by H. W. Brands
Turner offered to brief Reagan during the coming weeks on the world’s trouble spots, both when the president-elect was in Washington and when he was in California. The latter location presented certain dif ficulties, as there were no secure communications facilities near the Reagan ranch, and the PDB had to be very carefully guarded. But the agency would work something out.
Turner broached the issue of funding for the CIA. Meese and the others were receptive. “Meese asked that we prepare our ‘wish list’ for the new Administration,” the note taker wrote. Turner responded by inviting the Reagan team to Langley to meet with the rest of the agency leadership. They said they would be happy to do so, time permitting.
Agency officials spent the next week preparing for their first session with Reagan, which took place in a meeting room across the street from the White House. George Bush accompanied Reagan, to the delight of the CIA officials, who remembered Bush fondly for his stint as agency director in the mid-1970s. Meese, Allen, and Casey were also present, as was James Baker. Turner opened the meeting with a mission description of the CIA and the other branches of the intelligence community. He segued to conditions in the parts of the world that posed current challenges to American policy: the two-month-old war between Iraq and Iran, the year-old Soviet war in Afghanistan, the ongoing Iranian revolution. He spoke on possible ramifications of these developments for Saudi Arabia, Israel, and the rest of the Middle East.
A second meeting was convened the next day. At this session Turner and his aides briefed Reagan, Bush, and the others on Poland, where the Solidarity trade union movement had launched a surprisingly successful campaign of opposition to the Polish government; Nicaragua, where the ruling Sandinistas were driving the country toward the left; and El Salvador, where a conservative government was struggling to forestall a Sandinista-style revolution. Turner also discussed the military balance between NATO and the Warsaw Pact countries. He intended to talk about the condition of the Soviet economy, but demands on Reagan’s time cut the meeting short.
Turner was pleased with the sessions. “The briefings in general went well,” his assistant recorded. “There were a number of questions, mostly from Ambassador Bush and Mr. Allen. Governor Reagan’s questions went largely in the direction of ‘what can we do about it?’ ”
Reagan received another briefing in December. Turner again conducted the session. Meese, Casey, and Allen once more accompanied Reagan, though Bush did not. The lead topic this time was the Soviet economy. For decades the CIA had been monitoring the economic performance of the Soviet Union. During the 1950s the communist model appeared to be working reasonably well, at least in terms of delivering overall economic growth. Soviet growth outstripped American and made plausible the Kremlin’s claims to newly independent countries that the communist road was the one that led to the future. Lately, however, the Soviet economy had faltered and its growth curve flattened. “Economic prospects are gloomier and policy choices more difficult than at any time since Stalin’s death,” agency analysts wrote in a report that informed the briefing Reagan received. Industry was lagging, and agriculture had suffered consecutive failures. “Moscow’s basic problem is that the formula for growth used over the past 25 years—maximum inputs of labor and investment—no longer works.”
The CIA’s chief interest in this was that the stagnant Soviet economy constrained Moscow’s choices in foreign policy. The Soviet hold on Eastern Europe was only partly military; Soviet economic aid played a large role as well. Aid would come harder for the Kremlin in the future, and Soviet influence might diminish. Of greater direct importance to the United States, the economic troubles limited Moscow’s ability to keep up with America in the arms race. Soviet leaders might devote a larger share of national production to defense, but they would have to steal from the consumer sector to do so. This would antagonize ordinary citizens. Soviet citizens couldn’t vote, at least not meaningfully, but they could register their unhappiness in other ways. “Worker morale and productivity could drop sharply, further jeopardizing Moscow’s efforts to maintain even low rates of economic growth.”
The CIA analysts predicted no major policy shifts by the Kremlin during the next few years. But in the longer term the status quo was unsustainable. “Soviet economic problems are too severe.” By the mid- to late 1980s the Kremlin would be forced to choose between two alternatives. The first was more of the painful same. “Moscow could impose more austerity at home to support military spending. Consumption would suffer greatly.” The Kremlin would probably claim new danger from the West or China in order to justify this course. The other path was toward reform. “A new generation of leaders, less committed to the status quo, might come to power and view a change in resource allocation policy in favor of consumers as a more viable way of maintaining ‘superpower’ status.” The change of leadership might come soon. “Brezhnev is in poor health and most of those who hold key positions are in their seventies.”
The record of Reagan’s briefing did not describe his reaction to the CIA’s assessment of Soviet prospects. He apparently listened and kept his thoughts to himself. But he couldn’t help taking heart from the troubles the communists were experiencing. “My theory of the Cold War is: We win and they lose,” he had said to Richard Allen earlier. At that time he had been able only to guess how broken the Soviet economy was. Now he knew, and he had reason to hope victory might be closer than he had imagined.
35
REAGAN AND NANCY awoke on January 20, 1981, at Blair House, across Pennsylvania Avenue from the White House. At nine thirty they attended a brief service at St. John’s Episcopal Church, around the corner on the north side of Lafayette Square. “We sat in George Washington’s pew,” Nancy remembered, “and I couldn’t help feeling history closing in on us that morning.”
