by H. W. Brands
Whether or not he should have been surprised at Reagan’s endorsement of ideas held by the supply-siders, Stockman was thrilled when Reagan, after the election, invited him to head the Office of Management and Budget. Kemp, who had recommended Stockman to the president-elect, told him that a telephone call would be coming. “I’d worked out a little script with some clever lines,” Stockman recounted. But the call was delayed, and his wit vanished. “When the phone finally rang, my hands were trembling. It was the first time I had ever spoken to a president. All that came out was a flat midwestern ‘Haallo?’ ” Reagan didn’t notice. “As I would learn again and again, Ronald Reagan had the gift of setting you utterly at ease. ‘Dave, I’ve been thinking,’ he said in a relaxed, melodious voice, ‘about how to get even with you for that thrashing you gave me in the debate rehearsals. So I’m going to send you to OMB.’ ”
DONALD REGAN WAS less starstruck than David Stockman at the opportunity to shape the economic policy of the new administration. And he was definitely less taken with supply-side economics. Regan was a Harvard graduate, which impressed Reagan a little; a former marine, which impressed him more; head of Wall Street’s Merrill Lynch, which seemed good training for the Treasury Department; and a fellow Irishman, which prompted Reagan to affect an affinity for Regan the latter never entirely reciprocated. Reagan was certain they shared ancestry, despite the difference in pronunciation of their names (Regan was Reegan). Reagan liked to tell a story on himself that almost made him part of Regan’s branch of the extended tree. In the story Reagan was to be the guest of honor at a luncheon in Los Angeles shortly after his election as governor. The master of ceremonies had seen Reagan’s name printed but unaccountably had never heard it pronounced. He didn’t know if it was Raygan or Reegan. Amid his perplexity he took a walk through Beverly Hills and met a man walking a dog. Thinking the man might know the answer, the emcee asked him how the new governor pronounced his name. The man said, “It’s Raygan.” The emcee asked him if he was sure. “Believe me, it’s Raygan,” the man repeated. “I’ve known the guy for years.” The emcee expressed relief and thanked the man for solving his problem. “By the way,” he said, “that’s a nice dog. What breed is it?” “A bagel,” the man replied.
Regan had met Reagan a couple of times before the campaign of 1980. He encountered him again after William Casey suggested that Regan, as a good Republican and well-connected Wall Streeter, organize a fund-raiser. Regan did so, and he spent a few minutes discussing the economy with the candidate after the event. “He said nothing remarkable, but he seemed to have had sound economic advice,” Regan recalled.
Regan heard rumors after the election that he was being considered for Treasury secretary. Yet he discounted the rumors because William Simon was said to be the first choice. Then Simon declined, and Reagan called to offer him the job. “Thank you very much,” Regan replied. “I accept.” Reagan seemed surprised. Didn’t Regan have to think it over, perhaps talk to his wife? “Mr. President, what is there to think over?” Regan answered. “How could any American say no when asked to serve by the president-elect? If you’ve selected me, it’s my duty to say yes.” Reagan expressed satisfaction. Regan would be hearing from members of the White House staff. “I’ll see you in Washington,” Reagan said.
In fact Reagan did not see Regan in Washington, at least not very often. Eight weeks into the president’s first term, Regan jotted a memo to himself. “To this day I have never had so much as one minute alone with Ronald Reagan!” he wrote, mystified. “Never has he, or anyone else, sat down in private to explain what is expected of me, what goals he would like to see me accomplish, what results he wants.” Regan’s experience of the business world had caused him to embrace written, measurable objectives. He found their absence in Washington—under Reagan, at any rate—disconcerting. “How can one do a job if the job is not defined? I have been struggling to do what I consider the job to be, and let others tell me if I’m wrong, or not doing the right thing.” So far no one had. He couldn’t help thinking this absence of guidance was fraught with peril.
