The inauspicious, shape-of-the-negotiating-table beginning of the meeting between President Reagan and House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) last Wednesday should have been signal enough that their talks would produce more posturing than peace and agreement on the 1983 budget.
First the leaders of the rival powers hovered around the rectangular mahogany table like sumo wrestlers engaged in an ancient ritual. The speaker, after disregarding the carefully arranged White House place cards and sitting across from the president rather than next to him, touched off the day's first controversy: he insisted that his young aide, S. Ariel Weiss, be allowed into the room.
The president relented only after taking firm counteraction: to balance the modestly renowned Weiss, he summoned from the corridor two formidable figures, Treasury Secretary Donald T. Regan and Office of Management and Budget Director David A. Stockman.
The only things that remained to be settled by Reagan and O'Neill were the levels of funding in the next three years for defense, Social Security and all other domestic programs--and the levels of the remaining tax cuts, the heart of the Reagan economic program.
For the next three hours last Wednesday afternoon, the nation's top Republican and Democrat sat in the ornate Presidents' Room of the U.S. Capitol with their principals: White House chief of staff James A. Baker III, White House counselor Edwin Meese III, Senate Majority Leader Howard H. Baker Jr. (R-Tenn.), Sen. Paul Laxalt (R-Nev.), Stockman and Regan with the president; House Majority Leader James C. Wright Jr. (D-Tex.), House Rules Committee Chairman Richard Bolling (D-Mo.) and Weiss with the speaker.
Interviews and notes of the participants show that the president and the speaker repeatedly made statements aimed more at their constituencies outside the room than at the negotiators at the table. The most detailed notes were by a Democrat who recorded an evenly divided number of flattering and not-so-flattering comments of both sides.
The president spoke first. A month of meetings between his advisers and congressional Democrats and Republicans had produced a number of proposals but no accord. Now the president opened with an off-color joke, followed by a true-colors bid for a compromise.
"I understand there are many areas where a little bit of give on everyone's part could resolve the issue," he began.
The president did most of the early talking for his side--and he performed knowledgeably and ably, Democrats privately conceded. Later, Howard Baker emerged in the role of the great compromiser, a role that had been scripted for him in advance, according to GOP sources.
The president's opening note of optimism was countered by the speaker. "We have got to evaluate the 1981 cuts and how they affect this year's spending," he said. Matters quickly went downhill from there.
The president talked about how the budget suffered from "built-in deficits" and asked: "Can we continue this way forever?"
Said Bolling: "The offer I made in the negotiations does better in the out years than what you are talking about."
James Baker, who had been the president's chief negotiator for the past month, said that O'Neill's attempt to go back to talking about the 1981 budget would be like the president talking about the ballooning cost of social programs in the future years.
Which prompted the speaker to interject: "If you are going to talk of that, then you have got to talk about food stamps, which was a Richard Nixon program."
"We have always talked about the need for budget cuts," countered the president. "Our budget cuts have not done damage to America."
"Mr. President," answered O'Neill, "the damage is that you have a rapid defense buildup and a massive tax cut bill."
Reagan, his voice showing anger, according to the Democrats, retaliated by striking close to home to the Massachusetts-born speaker. "Our defense spending as a percentage of the budget is much lower than in John F. Kennedy's day," Reagan said.
"But the times are not the same now as when Kennedy was president," O'Neill protested. "I know you people don't like to hear it, but you're just advocating trickle-down economics."
The president persisted. "I'm just advocating President Kennedy's program," he said. And for good measure he read for O'Neill an old John Kennedy quote about how it would be a mistake to delay his tax cut.
O'Neill began lecturing Reagan on the contemporary facts of economic and political life. "Mr. President, the nation is in a fiscal mess . . . . I can read the House. Last year you were going to win on everything you put up. Now the economy is going bad. If we don't have agreement, there will be massive deficits. Let me tell you what can pass. If you're going to be in cement, we are not going to get a budget."
And for good measure, the speaker finished with a full, partisan twist: "Your 1981 budget was unfair and had no equity."
Reagan responded in kind. "I've heard all that crap," he said. "You have the first actual deflation in 17 years. Interest rates are down . . . ." He went through the litany of his defense of his economic program.
James Baker tried to turn the debate into negotiation. "We are into a reasonable range of difference," he said, drawing attention to the work sheet. "The president has already come down 40 percent. We are in narrow differences now."
But Bolling interjected: "Except in terms of its substantive impact on people."
To which Reagan replied: "I don't know where our program of last year created any unfair situation." And he added: "We haven't thrown anyone out in the snow to die."
