The letter was harsh. The fact that it came from his home state made it personal. Never mind that Baker did not really know Clymer L. Wright Jr., who had been the Texas finance chairman of Ronald Reagan’s campaign in 1980. Wright felt he knew Baker and, with a three-page bill of particulars sent to fellow Republicans in May 1982, he made it his mission to expose the chief of staff as an enemy within, a traitor intent on destroying Reagan’s presidency.
Baker had heard this ever since he took the job, of course. To some of Reagan’s most fervent supporters, Baker was an apostate, a sellout, a moderate, a liberal even. He was a country-club Republican. A Bush guy. A Ford man. Worse, he was a manipulator, steering an overly trusting true conservative of a president to the mushy middle, ever willing to sacrifice principle in the name of pragmatism. Baker found this indictment endlessly aggravating. When pressed, he insisted he was every bit as conservative as any other Reagan adviser. He was from Texas after all. But unlike the purists, he understood how to get things done.
To be sure, he had successfully kept Reagan out of what Baker considered losing fights over pointless ideology. By focusing on tax cuts as the main priority in the opening months of the administration, Baker had effectively sidelined some of Reagan’s more radical campaign promises. When Reagan made his first appointment to the Supreme Court in July 1981, Baker helped direct him to Sandra Day O’Connor, a state judge from Arizona and the first woman in American history to become a justice.
The subsequent fight over her confirmation taught conservatives, if they did not know already, that Baker was no ally and they learned to their fury that the chief of staff was a roadblock to their access to Reagan. Paul Weyrich, one of the founders of the modern political right, was agitated over O’Connor, viewing her as a suspect figure who would come to the court with little fidelity to conservative judicial philosophy. But when he went to Baker seeking a meeting with the president, the chief of staff kept him out of the Oval Office. Others were convinced, with some justification, that Baker was disdainful of them behind closed doors. John Lofton, a conservative columnist, told people that Baker had called the activists opposing O’Connor “kooks,” according to the scuttlebutt passed along to Baker by Richard Williamson, a White House aide. (“Not helpful,” Williamson added, “whether accurate or not.”) O’Connor went on to be confirmed by the Senate with no opposition just two months later—and Weyrich’s fears proved well founded, as she evolved into a centrist figure on the court on issues such as abortion and affirmative action.
The columnists Rowland Evans and Robert Novak, well-connected conservative insiders who often signaled where the new right was headed, wrote that the O’Connor nomination showed that “Reagan shares the view of Jim Baker and his other aides that the Moral Majority is not vital to his political coalition.” Baker resented the column and Novak later said it ruined their relationship. “With this, I burned bridges to the White House, Baker, and maybe the president,” Novak recalled. But he kept the flames blazing. Every week, it seemed, Evans and Novak targeted Baker in their column. At a Washington party in May 1982, “the air crackled” when Novak approached Baker, as Sara Fritz, a writer for U.S. News & World Report, recorded in an internal memo to colleagues the next day. “How come you didn’t write anything bad about me today?” Baker asked Novak with more than a little edge. The columnist insisted that he actually admired Baker. “This was followed by a stiff silence that caused everybody to feel uncomfortable,” Fritz wrote.
Just eleven days later, Clymer Wright sent his letter assailing Baker to fellow Republicans. “Dear Friend of Ronald Reagan,” he wrote. “Our beloved President today stands alone under siege. His economic program is being undermined by White House Chief of Staff James Baker.” Calling him a “usurper,” Wright enclosed a story from the New York Post and one of those columns by Evans and Novak. He also noted that Baker had run losing campaigns for Gerald Ford and George Bush:
Now is the time for Ronald Reagan to ask James Baker for his resignation. Now is the time to replace James Baker with someone who is loyal to Ronald Reagan personally and to his programs. Now is the time for the man we elected to assume command of his own administration. It is essential that his key staff be philosophically in tune with the President; Mr. Baker obviously is not.
The attack got under Baker’s skin. Reagan personally responded with a tough “Dear Clymer” letter that Baker allowed years later was likely sent at his instigation. “Yes, there is undermining of my efforts going on and, yes, there is sabotage of all I’m trying to accomplish,” Reagan wrote. “But it’s being done by the people who write these articles and columns, not by any White House staff member and certainly not by Jim Baker.” He added that he resented the notion that he was “led around by the nose” by Baker:
Clymer, I’m in charge and my people are helping to carry out the policies I set. No, we don’t get everything we want and, yes, we have to compromise to get 75% or 80% of our programs. We try to see that the 75% or 80% is more than worth the compromise we have to accept. So far it has been. There has not been one single instance of Jim Baker doing anything but what I’ve settled on as our policy. He goes all out to help bring that about.
