Chapter One: January 20, 1981
The thirty-ninth President of the United States, Jimmy Carter, had not slept for almost forty-eight hours when he telephoned the President-elect, Ronald Reagan, just before seven o'clock on the morning of January 20, 1981. "We have good news on the hostages," he said to the Reagan assistant who answered the phone, Michael Deaver.
Carter had spent those sleepless hours in the Oval Office and in the subbasement Situation Room of the White House, personally supervising intricate negotiations between diplomats in Washington, Tehran, and Algiers, and bankers in New York and London, attempting to free fifty-two American hostages held in captivity in Iran for 444 days. The last step was a complex series of bank cash transfers releasing $12 billion in Iranian assets seized by the United States government after the diplomats, their staff, spies, and Marine guards were taken at the embassy in Tehran in November of 1979. At 6:47 a.m., the last transfer was done and planes were waiting on the runway of the Tehran airport to take the Americans out of Iran.
Reagan was sleeping just across Pennsylvania Avenue, in Blair House. Deaver told President Carter that Reagan had left orders that he was not to be disturbed unless the hostages were actually free, in the air and out of Iranian airspace. The former governor of California had left a wake-up call for eight o'clock, four hours before he would be sworn in as the fortieth President. At the appointed hour, Deaver knocked on the door. Reagan grunted and Deaver heard him roll over, so he knocked again, saying: "It's eight o'clock. You're going to be inaugurated as President in a few hours."
"Do I have to?" Reagan called back. Then he laughed.
The President called again at 8:30. Reagan was up. Carter said that planes were still on the runway in Tehran. The takeoff was being delayed by the Iranians and it looked as if the planes would not be out of Iran before noon in Washington, the hour at which Reagan would become the fortieth President. Reagan said he was sorry about that and he meant it. The hostage crisis, along with soaring inflation and interest rates at home, had doomed the Carter presidency and the next President did not want it to take over his as well. He told the President what he had told his own men, that he did not want to say anything about the hostages in public until they were all safely out of Iranian airspace. "It's very close," Carter said. Reagan was not unsympathetic to the man he had defeated in November. He thought Carter deserved both the blame and the credit for the Iranian crisis and resolution. The President-elect's major contribution to the negotiations were campaign statements designed to persuade the Iranians that he would be a tougher adversary than Carter, and they would be well advised to release the Americans before he took office. As the conversation wound down, Reagan asked the exhausted President if he would be willing to go to West Germany, to the United States Air Force base and hospital at Wiesbaden, to greet the hostages once they were finally released. Carter immediately said yes.
A couple of hours later the two men rode together side by side in a limousine, up Pennsylvania Avenue to the Capitol for Reagan's inaugural. They did not much like each other and conversation was hard. Reagan took the initiative as he often did; entertainment after all had been his business for more than thirty years. Trying to make his beaten and bitter predecessor feel more comfortable, he rolled out old Hollywood stories, a couple of them about his days at Warner Brothers studios under Jack Warner.
"He kept talking about Jack Warner," Carter said later to his communications director, Gerald Rafshoon. "Who's Jack Warner?"
The Presidents, old and new, shared only one moment of true personal communication. Reagan hoped to announce the release and credit Carter during his inaugural remarks. Just before noon, as he stood to take his oath of office, he turned to look at Carter, who shook his head slightly and whispered the words, "Not yet." Back in the Situation Room, eighteen feet under the West Wing of the White House, Carter's chief of staff, Hamilton Jordan, and Rafshoon were working, still on open phone lines back and forth to Algiers. As Reagan stood to deliver his inaugural address a mile away, a White House secretary came down and told them, a bit frantically, "You've got to get out of here. The Reagans will be on their way." As the Carter men hustled up the stairs from the Situation Room, they realized that the photographs on the wall of the corridor leading to the press room had all been changed. Carter images were gone, the framed Reagans smiled at them now.
Reagan, who took pride in the fact that he wrote or at least carefully edited most of his own speeches before and after he became a politician, had begun working on his inaugural speech the day after he defeated Carter. Actually he had been working on it for twenty-five years, beginning on the day in 1954 when he was hired by General Electric to translate his fading fame as a movie star into being the company's traveling spokesman and morale booster, speaking to more than 250,000 GE employees at 139 plants. That experience catapulted him into politics at the highest levels when he adapted his standard GE speech into a half-hour 1964 fund-raising speech for the Republican presidential candidate, Senator Barry Goldwater of Arizona. Goldwater was crushed in that election, but Reagan soared, replacing Goldwater as the public voice of American conservatism and becoming governor of California within two years. It was a wonderful voice, husky and honeyed, but not greatly respected. In one of his first presidential campaign memos, Reagan's pollster, Richard Wirthlin, told him:
We can expect Ronald Reagan to be pictured as a simplistic and untried lightweight (Dumb), a person who consciously misuses facts to overblow his own record (Deceptive) and, if president, one who would be too anxious to engage our country in a nuclear holocaust (Dangerous).
