Reagan: The Life (82 page)

Marcos demanded to speak to Reagan directly. “The president, of course, couldn’t talk to him,” Laxalt recalled. Marcos unhappily settled for speaking to Laxalt. He asked for advice. “What would you do, Senator?” he said. Laxalt, on Reagan’s authority, told him it was time to give up power and leave the Philippines. “
There were long silences,” Laxalt recalled. “He was very emotional.” Marcos tried to bargain. He spoke of a compromise with Cory Aquino. Laxalt repeated his message, more firmly. “I was very direct,” Laxalt said. Marcos didn’t know what to say. “There was a long pause,” Laxalt recounted. “I thought he’d passed away on me.” When Marcos continued to bargain, Laxalt put the matter as succinctly as he could. “Mr. President, cut and cut clean,” he said.

Marcos did cut, but he didn’t cut cleanly. He fled Manila but tried to stay in the Philippines, forcing Reagan to let him know that this half-measure would not suffice. The United States would offer no protection against the wrath of the Philippine people as long as he remained in the country. Marcos and Imelda then accepted transport by the U.S. Air Force to Hawaii.

Reagan felt badly for the Marcoses. So did Nancy. “
I phoned President Marcos and Imelda,” he wrote in his diary some weeks later. “Nancy talked to her for an hour. They have not given up on returning to the Philippines and to the office which he claims is still his.”

The Marcoses settled for Hawaii. Marcos’s health declined, limiting his activities, but Imelda reprised her role as the center of attention, if on a smaller stage. “
She’s quite something,” an employee at an Oahu restaurant she frequented told a reporter. “She’ll make reservations for four, then she arrives with an entourage of nine or twelve, and more keep coming all evening to join the group.” A clerk at an upscale dress shop remarked, “She always gets very special treatment.”

D
ONALD
R
EGAN LEARNED
a great deal as chief of staff about Reagan that he hadn’t guessed as Treasury secretary. He discovered that the president had a passion for order and predictability. “
His daily schedule was the centerpiece of his life,” Regan wrote. “The scrupulous way in which he observed it, checking off each event with a pencil after it ended and preparing himself for the next, gave his life a regularity and a tangible measure of accomplishment that evidently was deeply pleasing to him. He seemed to feel that his schedule set him free: more than almost any other person in the world, he knew exactly what to expect all day long, every day.”

Reagan assumed others valued predictability as much as he did. He interrupted the routine of the White House staff only rarely, and then primarily to deliver a birthday balloon or funny gift. He often didn’t know the recipients, but he enjoyed the moments much as he had enjoyed playing the celebrity on his publicity tours as a Hollywood star.

Reagan almost never canceled meetings. He knew that a great deal of effort had gone into the planning and that people might be upset. “He seemed genuinely horrified at the prospect of causing embarrassment or disappointment or inconvenience to another person,” Regan said. “If he promised that he would do something, he did it.”

Unlike many presidents, Reagan enjoyed cabinet meetings. “He loved the give-and-take of policy discussions at the cabinet councils, when he had a chance to pronounce on the broad general principles that primarily interested him,” Regan said. The president especially enjoyed meetings attended by the female members of his cabinet. “The presence of Ambassador
Jeane Kirkpatrick or Secretary of Transportation
Elizabeth Dole
at a cabinet meeting always made for a heightened presidential mood; he was more amusing, more talkative.”

Reagan’s style of persuasion was gentle, almost passive. With legislators in particular, he appealed to reason. “The president never bullied, never threatened, never cajoled,” Regan said. “It was always: Let me explain why I’m for this bill, and I hope that we can count on your vote. He would listen to the reply, making meticulous notes as he went. If the senator or the congressman had some sort of problem with a provision of the bill, Reagan would assure him that he would look into the matter, and he never failed to do so—usually by handing his notes to me and asking for a follow-up.” The president didn’t win over every waverer, but he got more than his share.

