Early in his presidency, Ronald Reagan caused a stir in the media when he hung in the White House Cabinet Room a portrait of Calvin Coolidge.
Coolidge had been persona non grata in the executive mansion since the Great Depression. Franklin Roosevelt's followers blamed his policies for the economic catastrophe. By the early 1960s, with the work of Milton Friedman and others, it was becoming clear that the Roosevelt rap on Coolidge was a bum one, but still politicians kept their distance. Until Reagan.
As he had said in a 1975 radio essay (reprinted in Reagan In His Own Hand, edited by Kiron Skinner, Annelise Anderson, and Martin Anderson ), Reagan admired Coolidge's tax-rate and budget cuts and the prosperity they produced. As president, he held up Coolidge's economic policies as a model for his own. So he embraced the taciturn New Englander.
But the media took almost no notice of the other new Cabinet Room portrait. Staring back at Coolidge from the far end of the long, narrow chamber was a painting of Dwight Eisenhower, whom Reagan also extolled in that 1975 broadcast. And not just in the Cabinet Room: a photograph of the former president also sat on the table behind Mr. Reagan's Oval Office desk; and in the president's private study next door, a bust of Eisenhower stood on a table near the president's favorite chair.
Eisenhower was the only past chief executive represented in all three rooms. Why?
Yes, the 34th president had, as Reagan's radio talk put it, "halted dead in its tracks the advance of communism." Yes, as Supreme Allied Commander in World War II, he had helped create the coalition of democracies that, with the Soviet Union, beat the Axis powers and, though frayed, was standing against the Soviet Union in the Cold War. As part of his approach to ending the long, twilight struggle, President Reagan was seeking to reinvigorate that coalition.
But Eisenhower may have appealed to his successor in another way. As president, he presented an avuncular, sometimes befuddled manner to the media. Yet behind the mask, he was sharp, exacting, driven, a precise speaker and close editor, an accomplished coalition builder and canny negotiator, a penetrating strategist.
Early in Reagan's first term, the duality of Ike's public and private faces received considerable attention with the publication of Fred I. Greenstein's The Hidden-Hand Presidency (1982). Greenstein detailed how a president the intelligencia so disdained was smarter than critics imagined. Some reviewers even suggested that in this respect Reagan might be like Ike. Soon, however, any such high opinion of Reagan faded. Peter Sellers's simple-minded gardener, mistaken as sage and leader in the movie Being There (1979), was the more telling comparison according to most professors and commentators. How wrong they were.
My first contact with candidate Reagan came when he visited New York City early in 1980. A volunteer spending all my free time on the campaign, I was assigned to go to Newark Airport to help move the former governor and his entourage to a midtown fundraiser. The campaign had bused about thirty volunteers to the terminal to cheer Reagan as he emerged from the jet-way. Mostly older women, they squealed like teenyboppers when he walked down the ramp. He shook hands through the little crowd, then said, "They tell me I have to go." Wait, I thought. No one has told him anything. But then I saw: good news comes from "me"; bad news comes from "them."
By this point in my life, I had worked with and been around numerous governors, members of Congress, and other political figures. I knew how politicians operated. And I saw something different in the way Reagan handled the minor matter of breaking from this small group. The task was routine. The style and tact in his execution of it were not. More than with any political figure I had known, this man appeared to calculate and calibrate every nuance of personal interaction.
For Reagan, seeing and touching the individuals in the crowd were essential to his approach to the theory and practice of politics. In his famous 1964 television speech supporting Barry Goldwater, Reagan quoted a left-wing senator to the effect that government should help "the masses." He replied, "Well, I, for one, resent it when a representative of the people refers to you and me, the free men and women of this country, as ‘the masses.'" In Hollywood he was an assiduous answerer of fan mail. Even in the White House, he remained in correspondence with a woman who had, as a young girl, headed a Ronald Reagan fan club. As governor and president, he continued the practice, taking big handfuls of letters that were normally answered by a correspondence unit and responding to them himself.
Former Reagan aide and speechwriter, now California congressman, Dana Rohrabacher, tells of a campaign stop involving a grade school class of blind children. After reporters had left for their bus, Reagan stayed behind and asked the teacher if the children would like to feel his face. The teacher said they would be thrilled. So for a few minutes, without publicity, the children got to "see" him in the only way they could.