REGAN’S IMMEDIATE CONCERN involved the budget the president was supposed to deliver to Congress soon. In the infancy and youth of the American republic the federal budget originated in Congress, as the framers of the Constitution intended. But during the twentieth century the initiative on the budget, as on many other aspects of national governance, shifted to the executive branch. The federal budget became the vehicle by which presidential promises were transmuted into public policy. In Reagan’s case, his budget proposal to Congress would indicate how his general calls for tax cuts and smaller government would take specific shape.
Two weeks into his presidency, Reagan launched his campaign for economic reform. He and his advisers had considered a formal State of the Union but opted instead for what he called “a report on the state of our nation’s economy.” The economy’s state was not good, he said for the thousandth time. “We’re in the worst economic mess since the Great Depression.” Government was, as he had declared in his inaugural address, the heart of the problem. “The federal budget is out of control.” The deficit for the current fiscal year would be nearly $80 billion. This was more than the entire federal budget a generation earlier. The federal payroll had quintupled in twenty years. Interest rates were higher than at any time since World War I. The unemployed numbered seven million. “If they stood in a line, allowing three feet for each person, the line would reach from the coast of Maine to California.”
On the stump Reagan had often blamed malign intent, a bureaucratic will to power, for the growth of government. He took a different tack this evening. He pointed at the American people collectively. “We all had a hand in looking to government for benefits,” he said. For a time the benefits had appeared inexpensive. The nation’s income doubled in the generation after World War II, and the economy sustained the burden of growing government without obvious difficulty. Inflation had risen, but not to alarming levels.
Yet Americans should have been paying closer attention, Reagan said. Some had been, though he didn’t identify himself by name. “If we look back at those golden years, we recall that even then voices had been raised, warning that inflation, like radioactivity, was cumulative, and that once started it could get out of control.” And so it had gotten out of control. Now it was ravaging the country, and it would continue to do so until the federal deficit was tamed.
The question was how. One way would be to raise taxes. But this had been tried and had failed utterly. “Prior to World War II, taxes were such that on the average we only had to work just a little over 1 month each year to pay our total federal, state, and local tax bill. Today we have to work 4 months to pay that bill.” Taxes had grown, but government had grown faster.
The solution was not to raise taxes but to cut them. This sounded paradoxical, for it appeared to aggravate the deficit problem. Yet it was the only way to get a grip on spending, the source of the problem. “Over the past decades we’ve talked of curtailing government spending so that we can then lower the tax burden. Sometimes we’ve even taken a run at doing that. But there were always those who told us that taxes couldn’t be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.”
Likely no one in Reagan’s audience recognized the significance of that last sentence. Reagan himself did not recognize it. But by putting tax cuts ahead of spending cuts, he proposed to lead America across an economic Rubicon. Republicans and conservatives had hitherto made balanced budgets the touchstone of their fiscal philosophy. They sought to cut taxes, but not at the cost of increasing debt. They knew that cutting taxes is politically easy, because it makes constituents happy. Cutting spending is the hard part, for it causes constituents pain. Reagan proposed doing the easy part first. The hard part could wait.
Not that he ignored spending cuts. He explaine
d that he had placed a freeze on federal hiring, ordered reductions in government travel, trimmed the number of consultants hired by the federal government, and canceled orders for new office equipment. This was just the beginning. More must be done. His administration would have a blueprint soon. “It will propose budget cuts in virtually every department of government.”
Yet against this unspecific promise of spending reductions, Reagan proposed very specific, and substantial, tax cuts. “I shall ask for a 10 percent reduction across the board in personal income tax rates for each of the next three years.”
Reagan pitched his package as the country’s last chance to reclaim prosperity and restore freedom from overweening government. “Over the years we’ve let negative economic forces run out of control. We stalled the judgment day, but we no longer have that luxury. We’re out of time.” Future generations would thank this one or condemn it. “We can leave our children with an unrepayable massive debt and a shattered economy, or we can leave them liberty in a land where every individual has the opportunity to be whatever God intended us to be.”
