A Tale of Missteps and Misreadings on Both Sides : How Reagan-Dole Relationship Soured

In President Reagan’s mind, the issue was simple: Either he honored his campaign promises not to raise taxes and tamper with Social Security or he did not.

Senate Majority Leader Bob Dole (R-Kan.) saw it differently: Regardless of any misguided campaign commitments, the President and his Republican colleagues in Congress should seize the moment to grapple seriously with dangerously escalating federal deficits that threaten to ruin the nation’s economy and turn future voters against the GOP.

Now Reagan is angry at Dole for being angry at him, and House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.) is chortling at the bizarre breakdown in Republican unity at a crucial juncture in the President’s second term.

The acrimony, among other things, jeopardizes Reagan’s ambitious goal of enacting later this year a major revision of the income tax code. “I’m less inclined toward it now--less inclined to bend to the President’s view,” Sen. Rudy Boschwitz (R-Minn.) said, reflecting Senate GOP bitterness.

How it all went sour between Reagan and Dole--the President’s most important ally in Congress--is a tale of missteps and misreadings by the White House and the Senate majority leader, according to persons who participated in the months-long deterioration of a once-solid relationship.

Also contributing, they say, were the wily maneuverings of O’Neill, looking out for Democratic political interests, and early jockeying by Dole and Rep. Jack Kemp (R-N.Y.) for the 1988 presidential race.

A serious rift began when Reagan, on July 10, backed off his previous commitment to Dole and Senate Republicans to support a one-year freeze in Social Security and other federal retirement benefits.

“If the President can’t support us, he ought to keep his mouth shut,” Sen. Charles E. Grassley (R-Iowa) immediately declared.

Grassley is one of 21 Republican senators up for reelection next year and one of 47 who on May 10 bowed to Dole’s urgings and risked their political necks by voting for the Social Security freeze. The stakes then were thought to be so high that Sen. Pete Wilson (R-Calif.), hospitalized for an emergency appendectomy, was dramatically rolled into the Senate chamber to cast the vote that forced a deadlock, allowing Vice President George Bush to break a tie.

But the rift became a chasm last Monday, when Reagan announced that he would not back Senate Republicans in what Budget Committee Chairman Pete V. Domenici (R-N.M.) called their final attempt to fashion “a real, significant, reliable, credible deficit-reduction package.” The rejected proposal involved a $5-a-barrel oil import fee, postponing Social Security cost-of-living increases every other year and delaying income tax indexing.

“The President has sold us down the river again,” Sen. Slade Gorton (R-Wash.) proclaimed.

Reagan ‘Miffed’

A senior White House official, defending the President’s action on condition that his name not be used, said: “What kind of politics is it to raise gasoline 10 cents a gallon and throw some people out in the cold in New England next winter? Or tamper with Social Security? I don’t know what kind of politics the senators were thinking of when they thought that was good politics. The President is the only one who showed good politics. For the life of me, I can’t understand it. The President is bewildered and a bit miffed.”

For Reagan, this unhappy story began at last summer’s Democratic National Convention when Walter F. Mondale announced that, if elected President, he would raise taxes to reduce the deficit. The Democratic nominee accused Reagan of harboring a secret plan to raise taxes too, prompting the Republican incumbent ultimately to vow: “Over my dead body.”

The saga continued at the televised presidential debates when Mondale accused Reagan of having another secret plan to cut Social Security benefits. So the President pledged a few days later, through spokesman Larry Speakes, not to even tamper with Social Security.

‘Washington Mentality’

“You know, it amazes me, this Washington mentality,” one longtime Reagan adviser said recently, speaking on condition that he not be identified. “Somebody insists on carrying out their campaign promise and everybody in this town acts in disbelief--’Hey, that was last year; this is now. That was just to get reelected.’

“Ronald Reagan feels very deeply about certain things. And it was a bad misreading of him to think he’d support a tax increase until somebody had absolutely proven to him it was necessary. And that obviously hasn’t happened.”

But more cynical views were offered by other Reagan associates. Several noted that the first item on the President’s domestic priority list is not deficit reduction but continued reduction of the size of government. And they pointed out that government, at the very least, cannot grow as long as tax revenues do not increase.

Pragmatic Side

One longtime Reagan adviser also noted that beyond the heartfelt, ideologically based commitments, there is another, less visible, pragmatic and paradoxical side to the President that allows him “in the final analysis” to rationalize almost any action. And it is this official’s thesis that Reagan possibly even could have been talked into supporting the oil import fee.

In fact, Budget Director David A. Stockman, in one of his final acts before leaving government for Wall Street, tried to persuade Reagan to accept the oil import fee on grounds that it would enhance national security, protect the U.S. oil industry and stabilize world prices.

“But the President made it plain at a Cabinet meeting that he just couldn’t see this as the answer,” recalled one official who attended the session. “He saw bad politics and bad economics.”

A Dole aide contended, however, that as late as July 26, the Senate leader met with White House Chief of Staff Donald T. Regan and Regan did not rule out the possibility of the President supporting the oil import fee.

Crossed Off on Memo

Regan’s side of the story is that Dole adamantly was told three days earlier that the President would not back such a tax. Dole then took his pen and crossed the oil import fee off a memo outlining the GOP deficit reduction proposal and handed it to the chief of staff, who recently showed it to a visitor.

Dole, according to Regan, returned two days later and informed him that Republicans were going to propose the oil import fee anyway. The senator asked the White House not to publicly oppose it immediately, and the chief of staff agreed.

But last Monday, after both Regan and the President had watched Dole push the idea on a Sunday TV interview show, they decided to resoundingly quash it along with the proposed delays in Social Security benefit increases and tax indexing.

“I think an explanation is due,” Reagan declared at the opening of a meeting the next day with Senate Republicans--a session that Dole uncharacteristically boycotted. Speaking from handwritten notes in the Cabinet Room, Reagan then launched into a detailed, historical recitation of the evolution of his political views.

Acknowledge Mistake

Most Reagan senior aides now acknowledge that they and the President made a mistake by supporting the Senate’s Social Security freeze last May. It also was an error, they concede, to have offered their own proposed cutbacks in Social Security benefit increases earlier--thus violating the President’s campaign pledge.

Kemp, who has his eye on the 1988 presidential race, ultimately persuaded Reagan that freezing Social Security was a bad idea. And when O’Neill told Reagan on July 10 that “no way was he going to buy a Social Security freeze,” recalled an aide, the President quickly acquiesced.

Dole, who also has 1988 presidential ambitions, theorized all along that the runaway deficit is the most crucial problem Republicans face and that it should be resolved at virtually any cost. “He wanted very graphically to illustrate that we stood on the high ground. Sooner or later--and probably sooner--we are going to return to the high ground,” Gorton said.