Reagan: The Life

by H. W. Brands

  Shultz was more impressed than ever. “Gorbachev’s free-flowing monologue showed a mind working at high intensity, even at the end of a long, hard day,” he wrote. “He displayed a breadth of view and vigor, I thought.” All the same, the positions Gorbachev described were nothing new.

  Bush answered for the United States and for Reagan. “We have no aspirations of dictating how to administer the Soviet Union,” the vice president said. “This is the farthest thing from our thoughts.” Yet he proceeded to explain that respect for human rights was central to America’s view of the world. “This issue is extremely important to the president and the American people.” Harsh treatment of Soviet political dissidents and the denial of exit visas to Soviet Jews were matters America could not overlook.

  Gorbachev shot back that the United States was in no position to lecture the Soviet Union on human rights. “The United States violates human rights not only on its own territory but also beyond its border,” he said. America oppressed its black population and supported dictators abroad. “It disregards the human rights not only of individuals but of entire nations and countries. It brutally represses human rights.” He nonetheless agreed that the subject might be discussed by the diplomats. But then he backtracked, saying internal affairs were inappropriate for negotiations between the two governments. Americans seemed to raise them to stall or block meaningful negotiations. “Every time there is a meeting involving our two countries, the United States proceeds to raise these questions.” He wasn’t going to apologize for the accomplishments of socialism. “Thank God there is socialism, because with socialism the people of former capitalist countries have gained more rights.”

  REAGAN HAD WRITTEN a letter to Gorbachev for Bush and Shultz to deliver. “As you assume your new responsibilities, I would like to take this opportunity to underscore that we can in the months and years ahead develop a more stable and constructive relationship between our two countries,” Reagan said. He didn’t underestimate the challenge involved. “Our differences are many, and we will need to proceed in a way that takes both differences and common interests into account.” But the two leaders bore heavy responsibility for maintaining the peace. “The international situation demands that we redouble our efforts to find political solutions to the problems we face.” Reagan pledged his personal commitment to engage Gorbachev in serious negotiations. “In that spirit, I would like to invite you to visit me in Washington at your earliest convenient opportunity.”

  Shultz explained to Gorbachev that Reagan had briefed him before his departure on what to tell the general secretary as accompaniment to the president’s letter. “President Reagan told me to look you squarely in the eyes and tell you: ‘Ronald Reagan believes that this is a very special moment in the history of mankind,’ ” Shultz said. The secretary of state continued in his own voice but reciting Reagan’s themes. “You are starting your term as general secretary. Ronald Reagan is starting his second term as president. Negotiations are beginning in Geneva. Over the past year we have found solutions to some problems, though not to the great problems, and if it is at all possible, we must establish a more constructive relationship between the United States and the U.S.S.R. President Reagan knows he personally must work on this hard, and he is ready to do so.” Shultz said the president’s invitation to Gorbachev to visit Washington was evidence of his commitment. And there was no time to waste. “If important agreements can be found, the sooner the better.”

  Gorbachev responded positively, though noncommittally. He agreed that the Soviet Union and the United States were at a “unique moment” that mustn’t be wasted. “I am ready to return Soviet-U.S. relations to a normal channel,” he said. “It is necessary to know each other, to find time for meetings to discuss outstanding problems, and to seek ways to bring the two countries closer together.”

  After the meeting, Bush cabled Reagan an account of the exchange and offered his assessment of the Kremlin’s new leader. “Gorbachev will package the Soviet line for Western consumption much more effectively than any (I repeat any) of his predecessors,” the vice president wrote. “He has a disarming smile, warm eyes, and an engaging way of making an unpleasant point and then bouncing back to establish real communication with his interlocutors. He can be very firm. Example: When I raised the human rights question with specificity, he interrupted my presentation to come back with the same rhetorical excess we have heard before. Quote ‘Within the borders of the US you don’t respect human rights’ or (referring to African-Americans), ‘You brutally repress their rights.’ But along with this the following: ‘We will be prepared to think it over’ and ‘Let’s appoint rapporteurs and discuss it.’ The gist being as follows—‘Don’t lecture us on human rights, don’t attack socialism but let’s each take our case to discussion.’ ”

  72

  SECOND-TERM PRESIDENTS BENEFIT from the credibility that comes from having survived a referendum on their performance. In Reagan’s case the referendum was overwhelmingly positive, and on the basis of his historic triumph he should have rolled into his second term with powerful momentum. But second-term presidents labor under peculiar difficulties that offset some of their credibility. Not the least of the challenges is that second-term presidents typically lead second-string teams. On first election, presidents have their pick of the best people their party has to offer; they fill critical cabinet and White House positions with the party’s first-string team. But the first-stringers grow weary of the work, of politics, and of the comparatively low pay, and they often leave before a second term is well under way. Their replacements occasionally turn out to be stellar, but more frequently they lack something of the experience, the judgment, the temperament, or the talent that might have got them chosen in the first round. Good help is hard to find, and never harder than at the apex of government, where mistakes are scrutinized, magnified, and publicized.