37
WHEN DAVID STOCKMAN arrived in his office in the Executive Office Building, just west of the White House, he noticed two things. The office was huge—“about the size of my junior high school gymnasium,” he said. And it was filthy. “When I picked up my phone, it almost slipped out of my hand it was so greasy.” Stockman was willing to ascribe the condition to laudable thrift in housekeeping on the part of his Carter administration predecessors at OMB, but one of his deputies declared, “The reason it’s greasy is they spent the last four months of the campaign handing out pork.”
Stockman cleaned up the office and set to work on eliminating the pork. Reagan’s promise to Congress of an economic blueprint compelled long days and sleepless nights by the president’s economic team. Stockman tried to assert control of the process by proposing deep cuts for most cabinet departments. He assumed that because the cabinet secretaries had been chosen by Reagan, they shared the president’s passion for reducing the size of government. In theory they did—theory being when the cuts targeted other departments. In practice—when Stockman’s scalpel came their own departments’ way—they objected. James Edwards, whose Department of Energy Reagan had promised to eliminate entirely, resisted Stockman’s proposal to unfund the office that allocated oil supplies and end the allocation program. Stockman was astonished. “It was so central to our free market approach,” he said of deregulation, “that I hadn’t imagined anyone would object.” Edwards wasn’t alone. Secretary of Transportation Drew Lewis accused Stockman of seeking power for himself by means of deregulation. “What kind of bureaucracy are you building up over at OMB?” Lewis demanded. Again Stockman couldn’t believe what he was hearing. “I was flabbergasted,” he said. He wasn’t building a bureaucracy but dismantling it. “He had the equation upside down,” Stockman said of Lewis.
Donald Regan thought Stockman was the one who misunderstood matters. Regan didn’t buy the boy-wonder reputation of Stockman, and he wasn’t going to accept Stockman’s seizure of economic policy. “Stockman was possessed of one simple idea,” Regan wrote. “He believed that the federal budget should run the economy and thereby shape social policy. This was a philosophical position designed to be executed by bureaucratic means. His plan of action was correspondingly simple: by controlling the flow of money into the cabinet departments, the director of the Office of Management and Budget would starve certain programs (for instance, welfare) and feed others that were more productive in economic terms.”
Regan was no politician, but he thought Stockman’s approach profoundly arrogant and dismissive of the democratic process. “Stockman had things backward,” he said. “What the country needed—and what Reagan had promised it—was not more centralization, but less. Surely, I said to the group”—the interagency group arguing over the budget—“we wanted to discuss the economy first, adopt a policy to avert recession and institute growth, and then decide what the budget would be.”
Regan’s problem, and Stockman’s, was that the budgeters were receiving little guidance from Reagan. Regan still couldn’t get a meeting with the president outside the crowded cabinet sessions, and neither could Stockman. Stockman blamed the blockade on the White House troika, especially Ed Meese. “By now it was clear that Ed Meese was protecting the president from having to choose sides among his cabinet members,” Stockman recalled. “He was seeing to it that Reagan never had to make a disagreeable choice among contending factions. That certainly kept Reagan above the fray, but presidents have to make unpleasant decisions. Whenever there was an argument, Meese would step in and tell us to take our arguments to some other ad hoc forum. The president would smile and say, ‘Okay, you fellas work it out.’ ”
CASPAR WEINBERGER SMILED too. His Defense Department, almost alone among the executive agencies, counted not merely on avoiding budget cuts but on receiving major increases in funding. During the decade of détente conservatives and especially neoconservatives had made an article of faith of the assertion that the American military was being starved of funding. They wrote articles and printed graphics claiming that the Soviets had built a dangerous lead over the United States in nuclear and conventional weaponry, and though they never found an active or retired general or admiral willing to swap America’s arsenal for Russia’s, they painted Armageddon as alarmingly nigh. Reagan adopted this view and, as a candidate, promised to restore American arms to their previous condition of unquestioned primacy.