Reagan’s testimonial notwithstanding, Baker remained a target. A song composed to the tune of Jim Croce’s “You Don’t Mess Around with Jim” and distributed among Baker’s enemies captured the moment.
Well—outa oily south Texas
Came this Princeton dude
He’s slicker than a lib’ral snake
Bamboozled Jerry Ford
Switched to Bush and got bored
Now Reagan’s a-payin’ this fake
So us right-wingers gotta save the country
Jim Baker’s stabbin’ us in the back
Side-trackin’ all our guys, hirin’ Bush-men on the sly
We may never get school prayer back.
The attacks found their target. “The ceaseless sniping from the far right took its toll on Baker, more than it did on me,” Michael Deaver remembered. But only those close to Baker could really see it. Peggy Noonan, who rose to fame as a speechwriter for Reagan later in his tenure, did not realize it until long after the White House during a flight she shared with Baker when he opened up about the old wounds. “I never knew until just a few years ago how he, Jim Baker, suffered through those days,” she said. Noonan never bought the notion that Baker had “delusions of grandeur” that he was going to make Reagan a moderate. “Reagan was going to be a conservative and Baker was going to be the conservative’s chief of staff,” she said. “I don’t think he tried to change his boss but when he thought an issue was not going to be a fruitful area for Reagan I think he would tell him.” Stuart Spencer considered the line of attack ludicrous. “The accusation used to drive me crazy,” he said. “I’d say, ‘This guy is a Republican Texan! They are conservative!’ But he’s a pragmatist too, just like Reagan was.”
David Stockman believed Baker was, at heart, instinctively conservative but driven more by success than ideology or details. “On matters of policy and substance,” he said, “Baker was a ‘leaner’; that is, given the choice between more central government and bureaucracy versus greater emphasis on private markets and local governments, he inclined strongly toward the latter. But Baker was, deep down, neither very versed on matters of policy nor intensely interested in them. As long as it was directionally sound, he was satisfied.”
Baker came under fire in large part because conservatives did not dare criticize the president himself. “Frankly, we weren’t in a position to be out there attacking Reagan,” Richard Viguerie said years later. “He was too popular with the grass roots. It was easier to go after Dick Darman, Baker, Mike Deaver and all of them. So we directed our anger, disappointment, frustration toward those people. But truth be known, Reagan knew what he was doing.” Viguerie acknowledged Baker’s value to Reagan. “Every president needs a Jim Baker,” he said. “Jim Baker made his trains run on time. He did the hiring and firing and he just made life much easier for Reagan than it would have been otherwise. I just wish he had chosen someone more ideologically akin to him.”
NOT ALL OF the rivalries in the Reagan White House were about ideology. Baker was already emerging as an unusually powerful chief of staff, but the staff itself was a dysfunctional mess of the more conventional kind, torn by intrigue, backbiting, rival power centers, personal feuds, and shameless posturing. The rule of thumb, as Peggy Noonan later put it, was that “we would have not been stabbing each other in the back, we would have been stabbing each other in the front.”
Larry Speakes, for instance, detested David Gergen, deeming him a Baker spy, a rival for the top media role in Reagan’s White House, so he gave the six-foot-five communications director the nickname “the Tall Man,” a phrase that he meant to be derogatory and later shortened to just “Tall.” When Gergen addressed reporters, Speakes had his staff lower the lectern in the White House briefing room so that he would “tower over it like Ichabod Crane.” As Speakes later admitted, “we threw virtually every booby trap in his way that we could, planted every story, egged the press on to get down on him.”
Speakes, who took over the press operation after the assassination attempt but never assumed the title of press secretary out of deference to Jim Brady, also ran afoul of Baker at times. When Speakes described for a Washington Post reporter how the staff prepared Reagan for a news conference, it resulted in a story that made the president look like he simply delivered scripted answers. After the article appeared, Baker took Speakes aside. “I want you to go into the Oval Office and apologize to the president,” he ordered. Speakes did. Reagan was forgiving but clearly wounded. “That’s all right,” the president told Speakes, “but you made me look like Charlie McCarthy,” the ventriloquist’s dummy.
