It is a long way from the Cambridge of Don Regan's childhood to the Oval Office, where the new White House chief of staff sees the president of the United States daily. A long way from the apartment where Regan lived with his family to his spacious home overlooking the Potomac in Mount Vernon. A long way from working his way through Harvard -- as a "day hop" who lived at home -- to the multimillionaire Regan became before leaving Merrill Lynch to become treasury secretary in 1981. A long way from his Democratic roots to becoming the consummate cheerleader of all things Reagan.
Who Donald Thomas Regan is -- and how and why he made those leaps -- is not easy to learn, particularly from Regan himself. Sitting in a sunlit room, looking past the winter-covered swimming pool to the river, Regan, the son of a railroad security guard, shunts aside questions about his past, saying half-jokingly, half-testily, "What are you? An amateur psychiatrist?"
Men who worked with him for years on Wall Street and those who have known him since 1981 as treasury secretary say such things as "No one really knows Don." "Not the kind of guy who ever had drinks with the guys after work." "A loner." "He doesn't have close friends."
The president runs a senior management administration, staffed with the corporate rich whom he enjoys and understands. There are the Bechtel Boys, George Shultz and Caspar Weinberger, former Wall Streeter William Casey, former president of Scovill Manufacturing Malcolm Baldrige and, of course, Regan. Tall and attractive with a full head of slicked-back silver hair, Regan, at 66, looks as if Hollywood cast him for the corporate board room. His brown eyes are his most arresting feature. They can twinkle when he thinks he is besting someone in verbal sparring, but most often they are wary, guarded, appraising, clicking away as he listens.
When Regan is asked what has driven him to the top, to become the powerful number-two man in the White House, he says flatly, "I am not introspective." His one explanation is that "I was always very competitive. I don't know why. It was built into me." Even in something as frivolous as charades, Regan has been known to get furious at team players who don't go for the win. Was this competitiveness something his mother or father instilled? He looks puzzled. "No. I've just been competitive from the time I was 3 or 4 years old."
Ann Buchanan Regan, his wife of 43 years, has been sitting across the coffee table. She now enters the conversation. "He was always an egotist. That's why."
Her husband nods. "True. Tell me who in Washington isn't -- including the press corps."
His wife continues, "To get to the top he had to believe in himself."
Don Regan says "That's true. I have believed in myself."
A refreshingly candid woman, Ann Regan sees part of her role in a world of fawning subordinates as "always knocking Don down a peg." Now she says with a half-jab, "He always knows more than the fella around him. Right?"
Don Regan: "Well, you're saying it, not I."
Later in the afternoon, Ann Regan, who is tall, stout and has silver hair and startlingly blue eyes, adds, "I'm not the least bit competitive. Neither are our children. But Don is just one of those guys," she says, stabbing the air in a gung-ho gesture, "who just has to be better than everybody else."
Regan's rise -- from post-World War II trainee to head of Merrill Lynch & Co., Wall Street's largest brokerage firm -- was not without controversy. He enjoys the money he made; estimates range from $30- to $40 million. Regan's standard answer is that he doesn't know how much, since it is in a blind trust. But he also savors his reputation as a maverick who championed changes that revolutionized the brokerage industry.
Sitting in his White House office with the fireplace crackling, Regan smiles, recalling those days. "Do you know why I'm hated?" he asks with relish. "I broke up their cozy little club. Wall Street was a cartel. They proclaimed capitalism -- but practiced cartelism. We shouldn't be closet cartelists if we're capitalists."
Regan began his business career with Merrill Lynch in 1946 after he left the Marines. He settled in for 34 years, eventually becoming chairman of the board. When Regan took control of Merrill in the late '60s, investment banking was dominated by an old-boy network in entrenched old-line houses, in many ways the world found in John P. Marquand novels. Then, Chris Welles wrote in Institutional Investor in 1981, "in a display of financial muscle perhaps not seen on lower Manhattan since the 1920s, Regan eclipsed most of his competitors."
In the '70s he pushed hard to, in effect, deregulate the stock market industry. Recalls a competitor, "Before, if you were interested, say, in buying 100 shares of General Motors on the New York Stock Exchange, there was a fixed fee. Then it all changed -- you could charge anything you wanted. It brought about discount brokers -- bare-bones terms, no research, advice, nothing. And a lot of small firms went under."
Another competitor, Walter Wriston, former chairman of Citicorp, says, "I have nothing but admiration for Don. Innovators have enemies who are interested in the status quo. Did a lot of firms go under when fixed fees ended ? Yes. Was somebody hurt? Sure. When you move from regulated to unregulated you have to get out and scratch."
While Regan is an advocate of the free market, he is above all the complete pragmatist. "I never heard him propound on economics," says Wriston. "He's just the typical guy with the American dream. There's a dozen like him, who succeed, but don't get the media attention. It's just that he's standing in Macy's window right now."
