giving paid lectures to corporate retreats and playing golf.
Because it was during the break, it was a date that would find me out of the country, for I’d been fortunate enough to be offered another opportunity to visit Swaziland, this time with Kathleen and our six-month-old, Michael.
The United States Information Agency ran a regular lecture series, which sent “American Participants,” people from various backgrounds, to meet with their counterparts in other countries. They asked whether I’d like to do a quick trip to Swaziland, Zaire, and Nigeria during the two-week hiatus. Once I’d been given the word I could bring Kathleen, then a reporter for ABC’s Washington affiliate, I jumped at the chance.
The three of us flew off right after the swearing-in of new legislators, at a moment when the Social Security negotiations remained on course. Or so I believed. However, when I dig back through the history of those critical days in early 1983, I see it was more touch-and-go than I realized.
The Greenspan Commission, it turned out, was at odds over the right mix of greater payroll taxes paid by workers into the system and lower benefits. The Democrats on it had been pushing for more revenues in the system, while their Republican fellows were insisting on lower payments to retirees. The result, as the deadline neared, remained a stalemate—an echo of the ongoing historic standoff between the parties—with the Democrats hoping to make the system of greater value to those who need it most and the Republicans looking for ways to reduce the burden on those paying in.
Back in December, Tip had said publicly he might be willing to support a tax on the Social Security benefits for those making more than $25,000 a year. The Speaker believed such a progressive tax solution would be a fair part of the deal.
But a very large question remained: who would be the first to show their cards?
Two senior U.S. senators, Bob Dole of Kansas and Daniel Patrick Moynihan of New York, now stepped in to play key roles in the drama. On the first morning of the new Congress, January 3, 1983, the New York Times op-ed page featured a piece by Dole headlined “Reagan’s Faithful Allies,” which brought an unexpected result. “Through a combination of relatively modest steps,” the Republican wrote, “the system can be saved.” Having just read Dole’s article on the Senate floor, Moynihan walked over and tapped his colleague on the shoulder. “Are we going to let this commission die without giving it one more try?” the Democrat asked.
As the commission attempted both to solve its complex assignment and also to work through its partisan differences, Greenspan, as chairman, proved nimble. Throughout 1982, as they studied and debated, he made a point of keeping both the president and the Speaker aware of the deliberations. At each step of the way, he’d check in with Jim Baker, who’d assure him Reagan was on board. To make sure every provision was okay with the Speaker, he’d rely on word from Robert Ball, Tip’s key man on the commission.
Ball had been administrator of the Social Security system under Kennedy, Johnson, and Nixon, and was strongly committed to its robust preservation. Ball’s liaison inside the Speaker’s office was a young staffer named Jack Lew. “He didn’t make a move that we weren’t aware of,” Lew later would tell me. “He’d leave the meeting and call me, or if I needed to, I’d call the Speaker. And it was all very safe—in the sense that we were never negotiating anything directly.”
The unspoken but paramount truth here was that both Reagan and O’Neill were conviction politicians. Each man embodied the philosophy of his party. If Reagan pronounced a deal okay, the Republicans would be ready to accept it. The same held for the Speaker and the Democrats. Between them, they carried an overriding political authority. Once they came together, the perilous situation could be resolved.
With the January 15 deadline looming, Reagan worried aloud. Now he was the wary one when it came to touching benefits in any way. If he did, he said, “the same old political football would be seen going up in the air like a punt on third down.” Even up until the day before the commission’s report was due, he refused to budge. “I’m not going to make choices on this until I see what the entire thing is they’re going to recommend,” he declared. Here’s the New York Times report: “Mr. Reagan’s wariness of Social Security was evident Friday when he refused to endorse the statement of his chief of staff, James A. Baker 3d,that he might accept a combination of payroll tax increases and restraints on the growth of Social Security benefits.”
Duberstein described the political minuet this way: “We weren’t going to put our head back in that noose, and the Speaker wasn’t going to come forward unless the president came forward, and so we just danced around and danced around.”
The fifteenth of January fell on a Saturday. Not until that night was a way found to make the deal without fear. It was like the exchange of a hostage for ransom in a life-or-death kidnapping. For six hours during the late afternoon and early evening, the deal was held up because the two sides could not agree on the wording of the agreement. Each also had to feel confident it would not be left holding the bag. The kidnapping parallel is apt: the hostage and the money needed to be delivered at the same precise moment.
In the end, two separate statements were issued, and in the interests of simultaneity, the president announced both his own agreement to the deal and also the Speaker’s.
Here, first, is the White House’s own careful wording of the outcome:
It is my understanding that the Speaker and the majority leader [Howard Baker] find this bipartisan solution acceptable.
