American Experiment (399 page)

In the mid-1970s, however, many conservatives were by no means convinced that the Republican party could be their ticket to power. To them the GOP seemed irretrievably in the hands of Gerald Ford and his Vice President-select, the hated Nelson Rockefeller. Ford had been in the White House for hardly half a year when the American Conservative Union and Young Americans for Freedom jointly sponsored a conference at Washington’s Mayflower Hotel to consider forming an independent party to challenge both the GOP and the Democracy. Enraptured by the vision of a new conservative party that would unite rural Southerners and northern blue-collar workers, they urged Reagan to lead the effort. He gave his answer in a banquet speech before a packed ballroom. After winning cheers for a denunciation of the Ford policies, he dampened the fire-eaters by demanding, “Is it a third party we need, or is it a new and revitalized second party . . ,?”—a committedly conservative GOP.

Reagan would wait—but the movement conservatives would not let him wait. In mid-June 1975, only four months after the Mayflower conference, a group of conservative leaders, including mail-order entrepreneur Richard Viguerie, columnist Kevin Phillips, Colorado brewer Joseph Coors, several supporters of George Wallace, and a cross section of conservative organization leaders, confronted Reagan at a private dinner. Phillips led the attack, asserting that the GOP was falling apart just as the Whigs had divided and collapsed in the 1850s, that it was time for a new conservative party that could overcome both Democrats and Republicans in a three-party battle, that Reagan must make a direct bid for the Wallace backers and hence must break whatever ties he had with Republican liberals and even Republican moderates. A free-for-all followed. Some in the group told Reagan harshly that he lacked “fire in his belly” and was dawdling
while Ford picked up conservative support for the approaching 1976 campaign. Viguerie, arguing that the GOP had become “unmarketable,” urged the governor to unite conservatives and independents in a New Majority. Then Reagan told them his decision—he would fight Ford for the Republican nomination; as the Republican nominee he would unite conservatives, independents, and conservative Democrats in a broad coalition; and if necessary he would propose that the Republican party change its name. In effect he would transform the GOP or, failing that, abandon it. Half persuaded, and lacking any alternative candidate of national standing (Wallace was still disabled by his gunshot wounding in 1972), the conservatives could only assent. Reagan soon demonstrated that he did have fire in his belly by taking Ford on in the 1976 presidential primaries despite pressure from many GOP leaders to wait his turn. He proved his commitment when he returned to the fray in 1980 as an unrepentant conservative and Republican, and then after winning both the nomination and the election, made clear that he would govern as a conservative, and as head of a conservative Administration.

The media for the most part interpreted the outcome of the 1980 presidential election as a repudiation of Carter rather than a victory for Reagan. Soaring prices, astronomical interest rates, the President’s apparent scolding of the American people in his “malaise” speech, his long agonizing months of being held hostage to the hostage situation in Iran—all these and much else were cited as proof. This view of the election outcome, however, revealed the bias of some liberals, who refused to believe that any authentic, outspoken conservative could win the presidency of the United States—the Goldwater syndrome at work. In fact, Reagan won the election by persuasive appeals to the right-wing vote and to disaffected independents, full exploitation of the remarkable direct-mail and fund-raising apparatus of the Republican national party, and his skillful coalition building between GOP regulars and movement conservatives, as reflected in the choice of George Bush for running mate.

Then, to the astonishment of many, especially of Democrats who had become accustomed to their winning candidates reneging on promises of peace and reform within a year or two of coming into office, Reagan began to govern just as he had promised—as a conservative. He promptly appointed a conservative cabinet headed by Alexander Haig as Secretary of State, and ordered a freeze of federal hiring of civilian employees. Then, after recovering from a near-fatal assassination attempt, he repudiated Carter’s human rights approach, crushed striking air controllers and their
union, called the Russians names, and engaged in a variety of symbolic acts that left no doubt that he was a conservative who meant it.

