President Taking Steps to Show He’s in Charge : White House Strategists Plan Dramatic Moves to Avoid Paralysis in Last Two Years of Term

The appointment of former Sen. Howard H. Baker Jr. (R-Tenn.) as the new White House chief of staff represents one of a series of major steps planned by President Reagan and his strategists to demonstrate that he is taking charge of his Administration in the wake of the Iran- contra scandal, White House sources said Friday.

The scandal, coming on top of a series of setbacks including the Democratic takeover of the Senate last November, has confronted Reagan with the prospect of paralysis in his last two years in office, notwithstanding his continuing personal popularity.

“The White House has been so preoccupied with Iran that it has given up its entire role of framing the public debate,” said Paul Weyrich, the influential New Right leader who heads the Free Congress Research and Education Foundation.

At stake for the next two years is the record that Reagan will leave in a host of policy arenas, from arms control to welfare reform. And beyond that, Republican political strategists are increasingly gloomy about their chances of winning the 1988 presidential election.

Quick Reaction Needed

Sources said the President was so stung by the Tower Commission’s portrayal of him as out of touch with crucial national security issues that he agreed with some of his longtime advisers that he needed to react quickly and decisively.

Hence his prompt appointment of Baker to replace Donald T. Regan, at whose doorstep the Tower Commission laid much of the responsibility for the mismanagement of the sale of arms to Iran and the diversion of profits to the Nicaraguan rebels.

Nor will Baker’s appointment be the end of it. “There will be pretty dramatic changes inside the White House,” said one of the key strategists. A shake-up in the Cabinet, he said, is not anticipated “at this time.”

Other initiatives, plotted by Reagan strategists at a series of meetings in the 24 hours since the Tower Commission report was issued, will include:

--A major address to the nation next Wednesday in which Reagan is expected to admit, for the first time, the flaws in his policy of selling arms to Iran in exchange for the release of U.S. hostages held by Iranian-supported terrorists in Lebanon. To date, Reagan has admitted mistakes in the implementation of the policy, but not in the policy itself.

--A meeting of Reagan with his Cabinet on Monday or Tuesday that will focus on the Tower Commission report. Two Cabinet members--Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger--were faulted by the commission for failing to properly advise the President of the consequences of the Iran arms sales and for distancing themselves from the policy’s execution.

--A plan to focus on only a handful of issues during the remainder of Reagan’s term. These include pressing Congress to support his “Star Wars” missile defense plan, keeping aid flowing to the contras and negotiating an arms control agreement with the Soviet Union. Also on the front burner are the federal budget, the trade deficit, battling drug addiction and possibly education.

Appointment for Walsh

Beyond these steps, sources said that Reagan is almost certain to assure that the criminal investigation of the Iran-contra affair continues by granting a presidential appointment to independent counsel Lawrence E. Walsh. A federal court has already appointed Walsh to that job, but the appointment has been challenged as unconstitutional on grounds that only the President may name prosecutors.

The challenge may be the greatest in Reagan’s political career. The Tower Commission’s devastating critique of Reagan’s handling of the Iran-contra affair raised questions not only about the wisdom of the President’s foreign policy but also about his ability to manage his own Administration.

However, Reagan’s advisers point to his long-established ability to rebound from political adversity. “One of the things I’ve learned about Ronald Reagan is that he rises to challenges,” said Richard B. Wirthlin, a private pollster who advises Reagan. “Anyone who counts him out at this point runs a serious risk of being mistaken.”

Reagan’s advisers believe that he must convince the public that, for the most part, he is not the passive, hands-off leader described by the Tower Commission.

“If they view it as an aberration,” one adviser said, “then it will be like his first debate with Mondale in 1984. After his poor performance in that debate, there was a spate of in-depth analyses of senility. But he came back strong in the second debate, and concern about age and mental agility faded.”

Looking for rays of sunshine, Reagan’s advisers note that polls show that 55% of Americans still approve of the job the President is doing and 80% like him personally. And if Congress has turned Democratic, they add, 24 of the 50 states now have Republican governors, up from 16 last year.

Increasing Opposition

But Congress matters much more to Reagan than the governors do. And even before the Iran-contra scandal blossomed, the President confronted increasing opposition in the new Democratic-controlled Congress.

The appointment of Baker, an 18-year veteran of the Senate, as Reagan’s new chief of staff should go a long way toward repairing the President’s bruised relations with Congress. Even Democrats found nothing but kind words Friday for the man who will preside over the White House staff.

In fact, Baker is more likely to encounter difficulty from the Republican right. Like James A. Baker III, Reagan’s chief of staff in his first term, Howard Baker bears the label of “pragmatist”--a Republican who would compromise his conservative principles in the interest of making deals with the other side. And with Democrats in firm control of Congress, the White House may find itself making deals or accomplishing nothing at all.

Baker himself conceded that he has not always taken the conservative stance of his new boss. He has questioned Reagan’s “Star Wars” missile defense plan and pushed him to reach an arms control agreement with the Soviet Union. He helped pass the Panama Canal treaties and supported the equal rights amendment.