Regan can synthesize other people's ideas and shape them into his own, unfettered by ideology or strong passions -- except for what succeeds. No supply-sider in 1981 when he became treasury secretary, for example, he embraced much of the doctrine and four years later stunned diehard supply-siders by proposing a tax-reform plan that cuts loopholes, which have enabled many corporations to pay no taxes at all.
But it is the Regan style rather than his views -- or lack of them -- that creates the controversy. He ruled Merrill Lynch with an iron hand and has a reputation for tyrannically chewing out subordinates. "I saw him treat men on the assistant secretary level in a very demeaning way. The 'boy, bring my bags' kind of approach," says one former White House insider.
Most of those who sit high above Wall Street in airy offices thinking about money have one thing in common with most of political Washington. Fearful of his power, they will not speak of Regan for attribution. All their stories about him speak of his temper and ego. A former colleague admires his "quick, incisive mind," but adds, "His weakness is that his ego was so strong he did not pick good subordinates. Or if they were, he broke them. He couldn't stand the competition."
A competitor says, "Regan had a very good sense of the jugular. Anyone who raised his head too high got it shot off." Regan agrees. "I chewed up a lot of people," he once said. "Either they couldn't stand the heat -- or I couldn't stand their performance."
A Merrill executive who calls Regan a friend says, nonetheless, that "if you argued with him in a meeting it simply was not tolerated. Once he made his decision that was it. Anyone who continued to argue could just get the blank off the team. He has a wild temper and can get very angry." Would he shout, explode, his face turn red? "All of the above." But the Merrill man adds what others have said at Treasury -- that Regan also instilled loyalty. "He was a strong leader, very articulate. You were never left in any doubt about what he wanted to do or wanted you to do."
Former representive James Shannon chuckles as he recalls the autocratic side of Regan in hearings before the Ways and Means Committee. "He would really bristle at me and Thomas J. Downey. He almost went through the roof when I cut him off when he was filibustering about tax cuts. Here was this former chairman of Merrill Lynch and secretary of the treasury and some 28-year-old congressman is giving him hell. He couldn't stand it."
The irony is that Regan himself, as a young man on Wall Street, was not unlike Shannon and Downey when it came to questioning his elders. "That's the brashest young bastard I've seen in a long time," commented Robert Magowan, a former Merrill Lynch partner when he first saw Regan in action. Today, in his eighties, Magowan still laughs as he recalls Regan.
"He is exceptionally able and he is brash and he is confident and he always has been that way. He was not gregarious the way a lot of businessmen are. He doesn't build warm friends. He's a tough guy. I'd hate to work for him."
Many early colleagues say now that Regan had a "private agenda" and a game plan for success that matched his ambition. "He always had Potomac fever," said one Merrill colleague. "He had his eye on a top job in Washington long ago."
When asked about his vaunted temper, Regan tries for a joke. "You mean old lovable me?" His wife interupts. "You might as well admit it. You have an impossible temper! The only thing to do when you get mad is leave the house and go for a long afternoon walk."
Quite another image of Regan emerged in Washington. He is widely regarded as a man who subordinated himself to the president to the extreme of being a toady. He was ridiculed for his ardent cheerleading, especially the premature prediction that the economy was roaring back. He seemed to be eclipsed first by budget director David Stockman and then by White House Chief of Staff James Baker, who did much of the negotiating on tax measures on the Hill. But longtime Regan-watchers insist that he did indeed have a game plan; purposely lying low until Stockman shot himself in the foot with his Atlantic Monthly interviews with William Greider, lying low until the supply-siders trusted him. Detractors sneer at his inordinate "adaptability," admirers point to his "survivability."
Jim Shannon says, "I think Regan was willing to toe the supply-side line in '81 in order to establish his credibility with the administration and the president. He becomes what he needs to become. I feel that Regan sat by and let a disaster happen. Maybe he didn't have any choice, but he had to have seen that the 1981 tax bill was not going to be the smashing success that Rep. Jack Kemp and Company predicted it would be."
Former representative Barber Conable, who was the ranking Republican on the Ways and Means Committeee, says, "Regan's a bright guy but he was resented by some in the White House who felt he ought to square his shoulders and say, 'This is what we ought to do.' Instead he would wait until the president came down and turn himself into a pretzel to support the president's decision. My impression is he's not going in as a policy initiator as much as a policy supporter."
In his office, Regan addresses his critics witheringly.
"Isn't it a shame that I should try to carry out the president's program and not my own?" There is anger in his voice, although it is his stock argument. "After all, who did the people elect and why did they elect him? And why shouldn't I, either as his Cabinet officer or chief of staff, carry out his program? Why should I have my own program? I don't think I should."
He repeats his standard response. "I will take a definite point of view and will argue, hopefully successfully for that point of view, but once the decision is made, then I support it."
However, some who attended White House meetings say otherwise. "What troubled me about Don," says one, "was that he never said inside what he believed. He was usually giving the good news or going in for some Fed Federal Reserve Board bashing." One celebrated story is that Regan was pushing for defense cuts but as soon as the president showed up, he instantly backtracked. "Yeah, I saw that same story," comments Regan. "Yeah, and that was an unnamed spokesman and I'd like him identified and I'd like to know in which meeting I caved. I asked my own staff when I read that article and none of us could remember."