But in addition to Reagan's measuring the individuals who made up his audience, I first glimpsed in that Newark moment a second quality—a pervasive, almost preternatural self-discipline. As I realized later, like Eisenhower—indeed like Washington and Lincoln—Reagan had disciplined himself to turn his public face into a tool at the service of those private calibrations.
Reagan's storytelling was part of his public persona. In speeches, he used humor and anecdotes to make points. But in small gatherings, what might be called an economy of the story (that is, an exchange of value) was often at play. White House aides would become exasperated in meetings with outsiders as the president told tales they had sat through frequently before. They never considered the dynamics of those meetings. The president heard whatever the visitors had come to say. He absorbed their information, opinions, or requests (the value he derived from the meeting). Meanwhile, his stories left his guests feeling responded to and confided in (the value they derived). He did this without saying anything that might surprise or embarrass him if it appeared in the press, or that committed him to policies he might think better of later. Both sides gained. He risked nothing.
Reagan had numerous devices for controlling risk. These included the famous staff-prepared talking points for even trivial events and the tape on each stage floor telling him where to stand. He expected staff to think through every detail of an appearance.
It was widely known that the formal White House staffing system put the president last in line to see most speech drafts. Few knew that he put himself first for reviewing the most sensitive addresses, especially ones dealing with the Soviet Union. This was true of at least one of the Soviet-specific speeches I drafted. It was true of Peter Robinson's 1987 "Tear Down This Wall" draft. Only after the president had seen them were the texts distributed, when, for Soviet speeches in particular, furious fights often developed. With others carrying the battle, the president would remain politically untouched. But he had already set the boundaries for an acceptable outcome. In the case of "Tear Down This Wall," the chief and deputy chief of staff, communications director, and speechwriters knew he had marked as untouchable the call for dismantling the Berlin Wall—but only they knew.
Baffled biographer Edmund Morris wrote of Reagan arriving at the Oval Office for a live television address. The president was fidgety, Morris recalled, until his eyes caught the monitor for a camera trained on him. "Ah, there he is," Reagan said. "Who, then, is Reagan?" Morris reported asking himself. Morris is among those who have fueled the myth of Reagan as a man with no close friends. Yet I have listened to at least two men alive today who regard the former president as among the closest friends of their lives, and they among his. But both are roughly Reagan's age, became close to Reagan well before he entered politics, and enjoyed successful careers in the entertainment industry. They are not politicians, journalists, staffers, or official biographers, all people privy only to Reagan's public face.
In the space between the public face and the man behind it was the key to Reagan's reading of the American people, the challenges before him, and the temper of his times. He used his public persona to embody themes of optimism, resilience, and common purpose (even with Tip O'Neill and, in advanced stages of their negotiations, the Soviets), to diffuse differences within his team and coalition, to disarm adversaries, and to give himself greater room for deliberation and decision. Yes, he pursued principle. But prudence informed principle, and prudence shaped that public face.
Big Unit Economy
Reagan assumed the presidency in a time of crisis, a time that would demand all the steel and guile that he could summon. On the day he was sworn in, two old orders dominated national and global stages. One had served the country, but its time had passed. National policy needed to adjust. The other was a mortal threat. Eight years later, the first was dethroned, the second close to annihilation.
Few in 1981 imagined such upheavals were possible. But it is clear that Reagan did. Steven F. Hayward has written of Reagan's insight (The Age of Reagan: 1980-1989 ). "Insight is discovery, not deduction," he notes, "it shares the same element of genius that creates great new art." The defining qualities of the Reagan presidency were the president's insight into how both nation and world could and should transform, and his skill in instigating and directing that transformation.
The first old order was what Michael Barone has called the "big unit" economy: Big Business, Big Labor, and Big Government. This triumvirate had shaped the largely successful taxing, spending, monetary, and regulatory policies of the post-war 1950s and '60s, policies that ceased to work in the 1970s.
The day Reagan took office U.S. inflation reached 13%; interest rates, 21.5%—numbers not seen since the Civil War. Since the mid-1960s, most American economists had believed that unemployment and inflation seesawed against each other. If prices rose, joblessness would drop, and visa versa. But by January 1981, with unemployment at 7.5%, both were high, a phenomenon dubbed "stagflation," that is, stagnation combined with inflation.