In Regan’s experience only Tip O’Neill consistently resisted Reagan’s charm. Regan judged this significant, as it belied the popular perception of the president and the speaker. “Although photographs taken after their meetings suggested a sort of underlying Irish camaraderie between the two men, the reality was that they were hammer and anvil,” Regan said. “O’Neill seemed determined to dislike Reagan and disagree with him, and sparks flew as a result.” Reagan was mystified. “I don’t know what the hell’s the matter with the man,” he told Regan. “I just can’t seem to reach him.”

Regan recalled an afternoon meeting at the White House, to which Reagan had invited the congressional leaders to discuss the budget. Reagan wasn’t a drinker, but on this occasion he slowly sipped an orange blossom cocktail. The guests imbibed more seriously. “It was a relaxed occasion, as it was intended to be, in which to discuss differences in a friendly atmosphere,” Regan recalled. Various suggestions were made as to which items could be cut. Eventually, one of the Democrats teasingly suggested, in the casual spirit of the session, that many of the problems could be solved if the president would simply agree to raise
taxes. Reagan responded, in similar good humor, “Come on, fellows. You know I’m not going to raise taxes.”

O’Neill’s reaction shattered the easy mood. “His face flushed,” Regan remembered. “With his meaty hand he delivered a karate chop to the table, rattling the glasses. ‘All right, goddamnit!’ he shouted. ‘If that’s the way it’s going to be, then everything is off the table with me, too!’ ”

The room fell into a stunned silence. No one had ever expected to see the president of the United States berated in his own house. Reagan himself was taken aback. “Reagan’s face flushed—a little pinker than usual
because even a small amount of alcohol causes his naturally ruddy color to rise,” Regan recounted. “The president’s lips pursed, a sure sign of anger. But he held onto his self-control. ‘Well, damn it, Tip,’ he said, ‘I just can’t do it.’ ”

Y
ET THE TWO
Irishmen needed each other, not least on the issue that proved to be the centerpiece of Reagan’s domestic agenda during the second term. Don Regan had jumped from Treasury to the White House not least to champion tax reform, and at the president’s right hand he pressed the issue. He made the case that reducing rates and closing loopholes would be good for the economy, good for the country, and good for the president politically. The economy would benefit from the stimulus of lower marginal rates and the redirection of talent and energy from tax dodges to productive enterprise. The country would benefit from the greater fairness of the principle that equal incomes should pay equal taxes. The president would benefit politically from a big victory on behalf of the American people.

Some of Reagan’s advisers were skeptical.
Paul Laxalt declared that anything beyond tweaking was a recipe for disaster. “
When you open up the whole code, lobbyists from all over the country, and perhaps the world, will be crawling out from under any rock,” Laxalt said.

But Reagan went ahead. He addressed the American people to pitch his vision of tax reform, based on the proposal Don Regan’s team had crafted. “
We have made one great dramatic step together,” he said of his first-term tax cuts. “We owe it to ourselves now to take another. For the sake of fairness, simplicity, and growth, we must radically change the structure of a tax system that still treats our earnings as the personal property of the Internal Revenue Service; radically change a system that still treats people’s earnings, similar incomes, much differently regarding the tax that they pay; and, yes, radically change a system that still causes some to invest their money, not to make a better mousetrap but simply to avoid a tax trap.” The president outlined his plan. The existing system of fourteen tax brackets with rates that ranged from 11 percent to 50 percent would be replaced by a system of three brackets of 15, 25, and 35 percent. Low-income earners would benefit by the expansion of the standard deduction and the personal exemption.

The guiding principle was simplification; the primary value was fairness. Special loopholes, deductions, and exclusions would be dramatically
curtailed. The new plan was revolutionary, but it had everything to recommend it. “Comparing the distance between the present system and our proposal is like comparing the distance between a Model T and the space shuttle,” Reagan said with a smile. “And I should know—I’ve seen both.” The task would not be easy. The defenders of the status quo would cling to their privileges. But Reagan put his faith in the American people and their insistence that government serve them and not the special interests. “The American dream belongs to you,” he said. “It lives in millions of different hearts; it can be fulfilled in millions of different ways. And with you by our side, we’re not going to stop moving and shaking this town until that dream is real for every American.”