Jimmy Carter had the same feeling, amplified. Carter considered himself far more competent to be president than Reagan, and he still resented his loss in the election. His attitude didn’t improve amid final round-the-clock efforts to free the hostages in Iran. A deal was near, but the Iranians appeared determined to deny him the victory of winning their freedom while he was still president. Nancy Reagan sympathized with the departing chief executive. “President Carter had been up all night working on the Iran hostage situation—and it showed,” she observed. “It was impossible not to feel for him.”
Reagan was less charitable. He described the ride to the Capitol: “The atmosphere in the limousine was as chilly as it had been at the White House a few days before when Nancy and I had gone there to see for the first time the rooms where we would be living. We’d expected the Carters to give us a tour of the family quarters, but they had made a quick exit and turned us over to the White House staff. At the time, Nancy and I took this as an affront. It seemed rude.” Retrospect softened Reagan’s conclusion. “Eight years later I think we could sense a little of how President Carter must have felt that day—to have served as president, to have been through the intense highs and lows of the job, to have tried to do what he thought was right, to have had all the farewells and good-bye parties, and then be forced out of the White House by a vote of the people. It must have been very hard on him.”
THE LIMOUSINE ARRIVED at the Capitol, and Reagan stepped onto the largest stage in America. Half a million people had come to see the new president inaugurated. Their approach clogged the streets and overwhelmed the Washington subway system, compelling the attendants to throw open the turnstiles and let riders in free lest the system break down entirely. Even then they threatened its structural integrity; at the stop nearest the Capitol, passengers reported a shaking that felt like an earthquake.
As the noontime ceremony neared, the throngs crowded onto the National Mall, west of the Capitol. Since the nineteenth century presidents had been inaugurated on the Capitol’s east side, but Senator Mark Hatfield of Oregon, the chairman of the congressional committee on the inauguration and, like Reagan, a westerner, decided that the time had come for the new p
resident to take his oath on the opposite side, the side facing the direction that had always signified the American future. Reagan happily endorsed the innovation, which allowed him to speak to an audience larger by far than any he had ever addressed in person, larger than any addressed by more than a handful of speakers in all of human history.
He couldn’t have scripted a better setting, nor cued the lighting more dramatically. The warmth of the morning had broken records for the date in Washington, but clouds covered the sky until the moment Reagan stepped forward, when the sun burst through in cinematic glory. He took his oath from Chief Justice Warren Burger; Nancy held Nelle Reagan’s Bible as Nelle’s son laid his hand on it and swore to preserve, protect, and defend the Constitution.
Reagan turned to deliver his inaugural address. He paused to absorb the moment. Perhaps he remembered when Nelle had first put him onstage. Perhaps he recalled the music he had heard when his first audience applauded. This crowd was immensely larger, and the music far more powerful. He couldn’t see Illinois from where he stood, but he could see where his fellow Illinoisan, Lincoln, sat in marble splendor two miles down the Mall. Between them spired the monument to George Washington. In the foreground were the hundreds of thousands of ordinary Americans who had come this day not to see Lincoln or Washington but to see him. They waved American flags; they shouted his name. Their hopeful faces looked upward at him as he began to speak.
He offered a grace note. He cited America’s long tradition of peaceful transfers of power from one party to the other, even amid grave trials. He nodded to Carter with greater warmth than he felt, and he thanked his predecessor for his cooperation during the transition.
He returned to the themes of the campaign, the themes that had brought him to this time and place, the themes that had summoned this tremendous audience. The economy was in shambles, he said. He shook his head and frowned slightly. Inflation roared out of control. “It distorts our economic decisions, penalizes thrift, and crushes the struggling young and the fixed-income elderly alike. It threatens to shatter the lives of millions of our people.” Unemployment robbed millions of honest Americans of their dignity and hope. Government punished the rest with rising taxes. Yet the tax take couldn’t keep up with government’s appetites. “For decades we have piled deficit upon deficit, mortgaging our future and our children’s future for the temporary convenience of the present.” This destructive, demoralizing trend could not continue; the deficit must be tamed.
Reagan knew a sound bite when he spoke it, and he could envision himself on the evening news when he declared, “In the present crisis, government is not the solution to our problem; government is the problem.” He let his audience ponder the meaning of his sentence: the just-inaugurated head of the American government was declaring war on that government.
He went on to explain that special interest groups had captured the government and turned it to their own ends. He said he spoke for a broader interest group: the American people. He promised to do the American people justice by restraining government. He added that he would be more respectful of the rights of the states. “All of us need to be reminded that the federal government did not create the states; the states created the federal government.”
