Here at 2 p.m. in the secretary's vast office at the Treasury Department, Jim Baker's got trouble. It is six hours before a presidential press conference and UPI has just published a confusing story that implies Baker told a House committee there may not be a tax reform bill this year. It is the biggest domestic issue of the year -- for Congress, for the White House and for the taxpayer. And it is believed to be the principal reason that in January James A. Baker III resigned one of the most powerful jobs in the country -- chief of staff to the president -- for this Cabinet post.

All three networks have already called. So have White House chief of staff Donald Regan and Vice President Bush.

Can Jim Baker repair the damage before the cameras roll, before the headlines are printed, before the national media bellow about discord in the administration?

Watch a hands-on political pro in action:

"Get me CBS."

"William," he says to CBS White House correspondent Bill Plante, "I hate to disappoint you, but there's no news here. What I said was that we want a tax bill this year . . . You got it straight from the horse's mouth."

"Get me NBC. Get me ABC."

And then: "Well, they're convinced. Call the Post and Times . . . And call UPI. Get me Don Regan."

"Don, what I said was . . . Are you okay on this now? Let me say that yesterday I was even more emphatic about it in the Senate . . ."

"Get me Larry Speakes."

"Larry, what I said was . . . You might whisper in the boss' ear."

He has spent two hours of his day on this because Jim Baker knows one thing about Washington: Bad story, big trouble.

It is 5 o'clock when he finally drops his lanky frame onto the office couch, answering a call on the ringing private phone from assistant Margaret Tutwiler, with a quick "Yes?"

"Well," he says, hanging up the phone and turning to a visitor with a smile of satisfaction, "UPI has rewritten the story."

Jim Baker, the master of the master game, has lived up to his reputation.

They say he is unflappable, smooth and smart, the consummate tactician whether he's dealing with a Social Security compromise, the press or the conflicting ideologies that have marked this administration. And for the past two weeks, many White House insiders have been insisting that the political debacle over the president's decision to visit Bitburg cemetery, where 49 Nazi SS soldiers are buried, would have been remedied promptly if Jim Baker had still been running the White House show.

"There's no way that anybody not a resident of the White House can second-guess decisions that are made here," Baker tactfully responded yesterday at a White House press briefing, called on the eve of the European economic summit. "I do not have all the facts and circumstances that went into the Bitburg decision, and there's no way I can second-guess it."

Always artful, Baker at 55 is a complex combination of southern patrician and crafty politician, perfectly comfortable chewing a wad of Red Man tobacco one minute and meeting with British Prime Minister Margaret Thatcher the next.

In a city where power is judged in terms of one's proximity to the Oval Office, James Baker, without qualification, had it.

"People have said to me, 'How can you quit right at the time when it was all yours?' And I said because power isn't my bag," he says, winding down in his office late one night. "They said, 'How can you quit when you have all that power?' and I said I don't give a whit about power . . .

"A lot of people think that it's glamor and glory and it isn't. It's 14-hour days, it's keeping your eye on the ball and, frankly, it's being able, to some degree, to be careful not to seek too high a profile. There's a saying around this town: the higher the monkey climbs the more you can see of his behind. The higher you climb, the more people you have shooting at you."

But Baker's not the type to stop climbing; he just finds another vine. After guiding the largest presidential electoral vote victory in American history, Baker switched jobs with then-Treasury Secretary Regan, and set out again to do the thing he likes to do best: Win. "Hell," he says, "I've lost as much as I've won. But some of those people that go around saying Jim Baker is a loser can't write that anymore."

This time he's tackling the tax reform and simplification plan, a Treasury proposal expected to be out in two weeks, bound to hit every major political constituency in the pocketbook and threatening to give him a lot more grief than applause. He has already met with the bankers, the businessmen and the charities -- some of the many who have a gripe with the Treasury Department's original plan as proposed by Regan.

Which is all the more reason why even Baker doubters concede: If anyone can pull this one off, it's Jim Baker, the Reagan administration's star pacifier and negotiator.

Worried that maverick Republican Rep. Newt Gingrich of Georgia is going to cause trouble for the president by opposing him on major issues?

Have him to the White House and let him know the president needs his input on an upcoming address.

Nervous that a major newspaper is about to publish a critical story?

Call the reporter before deadline and offer to answer any questions.

Concerned that Rep. James Jones (D-Okla.), one-time chairman of the House Budget Committee, won't compromise on a gridlocked budget bill?

Go to his home personally for breakfast to assure him that both sides can work together.

Says Baker: "My father used to tell me something that I think stood me in good stead. And that is, remember that anytime you have somebody behind the eight ball, that time will come when they'll have you."

"He's an honest adversary," says Rep. Dan Rostenkowski (D-Ill.), who dealt with Baker on the 1982 Social Security compromise. "He has a first-rate political gut, his instincts are sharp, his word is gold. He deals face to face, and rarely sends staff. Jim Baker knows I would not tolerate that."

"I felt when he came to the White House as chief of staff from the Bush campaign where he was campaign director in 1980 the guy would have an impossible time surviving being an outsider," says Lee Atwater, who was deputy director of Reagan-Bush '84, and is now a political consultant. "Obviously, I was wrong."