A few years earlier economists had boasted that modern theory had conquered the business cycle; but now the economics profession was gripped with near panic. A prominent policy journal—The Public Interest—devoted an issue to what it called "The Crisis of Economic Theory." It invited a wide range of scholars to contribute explanations of the predicament and prescriptions for escaping it. As the submissions made evident, the neo-Keynesian consensus of the prior decade had vanished. No one could agree on what to do.
Looking back, the source of America's late '70s economic malaise seems simple: the post-World War II period was over. The time for the economic policies that defined the period was done. For all their success providing a foundation for the U.S. postwar boom and the reemergence of Europe and Japan, the expansive monetary practices, wide-reaching economic regulation, and redistributionist taxing and spending born of the Great Depression and the war could no longer be sustained.
The package had worked for a time, once FDR's capricious prosecutions (detailed in Amity Shlaes's The Forgotten Man ) stopped with Eisenhower's inauguration. Taken together, U.S. post-World War II policies sharply favored consumption over investment. They combined to pull in global goods and push out American capital, in the process restoring global and, in particular, European and Japanese liquidity. And for that reason, one unappreciated in any quarter, they worked for the U.S. economy, too. Real incomes increased; real personal wealth expanded.
But by the early 1970s, Europe and Japan had recovered. Other regions had not yet adopted the secure, easily established and readily transferable rights of property, impartial rule of law, and deference to free markets that would have allowed them to ingest and digest excess American liquidity. So formerly successful policies turned corrosively inflationary.
In 1972, President Richard Nixon reacted to the resulting turbulence in the currency markets and cut the dollar free from gold. Within two years, the oil exporting countries, attempting to protect their real incomes in their dollar-denominated trade, imposed steep spikes on crude petroleum prices. Their actions signaled the start of the nearly decade-long inflation crisis of the 1970s, the only peacetime inflation crisis in U.S. history.
Meanwhile, even after the Kennedy income tax cut of the early '60s, both personal and corporate tax rates remained near historic highs. But following the unprecedented upheavals of the Depression and the war, the U.S. domestic market was still expanding back into itself. It required much more demand than investment, in keeping with the policies of the period. At the same time, 19th- and early 20th-century large-scale manufacturing techniques and processes still dominated the productive scene.
In this almost ideal environment for relying on big, long-established corporations to fuel growth, high tax rates produced less drag than in other periods. When tax rates are elevated, it is smaller and younger companies, with their more expensive cost of capital, that are priced out of the financial markets. Heavy economic regulations work the same way. Big companies can afford them. Smaller companies cannot. But by the mid-'70s, reliance on established enterprises was no longer sufficient. Impressive yet inagile firms faltered in the unstable environment. More adaptive entrepreneurial companies became an increasingly essential driver of national economic growth. High taxes and New Deal-era economic regulations turned increasingly dysfunctional.
Ronald Reagan had enjoyed success in the big unit economy, excelling in big corporations (the movie studios and, as a spokesman, General Electric) and big labor (as president of the Screen Actors Guild). Yet he understood the emerging entrepreneurial economy before almost any major political figure. Asked in the 1980 campaign about the apparent lock on corporate board rooms enjoyed by another GOP candidate—former Nixon Treasury Secretary John Connally—he replied: fine, I'll appeal to small businesspeople; there are a lot more of them. As president, he recast American policy to foster the developing metamorphosis.
The subsequent change has been profound. According to a recent study from the Ewing Marion Kauffman Foundation, in the quarter century after 1980, five-year-old or younger companies created nearly all of the nation's net new jobs. It would not be too much to say that the reason for the failure of the Obama Administration's economic policies to date is that they do not fit this new world. The reason for the success of the Reagan Administration's policies was that they did—and in fitting it, helped to create it.
The second old order was, of course, Soviet Communism. Reagan's critics now dismiss his role in the fall of the USSR, saying that the impetus came from the last Soviet leader, Mikhail Gorbachev, and that the Soviet Union would have collapsed anyway.