  Don Regan was one of the first stringers who became worn down by his job and all that went with it. The leaking and backbiting that had driven Al Haig from office vexed him almost as much. During 1984 he had followed the president’s directive and developed a proposal for tax reform. He tried as a tactical matter to keep the discussions secret, lest opponents of change mobilize against attacks on their pet programs before the proposal could be unveiled and defended as a whole. He was pleased to hand the president a comprehensive plan three weeks after the election. The plan wasn’t perfect, but it was an improvement, he judged. “I reflected, as I placed this weighty document in his hands on November 26, 1984, that our simplified plan was still far too long”—262 pages of text and 536 of appendixes—“but it was a hell of a lot shorter than the sixty-three feet of bookshelves required to accommodate the existing tax code and its concordances,” he observed.

  To remind the president of the imperative for reform, Regan asked him an irreverently personal question. Had he ever made as much as $1 million a year before becoming president?

  Reagan registered surprise. Not by a long shot, he said.

  “Six figures, then?” Regan insisted.

  Reagan nodded.

  “Okay, how much did you pay in taxes?” Regan asked.

  Reagan realized Regan was driving at something. He said he had paid about half his income in taxes.

  “Sucker!” Regan pronounced. “With the right lawyer and the right accountant and the right tax shelters, you needn’t have paid a penny in taxes even if you made more than a million dollars a year—and it would have been perfectly legal and proper. The tax system we have now is designed to make the avoidance of taxes easy for the rich and has the effect of making it almost impossible for people who work for wages and salaries to do the same. As someone who has made a lot money and benefited from the system, I can tell you it’s a great thing for people with high incomes and good tax advisers. But as your secretary of the Treasury, I’m telling you that it ain’t fair and that it is undermining the morale of taxpayers and crippling the economy. Too many people are getting away with t
oo much. You asked me for a plan to change all that, and that’s what I’ve brought you today.”

  Regan proceeded to explain the plan at length. The briefing lasted an hour and forty minutes—“the longest encounter by far I had had with him to date,” Regan recalled. The essence of the plan was simplification. The fourteen brackets for personal taxes were reduced to three, with marginal rates of 15, 25, and 35 percent. Special deductions and preferences—“loopholes” to those who didn’t benefit from them—were sharply pared. The corporate tax rate was cut to 33 percent. Capital gains were no longer treated specially but were taxed as ordinary income.

  Reagan liked what he heard and read, giving Regan hope that something might come of the exercise. “If the president acted on his principles, I was sanguine about the outcome,” Regan recounted. “I was under no illusion that we had produced an irresistible document, but I knew that we were giving the president a powerful lever; if he stood his ground he might very well move this particular world.”

  YET STANDING HIS ground proved a challenge. The numerous interest groups whose preferences were targeted for elimination besieged Congress, and senators and representatives on pertinent committees began to shake their heads in disapproval.

  But what really annoyed Regan was the sabotage by those close to the president. “The ship of state began leaking like a sieve,” Regan wrote. “On the morning after I presented the plan to the president (and before I had given my own verbal summary to the press) the substance of that confidential briefing, issuing from anonymous presidential aides, appeared on the front pages of the Wall Street Journal, the New York Times and the Washington Post. Even the Baltimore Sun was able to discuss my program in detail before I revealed it in a press conference. Unnamed White House sources were quoted as saying that the president had decided to distance himself from the plan.”

  Regan couldn’t really complain about the substance of the stories, which were accurate enough, including the part about the president keeping clear of the tax reform proposals. Regan himself had suggested that Reagan not rush to endorse them. “Don’t embrace the whole plan right away,” Regan said. “Be cool—watch what happens.” The currently favored interests would fight to preserve their advantages, and if they proved too persuasive with Congress, the president could walk away and blame the fuss on Regan.

  But Regan was irked to be preempted, and he thought the leaking undermined the chances that the program would be approved. The president’s aides were too protective of his image, he thought. “Great risks were involved in pushing the plan, and risk-taking is not the language of image-makers.” The resistance revealed their perception of the recent election. “The president had not run on a promise of tax reform but on a wave of good feeling that his advisers believed, with some justice, was a product of their manipulation of the media. Why should they subject the president and themselves to the bruising public battle that tax reform was certain to be? Their hearts simply weren’t in it.”

  Regan thought the president was being ill served by such timid advisers. “The good fight for tax reform, like so many issues before it, was degenerating into a squabble in the media rather than becoming a grand debate on the future of our nation led by the president,” he said. This was simply bad management. “It seemed to me, after four years of living in an environment in which policy seemed to be made on the basis of a belief in public opinion that amounted to superstition, that the presidency was in need of sound management advice. Willy-nilly, Ronald Reagan had achieved great things in four years. What might he do if his office were better organized and his ideas were more systematically transformed into policy?”

  Regan’s thinking reached a crucial point following a cabinet meeting as the report on taxes was being finalized. George Shultz shared Regan’s distress at the problem of leaks and had suggested that Regan raise the matter with the president. Regan did so at the cabinet meeting. After he reported on the progress of the tax reform group, he argued strongly that administration staff needed to keep their mouths shut and that violators should be sternly disciplined. The president seemed sympathetic. But in the next morning’s Washington Post, Regan read a detailed account of his cabinet comments on tax reform.