Each of us recognizes that this is a compromise solution. As such, it includes elements which each of us could not support if they were not part of a bipartisan compromise. However, in the interest of solving the Social Security problem promptly, equitably, and on a bipartisan basis, we have agreed to support and work for this bipartisan solution.
I believe the American people will welcome this demonstration of bipartisan cooperation in offering a solution that can keep a fundamental trust, while solving a fundamental national problem.
The Democrats’ statement was every bit as meticulously phrased. Reagan had made sure Tip O’Neill was fully implicated, and the Speaker did likewise. He called the plan “acceptable to the president and to me, one which I can support and which I will work for.”
The agreement consisted of an increase in the payroll tax, a delay in cost-of-living increases, and a requirement that federal employees enroll in Social Security. It would also subject retirees making $20,000 or more of other income to pay federal income tax on half their Social Security benefits.
That night, Reagan recorded the historic moment in his diary: “S.S. team came by early evening. I okayed a proposal. Within the hour they phoned—we have a deal supported by Tip et al. Vo
te on commission was 12 to 3—the 3 hold outs were Dem. Waggoner & 2 R’s. Armstrong & Bill Archer.”
The fact that the three holdouts were on the right—Waggoner was a conservative Democrat appointed to the commission by Reagan—was a leading indicator that the final deal tilted to the left. For the first time, Social Security benefits for higher-income recipients would be taxed. Altogether, the changes favored low-income Americans and ensured the survival of a strong Social Security system.
Chairman Alan Greenspan said that the main reason for the commission’s ultimate success had been the care he’d taken to keep the president and the Speaker agreeable to the decisions every step of the way. Still, it could not have been done without the two principals working the issue from both ends. “It was very helpful to have a few giants around them who were willing to put their credibility on the line and take a position,” was the way Republican Judd Gregg, a young Congressman from New Hampshire starting his second term, saw it. Their sheer weight guaranteed the deal, and even Gregg, new to the game, understood how critical it had been.
Greenspan also told me that, in the final twelve hours of negotiation that Saturday, the White House gang—Jim Baker, his deputy Richard Darman, David Stockman, and Ken Duberstein—was on full alert. It fell to them to carry up-to-the-minute reports and their boss’s subsequent responses back and forth between the White House and Blair House (directly across Pennsylvania Avenue), where the commission was meeting.
Robert Ball, for so long both an overseer and champion of the Social Security system, called his work on the commission the most important of his life. “More than any other event in recent times, the Social Security compromise demonstrated that there is a political center in America that can govern for the benefit of the country even when there are extremely difficult problems to be faced and strongly held differences of opinion about solutions. This bill demonstrates for all time our nation’s ironclad commitment to Social Security.”
That Monday, Reagan, seeing blue skies ahead, made phone calls all around to congratulate Tip, Rosty, Howard Baker, and a couple of commission members themselves. The deal was, indeed, an “all together” mutual solution. The policy and the politics were a tight match to both Social Security necessity and electoral expedience.
What’s important to me—with my own strong feelings about the role of Social Security in America’s common life—is that the man for whom I worked had given up the issue politically in order to get a better deal for the people he sought to champion. A cynic could say he’d made splendid political capital of the issue in the 1982 election and now figured on diminishing returns, even a downside, to continuing the fight through 1984. Equally, had the system failed in any way, he and the Democrats, as its traditional defenders, would surely have been blamed. What’s important is that what might have happened, didn’t.
• • •
Staffers in politics tend to mimic their bosses. You take your key from them. Tip’s staff had good relations with Reagan’s, and I give a lot of credit to the Reagan people. They always took our calls and were incredibly—by later standards—collegial. There was a sense, on a certain level, of working together in service of the country. What’s strange is that I can claim such a thing even though the rivalry was so often ferocious.
It’s easy, from the vantage point of today, to mock all those Irish jokes and the swapping of stories between the president and the Speaker. But I was there, and the plain truth is, they kept the conversation going when no progress seemed possible otherwise.
• • •
I arrived home from Africa just in time for President Reagan’s second State of the Union address, on January 25. Meeting him once again, as he waited for his cue in the Speaker’s ceremonial office, this time he struck me as more on-guard, more James Cagney than Jimmy Stewart. Now he had a bottle of Perrier on hand. As he waited, he greeted an old California political associate, Democratic congressman Don Edwards, who came in the room. The president seemed stunned to see Edwards already holding a copy of his speech in hand. I explained that the White House traditionally let out an early copy for use by the East Coast papers in their early-morning editions.
What no one told him—and I wasn’t about to—was what the Democrats had up their sleeve, once his speech was under way. In the draft, which we’d now seen, one of the themes was the responsibility of job creation. As soon as President Reagan got to the part where he was planning to say, “We in government must take the lead” in putting people to work, our plan was for everyone on the Democratic side of the aisle to stand up and applaud loudly, dramatically—and triumphantly.