For Reagan defenders, it is easy enough to cite famously misguided statements of leading Reagan critics from as late as the mid-1980s. Men like Arthur Schlesinger, Jr., and John Kenneth Galbraith assured us of the Soviet system's stability, longevity, and even superiority. But more to the present point, the idea that the Soviet Union was doomed assumes that the Soviet leaders were passive players. They were not.
By the late 1970s, the Soviets had evolved a global strategy that would have left them in effective control of the entirety of Europe, winners of the Cold War. They had begun pouring resources into insurgencies at the mouth of the Red Sea and the lower quarter of Africa-chokepoints in Western Europe's access to supertanker-delivered Middle Eastern oil. They were organizing and supplying other insurgencies in Central America, and, if these had succeeded, destabilizing Mexico was the obvious next objective. Meanwhile, Soviet sponsored "peace" movements had intimidated President Jimmy Carter into canceling NATO deployment of the neutron bomb. Soon they would attempt to block basing in Western Europe of U.S. Pershing missiles, NATO's response to the Soviets' SS-20 deployments in Warsaw Pact countries. Unstopped, by the late 1980s these Soviet initiatives would likely have produced a stranglehold on Western Europe's economy, an effective veto over NATO weapon deployments, shattered credibility of the U.S. nuclear umbrella over Europe, and pressure to move our troops out of Europe to our southern border.
So by 1981, the Soviets were rushing toward what Commentary magazine editor Norman Podhoretz characterized as the "Finlandization" of Western Europe, not outright occupation but hegemony, in the manner of Soviet hegemony over Finland.
Instead, on Christmas Day one decade later, the Soviet Union ceased to exist.
Reagan frustrated the Soviet encirclement plans, meeting Soviet-sponsored insurgencies with counterinsurgencies, including arming the Afghan mujahedeen to defeat the Soviet military itself. He went forward with Pershing missile deployment. And he evolved an unexpected and devastating strategic approach of his own based on factors against which the totalitarians could not compete-free-world economic vitality, American technological innovation, and the human imperative of liberty.
Putting economic stress on the Soviet system—leading it, in Reagan's word, to "implode"—was central to the president's strategy. Hoover Institution fellow Peter Schweizer has found (Reagan's War ) that the concept of linking a military buildup with the goal of bankrupting the Soviet Union appeared in Reagan's statements reaching back several decades before he entered the Oval Office. According to Schweizer—who studied Moscow's own numbers when the Soviet archives were opened—the U.S. succeeded in pressuring the Soviet economy on numerous fronts: blocking a second line on the Russia-to-Europe natural gas pipeline; forcing the Communists to fund operations against U.S.-backed guerrillas; forcing them to try to match the U.S. arms buildup; forcing them to bear the costs of Reagan's technology-import restrictions against Communist countries; and driving down their revenues from oil sales, the result of price declines that were in part the product of U.S. diplomacy. This sample list alone imposed a burden on the Soviet regime of $36-44 billion a year.
Former British Prime Minister Margaret Thatcher has written that Reagan's missile defense plan, the Strategic Defense Initiative (SDI), tipped the balance. Its promise to make obsolete the Soviet Union's massive post-Cuban Missile Crisis investment in a first-strike capacity crushed the will of the USSR's leadership. But military historian Norman Friedman suggests (The Fifty Year War ) that SDI was just the most spectacular manifestation of a broader revolution in military affairs driven by application of the microchip to both weaponry and operations. The Soviets came to understand, he argues, that the information revolution would make their entire military establishment archaic and that their system left them incapable of matching it.
Meanwhile, Reagan made the case for freedom's superiority to Communism more insistently than any other Cold War president, not only in his own statements—beginning with his first press conference—but also through Radio Free Europe and every communication vehicle at his disposal. Russian and Eastern European dissidents of the period have since testified how much his words heartened them and helped them persevere, in the process driving up the cost and complexity for the Soviets of holding together their empire. Finally, in 1988, standing before the bust of Lenin at Moscow State University, in a speech written by Joshua Gilder, Reagan appealed to the Soviet people to join the community of normal nations.
Similarly he used communications directed at Great Britain and Europe to urge the democracies to stand firm. In the face of massive anti-American demonstrations throughout the continent, he pressed his case, in the process bolstering friendly leaders like Helmut Kohl. It was after victories at the polls for supportive governments in Britain, Canada, and Germany, as well as his own 1984 reelection, that the Soviets abandoned their strategy of domination, and in effect sued for peace.