That was a tried-and-true technique for Baker, sending rogue staffers into the Oval Office, where he knew they would be pardoned by a soft-hearted president. When Ed Rollins, the White House political director, was quoted as telling a reporter that Maureen Reagan, the president’s oldest daughter, who was running for Senate in California, had “the highest negatives of any candidate I’ve seen,” he was summoned to Baker’s office. Deaver was there, waving a copy of a wire service news story with the quote and fuming with anger. Baker let Rollins stew about it over the weekend and then on the following Monday morning told him he would not be fired but would have to apologize to the president. “You’ve gotta go to the woodshed and he’ll kick your ass good,” Baker told him, “but I saved your ass.” As with Speakes, Reagan went easy on him. After all, the president himself had said publicly that he wished that Maureen would not run. Baker did not take Rollins’s relief well, seemingly miffed that he was not acting chastened enough. “Now goddamnit, you walk out of here like a guy who’s been to the woodshed,” Baker demanded. “I don’t care how good you feel. You’re a mighty lucky man.” Baker again claimed responsibility for the outcome. “Just remember who your friend was,” he lectured, although Rollins later concluded that Baker had taken credit for saving him when in fact he had not.
No one, however, demonstrated greater indiscipline in the first year of Reagan’s presidency than David Stockman. Brilliant more than wise, too candid for his own good, the thirty-four-year-old former congressman was a onetime Marxist who was turned off by antiwar violence and concluded that “the left was inherently totalitarian.” He had joined the Reagan White House with a zealous sense of mission, determined to tame big government and make it “a spare and stingy creature, which offered even-handed public justice, but no more.” But as Reagan’s presidency progressed, Stockman grew disenchanted with the forces of status quo he called the Second Republic, and came to the belated realization that even fellow conservatives were not fully committed to radically scaling back the scope of government if it involved political pain.
Stockman secretly confided these frustrations and experiences to William Greider, a Washington Post editor who was writing a long article for The Atlantic Monthly. In eighteen tape-recorded sessions over the course of his first year, Stockman exhibited a cynical view of Reagan’s economic program, saying that supply-side theory was just a disguised version of “trickle-down” policy and that the tax cut legislation was just a “Trojan horse to bring down the top rate” on the wealthiest. He revealed to Greider the “magic asterisk” that the White House had used to disguise future deficits with illusory unspecified spending cuts.
When the article was published under the headline “The Education of David Stockman” in November 1981, Baker faced the fallout. Deaver, Ed Meese, Lyn Nofziger, and others wanted Stockman fired. “David Stockman stuck a knife between the president’s ribs,” Deaver complained. Baker still valued Stockman’s skill and wanted to keep him, making the case “in that deliberate, dispassionate, almost lulling way,” as Reagan’s longtime aide, Helene Von Damm, put it. Fortunately for Stockman, Reagan agreed. “He didn’t like to fire people,” Meese said later, “largely, I think, because his father had been fired and he always remembered that.”
But Baker knew a public price had to be paid and orchestrated a ritual punishment for Stockman. Summoned to the chief of staff’s corner office, Stockman found a different Baker than he was used to—no off-color jokes, no casual waltz around his office, no jump shot sending a wad of paper into the wastebasket.
“My friend,” Baker started, “I want you to listen up good. Your ass is in a sling. All of the rest of them want you shit-canned right now. Immediately. This afternoon. If it weren’t for me, you’d be a goner already. But I got you one last chance to save yourself. So you’re going to do it precisely and exactly like I tell you. Otherwise, you’re finished around here.”
Baker told Stockman that he was to have lunch with the president. “The menu is humble pie,” Baker said. “You’re going to eat every last mother fucking spoonful of it. You’re going to be the most contrite son of a bitch this world has ever seen.”
Baker stood to end the meeting. “Let me repeat something, just in case you didn’t get the point,” he added sternly. “When you go through the Oval Office door, I want to see that sorry ass of yours dragging on the carpet.”
Stockman was stunned. Never in his life had anyone talked to him in such a humiliating way. But he realized that Baker was trying to shock him into understanding that the shark feed was on. Baker played the disciplinarian because he knew Reagan would not. Indeed, when Stockman went in for his “woodshed” session, the president said he was disappointed but readily forgave him over soup and tuna salad, just as he would with other transgressors. The grateful miscreants were meant to thank Reagan—and Baker—for saving them.
