An American Life

by Ronald Reagan

  During the 1976 campaign, Carter had come up with what he called the “misery index” to attack Gerald Ford. He’d added together the rates of inflation and unemployment (it had come to something like twelve percent), called it the misery index, and claimed no man responsible for giving the country a misery index that high had a right to even ask to be president. Well, he didn’t mention the misery index in 1980, probably because it was then more than twenty percent.

  I was anxious to get Carter into a nationally televised debate, but his people wouldn’t go for it. In late September, John Anderson, who was running as an independent candidate, and I had a televised debate in Baltimore but Carter stayed out of it. Stu Spencer said that if we kept challenging him to a debate, sufficient public pressure would eventually build up on him and he would be forced into a debate; but from our point of view, the timing of the debate was critical: The closer it was to election day, the more impact it would have.

  When Carter finally agreed to a debate, the date was set for October 28, one week before the election, and we were delighted. The debate went well for me and may have turned on only four little words.

  They popped out of my mouth after Carter claimed that I had once opposed Medicare benefits for Social Security recipients.

  It wasn’t true and I said so:

  “There you go again . . .”

  I think there was some pent-up anger in me over Carter’s claims that I was a racist and warmonger. Just as he’d distorted my view on states’ rights and arms control, he had distorted it regarding Medicare, and my response just burst out of me spontaneously.

  The audience loved it and I think Carter added to the impact of the words by looking a little sheepish on the television screen.

  To me, the finish of the debate was probably more significant: In my closing statement, I asked people if they thought they were better off now than they had been four years earlier. If they were, I said they should vote for my opponent; if not, I said I thought they’d agree with me that it was time for a change.

  After a final week of campaigning, Nancy and I returned to Los Angeles for election day and to await the people’s decision. It was our tradition to have dinner on election night with a small group of old friends at the home of Earle Jorgensen, who’d been a member of my Kitchen Cabinet in Sacramento, and then drive over to our campaign headquarters to wait out the returns.

  Late that afternoon, I was in the shower, getting cleaned up for the evening, when Nancy, who’d already taken her bath and was wrapped in a towel, came into the bathroom and shouted above the drizzle of the shower water that I was wanted on the telephone.

  “It’s Jimmy Carter,” she said.

  I turned off the water and got out of the shower and dried off a little, then grabbed an extension phone in the bathroom while Nancy stood beside me.

  After listening for a few minutes, I said, “Thank you, Mr. President.”

  Then I hung up the phone and looked at Nancy and said, “He conceded. He said he wanted to congratulate me.”

  Instinctively, she gave me a big hug and I hugged her.

  The polls in California wouldn’t even close for another two hours. But standing in my bathroom with a wrapped towel around me, my hair dripping with water, I had just learned I was going to be the fortieth president of the United States.

  PART TWO

  The First Year A New Beginning

  36

  SHORTLY BEFORE NOON on January 20, 1981, Nancy and I left Blair House, the Washington guest house for visiting heads of state, and were driven through the gates of the White House and up to the North Portico.

  Jimmy and Rosalynn Carter were waiting for us, and a few minutes later, by tradition, he and I got in one car and Nancy and Mrs. Carter got in another for the drive to the inaugural ceremonies.

  As we drove up Pennsylvania Avenue, the limousine was very quiet. The president and I were seated side by side. Although he was polite, he said hardly a word to me as we moved slowly toward the Capitol, and I think he hesitated to look me in the face.

  Perhaps he felt drained after having been up most of the previous night trying to complete negotiations to free the hostages in Iran. Whatever the reason, 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. But 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 to be forced out of the White House by a vote of the people. . . . It must have been very hard on him. One of the great things about America is how smoothly we transfer presidential power, but after having lived in the White House, and having left it, I can understand how sad it must have been for Jimmy and Rosalynn Carter that day.

  For the first time, the inauguration was being held on the west side of the Capitol. When we arrived, tens of thousands of people were already waiting on the Capitol grounds and streaming down the Mall in a great river of humanity. Flags and bunting were everywhere. In the distance above the people was the glittering white column of the Washington Monument and, beyond it, at the far end of the Mall, the Lincoln Memorial sparkled under the overcast sky like a beautiful diamond. Off to one side I could see the soft white dome of the Jefferson Memorial.

  Those monuments, all those people—it was an unforgettable sight.

  George Bush was sworn in as vice president and then it was my turn. As I took my place, the sun burst through the clouds in an explosion of warmth and light. I felt its heat on my face as I took the oath of office with my hand on my mother’s Bible opened to the seventh chapter, fourteenth verse of Second Chronicles: “If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.”