"He does his homework," says Tutwiler, who also left the White House to follow him to Treasury as assistant secretary for public affairs. "He prepares for Sunday talk show appearances for hours. He does not believe in winging it. He is an extremly disciplined person. He is an extremely cautious person."

"He leaves little to chance," says Mike Deaver, White House deputy chief of staff and Baker ally. "If he wants something done, he calls me five times in one morning until I do it. He would drive me crazy."

His detractors and allies alike cite this same thoroughness and caution as a negative, complaining that on the fast-moving train of political risk-taking, Baker is last to get on board. "These people who say that," says Baker with a tinge of sarcasm, "do they think if I did things differently, we would have won Minnesota?"

Consider his modus operandi with the media, for example. Baker almost always talks for "background" during interviews, which means the information can be used but not attributed to him. He refuses to be quoted for major stories unless the reporter agrees to give him veto power over his quotes, which he exercised in this story. Baker does not believe he is being overly cautious or manipulative because, he says, "it's a two-way street."

Critics also maintain that Baker is only focused on his own self-advancement, and that he now wants to be president himself. They say that in the past four years he has really only watched out for three other people: Tutwiler; John F.W. Rogers, former White House aide who is now assistant secretary for administration at Treasury; and Richard Darman, his bright and brash deputy secretary who also followed him from the White House for the number two Treasury spot.

And conservatives have long complained that Baker has no ideology. They say Baker, having worked for "moderates" like Gerald Ford and George Bush, has his own agenda and has kept the views of the right away from Reagan. "He kept talented people like Jeane Kirkpatrick away from the president," says conservative direct-mail czar Richard A. Viguerie, a longtime Baker critic. "But I will say, he was always a gentleman about it."

Baker is tall and dignified, polite and relaxed, with the kind of gentlemanly demeanor that Texas teaches. He is a man for whom nothing seems to go wrong, from his upbringing in one of Houston's oldest and most prominent families to his sparkling re'sume'.

His great-grandfather founded Houston's oldest law firm, Baker and Botts, where his father practiced law and where his oldest son does now. Baker spent most of his working years at another Houston firm, however -- Andrews, Kurth, Campbell and Jones -- a short-lived nepotism rule having prevented him from working at Baker and Botts.

He is said to be worth an estimated $7 million, most of it family money. He graduated from the Hill School, a prestigious prep school in New Jersey; Princeton University; and the University of Texas Law School.

Yet beneath the glossy veneer is, at times, an impatient man who seems to have found most of the happiness in his life through work ("My father said nothing is worth having that you don't have to work for, and he was a pretty hard taskmaster"); and who, after 15 years, is still struggling with the sudden loss of his first wife, Mary, to cancer and the years of trying to piece his family together.

"One of the regrets in my life is that I didn't spend more time with the boys and their mother . . . It's something that affects me here," he says pointing to his head. "I guess you'd say there is some guilt . . . In the 15 years we were married I don't think I took more than two planned vacations with her. We were young parents raising a family and I was trying to make it in a competitive atmosphere."

Says Jamie Baker, the oldest son, now 30: "He was crushed by her death. I remember on the night she died. We were all sitting around the living room and there were a lot of people around and he just broke down and started crying, really sobbing. I had never seen him so emotional. And I never have since."

A year later, as fellow Texan and friend George Bush tried to help him out of his grief by drawing him into his unsuccessful 1970 Senate race, Baker found himself struggling to raise the four sons he barely knew.

"I think he tried to spend more time with us. But he did it in a way that his father did, and that wasn't necessarily right for us," says Jamie. "And that is hunting, getting you out of bed at 5 to stand in the dark, in the cold, at the duck blind. He offered to do that with me, but I was too vengeful and decided I wasn't going to give him the satisfaction. I guess the message was that he can't buy me off."

The heartaches had just begun for the family. In 1973, when Baker was about to put his Houston law practice on hold to head to Washington as an undersecretary of commerce for Gerald Ford, he married Susan Winston, the ex-wife of a good friend. She had three children of her own, and, instead of adding a little peace to his life, the union started off as a disaster.

"It was explosive," says Susan Baker today. "Dealing with three seventh-graders under one roof . . . We look back and wonder how we survived in Jimmy's three-bedroom house. We were trying to remodel, so that there were kids sleeping on the stairwells. And the socks, think about the socks. I still have nightmares thinking about trying to keep all those socks straight."

"A horror show that first year," Jim Baker says. "It's hard when you're that age to accept somebody else in the place of your mother or father. They were hurting."

Says Susan Baker: "One of the children was particularly hurt. And I prayed that I would love that child -- even when he was swearing at me and saying that he was going to get his father to divorce me. And I did. It was truly a miracle."

Says Jamie Baker about that period: "I think they both had a tight line to walk. I remember once in particular all the boys wanted to put up an oil painting of my mother and Susan said, 'Listen, I loved your mother, too, she was my friend, but we're not going to have this house be a shrine.' That was the kind of thing he was up against."