When Reagan won the Republican nomination in 1980 on his third try -- he lost to Richard Nixon in 1968 and to President Gerald Ford in 1976 -- it marked a peak for movement conservatives but still frightened many Republicans who more or less agreed with the premises of the Wirthlin memo. Led by former Secretary of State Henry Kissinger, the party's elders came within minutes of persuading Reagan to take Ford as his running mate, not so much as Vice President but as a kind of co-president in charge of foreign affairs and budgetary matters. A joke, which took notice of Reagan's supposed laziness, made the rounds on the floor of the Republican convention: "Ford will be president before nine, after five, and on weekends."
In the weeks before his inaugural, with staff and press concentrating on who would man the new government, the President-elect spent his own time outlining the inaugural address. To him, the words were more important than the men who served him, aides he usually just called "the fellas," often because he could not remember all their names. He was helped this time by a fellow named Ken Khachigian, a Los Angeles lawyer who had written for President Nixon and done a good deal of the heavy word-lifting on the 1980 campaign speeches. As he always did, Reagan began by chatting for twenty minutes or so about his ideas and gave Khachigian a six-inch pile of the four-by-six index cards he had used and edited for speeches over the years. In his transition meetings with Carter, Reagan had not taken a note nor made a serious comment during the President's long and complicated issue briefings, but at the end of the first and most important session -- use of nuclear weapons was one topic -- he noticed that Carter used three-by-five cards listing the subjects of the hour-long talk. "Can I get copies of those?" Reagan asked as he stood up to leave.
With his writer taking notes, Reagan began dictating themes:
The system: everything we need is here. It is the people. This ceremony itself is evidence that government belongs to the people....Under that system: our nation went from peace to war on a single morning, we had the depression etc....We showed that they, the people, have all the power to solve things....Want optimism and hope, but not "goody-goody."...There's no reason not to believe that we have the answer to things that are wrong.
He also told Khachigian to find the script of a World War II movie. "It was about Bataan," he said. An actor named Frank McHugh, Reagan remembered, said something like: "We're Americans. What's happening to us?" The writer found the line, which was somewhat different from what Reagan recalled, and used it as a finale in the first draft of the speech he brought to the President-elect on January 4: "We have great deeds to do....But do them we will. We are after all Americans."
The new President, unlike most of his predecessors, wanted to give his inaugural address from the back of the Capitol, facing west toward the monuments to Washington, Jefferson, and Lincoln -- and toward Arlington National Cemetery, the final resting place of many American heroes. He told Khachigian that a friend from California had written him a letter about a soldier buried there, a World War I battlefield courier named Martin Treptow, a boy from Wisconsin killed in action in France in 1917. Treptow had kept a diary, Reagan said, with this on the flyleaf: "My Pledge: America must win this war. Therefore I will work. I will save, I will sacrifice, I will endure, I will fight cheerfully and do my utmost, as if the issue of the whole struggle depended on me alone."
"Can I see the letter?" asked Khachigian. "We have to check this out."
Reagan looked hurt, at least that's what Khachigian thought.
The writer met again with Governor Reagan on January 18, two days before the inauguration. It was a Sunday. The President-elect had already been to church and was sitting in bed, under the covers. He had hung up his pants -- so they wouldn't wrinkle, Khachigian thought -- and was having coffee and toast with honey. Reagan immediately noticed that the Treptow story was not in the final draft of his speech. Why? Khachigian nervously said that researchers could not find a diary and the soldier was not buried at Arlington but in his hometown, Boomer, Wisconsin.
"Put it back in," Reagan said.
The writer came back an hour later with the changes Reagan wanted. Richard Allen, a conservative veteran of President Nixon's National Security Council scheduled to be Reagan's NSC director, was there with a couple of other staffers to talk about the latest word on the hostages in Iran. They were watching television. Steve Bell of ABC News was talking about the crisis, about Carter and his men working on the details of transferring money to the Iranians. The image of an Iranian mob appeared; the President-elect pursed his lips and muttered: "Shitheels!"