Some of the new president’s listeners doubtless wondered at this last assertion, especially coming from a former governor of California, which had indisputably been created by the federal government. But Reagan rolled on. He derided those who said America’s best days were past. On the contrary, national renewal required only a summoning of the valiant spirit that had built the country. “We have every right to dream heroic dreams,” he said. Heroism was in America’s genetic code, the inheritance as fully of ordinary Americans as of the great figures of American history.
He looked again across the Mall. He gestured toward Lincoln and Washington. He lifted his gaze. “Beyond those monuments to heroism is the Potomac River,” he said, “and on the far shore the sloping hills of Arlington National Cemetery, with its row upon row of simple white markers bearing crosses or Stars of David.” Each marker signified exemplary service to America. “Under one such marker lies a young man, Martin Treptow, who left his job in a small town barbershop in 1917 to go to France with the famed Rainbow Division. There, on the western front, he was killed trying to carry a message between battalions under heavy artillery fire. We’re told that on his body was found a diary. On the flyleaf, under the heading ‘My Pledge,’ he had written these words: ‘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.’ ”
The crisis now facing America did not require the degree of sacrifice made by Martin Treptow, Reagan said. “It does require, however, our best effort and our willingness to believe in ourselves and 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.”
36
DAVID STOCKMAN HADN’T expected to join the shock troops of the Reagan revolution. “Ronald Reagan?!” he spluttered when his political mentor Jack Kemp, Republican congressman from New York, said he was not going to run for president in 1980 but instead was joining the Reagan team. “Jack, I can’t believe you’re hooking up with Reagan.” Stockman later explained his astonishment: “The man was more ancient ideologically than he was in years. I considered him a cranky obscurantist whose political base was barnacled with every kook and fringe group that inhabited the vasty deep of American politics.”
Stockman, like many other neoconservatives, had commenced public life in the tall grass on the radical left of American politics; like them he cared little for the social issues that inspired much of the Republican right. “I didn’t give two hoots for the Moral Majority, the threat of unisex toilets, the school prayer amendment, and the rest of the New Right litany,” he said. These distracted from the overriding dual issue of the time: “How do you get a prosperous economy and hold off the Russians?” In fact, the social issues were worse than a distraction; they were a contradiction. “I didn’t believe in economic regulation and I didn’t believe in moral regulation.”
Neither did Kemp, Stockman knew. This was what made his association with Reagan so shocking. “He was aligning himself with Jerry Falwell, the anti–gun control nuts, the Bible-thumping creationists, the anti-Communist witch-hunters, and the small-minded Hollywood millionaires to whom ‘supply side’ meant one more Mercedes. So there I was, thinking, ‘How is this antediluvian going to help us? He’s exactly what the establishment needs to discredit our ideas.’ ”
The establishment, the nexus of Washington insiders and crony capital, was, to Stockman and his fellow supply-side theorists, the enemy of America’s regeneration. Supply-side economics defined itself in opposition to the demand-side economics of John Maynard Keynes and of the American government during much of the period since the 1930s. The demand-siders contended that ensuring sufficient demand would keep the economy growing and the country prosperous. When private demand fell short, as during the Great Depression, the government should step in with public demand. The supply-siders said this approach was bound to fail, for the country inevitably became addicted to government spending. As with other addictions, they asserted, government spending had to be administered in ever larger doses to prevent withdrawal. The supply-siders’ evidence was the economy’s recent and present abysmal performance, with its record inflation and almost unprecedented unemployment.
The solution, the supply-siders said, was to focus on the other half of the supply-demand equation. The supply-siders rejected the Keynesian contention that capitalist economies inherently experience booms and busts; they blamed depressions and other ills on the meddling of government. The answer was not to create artificial demand but to ensure soundness on the supply side. As Stockman delineated the supply-side agen
da, “The establishment had to be taught that you couldn’t stop inflation with wage and price controls; you had to stop printing money. It had to be taught that you couldn’t create economic growth by expanding the welfare state; you needed to start dismantling it and cutting taxes.”
Stockman knew Reagan merely by reputation, and he couldn’t imagine that the former actor grasped the essentials of supply-side economics. But Kemp said he did. “Reagan had been successfully ‘converted,’ ” Stockman recounted. “There had been a powwow out in California on the eve of the day-to-day primary campaigning. Ed Meese decided the governor should be drilled on supply side—so he’d get the basic message down.” Kemp arranged for Reagan to meet supply-siders Jude Wanniski and Art Laffer. “According to Jack, they’d spent days out there with Reagan, discussing the gold standard, the tax cut, supply-side theory, economic growth, the whole enchilada. And Governor Reagan had responded enthusiastically. Kemp said he had an intuitive ‘feel’ for the Laffer curve”—a theoretical graph showing that reducing tax rates could increase tax revenues by stimulating economic activity. “ ‘He’s ninety percent with us,’ Kemp enthused.”
This wouldn’t have been such a revelation had Stockman or Kemp bothered to read what Reagan had been saying and writing for decades. Reagan wasn’t a goldbug, but he had long preached the virtues of smaller government and lower tax rates, not simply for individual liberty, but also for economic growth.