The work sheet, Howard Baker kept saying. Let's look at the worksheet.
"Mr. President," asked O'Neill, focusing on the work sheet that had been prepared under the auspices of the OMB, "are these figures acceptable?"
"Let's say they're a start," said Reagan.
It was the work sheet that got them to focus on Social Security and its COLAs, or cost-of-living adjustments. And it was the COLAs that brought the negotiations to stall and ultimately to collapse.
The work sheet contained one proposal made earlier by Bolling to lower the planned Social Security cost-of-living increases. It would make no change in the Social Security COLA set for this July, but would limit the increases for 1983 and 1984 to 5 percent.
Bolling asked why there was nothing on the work sheet to reflect an earlier proposal by the administration. It was a plan to put a 4 percent cap on the COLAs in each year and to delay the paying of the COLA for three months this year, six months from its original payment date in 1983, and nine months in 1984.
James Baker said that the Republican proposal was not on the work sheet "because Bolling said they couldn't live with it," according to one Democrat. Instead, Baker continued, the work sheet reflected a compromise between that plan and the Bolling plan. It was shaped along the lines of the Bolling plan; gone were the COLA delays.
At this point, James Baker emphasized, according to the Democrats, "This is not the president's program. It represents a compromise between the Democratic and Republican negotiators from Congress."
Since politicians equate tampering with a Social Security COLA with playing with a Molotov cocktail, O'Neill pressed on. He did not like the impression that the president was not taking any responsibility for tampering with the COLA.
He asked again if the president, too, had this on the table. The president answered, according to the Democrats, that "this is the proposal that came from the Congress."
"If the president isn't proposing this, it's not on the table," O'Neill said, stiffening his opposition.
Said Reagan: "We've got to get away from playing games on Social Security. The only way it can be touched is if both sides agree. Is it down to a choice between a 5 percent COLA and a 4 percent COLA?"
Said O'Neill: "We have no intention of touching the COLA this year, or agreeing to a three-month delay, or agreeing to this proposal."
The president responded: "We were only talking about a one-time delay and never three delays, isn't that right, Dave?" But Stockman replied that in fact, "the rolling delay three months each year for three years was one of the proposals that was put on the table very early and was taken off very early."
Recess. The president and the speaker adjourned with their allies to retrench. An aide to the speaker, Chris Matthews, told the Democrats that White House reporters had just told him that presidential aides were saying that the only proposal to limit Social Security COLA payments under consideration was Bolling's, which meant the Democrats would bear the responsibility.
Reconvene. The president and his men were facing three angry Democrats. Bolling repeated what they had just heard.
The president's advisers said there was no such briefing. Finally, White House communications director David Gergen was summoned to the room. No one at the White House was trying to focus the responsibility on Bolling and the Democrats, he said.
Howard Baker then proposed a three-month delay in the COLAs, beginning this year.
No one has to remind O'Neill that this is an election year: "I don't want to talk about the first year of the COLAs. That's off the table for me."
And when the president said he thought it seemed "the least harmful thing we could do to Social Security," O'Neill responded: "There's no way that would pass, even if all the Democrats in the House abstained."
Now Howard Baker had one more line. "Here's my last option. Let's freeze all COLAs for 90 days and postpone the third year of the tax cut for 90 days." This would reduce the 1983 budget deficit significantly.
The president interjected: "I would buy that." But the Democrats were not buying anything.
Wright, in a bid that had not been discussed with his colleagues in advance, tossed in one new idea: cutting Reagan's third year tax cut back to 5 percent in exchange for a series of other domestic spending cuts, plus a reduction in defense spending increases, and a surtax.
Reagan rejected Wright in the unmistakably clear terms of a great communicator. "Well, you may make me crap a pineapple," he said, "but you won't make me crap a cactus."
There was little need to go on. "It doesn't seem like we can achieve an agreement," Bolling said, and O'Neill agreed.
"The differences don't seem to be that big," the president remarked. "I would think we can just split the difference."
Soon there was silence. No one wanted to be the first to quit. "Mr. President," said the speaker, "We're waiting for you to get up." And James Baker suggested:
"Let's all get up at the same time."
EPILOGUE: Back at the White House that evening, assistant to the president Richard G. Darman held a background briefing for reporters to explain what had transpired in the COLA controversy. According to a reporter who was there, Darman went to great lengths to assert that the White House had never offered any substantive proposal for trimming Social Security. Darman pinned responsibility for such proposals on Bolling--OMB officials had only worked with Congressional Democrats on a "technical" paper on reducing COLAs, he said.