On Tuesday, Reagan's men circulated among reporters, making sure the ladies and gentlemen of the press understood the symbolism of facing westward: a new direction opened by a man of the West. But it was the Californian's words that marked the most radical departure from presidential tradition. And the words were Reagan's own. He wrote the final version of the speech out in longhand on a yellow legal pad -- waking once at 4 A.M. to write for twenty minutes -- changing the speechwriter's phrasing, changing "they" to "you," adding old favorites of his own, among them: "Those who say we are in a time when there are no heroes just don't know where to look." He followed that with his own ode to the common people: "You can see heroes every day going in and out of factory gates...producing food enough to feed all of us and the world beyond....You meet heroes across a counter."
He said nothing he had not said before in his years as spokesman and speechman for General Electric and then as governor of California and as the post-Goldwater icon of the conservative wing of the Republican Party. As he had during the campaign, he touched four simple themes: (1) reducing taxes and deficits, thus reducing the power and size of the federal government; (2) rebuilding the American military; (3) confronting communism around the world; (4) restoring American patriotism and pride.
Ronald Reagan wanted to destroy communism. He had long ago rejected words like "containment" and "détente," instead preaching a victory of right over wrong. In 1977, he had listened to a long briefing by Richard Allen about the need for an overall strategy for dealing with Soviet communism and interrupted to say, "I do have a strategy: 'We win, they lose!' " Talk like that and the repeated anti-communist sermons were what had worried Kissinger and others. But this inaugural day, Reagan's first speech as President focused on America and Americans, just as his campaign had.
Rather than repeat economic statistics, which he often mangled anyway, Reagan tried to change the way people thought. Importantly, he redefined populism, the old American idea that someone up there was screwing the little guy. In the past, in the agricultural South and in the Midwest, the homegrown oppressor of the hardworking little guy was traditionally big business, the banks, the railroads, Wall Street. In Reagan's new populism the bad guys were not businessmen and financiers -- they were heroes to Reagan -- his bad guy was big government. Speaking to and for all his fellow Americans, their brand-new President said:
These United States are confronted with an economic affliction of great proportions....In this present crisis, government is not the solution, government is the problem....
It is time to reawaken this industrial giant, to get government back within its means, and to lighten our punitive tax burden. And these will be our first priorities....
Those who do work are denied a fair return for their labor by a tax system which penalizes successful achievement and keeps us from maintaining full productivity....For decades we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present....
"We the people," this breed called Americans...special among the nations of the Earth....And as we renew ourselves here in our own land, we will be seen as having greater strength throughout the world. We will again be the exemplar of freedom and a beacon of hope for those who do not now have freedom.
Conservative intellectuals called that a revolution. But to Reagan it was a restoration. He wanted to take America back to a past imagined, a time of hard work, generosity, and patriotism, all under a God on our side.
He ended his speech with the Treptow story, talking of the crosses at Arlington and saying the dead soldier lay under "one such marker" and quoted the young soldier's pledge. "The crisis we are facing today does not require the kind of sacrifice that Martin Treptow and so many thousands of others were called on to make. It does require, however, our best effort and our willingness to believe in our capacity to perform great deeds, to believe that together with God's help, we can and will resolve the problems which now confront us....
"And after all, why shouldn't we believe that? We are Americans."
Reagan, too old to change his mind about much, knew one very big thing about leadership and leaders: Words are usually more important than deeds. And words of hope and destiny had elected him over a failing President. When Jimmy Carter said the nation faced "a crisis of confidence," Reagan said no, it was Jimmy Carter who had lost confidence, adding: "I find nothing wrong with the American people." Carter, the former governor of Georgia, was the last of a line of Democratic and liberal leaders and liberal commentators who consistently reminded Americans of what was wrong with them, citing milestones of failure, from the racism of the old South to the folly of the war in Vietnam and the lying of Watergate. But it was not an easy election. With an independent candidate, John Anderson, a moderate anti-Reagan Republican congressman from Illinois, winning 7 percent of the vote, the new President won just 50.75 percent of the voters who went to the polls that day. So, now Reagan was proceeding down Pennsylvania Avenue to move into the White House and Carter was on a helicopter headed for Andrews Air Force Base and a flight back to Georgia. He met Jordan at Andrews and asked him to check on the hostages. Jordan called the White House to ask his old military liaison whether the hostages were safe yet. "I'm sorry, sir," said the officer. "You are no longer authorized to receive that information."
In a special Inaugural Section of The Washington Post, James David Barber, a political scientist from Duke, writer of a best-selling book, The Presidential Character, said: "Reagan floated into the presidency on a recurrent tide that swells through politics with remarkable regularity -- the tide of reaction against too long and hard a time of troubles, too much worry, too much tension and anxiety. Sometimes people want a fighter in the White House and sometimes a saint. But the time comes when all we want is a friend, a pal, a guy to reassure us that the story is going to come out all right....In short, Reagan was elected because he is not Carter." Then Barber added an important perception of the old entertainer: "Reagan has a propensity to be more interested in theatrical truth than in empirical truth." Reagan was not a man of vision, he was a man of imagination -- and he believed in the past he imagined.
