I did get a chance during the press conference to make a few points of my own, although I was cautioned not to discuss my views on the wage-price controls or international economic policy before I went through the Senate hearings required for confirmation. I said pointedly that, although I was registered as a Republican, I regarded myself as “highly independent” in political matters, guided in voting by my views of individuals and/or the policies they espoused rather than by party affiliation. Asked for my views on the “women's lib” movement, I answered that I shared its goals but preferred to pursue them in less spectacular ways than did some of its leaders.23 “I don't want to contribute to the characterization of men as our enemies,” I explained. “I'm a strong proponent of the monogamous or nuclear family.”24
The note of ambivalence that crept into my expression of support was real. I've always chosen to be a reformer from inside the establishment rather than outside, to try to bring about change by means of persuasion and example rather than confrontation, an attitude that from time to time has exposed me to criticism and even, occasionally, my own later regret, as when I look back on my passivity during the civil rights movement. As I saw it, we were all trying to get to the same place, but by different paths.
One reporter commented accurately that I described myself as an economic problem solver rather than an intellectual bomb tosser, and that I was ambivalent about my sudden emergence into the spotlight: “On the one hand, she is delighted at the chance to move from the kitchen of the council into the living room, to become a policy maker rather than a staffer. But counterbalancing that joy is the fear that she is increasingly being pried apart from her family.” Then came the punch line: “She bridles at the thought of becoming the sex symbol of the Nixon Administration and, in fact, her tall good looks are more a cross between country wholesome and middle European than Hollywood-style sexy.”25
That description must have been a first for any presidential appointee, and I didn't know whether to be flattered or outraged. But I mused that my mother, whose expectations for her daughter's success had rested heavily on her efforts to imbue me with her own attractiveness and charm, at times without much hope of success, would see it as confirmation that her efforts had not been in vain.
Back in Pittsburgh there was another press conference, this one arranged by the university. The main local paper, the Pittsburgh Post-Gazette, sent a reporter from its women's page, rather than its economics section, to cover the event, and her interest appeared to be mainly in how I thought Laura's pet gerbils would survive the trip. I was furious at the insult, and Pitt's director of public relations later angrily told the paper's executive editor that if he ever again committed such a gaffe his reporters would no longer be invited to the university's news conferences.
Now that Bob, God bless him, had made it possible for me to join the CEA without tearing the family apart, settling the logistical details was a snap, freeing me to focus my attention on boning up for hearings before the Senate Banking Committee, the first and most crucial step in the Senate confirmation required for appointment to the CEA. William Proxmire, the Democratic senator from Wisconsin, began the session by asking my opinion about the progress of the Price Commission, from which I had resigned only two days before. Proxmire, a lean runner before jogging became fashionable, was famous for his annual list of Golden Fleece awards, bestowed on those research projects with the silliest-sounding titles that had received grants from the National Science Foundation (the sheep shorn of its golden fleece was presumably the American taxpayer), and I was afraid that he might exercise his sharp and sometimes unfair wit on me. I replied cautiously that the commission had “gotten off to a far better start than we dared to hope.”
Proxmire scolded me about the commission's lack of transparency and asked pointedly whether the other commissioners were ceding too much decision-making power to Chairman Grayson. I stoutly denied his allegation, insisting that I had been anything but “silently acquiescent” and explaining the rationale for some of my votes. He also pressed hard on whether I regarded 5 percent unemployment as “full employment,” making it clear that he certainly didn't. Neither did I, I replied; an unemployment rate of 5 percent and inflation in the 2 to 3 percent range stipulated in the guidelines for Phase 2 were merely interim goals; we expected to do better over the long term.
I enjoyed this interchange with a politician who had seriously educated himself on macroeconomics.26 But, to my chagrin, the gender issue reared its head again. Proxmire and Republican Edward Brooke of Massachusetts, the first black member of the Senate since Reconstruction days, got into a wrangle over whether the fact that I was a woman and a “housewife,” as well as an economist, was relevant to my appointment to the CEA. Aside from this perhaps inevitable but rather pointless argument, the hearing seemed like a brief PhD oral exam, serious and substantive but conducted with a civility that disappeared from the scene in the post-Watergate era and has yet to be recaptured.
The next step, after the full Senate had approved my appointment without discussion, was my swearing in, which, again, the president decided had enough public relations value to be worth attending personally. His presence was rewarded by a photograph that ran in several newspapers. showing me flanked by Nixon and my husband holding the Bible on which I had just taken the oath of office, with the president telling me in both voice and body language to “get those meat prices down.”
For once, I wasn't fazed by a remark that seemed to highlight my housewifely role. I was much too intent on wishing with all my heart and soul that my father could see me now. There I stood in the White House surrounded by the family that he had feared would obliterate my chances for professional success. And in the middle, with an arm around each of our children, was the president of the United States, who had just announced my appointment as one of his advisers on economic issues. As souvenirs, Bob, the children, and I each received signed copies of a photo of the four of us standing with the president, all staring into the camera, stiff and serious and a bit awed by our surroundings. Our children, long since grown, have hung this photo on their walls to amuse their friends. But to me it is a memento of the joyous occasion when my father's expectations and my own, which had clashed and come between us as he was dying, had finally converged.