AS POWERFUL AS he was becoming in Reagan’s White House, Baker largely played a secondary role when it came to foreign policy in his early years as chief of staff. His pact with Deaver to keep an eye on the Central America hard-liners was largely defensive. He considered himself a Cold War conservative but he was not interested in provoking another turf war, nor did he have enough mastery of the issues to play a major role in shaping policy. To a large extent, he ceded the territory to Ed Meese, who wrested control in their initial power-sharing negotiation and made sure that the national security adviser Richard Allen reported to him.
The exception was when Congress got involved. Then it usually fell to Baker to make lawmakers fall in line, a task sometimes easier defined than achieved with the House in opposition hands. Baker’s main involvement with international affairs in his first year came with the sale of sophisticated aircraft to Saudi Arabia. Jimmy Carter had favored the arms sale and, as he left office, one of the few things he asked of Reagan was to follow through on it. The incoming president agreed. When Baker heard that would be one of the top priorities for the White House, he “was politically disappointed because he did not see that as anywhere near the priority of other things that they wanted to move on,” said Robert Kimmitt, then a young military officer working on the National Security Council staff. Baker managed to put off the fight for months, under his economy-first dictum, but by the late summer of 1981 he could wait no longer. It became a test of Reagan’s clout, a test that Baker had to pass.
The $8.5 billion arms sale would provide Saudi Arabia with, among other weapons, five Airborne Warning and Control System planes, commonly known as AWACS, used to give early warning against enemy attack and to manage air-to-air combat. Israel strongly opposed the sale, fearing it would empower an Arab adversary. A strong supporter of Israel, Reagan was reluctant to disappoint a friend but he saw value in building relationships with key Arab allies. Moreover, Reagan grew annoyed by Israeli lobbying. Hosting Prime Minister Menachem Begin for a State Dinner in September, Reagan thought the Israeli leader had promised not to fight the sale, only to grow perturbed when he learned that Begin was in fact rallying opposition on Capitol Hill. When he formally announced plans to proceed with the sale, Reagan made his irritation plain. “It is not the business of other nations to make American foreign policy,” the president said.
Under the arcane rules of arms sales, the deal would go through unless both houses voted against it, which meant Baker only had to prevail in the Republican-controlled Senate. When President Anwar Sadat of Egypt, who courageously made peace with Begin in Camp David talks hosted by Carter, was assassinated just days after Reagan’s announcement, Baker brought key lawmakers to the White House to meet with the president and hear him talk about the need to bolster the forces of moderation in the region. Nonetheless, the House voted overwhelmingly, 301 to 111, to block the sale. Baker understood that Reagan’s credibility, both at home and abroad, was at stake. “We knew we had to win this fight,” said Kimmitt.
Baker sat down with several Republican senators who wanted conditions in exchange for their votes. Ultimately, Baker and his team adopted some of their proposed language and crafted a letter with six conditions that the president promised to meet before executing the sale. Among them, he would obtain an agreement from the Saudis that would prevent use of the aircraft against Israel and certify that the Saudis were making efforts to encourage peace between the Israelis and Arabs. It was a classic Baker solution to the problem. As a negotiator, he always looked for ways to satisfy his counterparts’ concerns—or more precisely, ways to let his counterparts publicly demonstrate that their concerns had been addressed—without giving up the substance of what he was trying to secure.
When the day of the vote arrived, eight original sponsors of the resolution of disapproval voted against their own motion, giving the White House a 52 to 48 victory. Senator John Glenn, an Ohio Democrat leading the opposition, groused that Baker’s team had bought and strong-armed votes, declaring that the president was “ill served by a staff that uses methods like that.”
The AWACS fight completed Baker’s disenchantment with Richard Allen and ultimately helped accelerate the end of his tour as national security adviser. A hawk on Vietnam and a skeptic of détente with the Soviet Union, Allen had served as a deputy to Henry Kissinger in the Nixon White House before becoming Reagan’s foreign policy adviser in the years leading up to his election. Allen was close enough to the future president that he was the one who suggested George Bush as the backup choice for running mate when the misguided negotiations with Gerald Ford collapsed.
But even though he was named national security adviser, Allen had not been given the same stature and authority that Kissinger had. Ed Meese took the northwest corner office that Kissinger and other national security advisers had occupied while Allen was consigned to the White House basement. Rather than report directly to the president, as his predecessors had, Allen answered to Meese. Allen’s briefings to the president were eventually cut out altogether in the name of efficiency. He was, in the words of David Rothkopf, a historian of the National Security Council, the “not-quite-national-security adviser.” According to Al Haig, Allen was “regarded by his colleagues as being irrelevant. In time, I am sorry to say, I came to regard him in that light too.”