Reagan had shrewdly recognized—or perhaps had simply sensed intuitively—that he should move ahead strongly in domestic economic policy even at the expense of dramatic initiatives abroad. Tax policy offered the best opportunity to redeem his campaign promises and publicize his departure from “discredited” New Deal policies of Carter and his Democratic predecessors. Working closely with congressional leaders, Vice President Bush, and the Republican Senate, the Administration pushed its legislative program of cutting personal income taxes across the board over thirty-three months; reducing the maximum tax on all income from 70 to 50 percent; indexing tax rates to soften the impact of graduated income taxes on rises in personal income; reducing the maximum tax on capital gains from 28 to 20 percent; liberalizing deductions for contributions to individual retirement accounts; lowering estate and gift taxes; providing business with tax breaks. The tax reductions were tied closely to a package of budget cuts that slashed toward the heart of the New Deal, Fair Deal, and Great Society domestic programs—education, health, housing, urban aid, food stamp programs, the National Endowments for the Arts and for the Humanities, and the Corporation for Public Broadcasting, and even federal subsidies for school meals—but never never never defense spending.

The Reagan Revolution was underway. The head revolutionary spurred his troops on television, in speeches to joint sessions of Congress, in huddles with key senators and representatives, in trips out into the country. Revolutionary fervor needed a doctrine, and this took the form of the supply-side theory that lowering taxes would produce prosperity by giving producers more capital for production and giving consumers more money for consumption. Savings, investment, and growth would be stimulated, the budget ultimately balanced through growth in the tax base. For all-out supply-siders, these were at the heart of a much wider program, described later by Reagan’s budget chief, David Stockman, as a “whole catalogue of policy changes, ranging from natural gas deregulation, to abolition of the minimum wage, to repeal of milk marketing orders, to elimination of federal certificates of ‘need’ for truckers, hospitals, airlines, and anyone else desiring to commit an act of economic production. It even encompassed reform of the World Bank, and countless more.” All of this was designed to overcome the stagflation of the late 1970s.

Since the House of Representatives had remained in Democratic hands in the 1980 election, it was imperative that the President bring around a large segment of the opposition. In a House vote on his crucial budget bill within four months of his inauguration, sixty-three Democrats—over a
quarter of the Democracy’s House membership—broke ranks to support the Administration. Many of these were from the South and West—an exciting hint of the possibilities of a future party realignment. No President since Roosevelt,
Time
opined six months after Reagan’s inauguration, had “done so much of such magnitude so quickly to change the economic direction of the nation.”

The euphoria was not for long. During late 1981 and 1982 the economy plunged into recession. Once again the media headlined stories of bank failures, farm closures, bankruptcies, desperate family and individual crises. The jobless rate rose to over 10 percent, the highest since the great depression of the 1930s. The hard facts threw the White House economists and their colleagues outside into disarray. The supply-siders defended themselves with the classic explanation of dogmatists who fail—their program had not been tried hard enough, or long enough, or this or that vital ingredient was missing. Stockman was now mainly concerned that future Reagan budgets would be more and more out of balance in a recession situation. Republican party leaders feared that the GOP would be tagged with another “Hoover depression.”

And Reagan? The President had now fallen into a severe political and intellectual bind. He had not been able to balance the budget—politically he dared not cut Social Security and other major safety-net spendings, viscerally he not only opposed cuts in his planned military buildup but also wanted a huge boost in defense spending. And in the end he still confronted Speaker Thomas P. O’Neill’s power base in the House. Doctrinally he remained absolutely rigid in the face of his failure. Time and again emergency budget meetings in the Oval Office were trivialized as the President retreated into anecdotage about timeserving bureaucrats or wasteful projects. Stockman noted that when Pete Domenici, a Republican senator friendly to the White House, confronted Reagan with the need to raise taxes, the President jotted down notes during the presentation but only in order to rebut it.

“Damn it, Pete,” he said, “I’m just not going to accept this. This is just more of the same kind of talk we’ve heard for forty years.”