  Next to these words my mother—God rest her soul—had written: “A most wonderful verse for the healing of the nations.”

  Because it was on the minds of so many Americans, I devoted a good deal of my inaugural address to the state of our economy:

  The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks or months, but they will go away. They will go away because we as Americans have the capacity now, as we’ve had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom. In the present crisis, government is not the solution to our problems; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden . . . it is my intention to curb the size and influence of the federal establishment and to demand recognition of the distinction between the powers granted to the federal government and those reserved to the states or to the people; all of us need to be reminded that the federal government did not create the states, the states created the federal government. . . in the days ahead I will propose removing the roadblocks that have slowed our economy and reduced productivity. Steps will be taken aimed at restoring the balance between the various levels of government.

  Progress may be slow, measured in inches and feet, not miles, but we will progress. 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, and on these principles there will b
e no compromise. . . .

  My inaugural address ended the ceremonies and we went into the Capitol for lunch with members of Congress and other guests. On the way to lunch, I stopped in a room in the Capitol called the President’s Room and performed my first official act as president: I signed an executive order removing price controls on oil and gasoline, my first effort to liberate the economy from excess government regulation.

  At lunch, I was able to announce that President Carter’s efforts to free the fifty-two Americans held hostage for 444 days in Iran had been successful, and that the plane carrying the hostages had just crossed the border and was no longer in Iranian airspace. Jimmy Carter was already on his way home to Georgia, and my heart went out to him: I wished he had had the chance to make that announcement.

  After lunch, we drove back to Pennsylvania Avenue and took our seats on a temporary grandstand that had been set up on the front lawn of the White House. From there we watched the inaugural parade. One of the bands was from Dixon High School, and for a moment or two I had a vision of the school, the main street in Dixon, Lowell Park, the lush cliffs overlooking the Rock River.

  Then, with the parade over, Nancy and I headed toward the front door of the White House.

  With its iron-grille fence and acres of green lawn, the big white mansion had had a mystical, almost religious aura for me since I was a child. I had first visited there when Harry Truman was president as part of a delegation of motion-picture labor leaders and then had come back when I was governor, when Lyndon Johnson and later Richard Nixon were president. But nothing had prepared me or Nancy for the emotion we felt the first time we entered the White House as its legal residents.

  We walked through the front door, entering what’s called the State Floor—the section of the White House that is open to public tours—and then the two of us took an elevator to the second floor, to the rooms where we would be living.

  When the doors of the elevator closed behind us, we stood in a huge, long hall with a very high ceiling that extended almost the full length of the White House. On the west side of this hall, through an archway, we could see our new living room, and amazingly, our furniture from California was already there, welcoming us with a warm familiarity; it was the first example of the kind of minor miracle we later came to take for granted from the White House staff.

  I think it was only then, as Nancy and I walked hand in hand down the great Central Hall, that it hit home that I was president. We’d had the election, the election-night parties, the weeks of planning for my administration, the hours spent choosing a cabinet, then the pomp of the inaugural ceremony. But it was only at this moment that I appreciated the enormity of what had happened to me.

  Maybe it was just recognizing our own furniture in the White House that did it. Maybe it had something to do with being reminded of my childhood by the Dixon High marching band. The depth of the emotion we felt at that moment is hard to describe. It packed a wallop that made both of us misty-eyed.

  For so long, I had shared the reverence most Americans have for that historic building; back when I was a kid in Dixon, I’d imagined what the private part of the White House must be like; but I had never imagined myself actually living there. Now, we had gone in the front door, gotten on an elevator, and we were here to stay—at least for four years.

  If I could do this, I thought, then truly any child in America had an opportunity to do it.

  Still walking hand in hand, Nancy and I examined the rooms on the second floor that were to be our new home. We could almost feel the presence of those who had lived here before—Roosevelt, Truman, Eisenhower, Wilson, and others, especially Lincoln, whose bedroom was furnished exactly as it had been during the period when he lived in the White House. In it was a large, oversize wooden bedstead that Lincoln’s wife, Mary, was having made for her husband at the time he was assassinated; he’d died without ever returning to the White House. Next to the Lincoln bedroom, with an entrance opposite the grand staircase, was the Treaty Room, its walls lined with historic treaties and documents, including the Emancipation Proclamation. Off the great center hall of the family quarters, on the south side, was the formal living room, a thirty-by-forty-foot oval room opening onto the Truman Balcony.

