Without Don Regan's strength and loyalty, Ronald Reagan would have been a less successful president.
After Don Regan was nominated as Treasury Secretary by President-elect Reagan, he asked me to stop by to see him. He would need a strong supply-side team, he said, if he was to succeed in his task of getting Reagan's controversial new economic policy out of the administration and through the Congress.
Regan was concerned that he might not get the team he wanted, because he had read press reports that some supply-siders had preferred a different candidate and were unhappy with his nomination. He was also concerned about the low pay of sub-Cabinet jobs. In his matter-of-fact way, he laid it on the line: Supply-siders had sold the president on a new policy, and it was their responsibility to come help him deliver the goods.
Regan realized that we were in for an uphill fight. Supply-side economics was not widely understood, least of all by the Republicans. Moreover, the Republican establishment had no stake in a policy identified with outsiders like Jack Kemp and Ronald Reagan. George Bush had called it "voodoo economics," and this was the opinion of important Republican senators.
The economics profession was against it. Keynesian economists did not believe that the economy could grow without causing higher inflation. They were convinced that a budget deficit from tax cuts and military spending would cause the existing double-digit inflation rate to explode. Fed Chairman Paul Volcker had the same opinion.
Don Regan had no illusions: "It's the President and the Treasury against the world."
Regan could have taken the easy path. He could have tried to talk Reagan out of going forward with a controversial new policy. He could have assembled a team lacking the determination to succeed with the contested policy.
Instead, Regan set out to achieve what the president wanted.
The 1981 tax cut was a near-run thing. It almost did not get out of the administration. After it became law, those who continued to oppose the tax cut worked to have it repealed in Reagan's 1982 State of the Union address.
They failed, but the experience left Don Regan frustrated with President Reagan's lax management style. OMB director David Stockman and White House Chief of Staff James Baker had tried to box in Reagan and force him to accept major tax increases. They told Regan that Reagan's intransigence on taxes was merely an act designed to get maximum leverage on spending cuts. They told Regan that Treasury's opposition to tax increases would leave him out on a limb.
In his 1982 State of the Union address, Reagan chastised the advisers who had tried to substitute their policy for his. The press understood that Reagan was chastising Stockman and Baker. The morning after the State of the Union Address, press secretary Larry Speakes met with the White House correspondents. The first question was, "Is Jim Baker still employed today?"
Don Regan believed that when the president made a decision, it was the duty of subordinates to get on board with the decision or to resign. He did not understand how Reagan could tolerate his aides' perfidy.
Regan decided that if Reagan's second term was to be successful, he would have to become chief of staff. Since Reagan wouldn't fire Baker, Regan swapped jobs with him.
Regan had an unusual loyalty. He did not know Reagan prior to becoming Treasury Secretary. Yet his loyalty to Reagan was second only to Nancy's.
Regan did not play the Washington game. He told me early on that he had ceased going to Washington dinner parties where "everyone tries to tell me how to run the Treasury." This left him without a support system when the sharks decided to use Iran-Contra to weaken Reagan by forcing out his strong loyal arm in 1987.
The Republican establishment gained control and installed former Sen. Howard Baker as chief of staff.
Regan had achieved a high level of success in his life. He brought the confidence that success had given him to Washington. He knew who he was and had no problem with helping another man achieve even greater success. Regan supported Reagan's economic policy, which brought the end of stagflation, and he encouraged the relationship with Mikhail Gorbachev, which brought the end of Soviet communism.
Paul Craig Roberts, author of The Supply-Side Revolution, was assistant Secretary of the Treasury for Economic Policy during President Reagan's first term.
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