So Allen was already standing in quicksand when he got in trouble for accepting $1,000 from a Japanese magazine intended for Nancy Reagan as a gratuity for granting an interview on the day after her husband’s inauguration. This was in keeping with the custom of Japanese media. Allen explained that he had been given an envelope with ten $100 bills but instructed an aide to figure out what to do about it, whereupon the cash was stored in his office safe. He forgot about it until colleagues came across it. The Japanese journalists had also given him two wristwatches. When the matter went public, Allen took a leave while the Justice Department investigated. He was cleared, but when Allen arrived in the White House expecting to return to his job, he discovered that Reagan was not prepared to have him back. “I could see he had been gotten to by others,” Allen said later. Did he suspect Baker’s hand? “No,” Allen said. “I just think he didn’t help. He wasn’t the hatchet in that respect.”
To replace him, Reagan tapped William Clark, the Californian serving as Haig’s deputy. Ideologically, there was little difference between Allen and Clark. They were both conservatives favoring a hawkish approach to the Soviet Union. But Clark had the closer relationship with Reagan and had in fact been Meese’s superior in California, and he was not about to become his subordinate now; instead of reporting to Meese, he would report directly to the president. As a result, Clark’s arrival had the added benefit from Baker’s perspective of further diminishing Meese’s power.
Reagan saw foreign policy in Cold War terms and, as Baker had anticipated, the president and his more conservative advisers were fixated on Nicaragua as the latest battleground in the long-running proxy war with the Soviet Union. The Somoza dynasty, a brutal, pro-American government that ruled Nicaragua for forty-three years, had fallen in July 1979 amid widespread public discontent. By the next year, power was consolidated in the hands of the Marxist opposition force known as the Sandinista National Liberation Front, named after General Augusto César Sandino, an iconic figure who had opposed American policy in the region until his assassination in 1934.
The Sandinistas, led by Daniel Ortega, a fiery guerrilla leader with a bushy mustache and designer sunglasses, signed agreements with the Soviet Union for military aid while Cuban advisers streamed into the country. Nicaragua also started actively aiding the leftist rebellion against the pro-Washington military government in neighboring El Salvador. To Reagan and some of his advisers, this was the old domino theory all over again, playing out in America’s backyard. To stop it, they decided to embrace a motley assemblage of resistance fighters known as the contras, or counterrevolutionaries, a mix of former Somoza national guardsmen, disaffected Sandinistas, and Nicaraguans unaffiliated with either side. On December 1, 1981, Reagan signed an order known as an intelligence finding authorizing a covert CIA program to arm, train, and supply the contras with about $19 million. The stated goal at that point was to stop the flow of arms from Nicaragua to El Salvador.
To Baker, this could be the first step down the slippery slope that he had feared from the earliest days of the administration. Reagan saw it as a noble venture, part of his broader assault on the Soviet empire. Addressing both houses of Britain’s Parliament in Westminster Palace in June 1982, Reagan gave one of the defining speeches of the Cold War, presciently diagnosing the “decay of the Soviet experiment” and vowing to promote democracy around the world. “What I am describing now is a plan and a hope for the long term—the march of freedom and democracy, which will leave Marxism-Leninism on the ash heap of history.”
By that summer of 1982, Baker’s most pressing foreign policy problem, however, was in Washington. The foreign policy team was, he believed, a “witches’ brew of intrigue, elbows, egos, and separate agendas.” The chief intriguer, in his mind, was Al Haig, whose tenure in the cabinet had gone from bad to worse to simply untenable as far as the chief of staff was concerned. Since the first day of the administration, Baker had struggled to keep Haig in line, only to find the willful secretary of state virtually unmanageable. “What an ego!” Baker was overheard calling out when he hung up the phone after another testy conversation with the secretary. Baker was not alone. Haig had few allies in the West Wing. “I used to describe Al Haig as a cobra among garter snakes,” said Donald Gregg, a White House aide who would become the vice president’s national security adviser. “At the cabinet meetings, whereas everybody else would be sort of slithering happily around the table, he was up there, with his lips spread, looking for somebody to bite.” Haig had threatened to resign on multiple occasions over the course of Reagan’s first year, but Baker and his camp initially feared the damage a public rupture might cause. Michael Deaver, no Haig fan, had argued that they could not afford to let him go, at least not right away. “I was convinced that politically it would be terrible if Reagan lost his secretary of state the first year,” Deaver said.