  Even though we were faced with having to get into formal dress for the evening’s inaugural festivities, Nancy and I couldn’t escape a feeling of unreality as we went from room to room.

  Later, I peeked into the Oval Office as its official occupant for the first time. I felt a weight come down on my shoulders, and I said a prayer asking God’s help in my new job.

  That evening, we almost danced our feet off at ten different inaugural balls held all over the city of Washington. Then Nancy and I spent our first night in the White House.

  The next day, the celebrating was over and it was down to work. I had come to Washington with my mind set on a program and I was anxious to get started on it.

  37

  I DON’T KNOW WHAT I EXPECTED, but my first morning in the Oval Office had a surprising ring of familiarity to it. It reminded me a lot of my job as governor. On my desk was a schedule of appointments for the day; there were meetings with the cabinet, staff, and legislators; and outside my door were Ed Meese, Mike Deaver, and others who had been with me in Sacramento. There was another similarity: Just as I’d come to Sacramento when the state was facing its worst financial crisis in decades, I was arriving in the White House as the country was experiencing what many economists called its greatest economic emergency since the Great Depression.

  The most immediate priority was dealing with double-digit inflation, high unemployment, and a prime interest rate of 21.5 percent, the highest since the Civil War.

  As I’ve said, I believed that policies of the federal government reaching back for decades were mostly responsible for the problems. Although I knew we couldn’t turn things around overnight, I wanted to begin reversing those mistakes, and now I had a chance to try to do it. With my advisors, I had begun working on an economic recovery plan the first day after the election. The morning after inauguration day, at our first cabinet meeting, and at a meeting the following day of a team of specialists I had appointed to coordinate economic policy, we began the job of implementing the plan.

  Its basis was tax reform—reducing federal income tax rates from top to bottom. Simply put, I believed that if we cut tax rates and reduced the proportion of our national wealth that was taken by Washington, the economy would receive a stimulus that would bring down inflation, unemployment, and interest rates, and there would be such an expansion of economic activity that in the end there would be a net increase in the amount of revenue to finance the important functions of government.

  Excessive tax rates were at the heart of the problem. Back in the fourteenth century, a Muslim philosopher named Ibn Khaldoon wrote something about taxes in ancient Egypt: “At the beginning of the dynasty taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments.” In other words, when rates were low, the revenue was great; when rates were high, the revenue was low.

  During the 1980 campaign, a new term, supply-side economics, came into vogue. People said I embraced this theory, and several economists claimed credit for inventing its principles, which they said I had then adopted as the basis for my economic recovery program.

  To set the record straight, that wasn’t true.

  At Eureka College, my major was economics, but I think my own experience with our tax laws in Hollywood probably taught me more about practical economic theory than I ever learned in a classroom or from an economist, and my views on tax reform did not spring from what people called supply-side economics.

  At the peak of my career at Warner Bros., I was in the ninety-four percent tax bracket; that meant that after a certain point, I received only six cents of each dollar I earned and the government got the rest. The IRS took such a big chunk of my earnings that after a while I began aski
ng myself whether it was worth it to keep on taking work. Something was wrong with a system like that: When you have to give up such a large percentage of your income in taxes, incentive to work goes down. You don’t say, “I’ve got to do more pictures,” you say, “I’m not gonna work for six cents on the dollar.” If I decided to do one less picture, that meant other people at the studio in lower tax brackets wouldn’t work as much either; the effect filtered down, and there were fewer total jobs available. I remember one scene in the Knute Rockne picture that had only a farmer and a horse in it: Shooting it on location created work for seventy people.

  The same principle that affected my thinking applied to people in all tax brackets: The more government takes in taxes, the less incentive people have to work. What coal miner or assembly-line worker jumps at the offer of overtime when he knows Uncle Sam is going to take sixty percent or more of his extra pay?

  And the principle applies as well to corporations and small businesses: When government confiscates half or more of their profits, the motivation to maximize profits goes down, and owners and managers make decisions based disproportionately on a desire to avoid taxes; they begin looking for tax shelters and loopholes that contribute nothing to the growth of our economy. Their companies don’t grow as fast, they invest less in new plants and equipment, and they hire fewer people.

  Any system that penalizes success and accomplishment is wrong. Any system that discourages work, discourages productivity, discourages economic progress, is wrong.

  If, on the other hand, you reduce tax rates and allow people to spend or save more of what they earn, they’ll be more industrious; they’ll have more incentive to work hard, and money they earn will add fuel to the great economic machine that energizes our national progress. The result: more prosperity for all—and more revenue for government.