Days of Fire: Bush and Cheney in the White House

by Peter Baker

  Powell had developed a theory about Cheney and what made things so different this time around. While some believed the vice president had changed, Powell did not think so. In Cheney’s past jobs, under Gerald Ford or George H. W. Bush, he was contained. He was too young and inexperienced to impose his will on the Ford White House, and in the first Bush White House he was serving a president who was very sure of himself on foreign policy and national security. As defense secretary, Cheney had often expressed ideas similar to those he would advance as vice president. But back then, he was surrounded by other adults in the room with experience and gravitas—Brent Scowcroft, James Baker, Powell himself, and of course the president. In this White House, Powell believed, Cheney was not effectively contained by anyone. He had a much freer hand with a president whose background gave him little real preparation to be commander in chief. Powell thought Cheney saw himself as Tom Hagen, the mentor-tutor of the Godfather movies, the consigliere advising a young mob leader.

  Cheney came out on the winning end of these struggles more often than not. Powell recognized that the vice president had the advantage of proximity, seeing Bush multiple times a day, often one-on-one. There was no competing with that. Moreover, Bush did not connect with Powell. “The president was never comfortable with Secretary Powell,” said one White House official, “because Powell loomed so large that I always had the sense that the president felt like his all-star quarterback big brother was always around telling him what he should do better.”

  Bush generally left it to Rice to manage the rivalries, a formidable task even for a more experienced bureaucratic infighter. Rice had never held a government post higher than senior director in the National Security Council, a relatively mid-level position. Now she was charged with riding herd over a vice president who had previously served as secretary of defense and White House chief of staff, a secretary of state who had previously served as four-star general and chairman of the Joint Chiefs of Staff and had held her own position as national security adviser, and a secretary of defense who also had been White House chief of staff and was on his second tour running the Pentagon.

  Cheney and Rumsfeld, the two old friends, were a powerful tandem. “He never came over to me and organized against some decision or said we have to marshal support for this or that,” Rumsfeld said. But he did not have to. The two were instinctively on the same page. Powerful as Cheney was, it was Rumsfeld with whom Rice tangled most visibly. He was widely regarded as brilliant but prickly and had aggravated his own uniformed officers who thought, as General Hugh Shelton put it, that Rumsfeld ought to put a sign on his desk that said, “Don’t Tell Me, I Already Know.” Rumsfeld thought the generals had gotten too used to running the show under Clinton and that civilian leadership needed to be reasserted. With everything on his plate, he had little patience for the endless White House meetings Rice called and was dismissive of White House aides who presumed to issue instructions to his people. At times, he called Andy Card and berated him by telling him he was failing at his job. For a while, he resisted sending military officers to staff the NSC or as liaisons to the State Department, as was tradition, asking why he should have to give up his talent for their convenience. And he constantly threw roadblocks at White House efforts to get information, to the point where Rice asked one of her top aides, Frank Miller, to use back-channel Pentagon contacts to ferret out what was happening.

  When Rice tried to convene meetings on what to do with captured enemies, Rumsfeld refused to attend. She finally brought it up after a meeting on another subject, only to watch astonished as he got up to walk out.

  “Don, where are you going?” she asked.

  “I don’t do detainees,” he said.

  The tension came to a head in late 2002 when Rumsfeld sent a testy memo telling Rice to “stop giving tasks and guidance to combatant commanders and the joint staff.” He wrote, “You and the NSC staff need to understand that you are not in the chain of command. Since you cannot seem to accept that fact, my only choices are to go to the President and ask him to tell you to stop or to tell anyone in DoD not to respond to you or the NSC staff. I have decided to take the latter course. It [sic] it fails, I’ll have to go to the President. One way or the other, it will stop, while I am Secretary of Defense.”

  Rice bristled at the haughtiness but could not figure out how to address it. One day, after another clash during a White House meeting, she found herself walking alone with Rumsfeld through the Colonnade adjacent to the Rose Garden.

