In the conservative delirium induced by Ronald Reagan's election in 1980, the president-elect himself came to a black-tie dinner staged by the American Enterprise Institute. "I just want you to know that we'll be looking closely at your observations and proposals," Reagan told a cast of hundreds. Soon, the administration was staffed by dozens of AEI fellows and scholars -- from U.N. Ambassador Jeane Kirkpatrick to White House communications director David Gergen. After decades of painful isolation, the think tank had become the establishment.
Last night another celebration was scheduled at AEI, a dinner for outgoing board chairman Richard Madden, a corporate chieftain from Potlatch, a forest products company. But around noon yesterday, the affair was suddenly canceled. An urgent meeting of the entire staff was abruptly called, where President William Baroody Jr., in the face of considerable turmoil, announced he would not offer his resignation. He said he would await the judgment of the board, which is meeting today. And then he was sequestered, unavailable for comment, in what were described as intense meetings.
The think tank had become a rumor mill. Indeed for some time, most of the thinking going on at AEI has been on the sensitive subject of what has gone wrong at AEI.
What's gone wrong can be measured: The annual budget is being slashed from $13.9 million to $10 million. Half-a-dozen fellows have been let go or have not been replaced. And about a dozen others have been told to raise their own money if they wish to stay. This sudden plunge sk,2 sw,-2 into the free market has been a cold shock. Overall, the staff has been reduced from 154 last fall to 108 today.
AEI's desperate need for cash has also led to the privatization of some of the historic monuments of conservatism. Regulation magazine, whose former editor is Supreme Court nominee Antonin Scalia, has been sold. Public Opinion, AEI's principal political journal, is looking for an investor. Bewildered scholars wander the hallways wondering aloud who or what is next.
AEI's fall from grace has two main causes, according to a wide range of sources: mismanagement and, more crushing, creeping centrism. As a result of its flirtation with the mainstream, conservative foundations that provided a solid financial base for the think tank have decided to cut off all funding.
"AEI has lost sight of what its mission is or was," says William Schulz, the Washington editor of Reader's Digest, whose foundation gave millions and this year cut off all support. "Baroody's desire to move the organization to the center and appeal to foundations and corporations not thought of as conservative has alienated the original supporters."
*Within the conservative philanthropic community, the Olin Foundation's refusal to sustain AEI was a thunderbolt. Olin's grants to AEI have been extensive, and its president, former treasury secretary William Simon, occupies an influential place within the conservative movement. "We have ceased giving grants," says Simon. "We did that at the last meeting two weeks ago. Suffice it to say, they've gone very far downhill, on a managerial and a philosophical basis."
Unlike many of the more recently founded conservative think tanks, AEI boasts many scholars with independent reputations, some of whom happen to be Democrats. No pressure is applied to cleave to a party line. "There's so much diversity at AEI," says an AEI fellow. "That's what the conservative foundations see as the problem. It doesn't seem to have a particular vision. A lot of corporations and foundations willing to give to anything a few years ago want more bang for their buck now."
By stopping the funding now, the conservative foundations are acting at a moment of maximum leverage. AEI was already in financial crisis.
Almost everyone at AEI has a tale to tell of unhappiness over Baroody's management. According to one fellow, a board member recently surveyed the senior staff and discovered "only one who did not join in condemnation of Baroody as a manager."
The bitterness may be due partly to the grand hopes Baroody raised. Just a year ago, for example, plans were unveiled for a fabulous new building. Interior designers and architects titillated the scholars with interviews: How large should your desk be? How thick the carpeting? "Up until last fall," says a fellow, "we had these pictures and touched-up photographs showing us what it would look like. That was to be ours." Suddenly, the intellectual dream house was knocked down. And the firing of the secretaries began.
"Look, he Baroody has said he's made mistakes in managing the institute," says Pat Ford, his executive assistant. "But these mistakes have been addressed. Mainly, they involved trying to grow too fast. This wasn't an unproductive effort here."
For some conservatives, AEI's troubles have been a source of mirth. At the well-endowed Hoover Institution in Palo Alto, Calif., where the future Reagan Library will be located, some scholars regale one another with "stories about how bad off AEI is," according to a Hoover fellow. " They enjoy telling such stories, how they're going broke, how things are much worse than anyone knows."
bat10 Once AEI, founded in 1943, was the only conservative think tank. Its president, William Baroody Sr., the son of a Lebanese stonecutter from New Hampshire, was lured away from the Chamber of Commerce to labor as an intellectual entrepreneur. His task was to secure respectability for conservatism, which was widely regarded as an instinct rather than an intellectual movement.
Baroody was instrumental in convincing Sen. Barry Goldwater to run for president. And during the 1964 campaign, Baroody controlled speech writing and issues. When the walls were crumbling around the Republican standard-bearer, his political consultants wanted a certain Hollywood figure to argue his cause on television. Baroody furiously resisted but was overruled. So Ronald Reagan was permitted to deliver the speech that thrust him into national politics.
After Gerald Ford left the presidency, Baroody made an alliance with him. The former president became the distinguished AEI fellow. And great sums of corporate and foundation money started flowing. But much of the financial base depended upon specifically conservative sources.
Baroody died in 1980, months before Reagan was elected. But he had already bequeathed his scepter to his son William Jr., who had served in the Ford White House. Thus the transfer of leadership within the premier conservative think tank took place according to the principle of primogeniture.
For years, AEI had advocated the "competition of ideas," that in the public debate, conservatism should be at least the equal of liberalism. And representing conservatism would be AEI.
But by 1980, AEI was no longer unique within the conservative universe. There was, for example, the Heritage Foundation, which had not gone through the long travail of securing legitimacy. Its conservatism was unabashed. And it quickly attracted vast sums of right-wing money.
"Some of AEI's problems are the result of conservatism's larger successes," says Leslie Lenkowsky, director of the Institute for Educational Affairs, a conservative foundation.
With so many policy institutes seeking money, AEI's drift away from a sharply defined right-wing position became a vulnerability. "There is no serious supply-side economist there," Lenkowsky points out. "The foreign-policy program, with the exception of Jeane Kirkpatrick, has long been an object of criticism of people outside AEI . . . The general attitude of the conservative donor community is watchful waiting. There are fears for AEI's overall institutional viability. It's a role-definition problem."
Baroody Jr. thought he had the "role-definition" problem solved. AEI, he frequently said, was "the center of gravity."
The center, it appeared yesterday, does not hold.