Haig’s sense of his own importance was boundless. At Anwar Sadat’s funeral in Egypt, he was miffed that the three former American presidents also in the delegation were getting more attention than he was. He ordered the American ambassador in Cairo to threaten the Egyptians with the loss of foreign aid if he did not get more play in the media.
Haig never did figure out the Reagan operation. The man who had expertly maneuvered himself to the highest echelon of the Nixon White House was left scratching his head about this new team. “To me, the White House was as mysterious as a ghost ship; you heard the creak of the rigging and the groan of the timbers and sometimes even glimpsed the crew on deck,” he said. “But which of the crew had the helm? Was it Meese, was it Baker, was it someone else? It was impossible to know for sure.”
Privately, he saw Baker as the villain. “That son of a bitch is the worst influence I have ever seen in the federal government,” Haig told a colleague. Publicly, he complained about what he called a “guerrilla campaign” against him, led presumably by Baker. Amused, Deaver borrowed a gorilla outfit and burst into a cabinet meeting around Baker’s birthday.
“Happy birthday Jim, from the White House gorillas,” Deaver called out.
“The president broke up,” Deaver recalled, “but Haig found no humor in it at all.”
By the second year, the situation was unsustainable and Baker and Deaver, joined by William Clark, no longer seemed reticent to show Haig the door. Larry Speakes thought their plan was a time-honored scheme in Washington, “trying to irritate him enough to make him quit.” That seemed a fair surmise when the White House gave Haig a KC-135 retrofitted cargo transport with no windows for a trip to Britain and Argentina and assigned him to a noisy military helicopter open to the wind during a visit to London. Enraged, Haig blamed Baker. “Clark told me that James Baker was in charge of assigning aircraft and that he guarded the prerogative jealously,” Haig said. “It was he who had chosen my plane and only he could change the order.” Baker later denied that, saying it was really Deaver, acting on behalf of Nancy Reagan, who had “decided that Haig was not serving her husband well.”
When Israel invaded Lebanon in June 1982, just a couple days before Reagan’s Westminster speech, the war inside the administration reached a climax. Baker and the others grew irritated that Haig sought the limelight in the midst of a grave international crisis “in a manner that seemed to pre-empt the president’s authority,” as Robert “Bud” McFarlane, then the deputy national security adviser, put it. They were particularly annoyed when Haig gave instructions on how to handle the unfolding crisis to Philip Habib, the administration’s special envoy, without approval from Reagan. For his part, Haig was irked during a trip to Europe with the president when he was seated on Air Force One behind the compartment with Baker and Deaver. “At least he’s got a window this time,” Baker whispered to Deaver. But the trip only widened the rift amid a series of quarrels over a United Nations resolution. Baker and Deaver returned to Washington “with a white-knuckled animus toward Al Haig,” McFarlane said.
Haig, feeling undercut once again by the Baker “guerrillas,” told the president he would leave unless his status was restored and the incoherent foreign policy lines of communication were clarified once and for all in his favor. This time, Reagan stunned Haig by accepting his secretary’s threat to step down. Floored, Haig headed back to the State Department and set about writing a letter of resignation he had not actually expected to submit when he heard his departure announced on television along with the selection of former treasury secretary George Shultz as his replacement. “I assumed that he had been convinced to get rid of me by Baker and Deaver,” Haig said. He blamed them for “planting their toxic stories.”
Baker thought Haig had used the resignation bluff once too often. “I was in there when the president said, ‘Well, Al, you just better let me have that letter. I’m sorry.’ ” Haig’s perceived discourtesy to Nancy Reagan certainly did not help. The news of Haig’s fall spread quickly in the West Wing and produced a wave of rejoicing. “I don’t think anyone inside the White House on the president’s staff was sorry that Secretary of State Haig resigned,” said Margaret Tutwiler. Deaver was blunter: “We were all high-fiving inside the Oval Office.”
Even Reagan seemed glad to have it finally resolved. As he headed to the White House briefing room to announce Haig’s resignation, he cracked a few jokes. Baker, ever worried about the president’s public image, cautioned him against levity.
“Whoa there,” Baker said. “We better get serious here.”
“Oh, don’t worry,” said Reagan, still very much the actor. “I’ll play it somber.”
After the announcement, Reagan headed to Camp David and then watched Haig read his resignation letter on television. “He gave only one reason and did say there was a disagreement on foreign policy,” Reagan wrote in his diary that night. “Actually the only disagreement was over whether I made policy or the Sec. of State did.”