When I walked into the familiar Old EOB on my first day back at the CEA, I had to shake myself to make sure this was real. Even though my new office was a scant dozen yards from the one I had vacated just seven months earlier, it was a new world. It wasn't exactly a corner office, but the intricate construction of the Old EOB gave it enormous windows on two sides, one looking out on 17th Street and the other on Pennsylvania Avenue. The eighteen-foot ceilings, handsome furnishings, and decorator touches created an impression of gracious elegance. Even the brass doorknobs on the heavy wooden doors were works of art, heavily embossed with designs of American eagles, with hinges embossed to complement them. I took a deep breath as it hit me: this unfamiliar grandeur was a symbol of my move from the “back office” to the “front office” of the CEA. My brief time on the Price Commission had been a dress rehearsal; now I would be squarely in the public eye representing the Nixon administration.
My office was only one of the perquisites that went along with my new job. These included the right to park on the narrow strip of concrete, gated at both ends, that ran between the White House and the Old EOB and a pass that allowed me to rush unchallenged by guards through the inner sanctum, the red-carpeted labyrinthian corridors of the White House itself, on numerous trips between my home base on its west side and the Treasury building on the east. I also had lunch privileges in the White House Mess (so-called because it was staffed by navy stewards), which provided gourmet meals at subsidized prices and also offered the opportunity for informal conversation with other members of the Executive Office of the President.
I really liked the camaraderie and sense of belonging these lunches gave me, but they also caused me embarrassment. Because I
was one of two or three women with Mess privileges, I was recognized immediately by my fellow diners, who thereafter called me by name. But I have always been terrible at names, and after a couple of weeks I was too embarrassed to ask theirs. In several cases, it wasn't until I saw some of them on television, as participants in the unfolding Watergate scandal, that I was able to connect names with faces.
I took on my new role during a rare honeymoon period for the Nixon administration. Not only was Phase 2 of the price controls program both popular and apparently effective but the President was winning widespread plaudits for his overtures to our two main communist adversaries, China and the Soviet Union. In late February, between his announcement that he intended to appoint me to the CEA and my swearing in, he had made a historic trip to China, visiting three major cities and holding an unprecedented meeting with Chairman Mao Zedong and Premier Zhou Enlai. He followed this with a trip to Moscow in May, where he and General Secretary Leonid Breznhev signed both the SALT 1 (Strategic Arms Limitation) and ABM (Anti-Ballistic Missile) treaties.
Nixon's Moscow agreements represented a major step in restraining the two nations' rivalry in both offensive and defensive nuclear weapons, a competition in which the Russians had been gaining ground. The significance of his opening gesture toward China was less obvious but also critical in the long run. Had China become part of Russia's closed economic community rather than entering into trade and investment relationships with the West, the economic pressures that figured so prominently in the collapse of the Soviet Union might not have had the same impact. I dared to hope that “tricky Dick” was becoming a global statesman.
My CEA colleagues also made me feel comfortable in my new role. Herb Stein had become chairman and Henk Houthakker had been replaced by Ezra Solomon, a well-known professor of finance at the Stanford business school. Born in Burma to parents who endowed him with an exotic Burmese British Jewish heritage, Ezra had snapping black eyes, a round head, and a small, taut body. Physically, Herb and Ezra were in sharp contrast, the one as ponderous as the other was delicate, the one as drawling in speech as the other was staccato. But they had in common wise intelligence, dry wit, and a generosity of heart that made them ideal colleagues. I was also a fan of George Shultz, who became both secretary of the treasury and the president's “economic czar” soon after I joined the CEA. I did get annoyed with him, though, when he hatched a plan to have me visit a supermarket with the president and cast baleful eyes on a package of hamburger, a photo op designed to symbolize the president's sympathy for the difficulties rising food prices were causing the American housewife. “If you put me in that position, George, I'll quit,” I said, only half in jest, and the idea went no further.