“In 1981, the differences in our points of view were more pronounced than they are now,” he responded. “I made the decision then that I’d be his spear carrier. I will give the President advice, and I don’t expect any conflict with him or any wing of the Republican Party.”

If Baker can help Reagan in the Democratic Congress, he will not find it so easy to help the President surmount his lame-duck status.

As with all modern two-term presidents in their final two years in office, Reagan’s policies are growing stale--Congress has adopted the ones it liked and left the rejects behind. And because Reagan no longer needs to rally the public behind him in another election, he faces mounting difficulties in mobilizing popular support for his programs.

In foreign affairs, the Reagan Administration may be crippled for its remaining two years. Its first casualty likely will be the legislative program most directly tied to the Iran-contra affair--U.S. military aid to the Nicaraguan rebels.

Another $105 Million

The Administration had been planning to ask Congress this spring for another $105 million for the contras on top of the $100 million that Congress approved for this year. But now it has put off its request until fall at the earliest.

“Unless we get a miracle, it’s dead,” said an aide to Elliott Abrams, the assistant secretary of state for Latin America. “We’ve lost Nicaragua.”

Beyond Central America, the Administration’s foreign policy is a shambles in many corners of the globe. The Iran-contra scandal is not entirely to blame.

Last fall, the Administration lost face--and credibility--when it traded an accused Soviet spy to secure the release from the Soviet Union of Nicholas Daniloff, U.S. News & World Report’s Moscow correspondent. And the collapse of last October’s Reykjavik summit with Soviet leader Mikhail S. Gorbachev over Reagan’s “Star Wars” program enhanced the impression that Reagan was not up to dealing with the Soviets.

Thus the prospect that the continuing arms control negotiations in Geneva will yield results during Reagan’s term is growing ever dimmer, although Reagan is expected to press hard for an agreement that he could leave behind as part of the legacy of his eight years in office.

Arms control has also been a particular interest of Baker, the new chief of staff. And as for the Soviets, they realize that a Republican President probably has a greater chance than a Democrat of securing Senate ratification of a treaty because a Republican is less prone to charges of being soft with the Soviets.

However, experts in U.S.-Soviet relations say the Soviets, who have insisted that Reagan abandon “Star Wars,” have been dragging their feet in Geneva in the hope that the Democratic Congress will kill Reagan’s missile defense program for them.

The Reagan Doctrine--support for anti-communist insurgencies in Third World countries such as Nicaragua--can boast of no successes so far, and none are on the horizon. While U.S.-backed rebels have not been wiped out in Afghanistan and Angola, neither have they prevailed.

And in the Middle East, the peace process was in disarray before the unraveling of the Administration’s Iran arms sale policy.

Sources close to Secretary of State George P. Shultz say he sees himself as the leader of a holding action to make sure the Iran-contra scandal does not reverse gains already won, such as the movement from dictatorship to democracy in such countries as the Philippines and El Salvador.

Outlook Less Gloomy

On the domestic side of the government, the outlook for the Administration is somewhat less gloomy.

The economy, in the White House view, is humming along acceptably, if not very spiritedly. Even the twin deficits--budget and trade--command decreasing attention of Administration policy-makers.

The budget deficit--a record $221 billion last year--appears to be shrinking gradually as Congress blocks Reagan’s defense buildup, trims domestic spending and enacts minor tax increases. Ever since it adopted a whopping package of domestic spending cuts in 1981, Congress has moved toward making budget policy on its own.

Greater Concern

The mounting trade deficit, which hit $170 billion last year, is of greater concern to the White House, whose chief goal is to head off protectionist legislation. Last year Reagan successfully vetoed a bill to protect the nation’s textile industry from imports, and despite the Iran-contra affair, he probably still has enough congressional support to make similar vetoes hold up.

Even before the Iran-contra scandal, economic policy-making had largely devolved from the White House to Treasury Secretary James Baker and Federal Reserve Board Chairman Paul A. Volcker. Volcker’s second four-year term expires this August, and the biggest economic decision facing the White House is whether to reappoint him to a third term.

Volcker’s chances of getting a third term--if he wants one--increased with the departure of Regan, his most powerful detractor in the White House. The former chief of staff had a hard time accepting Volcker’s continuing determination to avoid a burst of economic growth that might reignite inflation.

Beyond the economy, the Administration’s agenda is modest. Its recent proposal to provide catastrophic health insurance for the elderly under the Medicare program is being well received in Congress--although conservatives have condemned it as an unwelcome intrusion by Big Government into the Reagan program.

Another of Reagan’s domestic initiatives--welfare reform--is not likely to be greeted so warmly. Although the President has yet to formulate a legislative proposal, his allegiance to spending cuts at the federal level and greater responsibility for state and local governments has not sat well either with Congress or the nation’s governors.

Staff writers Sara Fritz, Norman Kempster, Doyle McManus, Tom Redburn, Robert Shogan and Robert C. Toth contributed to this story.