It became clear during that first year that Reagan the campaign and electoral strategist was a different man from Reagan the head of government. The grand coalition builder, who had spoken from the stump in pieties and platitudes that united people, now proved himself unable to think in terms of the hard policies and priorities that linked the overall values to day-to-day governmental choices and operations. Stockman complained of Reagan’s habit of castigating spending in the abstract while he shrank from the “real bullets” he would have to face politically if he took
on the welfare state’s gigantic entitlement programs. Few in the White House pressed their chief to make fundamental strategic choices; rather they echoed his dogmatics or lobbied for some pet solution of their own. As Ralph Nader noted in a preface to a study of “Reagan’s ruling class,” the people around the President showed a remarkable sameness of “attitudes, ideologies, and even styles of thinking and explaining.” Not for Reagan was FDR’s penchant for peopling his Administration with challenging intellectual eclectics.

But one grand asset Reagan retained—political luck. The recession came early enough for some Reaganites to blame it on the lingering effects of Carter policies, early enough too for the White House to wait it out and hope for recovery by election time. The very spending that Reagan condemned in principle while authorizing in practice, combined with such anti-inflationary developments as an oil price decline over which the White House had little control, brought a strong recovery. Although large pockets of poverty and unemployment persisted, the recovery remained vigorous enough to project Reagan toward his massive reelection triumph of 1984. It was hard enough for Walter Mondale, leading a divided, irresolute party, to take on an incumbent whose personal popularity remained high, who had managed to maintain his electoral coalition despite sporadic complaints from both movement conservatives like Viguerie and liberal and moderate Republicans in the Senate. But former Vice President Mondale, forced to share some of the blame for failed Carter economic policies, also faced a Republican Santa Claus who continued to disperse federal money to thousands of vested interests and welfare projects even while preaching economy and thrift and budget balancing. He faced a chameleon who alternated between attacking government and exploiting
his
government. It was no contest from the start.

Reagan’s big reelection set the stage for a major piece of unfinished domestic business, tax reform. For some time the Administration had been tracking proposals by Republican congressman Jack Kemp, an early booster of supply-side economics, for further cuts in personal rates, and by two Democrats, Senator Bill Bradley and Congressman Richard Gephardt, for lower rates combined with a slash in deductions. The President virtually stole the issue from the Democrats during the 1984 campaign and made it his own. A few months later, in his State of the Union address to Congress, he made tax reform the central domestic initiative of his second term. “Let us move together with an historic reform of tax simplification for fairness and growth,” he proclaimed, promising to seek a top rate of no more than 35 percent. Evidently having taken to heart the lessons of his first-term setbacks, Reagan showed a good deal of flexibility in
bargaining with congressional leaders and factions over the specifics of his tax proposal.

Again and again the Administration measure seemed to die on Capitol Hill, only to be resurrected by a President absolutely committed to tax reform and ever ready to make political forays out into the country to channel public pressure toward Congress. White House leadership was crucial; while three-quarters of Americans in a poll favored a simplified tax system and almost three-fifths considered the existing system unfair, they listed the tax system fifth in importance among economic problems, behind the deficit, unemployment, interest rates, and inflation. The Administration had to fight off lobbyists who put heavy pressure on legislators. The bill curtailed consumer interest deductions, and she had a Chrysler plant in her district, a congresswoman said. She thought she should vote no, but “I couldn’t do it.”

Reaganites were proud that they had overcome “Lame-Duck-Itis,” as they felicitously called it. Historically, however, the problem of the presidential lame duck was less the second term than the second two years in each term, following the congressional midterm elections.

It was clear even as Reagan took command of tax policy that he must share leadership with committee chieftains and party lieutenants in Congress, which retained its constitutional authority over revenue measures. In foreign policy, on the other hand, the Chief Executive had held the dominant role both under the Constitution and by custom. If many conservatives had been sorely disappointed by Reagan’s compromises over taxation and domestic policies, hawkish right-wingers had been entranced by his fulminations against communism. Rhetorically, at least, he had entered the White House as the most bellicose peacetime President since Theodore Roosevelt. While TR had tended to strike out in all directions, however, Reagan had eyed the reds with the steely hostility of a frontiersman targeting a band of Indians.