Known and Unknown - Donald Rumsfeld [99]
Knowing how the speech shop operated, I suspected that the draft of the speech sent so late to my office might not have been vetted properly by the President’s economic advisers or experts in the Treasury Department.20 I called Alan Greenspan, chairman of the President’s Council of Economic Advisers, to check if he had seen it. Greenspan said he had received a copy of the speech only a few hours earlier. He and his staff had worked hard to try to improve it in the brief time they had, but the speech still contained errors and misstatements. He could only vouch for the accuracy of about four fifths of it. Even with his last-minute edits, Greenspan felt the speech was high risk.
I went in to see Ford and urged him to cancel the speech. Because the networks had cleared airtime for the President, I suggested that he instead give a five-minute address discussing the economic problems facing the country, and then say he was not yet satisfied with the economic programs presented to him but was committed to finding the best possible policy. I reiterated my concerns about Hartmann’s speechwriting operation.
Ford heard me out, but since he had already authorized Hartmann to go forward with the idea, he was reluctant to back down. “Don,” he finally said, “I think it is a good program.”
“Okay,” I replied. “I wouldn’t have felt right if I didn’t at least give you this thought.”21
The response to the speech was not what Ford had hoped. Wearing a pin to defeat inflation became a national punch line. Ford was disappointed by the negative reaction to his speech both in Congress and in the country. I felt sorry for him, but it was a self-inflicted wound and still another sign that the spokes-of-the-wheel approach the President had selected at the outset was not working.
As chief of staff I tried to keep my personal views on the substance of policy issues out of my advice to the President unless asked. I wanted to serve as an honest broker. But since my days in Congress, I had views on the economy and the limited role government should play. During my time in the Ford administration I came to know a young economist at the Department of Treasury named Arthur Laffer, who further focused my views. At one dinner I had with him and Dick Cheney, Laffer outlined his view that higher tax rates did not necessarily translate into higher tax revenues. On a cocktail napkin he sketched out what later became famously known as the Laffer Curve to illustrate his point.* Put simply, the theory that the higher the tax rate the greater the revenues to the government is disproved by the fact that if the tax rate were at the highest rate—100 percent of earnings—government revenues would drop precipitously. If everything one earned was to be confiscated by the government, people would have little if any incentive to work.
Laffer advised what seemed counterintuitive to many then (and even today) that the administration might need to reduce taxes to achieve higher revenues, since that would leave more money in the hands of those who create the jobs and therefore expand the economy. That night gave quantitative context and rationale for my inclination toward lower taxes coupled with fiscal responsibility. Laffer’s approach would also appeal to one of the Republicans soon to be running for president—Ronald Reagan.
When Ford offered Rockefeller the vice presidency in August, he had indicated—or at least he had left Rockefeller with the impression—that Rockefeller would have broad responsibilities for domestic policy. I was concerned by any vagueness in such matters and convinced that the President needed to provide clarity, and fast. “It seems silly now,” I conceded to Ford, “but mark my words, it will be a monstrous