The Great Negotiator
Reagan's success in turning grand strategy into beneficial results depended at the most crucial moments on his success in negotiating, whether with Congress or the Soviets. Reagan was—and regarded himself as—a master negotiator. His counselor and attorney general, Edwin Meese (in With Reagan ), reports that Reagan "had a definite theory" about negotiating "and prided himself on his abilities." As president, he frequently told of an incident from his Screen Actors Guild days. Negotiations with the studios had just finished. He and his team retired to assess the draft agreement. "We looked it over," he said, "and decided that some of what we'd got would be bad for the industry. So we returned to the room and gave it back."
It sounded like a Boy Scout's good-deed-of-the-day tale, but no Reagan story gives a clearer window to his amazing effectiveness on the national and world stages. Every union starts contract talks with three lists: the must-haves, the nice-but-not-essentials, and the there-to-give-aways. Against the studios, Reagan had worked so far into the "give aways" that he had reached the "we'll ask, but under no circumstances do we want."
One Soviet official summed up Reagan's negotiating style saying: "He takes you by the arm, leads you to the edge of the cliff, and then invites you to take a step forward for the good of humanity." But there was more to it than that. He sought to enter talks with the strongest possible hand and to weaken that of his opponent. This meant aggressive initial offers that also, as was often said inside the administration, "seized the moral high ground." His opening and ultimately successful bid on intermediate-range missiles in Europe was that the United States would not build such weapons if the Soviets would junk those they had already deployed. It had the moral appeal of eliminating an entire class of weapons but was so unbalanced that his chief negotiator, Paul Nitze, protested: How could he, Nitze, seriously propose such a one-sided offer? Reagan replied: "Just tell them that you work for one mean SOB."
Like a practiced union leader, which he was, the president used public opinion as a bargaining lever, then held out to the last moment before coming to terms. And although during actual negotiations he would stand behind the curtain as much as possible (another classic technique), he stepped forward when necessary to drive deals to a close or to jump-start stalled talks, as at Reykjavik. The U.S.-USSR arms talks of his term were among the final battlefields of the Cold War, central to the process that produced the peaceful collapse of the Evil Empire (a phrase coined by White House chief speechwriter Anthony R. Dolan). And final success on those battlefields turned—to a degree great events rarely do—on the strength, skill, and insight of one man of state, the chief American negotiator as well as the chief American strategist, the American president.
The lessons of this story are not novel, nor are they new. They tell the enduring tale of superior statesmanship. So many Aristotelian virtues are on display here, not in abstraction, but in dramatis personae, plot, and action—the focus of purpose; the contours of courage; the tempering by prudence; the aliveness to immediate moments, people, places; and yet the insight into unseen possibilities; most of all, perhaps, the ear for humanity's hidden heart.
So where does all this leave us, those who would carry his legacy today?
To gauge from the last few months, American conservatives have learned well the lesson of Reagan's clarity about principles. The question is, have we learned his other lessons?
Much is made of his years touring General Electric facilities. Sometimes he addressed more than ten audiences a day, a crushing schedule. But the real value of that time for him was not in what he said but what he heard. He questioned the workers who questioned him. What did they think of the state of the republic, of its leaders, of its direction and ways? What did they want the future to hold for themselves, their families, and the country they loved? As much as the rigorous study of economics, history, and philosophy that we now know he was putting himself through, listening to those workers informed all he later did. Like Walt Whitman, he heard America singing. Do we?
If the 2010 election told us anything, it is that the American people want to reclaim Reagan's agenda of reducing government, elevating freedom, orienting our economy to the world of our times (not the 1930s, '40s, or '50s), and they want no flinching or self-delusion when facing global dangers. They want leaders who will stand and fight, but do it with intelligence and skill.
As Washington believed, as Lincoln affirmed, as Reagan reasserted, America remains the last best hope of humanity. Still today, as for 235 years, if we meet the challenges of self-government, others will follow; if we affirm life, liberty, and human dignity, others will take heart.
Here is the question that hangs in the air: Do we today have within ourselves the principles and prudence, the steel and guile, the sympathy and insight to do as well on our watch as Ronald Reagan did on his?