  “What’s wrong between us?” she asked.

  “I don’t know,” he said. “We always got along. You’re obviously bright and committed, but it just doesn’t work.”

  Bright? Rice was taken aback. To her, that sounded condescending. She was not a peer in his mind, she concluded, but a subordinate.

  Rumsfeld was surprised later to learn she had taken offense, saying, “It certainly was not meant in a derogatory way.” His loyalists thought she read too much into a word he used a lot, but agreed it might have been hard for a man who had mentored someone to see her as an equal. That she would presume to oversee his stewardship of the Pentagon, even demanding to clear his travel in advance, just rankled.

  Powell, for his part, pressed Rice to ask the president to rein in Rumsfeld. She was reluctant to bring in Bush and wondered why Powell did not take his grievances to him directly. Given his stature, Powell would have more chance of being heard. But he did not, and she concluded that the soldier in Powell resisted a direct confrontation with the commander in chief. Still, one day he asked Rice, “Why doesn’t the president just square the circle? One of us needs to go.”

  As it happened, there was more unanimity on the UN Security Council, which on November 8, just three days after the midterm elections, voted 15 to 0 for Powell’s resolution holding Iraq in “material breach” of previous UN edicts and giving it a “final opportunity to comply” by admitting inspectors and providing a complete accounting of its weapons programs. Failure would result in “serious consequences.” In a surprise, even Syria, the only Arab country on the council, voted yes.

  IN THE WEEKS after the elections, Bush approved a strategy of “tailored containment” against North Korea, ratcheting up pressure to stop its nuclear program, starting by halting American funding for fuel oil. He also flew to Prague, where he successfully pressed NATO to invite seven Eastern European countries to join, including the former Soviet republics of Latvia, Lithuania, and Estonia. He signed legislation establishing a commission to investigate the September 11 attacks, despite Cheney’s concerns. And in the aftermath of the ugly election campaign, he signed legislation creating the Department of Homeland Security, which he would turn over to Tom Ridge.

  Most consuming in those days, though, was a raging fight over further tax cuts. Bush wanted to double down on the 2001 plan, hoping it might boost the economy. Cheney had little opportunity to shape the first tax cut plan designed before his arrival on the ticket, but he was determined to play a central role in shaping this one. “I would say all along he was a big driver,” recalled Glenn Hubbard, the White House economist. But Cheney found himself at odds with the Treasury secretary he had recruited. Paul O’Neill opposed another package of tax breaks on the grounds that “the economy did not need” it but “we did need the revenue for other important purposes” as the inherited surplus turned into deficit. O’Neill saw the tax cut as purely political. “I think they believed it was a way to assure reelection,” he reflected later.

  At an economic policy meeting on November 15, O’Neill cautioned that the country was “moving toward a fiscal crisis” with rising deficits.

  “Reagan proved deficits don’t matter,” Cheney countered. “We won the midterms. This is our due.”

  In saying deficits did not matter, Cheney meant that Ronald Reagan’s tax cuts and defense buildup in the 1980s were financed partly through deficit spending but the economy still grew. Cheney’s domestic policy adviser, Cesar Conda, had been sending
him memos arguing that the size of the deficit did not seem to correlate to interest rates historically, despite conventional wisdom. Either way, the drive for a new tax plan made clear how isolated O’Neill had become from his friend Cheney and the White House staff, who were developing economic policy behind his back. The plan “was designed in the White House and basically handed to us, and it drove him insane,” remembered one O’Neill aide.