  “I was infuriated by this treacherous insult to the president and to me,” he recalled. “And at 7:50 a.m., with the Post still in my hand, I called Jim Baker and gave him the full benefit of my reaction in Marine Corps terminology. The conversation ended with my shouting something a lot stronger than Go to the devil, Jim Baker! and slamming down the receiver.”

  Regan immediately dictated a letter of resignation. He dispatched an assistant to deliver it to the president, with instructions that it not go through Richard Darman, Baker’s assistant who managed paper flow and who was Regan’s prime suspect in many of the leaks.

  A few hours later he received a call from the president. “I got your letter and I’m calling to tell you that I can’t accept your resignation,” Reagan said. “In fact I’m tearing it up right now and burning it in the fireplace.”

  “I appreciate that, Mr. President,” Regan replied. “But I meant what I wrote. This atmosphere of leaks and mistrust is simply intolerable, and I want to go.”

  “Well, you can’t, Don, and that’s final. You’re the only friend I have around here. If you go, I’ll have to get my hat and go with you.”

  Regan withdrew his resignation. “The man is not yet born who could resist words like these from the president of the United States,” he remembered.

  BAKER SOON ARRIVED in Regan’s office. “It was obvious that he wanted to explain the leak and smooth things over,” Regan said. “I asked him to stay for lunch. My anger cooled, and I was glad enough to have the opportunity of talking to Baker. He seemed tired, distracted. He dropped into a chair, sighed loudly, shook his head, gave a wry smile. I asked him what was bothering him. He spoke the several names of the Lord one after the other and then described some of his behind-the-scenes experiences with the leading figures of American politics and government.” The fight for tax reform was only a small part of the picture, Baker said. The annual budget battle was raging; dozens of causes were being promoted by scores of people who had to be listened to if not agreed with; the media were always complaining; he was constantly having to patch over the mistakes of his staff and other members of the administration.

  “You know what the trouble with you is, Baker?” Regan responded. “You’re tired.”

  Baker looked at him for a moment. “You’re right,” he conceded. “I really am tired. I’ve got to get away from this.”

  “You’ll never do that,” Regan said. “You’re a political junkie. You’re hooked.”

  Baker didn’t deny it. They talked a bit longer. Then Regan said, “You know what we should do, Jim? We should swap jobs.”

  Regan claimed afterward that he was half kidding. “I tossed out these words without thinking,” he wrote. “But Baker bobbed his head like a man who has been hit with an idea.”

  “Do you mean that?” he asked.

  Regan thought it over for a few moments. “I guess I do.”

  They sat silently. Then Baker rose to leave. “Watch out,” he said. “I may take you up on that.”

  “Okay,” Regan said. “When you’re ready to talk, I’ll be here.”

  Baker broached the matter with the group he called his own troika: Dick Darman, Margaret Tutwiler, and Susan Baker, his wife. Darman and Tutwiler would accompany him to Treasury if he decided to go. Darman worked with Baker to produce a one-page balance sheet of the costs and benefits of staying against those of moving. “Possible Secretary of State,” the memo listed under the reasons to stay. Baker much preferred the senior cabinet post, and he thought he might get it if he held out for it. Referring to the Treasury job, the memo declared, “Not as good as State.” George Shultz, like Regan and Al Haig, became frustrated with the leaks in the administration, and one day he might get fed up and resign. But, then again, maybe he wouldn’t. And where woul
d that leave Baker? The Baker-Darman memo observed, “Bird in hand vs. bush.”

  The handy bird won. Two weeks later Baker met with Regan again. They talked about tax reform, with Baker asking more questions than a chief of staff needed answered. Regan wasn’t surprised when Baker ended the meeting by inquiring if he was still serious about switching jobs. Regan said he was.

  “How would we approach the Man on this?” Baker asked.

  “Hell, I’ll talk to him,” Regan replied.

  Baker had a better idea. “We need to get Deaver involved,” he said. “We could never do this without telling Mike.” Baker thought Deaver deserved to know, as he had wanted to be chief of staff and was leaving the administration in part because he guessed he wouldn’t be. No less important, Deaver would sound out Nancy Reagan, whose support for the switch would be crucial.

  Baker enlisted Darman to help him write a memo to Deaver. “It’s time for a change,” the memo began. Baker and Regan were both tired of their current jobs and had spent down their political capital. The switch would reinvigorate them personally and rejuvenate the administration. Regan, the better financial mind, had done a good job developing the Treasury’s tax reform plan; Baker, the better political tactician, would give it the best chance of winning legislative approval. Meanwhile, Regan, the budget hawk, would help hold the White House line on spending. Baker and Darman said they hoped Deaver liked the idea, which they urged him to take to the president and the First Lady but no one else. “Leaks could stimulate conflict, which could destroy one of the main benefits: infusion of momentum.”