That night, Haig went to a previously scheduled dinner at the home of the plugged-in Saudi diplomat, Prince Bandar bin Sultan. He was overcome with emotion—and blamed Baker and his coterie for his downfall. “I was set up and I was so stupid,” he told the dinner guests. “I let them set me up.”
BY THE TIME Haig was out, it was increasingly clear that Baker had emerged as the dominant force inside the White House. The Troika was more and more just a fiction for public consumption. Craig Fuller admitted as much one day in a background interview with Sara Fritz from U.S. News & World Report. “Baker is solely in charge,” she wrote in her notes, summarizing their conversation. When she wrote up an item in the next week’s magazine to that effect, without naming Fuller as her source, Meese erupted and stormed into Deaver’s office demanding to know what he would do about it. But there was nothing to do. The reality was what it was. Baker had won.
The question was what Baker could do with the influence. Deep into the administration’s second year, the country was back in recession and, after the tax cuts of Reagan’s early months and the unrealized spending cuts of the “magic asterisk,” the government was swimming in red ink. Baker felt increasing pressure to do more to reverse the trends, but negotiations seeking more budget cuts with Democrats on Capitol Hill resulted in stalemate. Reagan’s approval rating had fallen from 68 percent several weeks after the assassination attempt to 43 percent in the spring of 1982. For months, David Stockman had been trying to get the White House to back more serious spending restraints but kept running into roadblocks. Baker deep-sixed another run at Social Security. Defense Secretary Caspar Weinberger refused to pare back his hard-won military spending increases. And Donald Regan objected to any delay in the tax cuts.
But Baker concluded that something needed to be done. As much as he hated to admit it, perhaps they had gone too far in slashing taxes the year before. Knowing that such a course correction would be a hard sell with the president, Baker set about gathering allies, convincing Deaver, Ed Meese, and even Nancy Reagan that raising taxes was inevitable. When they made their case to Reagan, Baker tried to make it more acceptable by telling him that they would cut spending three dollars for every dollar of taxes raised.
Reagan never really understood the economic theories or the complicated numbers involved. He was a big-picture guy and depended on Baker and the others to fill it in. Instead, he kept telling the same old musty anecdotes about how he saved money as California governor by printing forms on smaller paper so they would not have to be folded and the state could buy fewer file cabinets.
Finally, against his instincts, Reagan gave in. Angry, the normally laid-back president threw his glasses down on the table. “All right, goddamn it, I’m going to do it,” he snapped. “But it’s wrong.”
Reagan authorized Baker to negotiate a deficit reduction plan that would include tax increases and cuts in the new military spending Reagan had already gotten passed. Reagan rebuffed Democratic pressure to cancel the third year of his original income tax rate cuts, so Baker and his team brokered a deal with Speaker Tip O’Neill to raise $98 billion over three years by closing loopholes, raising corporate tax rates, and adopting other measures. Conservatives howled at the apostasy. To them, it was the ultimate proof that Baker was leading Reagan down the wrong path. Baker was “extraordinarily cunning and manipulative, a man for whom making the deal is more important than what’s in it,” said Ed Rollins.
Among the critics was Lyn Nofziger, the scruffy political director who had left the White House by then as a committed enemy of Baker. The two had not gotten along from the start. To Nofziger, Baker was “among the slickest of political operators in a town where slick operators came a dime a dozen, or cheaper.” There was no commitment to Reagan or the Reagan cause, Nofziger believed. “His best buddy is himself, James A. Baker III.”
The two sniped over even the pettiest issues. When Baker ordered staff members to wear their White House passes at all times while in the building, Nofziger ostentatiously refused. He came to regret accepting the post of political director, declaring that he had made three mistakes after Reagan’s election. “The first was taking the job and the second and third were trusting Jim Baker.” The feeling was mutual. “I did make a mistake doing that,” Baker said later of his decision to hire Nofziger. He had hoped that would win him points with conservatives. “That’s how naive I was; I thought this would be good cover for me.”
So when Reagan agreed to support tax increases, an outraged Nofziger met with conservative allies to map out opposition to the plan, including Martin Anderson, the president’s onetime domestic policy adviser who had also left the White House. When Reagan learned about the meeting, he summoned Nofziger and Anderson to the White House and, with Baker, Deaver, and Meese sitting nearby, expressed disappointment that his former aides were organizing against him. Before Nofziger could plead their case, Baker interrupted.