  The debate played out in front of the president in the Roosevelt Room on November 26. Cheney, who participated via secure video, wanted to accelerate the 2001 rate cuts, which had been phased in over time, while reducing the double taxation of dividends and cutting capital gains taxes. Backed by Hubbard and Lawrence Lindsey, Cheney argued that would do the most to assist business expansion and job creation. “The vice president was always interested in just what are the arguments he could make for pro-growth policy, particularly on the tax side,” Hubbard recalled. O’Neill made his case for deficit control, joined at times by Mitch Daniels and Joshua Bolten, but Bush seemed less concerned about that than the structure of the tax plan. He favored doing something about double taxation of dividends; companies distributing profits to shareholders had already paid taxes on that money, then the individuals paid taxes on the dividends they received. To Bush, the concept seemed unfair, and he thought they should get rid of it altogether, not just reduce it. But he questioned cutting capital gains taxes because, he said, they were already doing enough for the rich.

  “The argument that rang most familiar with the president really wasn’t any of those” made by the vice president, Hubbard said. “It was more fairness. He was really concerned about double taxation. The same rhetoric he used to rail against the estate tax—he would call it the death tax—he used on dividend taxes. Frankly, those arguments did very well with the public. All the economist stuff about faster growth and all that, I don’t think that’s what sold the policy. I think his political instinct was spot-on and people caught on—why should I pay taxes twice?”

  ANOTHER MAJOR INITIATIVE was shaping up around the same time. Since taking office, Bush had developed an interest in fighting AIDS in Africa. He had agreed to contribute to an international fund battling the disease and later started a program aimed at providing drugs to HIV-infected pregnant women to reduce the chances of transmitting the virus to their babies. But it had only whetted his appetite to do more. “When we did it, it revealed how unbelievably pathetic the U.S. effort was,” Michael Gerson said.

  So Bush asked Bolten to come up with something more sweeping. Gerson was already thought of as “the custodian of compassionate conservatism within the White House,” as Bolten called him, and he took special interest in AIDS, which had killed his college roommate. Bolten assembled key White House policy aides Gary Edson, Jay Lefkowitz, and Kristen Silverberg in his office. In seeking something transformative, the only outsider they called in was Anthony Fauci, the renowned AIDS researcher and director of the National Institute of Allergy and Infectious Diseases.

  “What if money were no object?” Bolten asked. “What would you do?”

  Bolten and the others expected him to talk about research for a vaccine because that was what he worked on.

  “I’d love to have a few billion more dollars for vaccine research,” Fauci said, “but we’re putting a lot of money into it, and I could not give you any assurance that another single dollar spent on vaccine research is going to get us to a vaccine any faster than we are now.”

  Instead, he added, “The thing you can do now is treatment.”

  The development of low-cost drugs meant for the first time the world could get a grip on the disease and stop it from being a death sentence for millions of people. “They need the money now,” Fauci said. “They don’t need a vaccine ten years from now.”

  The aides crafted a plan in secret, keeping it even from Colin Powell and Tommy Thompson, the secretary of health and human services. They were ready for a final presentation to Bush on December 4. Just before heading into the meeting, Bush stopped by the Roosevelt Room to visit with Jewish leaders in town for the annual White House Hanukkah party later that day. The visitors were supportive of Bush’s confrontation with Iraq and showered him with praise. One of them, George Klein, founder of the Republican Jewish Coalition, recalled that his father had been among the Jewish leaders who tried to get Franklin Roosevelt to do more to stop the Holocaust. “I speak for everyone in this room when I say that if you had been president in the forties, there could have been millions of Jews saved,” the younger Klein said.

  Bush choked up at the thought—“You could see his eyes well up,” Klein remembered—and went straight from that meeting to the AIDS meeting, the words ringing in his ears. Lefkowitz, who walked with the president from the Roosevelt Room to the Oval Office, was convinced that sense of moral imperative emboldened Bush as he listened to the arguments about what had shaped up as a $15 billion, five-year program. Daniels and other budget-minded aides “were kind of gasping” about spending so much money, especially with all the costs of the struggle against terrorism and the looming invasion of Iraq. But Bush steered the conversation to aides he knew favored the program, and they argued forcefully for it.

  “Gerson, what do you think?” Bush asked.

  “If we can do this and we don’t, it will be a source of shame,” Gerson said.