Reagan took his tax reform show on the road. By making his case to the people, he judged, as he had made his case during his first term, he could compel the lobbyists and the interest groups to yield. At Williamsburg, Virginia, he cited the antitax ethos of the American Revolution. “
Here the arguments against unjust taxation rang out like a firebell in the night, and the chief arguer,
Patrick Henry, gave our movement for independence the one thing it needed to become a revolution—he gave it passion,” Reagan said. He quoted a senator who had opposed the Sixteenth Amendment, the one that allowed federal income taxes: “If we pass this amendment, we may very well see the day when the government could think it could take as much as 10 percent of a person’s earnings.” Reagan’s audience groaned for the good old days. The tax code had grown hopelessly byzantine, Reagan said. “It’s a system so utterly complex and ultimately inexplicable that half the time the tax professionals themselves aren’t sure what the rules are—a system that even
Albert Einstein is said to have admitted he couldn’t begin to fathom.” Reagan grinned as he added, “You know, it’s said that his hair didn’t look that way until after he experienced his first tax form.”

He flew west to Wisconsin. In the blue-collar town of Oshkosh he led a rally for tax reform. “
Do the people of Oshkosh want our tax system to be complicated and unfair?” he asked.

“No!” his audience responded.

“Do you want steeply rising tax brackets that punish achievement and hurt the American family?”

“No!”

“Or would you like a dramatic simplification that eliminates loopholes and makes our tax system straightforward, fair for all?”

“Yes!”

“And would you like to see a tax plan that increases personal exemptions, brings tax rates further down, and reduces the tax burden on working Americans and their families?”

“Yes!”

“Well, that’s the tax plan that, with your help, we can and will pass this year.”

He visited a high school in Atlanta. “
Someone might say it’s odd to talk about tax policy with young people in their teens,” he observed. But he thought otherwise. “I know some of you already have part-time jobs, and I know you keep your eye on the part of the check that shows what Uncle Sam is taking out.” Reagan’s speechwriters had prepped him on the cultural touchstones of his audience. “The way I see it, if our current tax structure were a TV show, it would either be ‘Foul-ups, Bleeps, and Blunders’ or ‘Gimme a Break,’ ” he said. “If it were a record album, it would be ‘Gimme Shelter.’ If it were a movie, it would be ‘Revenge of the Nerds’ or maybe ‘Take the Money and Run.’ And if the IRS—the Internal Revenue Service—ever wants a theme song, maybe they’ll get Sting to do, ‘Every breath you take, every move you make, I’ll be watching you.’ ”

T
HOUGH
R
EAGAN GOT
the popular response he wanted, crafting the new tax law required many months and more than a few strategic compromises. The original plan was dubbed “Treasury I” at the time it was replaced by “Treasury II,” a substitute that let some existing loopholes slide while adjusting certain proposed rates. The switch produced tension between Donald Regan, the father of the first version, and James Baker, the sponsor of the second. Baker thought Regan was becoming an impediment to the very cause he supported. “
His indecisiveness and lack of political smarts almost killed
tax reform,” Baker subsequently said of Regan. The friction within the administration encouraged stalling by congressional opponents of reform, including many Republicans. On one test vote in the House, a mere fourteen Republicans sided with the administration, prompting Tip O’Neill to declare that the insurgents had humiliated their own president.

“
The president
was
humiliated, and angry,” Baker recalled. Yet the revolt focused the administration’s attention. Baker urged the president to put his whole weight behind the proposed reforms. “Tax reform is
one of your top two domestic priorities
,” Baker wrote to Reagan (the other priority
being spending cuts). “It
will likely die if you do not support moving the Ways and Means bill forward
 … You must keep the process moving forward.”

Reagan agreed, and after O’Neill, who supported reform, challenged the president to deliver at least fifty Republican votes, Reagan resorted to retail politicking. He went up to Capitol Hill and met with the House Republicans. “
It was a straight talk session with all sides having their say,” Reagan recorded afterward. The opponents aired their grievances, which Reagan said he shared in some cases. But he said the bill could be fixed in the Senate. His strategy was subtle. He asked the representatives to vote for a bill he said he would veto if it arrived on his desk in its present form. Yet if they passed it, its flaws could be fixed in the Senate.