In 1977, as national politicians were still touting Jim Baker as the "Miracle Man" for his role as Ford's chief delegate hunter a year earlier, his first wife's parents were killed driving to Houston to visit Baker and his children.

And in 1982 and 1983, at the peak of his White House infighting with California insiders like then-national security adviser William Clark and White House counsellor Edwin Meese, Baker was also grappling with one son's arrest on a marijuana-selling charge. (John C. Baker pleaded guilty to a misdemeanor last December and was fined $2,000.)

Today, Baker says that his first wife's death made him realize the importance of family and that the beneficiaries have been Susan and the child they had together, Mary Bonner, 7.

"I would not have been as tolerant as I am with Mary Bonner," he says. "I was younger, and in a competitive atmosphere, you're busy trying to make it yourself."

"That's true to a certain extent," says Susan Baker. "But I think that his pattern is that he is very highly motivated in his career, and while he does spend a little more time thinking about family, it doesn't necessarily follow that he does things a lot different than before . . . We joke about it. He took his first wife on several vacations. We have had one bona fide trip in 11 years."

Jamie Baker speaks kindly of his father, but he says they are not as close as he would like. He believes his father "never has had the time" for the children, and Jamie has been reluctant to discuss his mother's death with his father. "I suppose someday I will have to deal with that," he says.

"I didn't know how sick she was," says Jamie Baker, "and he called me one morning to come home from boarding school, and by the time I got there, she was gone. I feel pretty good about her because the last time I saw her we stayed up really late one night talking. But I still would have liked to say goodbye.

"And I'll tell you something," he adds, "he's where he is because of her. She's the one who was really interested in politics. She would always say to him, 'You have no room to complain about the way things work unless you're going to do something about it.' "

Jamie is asked about a photograph his father keeps of his mother in his Treasury office.

"But there are none of us," he says, referring to the four boys. "That in itself should be telling. I'm sure it's just an oversight, and I don't want to sound like I'm jealous. But I am. He did have this one huge group shot of the entire family way back on some shelf in the White House, but I don't count that. It's not the same."

Asked if he ever told his father how he feels, he replies:

"I'm doing that now."

Democratic strategist Robert Strauss, a Baker booster, likes to tell this story about his friend:

"I was talking to this national reporter one day, and he told me as how he had to do a White House story so he called Baker and also called a lower White House assistant. Well, the other guy never called back, and Baker returned the call before his deadline. So this reporter says, 'Now Bob, who do you think I'm going to treat better in my next story?' That should tell you a lot about Baker."

To understand how Baker has managed to come through four years of White House political infighting virtually unscathed, it's important to know his relationship with the press. In an administration that has been at odds with the Washington press corps almost since Day 1, Baker has been a self-anointed lifeline. He talks to national reporters often, revealing behind-the-scenes information on "background" they might not otherwise learn. It is, naturally, to his advantage that the information is relayed from his point of view.

Even when Baker was about to lose a key inside battle to replace William Clark as assistant to the president for national security affairs, he managed to avoid being perceived as a loser by quickly taking his name out of the running.

"Baker is a master at burning out a bad story real quick, before it has a chance to recycle," says a key Reagan GOP strategist. "Just like the time he told a reporter that Labor Secretary Ray Donovan should resign. The next day he admitted it, apologized to Donovan and that was the end of the story." (Donovan has since resigned after being indicted on 137 counts of grand larceny and fraud.)

During Baker's first "background" briefing with reporters who cover the Treasury Department, one reporter for a news service wasn't quite ready to accept Baker's press policy and left abruptly because Baker wouldn't go on the record. Baker wasn't fazed.

"You're excused," he said, with a wave of the hand.

Baker believes he simply cannot come out a loser on the tax plan, despite an increasing feeling around town that it is an impossible undertaking. At issue is a plan proposed under the Donald Regan Treasury regime that would lower individual tax rates to a cap of 35 percent but also wipe out many favorite deductions and shift the tax burdens back from individuals to corporations. The president and many corporations are not comfortable with the Regan plan. There are also several other versions proposed on Capitol Hill.

"He came up and met with me to keep me informed on what was going on," says Senate Majority Leader Robert Dole of Kansas. "He always covers all his bases. But this is a big, big, big mountain to climb. You don't realize it until you start talking to people who are against it. And there are plenty. I talk to them every day. Everyone thinks the package is okay in principle -- except for the part about them. If he does this one, he'll be on his way to wherever he wants to go."

The way Baker views it is somewhat of a metaphor for the how-to-be-a-winner philosophy of his life.

"A good part of this game is expectations," he says. "If people expect you to win and you win, it's not a win. If they expect you to succeed and you succeed, it isn't anywhere near the success if you pull a big one out."

Baker and Richard Darman have just about finished drafting their own tax plan, and the president is in the process of reviewing it. Now comes the part where Baker excels.

"I think people tend to downplay the importance of political understanding in this town in terms of getting things done," Baker says. "A lot of it is, of necessity, more political than substantive. You've got to have the right product substantively. But you have to also know how to get it done."

So how does Jim Baker plan to handle all his constituencies?

"Carefully," he whispers across a dinner table, "very carefully."