So did he argue with the president for cuts in the defense budget? "Yeah." He is asked about the view, shared by many Republicans on the Hill, that Weinberger is pursuing a course of kamikaze obduracy on defense spending. "Well let's see what happens," Regan slides out of the question. "Let's keep our cool. You've been around Washington long enough to know what is being said one week is not necessarily next week's action. Let's wait and follow the action." He seems to hold out that defense compromises will be made. "There is still time."
Although angered by negative views of him in Washington, Regan says it does not really bother him, any more than it did when he was on Wall Street. "What I believe in is what I fight for."
His wife adds, "I guess that's why some people call us very private. We could care less. If they don't like it, that's tough. Right?"
Regan nods at her across the sun porch. "Exactly."
The only man Regan has to please is Reagan, and so far Regan seems more than satisfied with his own performance. He also takes pains to suggest that he is no yes-man, that he has already explained a thing or two to Reagan. Questioned about reports that the president seemed unreceptive to Regan's proposed corporate tax changes, Regan sighs. "As I told him, 'On this corporate tax you were lured into answering by the Wall Street Journal reporter who said, 'Well what do you think about raising corporate taxes $14 billion?' "
Regan goes on to say that he gave the president the benefit of his wisdom after the stories appeared: "What that means is that we're reducing the corporate rate from 46 to 33 percent . And guess who ends up paying taxes? The corporations that don't pay now. So it's not all corporations. And then he said, 'Oh. Now I see!' He really hadn't had time to read it all, to scope it out around the table."
Many ardent supply-siders can't understand why Regan now supports a tax simplification program that has been praised by liberals and moderates. Former assistant secretary of the treasury Paul Craig Roberts, who says Regan "stood up to everyone when they said we supply-siders were wrong," argues that the "proposal has been on the shelf for two decades. It has nothing to do with where Don's been the last four years. I think he was just too busy to watch the tax policy and it was just pulled out."
Regan emphatically says, "No, no. Craig doesn't want to believe I would do such a thing. But this is deliberate. I knew we were going to have opposition. No one likes to have their taxes raised but there is no way you can cut rates and still have the same amount without having a broadened base. Take anything. Take a pile of sand and squish it and it flattens out -- and that is what is called a flat tax. I think when people understand the trade-offs, that some of the industries now paying a higher tax will pay a lot lower and some industries that are now paying little or no taxes will pay some taxes, I think the majority of the people will be convinced it's for good."
But how is he going to combat the opposition of the corporate lobbies?
Sounding not at all like a man who for years made a living in a world of tax straddles and shelters, Regan smiles and says, "Get people lobbies against them."
Just about everyone in official Washington, including most in the press corps, has at least one Ego Wall: pictures of himself with anyone famous. In Regan's sprawling home, there is one large room devoted to these icons of success. He proudly points out the many pictures of himself with the president: "There we are, playing golf at the Annenbergs'." "There I am giving the president a golf lesson."
There are pictures of them laughing together in obvious rapport. "Dear Don," begins the inscription on a picture of the president whispering in Regan's ear. "Tell 'em what I said or they'll think I'm asking for a tax break. Warm regards, Ron." And the most recent inscription, "Now Don -- Let's see, is it sec. -- no it must be chief? Whichever I like it. Warmest Regards Ron."
The room means a lot to Don Regan. There are cover pictures of himself on Time, Newsweek, U.S. News & World Report. Farewell plaques from Merrill Lynch, a United States Marine Corps-inscribed bone china plate, a wide angle shot of a banquet table with Margaret Thatcher on Regan's right and the president across from them. The camera has caught them hearing the favorite story the president tells about Reagan and Regan: Pat Boone is wandering around late at night in Beverly Hills because he is worried. He has to introduce Reagan, then the new governor of California, and doesn't know whether to pronounce it Ray-gan or Ree-gan. A friend walking his dogs says he knows it's Ray-gan, at which point Boone thanks him and says "Oh, and what kind of dogs are those?" The reply: "Bagles."
Regan's wife enters the room. "Oh is that that old bagles-beagles, Reagan-Regan joke? I've heard it a million times. I'm so sick of it!"
Regan laughs and points, finally, with pride to his framed diploma from Harvard.
In many ways, that year, 1940, was the beginning for Donald Thomas Regan. In 1940 he became a Republican, and he joined the Marines. He saw action in four campaigns during World War II, including Guadalcanal and Okinawa. Regan has said often that the experience "changed my entire life."
Today he says, "At age 26 I was a major on Okinawa with 1,200 men under me. When people are calling you the 'old man' and you're 26 years old and you're responsible for so many people, it does shape your life. You're not afraid of command from then on."
Does combat make the battles of the corporate board room and Washington seem slight? "Let's put it this way. It conditions you for it.
"Having gone through combat," he adds, "you're not afraid of very much."