Reagan's triumph on November 4, 1980, also swept in Republican congressional candidates across the country, giving the party control of the Senate for the first time since 1954 -- the new Senate was made up of fifty-three Republicans and forty-seven Democrats -- and among the losers that day was a roster of the Senate's liberal all-stars, including George McGovern, Birch Bayh, Frank Church, and John Culver. In the House of Representatives the Democrats retained control with 243 members, while Republicans won 192 races. But several prominent Democratic liberals lost, beginning with Minority Whip John Brademas. "An across-the-board rejection of the Democratic Party," wrote William Schneider, a poll analyst writing in the Los Angeles Times.
Still, there seemed to be no consensus that Reaganism or Republicanism were being accepted across the country. The inaugural address got mixed reviews. The conservative editorial page of The Wall Street Journal cheered: "President Reagan said what needed to be said....His address was delivered by a man to whom the world has come around and who knows it. It was a radical speech, and it felt good to hear it." The Baltimore Sun disagreed: "What an insult to language and logic! It showed a willingness to distort a perfectly valid idea mainly for effect." The Philadelphia Inquirer stood somewhere in the middle: "The deep underlying question raised by Mr. Reagan's address, as by his candidacy for President, was unspoken....It is: Can the federal government be significantly dismantled, can the authority of the central government be broadly reduced, programs and spending cut, without savaging the lives and hopes of those Americans who are least equipped to defend themselves?"
The Algerian airliner lifting the hostages out of Iran took off at 12:33 P.M. Washington time. At his formal inaugural lunch, in the Statuary Hall of the Capitol, President Reagan rose to offer a toast, saying: "With thanks to Almighty God, I have been given a tagline...some thirty minutes ago, the planes bearing our prisoners left Iranian airspace and are now free." Then, in a viewing stand outside the White House, the new President watched 8,000 marchers and 450 equestrian teams parade by in his honor. With each passing flag, he leaped to his feet and put his right hand over his heart. He leaped again later that night in a holding room with his wife at the Washington Hilton before the first of eight inaugural balls. Straightening his tie in a full-length mirror, he jumped, clicked his heels, and said: "I'm the president of the United States of America!"
On January 29, the new President held his first press conference, nationally televised from the auditorium of the Old Executive Office Building next to the White House. After he recited a short list of symbolic anti-government acts -- a civilian hiring freeze, a 5 percent reduction in travel expenses for all federal employees, a reduction in the number of consultants attached to government -- Reagan spoke for the first time, as President, about the Soviet Union and communism. For him, after decades of crusading anti-communism, the words were routine. For a President they were harsh. The question was about détente, and he answered: "Well, so far détente's been a one-way street that the Soviet Union has used to pursue its own aims. I don't have to think of an answer as to what I think their intentions are...they have openly and publicly declared that the only morality they recognize is what will further their cause, meaning they reserve unto themselves the right to commit any crime, to lie, to cheat, in order to attain that....I think that when you do business with them, even at a détente, you keep that in mind."
Earlier that day, it was reported that his Secretary of State, Alexander Haig, had sent a "sharp message," in State Department jargon, to his Soviet counterpart, Foreign Minister Andrei Gromyko, warning that there would be "dire consequences" if the Soviet Union sent troops into Poland to put down anti-communist strikes and demonstrations. A sharp rise in food prices in the summer of 1980 had triggered protests led by shipyard workers who organized themselves under the banner "Solidarity," which quickly grew into a makeshift national movement of more than five million workers, led by a shipyard electrician named Lech Walesa. The first National Intelligence Estimate sent to President Reagan, fifteen pages prepared by the Central Intelligence Agency and the intelligence divisions of the Pentagon, was titled "Poland's Prospects Over the Next Six Months."
"The present crisis in Poland constitutes the most serious and broadly based challenge to communist rule in the Warsaw Pact in more than a decade," the secret NIE began, then warned that Soviet intervention of thirty Red Army divisions was a possibility if the country's own communist leadership could not control events that seemed to be spinning out of control. The conclusion read: "The Soviets' reluctance to intervene militarily derives above all from the enormous costs they probably anticipate in eliminating Polish armed and passive resistance....We believe that Soviet pressure on the Polish regime will increase and that, if the pattern of domestic confrontation continues, the trend is toward ultimate intervention."