“Why don’t you ask Lyn to come down and help us pass the bill?” he asked Reagan.
The president seemed dumbfounded. So was Nofziger.
“Would you?” Reagan asked.
Nofziger asked to think about it.
Baker had sandbagged him. He knew Nofziger could hardly refuse Reagan and thought that putting a prominent conservative in charge of passing a tax increase would potentially moot some of the opposition—or, at the very least, put the blame on a rival if it failed. Nofziger grudgingly agreed to come back to the White House later that day to meet with Baker to discuss the idea, but when he arrived at the gate and showed the Secret Service his old, expired pass, the officer refused to let him in and seized the badge. Swearing, Nofziger stormed off, blaming Baker. Back at his office, Nofziger grabbed a picture of Baker off the wall, threw it on the floor, and stomped on it. He refused to take Baker’s call.
The next morning, Baker and Deaver personally showed up at Nofziger’s office to ask him to take the assignment. Baker tossed Nofziger’s pass on the coffee table.
“There’s your pass,” he said. “I didn’t tell them to confiscate it, but next time make arrangements to keep it.”
“It seemed clear to me that you didn’t want me very badly if you were going to take my pass,” Nofziger said.
“We want you,” Baker insisted. “The president needs you.”
Between them, Baker and Nofziger pushed the tax plan through Congress, overcoming conservative resistance and cajoling 103 House Republicans to support it. In years to come, many would cite Reagan’s willingness to forgo his natural instincts on taxes as proof that he was more pragmatic than commonly assumed. And they would credit, or blame, Baker for being the one to lead him there—or manipulate him, depending on the point of view. The tax increases helped offset some of the lost revenue from the original tax cuts. But Baker came to regret the move. “He was right and we were wrong,” he said of Reagan. They had overreacted, Baker concluded in retirement. “I’m a reformed drunk when it comes to supply-side economics.”
WITH HIS ELEVATED PROFILE, some Texas Republicans began wooing Baker to return home and run for office. Senator Lloyd Bentsen, the Democrat who had beat his friend George Bush in 1970, was up for reelection and some thought Reagan’s popularity could help Baker unseat him. Baker was sent poll numbers intended to entice him, showing that he had the most support of five possible candidates in a Republican primary with 18 percent; of the five, he tested second-best against Bentsen. If there was a temptation to take down the Democrat who defeated Bush, however, Baker resisted the urge. He knew how tough Bentsen would be to beat even in a good election year. In red ink, he scribbled at the top of the memo with the poll results: “(1) I’m not running. (2) We don’t get involved in primaries.”
He even resisted encouragement on the home front. “Dad, why don’t you run for that?” his son Doug asked one day.
“I don’t really want to be a freshman senator,” he answered. “I’m White House chief of staff.”
Baker was a political realist and he knew that even with Reagan as the party’s titular head, the Republicans were looking ahead to a tough campaign season. Despite Baker’s success at mastering the politics of Capitol Hill and convincing a Congress partly controlled by the opposition to follow Reagan’s lead, the country was mired in a dark mood in the administration’s second year. History would later obscure this period amid gauzy revisionist narratives of the Reagan era, but that’s not how it looked at the time. The recession was the worst economic contraction since the Great Depression to that point and the comparisons were certainly not helping Reagan politically.
With the Federal Reserve raising interest rates to try to tame inflation, jobs were vanishing and businesses shuttering their doors. By November 1982, unemployment had reached 10.8 percent, far worse than anything during Jimmy Carter’s presidency and the highest rate since the Depression. More than seventeen thousand businesses failed, the second highest since 1933. Farms were foreclosed on, home sales fell. Reagan’s once sky-high approval ratings continued sinking as polls showed most Americans blaming his policies.
The economy hit bottom just as voters went to the polls in the midterm elections. As predicted, they exacted punishment on Reagan’s Republicans. On November 2, the president’s team joined him in the White House residence for a buffet dinner to watch the returns. The GOP lost twenty-six seats in the House that night, effectively ending the conservative coalition that Reagan had built with conservative Democrats and giving Tip O’Neill firm control over the body. “Had to expect that & it could have been worse,” Reagan dictated to his diary. Republicans did better in the Senate, holding on to their majority and even adding a seat.
But Reagan was politically damaged. His approval rating dropped to 35 percent in January 1983, the lowest of his presidency. Only a third of Americans even wanted him to run for reelection in two years. If Baker was to turn things around and win a second term for his president, he would have to live up to his 1976 nickname, the Miracle Man.