Weinberger became Reagan’s point man for the Pentagon buildup. Weinberger’s hero was Winston Churchill; he remembered reading Churchill as a boy in the 1920s and then following Churchill’s political fortunes during the 1930s, when in opposition in Parliament he warned his compatriots about Hitler and the need to gird for war. Weinberger tried to enlist in the British Royal Air Force in 1940, as Churchill was rallying the British against the Nazi onslaught, but was rejected on account of poor vision. Pearl Harbor pleased him for putting the United States into the war beside Britain; as an American infantryman he listened on the radio when Churchill addressed a joint session of Congress and called for Anglo-American solidarity against fascism. Meanwhile, he grumbled and fretted at the old equipment he was forced to train with and even carry into battle in the Pacific, on account of years of stinginess in Congress regarding defense appropriations. “I would not forget how long it took us to get proper equipment, and how inexperienced we were, and how completely unready to fight in jungles against opponents who knew all about jungles and were remarkably well equipped and trained,” Weinberger recalled. “Thus, when forty years later I was placed in a position to have some ability to help influence events, and I saw what I believed then to be the dangerous downward spiral of our military strength and our national will in the 1970s, I determined to do all I could to prevent America from continuing down that path of drift and self-disparagement and weakness that I was sure could lead to another war.”
WEINBERGER’S INSISTENCE ON rebuilding the American military, when enthusiastically endorsed by Reagan, made David Stockman’s job immensely more difficult. Stockman didn’t object, exactly. “I had become a big-budget proponent on defense,” he later said. “Some of my hawkishness had to do with the zeal of the convert. More of it came from watching the grim footage of the charred remains of the U.S. servicemen being desecrated by the Iranian mullahs at the site known as Desert One”—where the hostage-rescue attempt had failed. But at a time when Stockman and the other budgeters were projecting 30 percent reductions in tax rates, giving the Pentagon what Weinberger wanted made it impossible to forecast a balanced budget in the conceivable future with anything like a straight face. Stockman programmed his calculator to tally the bill for what Weinberger was demanding. “I nearly had a heart attack,” he said. “We’d laid out a plan for a five-year defense budget of 1.46 trillion dollars!”
Weinberger didn’t like or trust Stockman. “I became a little troubled by the qu
ickness and positiveness with which he would take positions and make his points,” Weinberger said. “Particularly troubling was that he was most positive when he did not yet quite have his facts straight.” Weinberger later accused Stockman of lying; referring to a Pentagon meeting at which defense spending was the focus, Weinberger said that Stockman’s account of the session was “most politely described as fanciful.”
Weinberger could simply have stared Stockman down. He knew that building up defense meant more to Reagan than balancing the budget. Yet Weinberger was canny as well as forceful. He knew that the administration would take heat for expanding defense while slashing social programs. So he arranged for the Pentagon to accept cuts, too. The cuts were notional. Weinberger wrote even bigger increases into the defense budget, then gave them back and called the givebacks cuts. Reagan recognized the ruse but appreciated the political cover it provided the administration.
38
THERE COMES A moment near the beginning of every presidency when the president feels in a personal way that this new job is unlike any he has held before. The president of the United States has power—power greater than that of any other person on earth. The power of a governor, a senator, a corporate CEO, is puny compared with what a president can unleash. By a word he can send armies into combat, launch air strikes, conceivably commence a nuclear war. Candidates for president envision that power, imagine the moment when it will become theirs. Those who have lusted for power look forward to grasping it; the ordinarily ambitious accept it as part of the president’s job.
But they typically misapprehend it. The great majority of presidents have sought the position for reasons of domestic politics. Only a few, as seekers of the office, have put foreign affairs first. Yet it is almost solely in foreign affairs that the president exercises his singular power. In domestic politics presidents are constrained by the Constitution, with its separation of powers; by the habits of Congress, which dictate procedures for the passage of legislation; by the political parties, which inject their own interests into policy considerations; by innumerable interest groups, each with its own agenda; and by the American people, who hold opinions on domestic affairs far stronger than those they have on foreign affairs.