The point behind all the noise was to make sure the entire country grasped the nature of the very large milestone occurring. Here, for the first time, the current White House occupant—famed as an unyielding ideological conservative—was admitting to government’s obligation when it came to jobs. With the unemployment rate at 10.8 percent in December, it was news. Big news. And we wanted to make sure both the American people—and the press—didn’t miss it.
When the moment arrived, I saw those on the Democratic side still in their seats, hesitant to make such a brazen display of themselves. Then, just as it appeared no one would have the guts to do it, Congressman Ed Markey of Massachusetts bolted to his feet, cheering. With that, he opened the floodgates as dozens of others rose and joined him.
Reagan, seeing and hearing the commotion, was taken aback, but only for an instant. After executing a true Hollywood double take, he said, “And here all the time, I thought you were reading the paper.”
The Democrats laughed appreciatively. But I sensed that Reagan actually managed to score off them more effectively than they realized. His quip about “reading the paper” slyly directed the people listening at home to see in their mind’s eye a bunch of lazy pols dozing over the afternoon newspapers. As usual, Ronald Reagan was playing not to the room he was in, but to the camera.
(Not long after, at his seventy-second birthday party, he let loose with another crafty ad-lib that hit its mark. As he handed out slices of cake—a surprise treat brought by Nancy to the press conference that day—one of those present was ABC’s Sam Donaldson. “But you understand we won’t sell out for a piece of cake!” he yelled. “No deals!” It was a perfect setup for Reagan. “Oh, you’ve sold out for less than that,” the president cheerily stung Donaldson on national television as his colleagues cracked up. It was hard to steal a march on a man who could fire off a comeback like that.)
Was Ronald Reagan serious in what he’d said about the government’s duty to create jobs? Here was a man who, previously, had been unwavering in his long-held belief that free-market forces were the solution to the unemployment problem. Now he was saying otherwise. “He spoke of creating jobs but opposes jobs legislation,” said a skeptical Tip O’Neill. “The government has a responsibility not simply to admit a problem but to take action in meeting that problem.”
It was a pointed comment. At stake was a $5 billion public works bill the House had passed in December. It was a narrow vote, however, just 204 to 200. Even if it were to pass the Senate, which it hadn’t, that wasn’t enough to survive a presidential veto—an important detail.
The day after the State of the Union, Reagan was scheduled for a quick trip to Boston. One of his stops was the Eire Pub, a traditional Irish bar in the blue-collar neighborhood of Dorchester. There, with an open trench coat over his suit, he raised a mug, posing next to a local fellow wearing a plaid shirt and watch cap. The idea was to show his solidarity with the country’s workers, those fellow citizens unhappily stuck in a slough of 10 percent unemployment. For this brief moment, at least, the “new” Reagan was convincing enough.
But not for long. An event in the suburban town of Bedford, Massachusetts, called for him to sit down with a clutch of high-tech executives. There he managed to quickly ring down the curtain on the excellent scene staged earlier in Dorchester. “I realize that there will be a great stirring and I will p
robably kick myself for having said this,” he explained to the businessmen listening, “but when are we all going to have the courage to point out that . . . the corporate tax is very hard to justify?” Here was Reagan reverting to those out-of-office years when he could freely express, through columns and speeches to businessmen, his view of the universe. It was an old argument believed by businessmen that corporate taxes were double taxation.
Back in Washington, the president’s incursion onto his home turf got Tip’s attention. After the cozy photo op in the pub, his adversary had morphed back from kindly Dr. Jekyll into the more familiar Mr. Hyde. And Tip was quick to note the transformation. “On the same day the president sat down to drink with the workingmen of Boston—and I have no complaints about that—he showed his heart was still in the corporate boardroom.”
Reagan had known it was coming: “Well, I said yesterday I’d be kicking myself. I have.” A few days later it was O’Neill doing the kicking. The top leaders of both parties in both houses had been invited to the White House—the president was preparing to deliver his new budget to them—and Tip chose the moment to go on the attack. In a verbal brawl that lasted nearly forty-five minutes, the Speaker attacked the president for failing to take action to deal with the country’s highest unemployment since before World War II.
Reagan: God damn it, Tip, we do care about those people.
O’Neill: It’s easy to say that you care but you aren’t willing to do anything about it.
In his diary that night, the president narrated the fight. “Tip & I got into a donny brook—I really had my dander up. The worst of it was Tip didn’t have the facts of what is in the budget—besides he doesn’t listen.” Jim Wright, who was in the room, called it “the toughest going-over I’ve ever heard a president subjected to.”
Tip and the Gipper: When Politics Worked Page 23