  Bush thought so too. So while he mostly wrestled with the coming war, he quietly set in motion one of the most expansive lifesaving programs ever attempted. Somewhere deep inside, the notion of helping the hopeless appealed to a former drinker’s sense of redemption, the belief that nobody was beyond saving.

  “Look, this is one of those moments when we can actually change the lives of millions of people, a whole continent,” he told Lefkowitz after the meeting broke up. “How can we not take this step?”

  That was not the end of the fight. In later weeks, Karen Hughes and Mary Matalin tried to prevent Gerson from putting the announcement of the President’s Emergency Plan for AIDS Relief, or PEPFAR, in the State of the Union address for fear it would send a message to the American people that Bush cared only about what was happening overseas. But Bush was committed. He would announce it from the biggest platform he had.

  BUSH SHARED HIS passion for helping Africa with Paul O’Neill, but that was about all the two shared. Bush “never clicked” with O’Neill and felt his Treasury secretary was too focused on tangential issues, too out of touch with the administration’s economic priorities. “He came in and he talked about safety at the mint,” Bolten recalled. “Safety at the mint was not a top priority.” O’Neill, who had been a corporate chief executive for years, “was not a team player,” one aide said.

  Bush also worried about repeating his father’s mistake by not focusing enough on the economy, so shaking up the economic team might send a useful signal. That would start with O’Neill. Bush also decided to replace Lawrence Lindsey, who had gotten in hot water with his back-of-the-napkin prediction that the Iraq War could cost $200 billion but mainly fell victim to being the coordinator of an economic team that resisted being coordinated. Yet while Bush was willing to make the decision, he left it to Cheney to carry out, avoiding conflict.

  Just after lunchtime on December 5, Cheney placed the call to O’Neill at the Treasury Building next door to the White House.

  “Paul, the president has decided to make some changes in the economic team,” Cheney said. O’Neill would remember a pause before Cheney spoke again. “And you’re part of the change.”

  O’Neill had been meeting with aides on the financial markets when the call came in, and it took him by surprise. He understood he was not always in tune with Bush and Cheney, but he was floored at being unceremoniously shuffled out over the phone.

  O’Neill sat down. “The president should have around him the people he wants,” he told Cheney. “I’m happy if the president wants to make a change.”

  With people in his office, O’Neill asked to call back. Afte
r reconnecting, Cheney outlined the plan.

  “We’d like to have you come over tomorrow or next week and meet with the president, and we’ll make an announcement that you’ve decided to return to the private sector,” the vice president said.

  O’Neill stiffened. If he was out, then he would announce his resignation the next day. But he would not go along with the cover story.

  “I’m too old to begin telling lies, and that’s a lie,” he said. “I’m not going to do that.” He went on, “I’m perfectly okay with people knowing the truth that the president wants to make a change. That’s his prerogative.”

  Again, O’Neill would recall an awkward pause before Cheney replied.

  “Okay,” the vice president said.

  Cheney later tried again to arrange a smooth departure, having Andy Card call O’Neill at home that night to invite the secretary to meet with the president. But O’Neill declined and also rebuffed Card’s request to wait to announce his resignation until they were ready to announce Lindsey’s departure and the appointment of John Snow, the chief executive of CSX Corporation, to take over Treasury. Instead, O’Neill turned in his resignation letter the following morning.

  “It wasn’t difficult for me at all,” O’Neill recalled, “because I was so disaffected, I was happy to go.” He grew even more upset years later when he read Bush’s memoir saying that “Paul belittled the tax cuts, which of course got back to me.” O’Neill said he was straightforward in his opposition to the tax cuts. “When the president says it got back to him, it’s a lie,” he said. “I told him three times to his face. I’ve got to tell you, that’s irritating as hell to me that the president would create this impression for the casual reader.” O’Neill’s departure also disappointed his patron, Alan Greenspan. “The Bush administration turned out to be very different from the reincarnation of the Ford administration that I had imagined,” Greenspan said later. “Now, the political operation was far more dominant.”