It was a document that played to one of Reagan's core convictions: The point was dramatized in a rather petty way when Soviet ambassador Anatoly Dobrynin arrived at the State Department to deliver a message from Foreign Minister Gromyko. The Soviet limousine was turned away from the department's private garage entrance. The driver was blocked by security guards and told to drop his passenger at the main entrance -- let the Russian sign in at the same door used by lesser nations.
The White House announced that the President would make his first speech from the Oval Office on his sixteenth day in office, February 5. The subject would be economics. That timing was purposeful. Reagan wanted to create a sense of urgency, to declare, as he had during the campaign, that the United States was in its worst economic crisis since the Great Depression of the 1930s. When the old Reagan hands from California saw the next-to-final draft of the speech, they were surprised to see that the usual attacks on Washington liberals had been stricken from the text. When one of the Californians, press assistant Lyn Nofziger, asked Reagan about that, he laughed and said, "Listen, if I were making this speech from the outside, I'd kick their balls off."
He was inside now, a new role for the old drumbeater, but as he had during the campaign, he did solemnly recite the alarming statistics that marked the end of Carter's presidency: high inflation, high interest rates, unemployment, and increased deficit spending. He showed graphs with the good lines going down and the bad lines going up. He took a quarter, a dime, and a penny out of his pocket -- he had gotten the change from his young personal assistant, Dave Fischer -- to illustrate the fact that a 1980 dollar was worth only 36 cents compared with the purchasing power of a 1960 dollar. Then he said: "It's time to try something different, and that's what we're going to do."
He was more specific than politicians usually are on what was to be done, declaring that he wanted to reduce government spending and graduated federal income taxes. On spending, Reagan used a tried-and-true line he had repeated a thousand times in after-dinner speeches: "Over the past decades we've talked of curtailing government spending so that we can 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."
That was old-time religion to American conservatives. This is what Reagan had told them for years: "It is a myth that our graduated income tax has any resemblance to proportionate taxation. The entire structure was created by Karl Marx. It simply is a penalty on the individual who can improve his own lot; it takes his earnings from him and redistributes them to people who are incapable of earning as much as he can." Ronald Reagan, the movie star making $3,500 a week before World War II, had paid 91 percent in income tax on much of that money. He had hated that, and he promised this night to cut taxes 10 percent a year for three years. The fundamental question for more literal conservatives then was: How do you raise military spending, cut taxes, and reduce deficit spending and the federal deficit itself?
"Voodoo Economics," one Republican, his own Vice President, George H. W. Bush, had called Reagan's numbers games when he was running against him in the 1980 primaries. "Supply-side Economics" was the name put forth by younger conservatives who argued that putting more money back in the pockets of taxpayers would jump-start the economy and lift it to new heights -- in earnings, spending, and investment -- and actually increase federal revenues to wipe out deficits. That trick was new to the old conservative from California. Whether or not he actually believed in it was a subject of endless argument in conservative journals, but it worked rhetorically as a rationale for Reagan's four goals -- and it was at least as true as some of his stock of old anecdotes.
Nice work if you can get it, The New York Times reported when the Reagan plan was proposed before the Senate Budget Committee: "Surprise swept over the Democrats when the new Treasury Secretary, Donald Regan, the former chairman of Merrill Lynch, acknowledged that the highly optimistic forecast was based on Administration economists' views of how Americans are likely to respond to the program and not on any existing model."
Reagan did not think in models. He often said he had always believed that economics, his major at Eureka College fifty years before, was at least 50 percent psychology. Times were good if you thought they were good. Or, in this case, the disastrous Carter inflation would go away if people thought it would, because lower inflation would affect, positively, people's attitudes about spending and investing.
The new President laid out his old thinking in simple language in his first budget message to Congress, saying: "First, we must cut the growth of federal spending. Second, we must cut tax rates so that once again work will be rewarded and savings encouraged. Third, we must carefully remove the tentacles of excessive government regulation....Fourth, we must work with the Federal Reserve Board to develop a monetary policy that will rationally control the money supply. Fifth, we must move, surely and predictably, toward a balanced budget."
The old and the new taken together became "Reaganomics." The details of squeezing it all together into a budget and tax legislation was the job of the President's new director of the Office of Management and Budget, a thirty-four-year-old congressman from rural Michigan named David Stockman. During the campaign, Stockman had impressed Reagan and his men when he played his former boss, John Anderson of Illinois, in rehearsals for a September 1980 debate against Carter. Stockman/Anderson clobbered Reagan in secret. The young winner was shocked by the old man's mumbling confusion -- at least in those rehearsals. "Sorry, fellas," Reagan would say. "I just lost that one."