Because I had so recently left the Price Commission, I quite naturally became a spokesperson for the administration on the wage-price control program as soon as I joined the CEA. In my early months there, it wasn't hard to take some pride in the way things were going. The price bulge that had immediately followed the end of the ninety-day freeze in November appeared to be slowing by March and April. In our testimony before the Joint Economic Committee in mid-April, Herb and I could truthfully list signs of progress, pointing out that the Phase I and Phase II programs had significantly reduced the rate of inflation, contributed to a more rapid rise of real (inflation-adjusted) wages, and led to an increase of over 1.8 million in the number of employed workers. We were careful to insert a note of cautions—“We cannot say we are sure that the system as it now exists will achieve our goal”—but our overall tone was both optimistic and determined.27
Even Walter Heller, the “dean” of Democratic economists who had chaired the CEA under presidents Kennedy and Johnson, acknowledged that he and I “were in substantial agreement that the economy would improve measurably during 1972.” Furthermore, he added, Phase II “is nudging wage and price increases down a little faster than natural forces would…After a very wobbly start, Phase II is shaping up.”28
While I was focused on restraining domestic prices as a member of the Price Commission, the international aspects of the president's New Economic Policy had set off a flurry of activity. The other industrialized countries had been caught off guard by his declaration of August 15, 1971, that the United States would simultaneously abrogate its commitment to convert foreign governments' dollar holdings into gold at thirty-five dollars an ounce and impose a temporary surcharge of 10 percent on imports until there was a positive shift of some thirteen billion dollars in the US basic balance of payments.29 Foreign leaders expressed outrage at these unilateral declarations. Privately, they acknowledged that their reactions were aggravated by the timing of the president's announcement, which had forced high government officials in Europe to cut short their cherished monthlong August vacations and rush back to their capitals. The stage was set for hard bargaining between Secretary Connally and his counterparts in Europe and Japan.
I had been deeply embroiled in the events that led up to the president's dramatic abrogation of the dollar's tie to gold when I was on the CEA staff, and I felt strongly about the urgency of moving to an international monetary system more responsive to the signals from foreign exchange markets than the one negotiated twenty-five years earlier at Bretton Woods. Now I was a full-fledged member of the Volcker Group, which was struggling to develop an American proposal for restructuring the international system.
The need to move forward on a proposal was urgent. The measures negotiated under the Smithsonian Agreement of December 1971, in which all participants made some adjustment in the value of their currencies—the United States by reducing the value of the dollar in terms of gold—weren't adequate to shrink the US current account deficit, downward pressure on the value of the dollar continued, and restrictions on international currency transactions were proliferating in Europe. I, along with others in the administration, had to defend American policy against accusations of “benign neglect” of the situation, and it was clear that there would be no progress until the United States put a proposal on the table.
The most significant structural changes embedded in the US proposal were to make the balance of payments adjustment process much more symmetrical than it had been under Bretton Woods. It would put as much pressure for adjustment on countries with chronic payments surpluses as on those with chronic deficits, whereas the old system had exerted pressure only on the latter. In the new system, furthermore, the US dollar, rather than serving as the currency whose value adjusted passively to eliminate inconsistencies in other countries' balance of payments goals, would be a currency much more like any other, meaning that the United States could now take active measures affecting its own exchange rate. It also meant, I warned, that with the United States no longer functioning as the shock absorber, payments balances would have to “add up” more rigorously than before, and there would have to be a conscious effort to achieve compatible balance of payments goals.30
When the Volcker Group's proposal was presented for international discussion, I cautioned that, although it was flexible, leaving plenty of room for discussion and amendment, it would be a mistake to treat it like a Chinese menu, combining some selections from column A with others from column B. The proposal, I insisted, was comprehensive and its parts highly interdependent, just like one of the elegantly curved staircases in the Old EOB, which would collapse along its entire length if one step were to break or be removed.31
The administration was doing battle at home, as well as abroad, to create an open and well-functioning global economy. It had been fighting congressional proposals to restrict imports when I left the CEA staff, and the battle was still in full swing when I returned. Seizing the initiative, the administration took the lead in starting up a seventh round of multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT). Its goals were not only to achieve reductions in both tariffs and nontariff barriers but also, by lowering them, to reduce the discriminatory effects of the European Communities' (EC
's) preferential trade agreements with both its new members and its former African colonies. Given a chance to put into practice the classroom lectures I regularly gave on the advantages of both trade liberalization and the GATT principle of nondiscrimination, I dove enthusiastically into the preparations for these negotiations.
My interactions with the Washington representatives of the EC countries and Japan sometimes continued, on a more congenial basis, into our weekday evenings, when we were invited guests at dinners hosted by one of their embassies. These dinners, which always ended promptly by ten so that people could be at work early the following morning, generally featured formal dress and boringly predictable menus. Bob was convinced that there was a huge subterranean central kitchen somewhere under the city, whence filet mignon, roast potatoes, and tiny green peas were sent through a network of pneumatic tubes to various embassies throughout Washington.
Whatever the menu, the conversations at these dinners were always stimulating. Where else could one have the deputy director of the National Security Council on one side and the elegant Count Etienne Davignon—a leading figure in the evolution of both the North Atlantic Treaty Organization (NATO) and the European Economic Community—on the other? Nor were all the gatherings of official Washington so formal. Don and Joyce Rumsfeld, in those days the young, ambitious but not yet affluent parents of three young children, gave parties in the garden of their small Georgetown house at which many of the administration's leading lights could be found drinking beer and munching on increasingly soggy popcorn and potato chips.
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