A Not-So-Brief Intermission

By WALTER ISAACSON

Then Reagan will face a new, more demanding set of issues

The stage is empty. There is a dramatic pause, tinged with accomplishment and anticipation. Washington's feature performers have exited--Ronald Reagan to his California ranch, Congressmen to their home districts. Act I of the Reagan Revolution, subtitled by the President "A New Beginning," was a dramatic 200-day political showdown between (stage right) an Administration determined to change America's economic system radically and (stage left) a Democratic House leadership hoping to preserve the social programs and progressive taxes that have evolved since the New Deal. Reagan's dazzling victories won him wide applause--both enthusiastic and grudging--for a masterly political performance. Now, players and audience alike await the second act, in which foreign policy and controversial domestic issues promise to dominate the stage.

The first-act curtain came down last week, as Congress overwhelmingly approved final language of the bitterly contested tax bill that passed two weeks ago. Over the next three years, the measure will cut personal jates by a total of 25% and provide a bevy of benefits for oil firms, savings and loan institutions, commodities traders and other businesses with powerful lobbyists. Altogether, the bill will reduce federal revenues by $750 billion by fiscal 1986. Senator Edward Kennedy made a last-ditch fight against some of the $33 billion worth of giveaways to the oil industry but accomplished little more than to annoy colleagues anxious to begin the August recess. Democrat James Shannon of Massachusetts similarly tried to reopen debate on these provisions in the House and was resoundingly beaten back. His party, which for decades had dominated budget and revenue debate in the House, had to content itself with the consolation that the President would henceforth be held solely accountable for any economic problems. Intoned vanquished House Speaker Thomas P. O'Neill: "The deficit is his. The interest rates are his. Unemployment is his."

Reagan, who plans to sign the tax bill next week, after Government printers finally catch up with the prolific lawmakers, seemed undaunted by the economic revolution he has effected. "Now all we have to do is make it work," he said with grand understatement at a farewell luncheon at the Washington Star, which ceased publication last week after years of heavy financial losses. Warned the President: "The signing of these economic matters, that isn't the end of the game--that's the beginning."

But before he starts this new phase of his term, Reagan will spend 28 days at his beloved Rancho del Cielo near Santa Barbara, Calif., chopping wood and riding his horse Little Man.* He spent the flight west last Thursday cleaning out his briefcase and has firmly told his aides, who had proposed presidential visits to Alaska and Hawaii, that he has earned an uninterrupted vacation. Only a doctor and a military aide are at the ranch with Reagan. Chief of Staff James Baker will spend time alone fishing in Texas and Assistant Michael Deaver will retreat to the New England coast. Only Counsellor Edwin Meese will remain on duty, splitting his time between the White House and California. Says one aide: "The President wants time to himself." His only scheduled activity is a short visit to Los Angeles for a meeting with advisers on defense policy, socializing, and a possible press conference, plus brief appearances at three California fund raisers.

Before he left Washington, there was a warmup for the foreign policy debate that will soon take center stage. President Anwar Sadat of Egypt arrived in Washington, the first in a series of postvacation Middle Eastern visitors who will include Israel's Prime Minister Menachem Begin, Jordan's King Hussein and Saudi Arabia's Crown Prince Fahd. Sadat was met on the White House lawn with great flourish: herald trumpeters played an original composition called A Salute for a New Beginning, and Reagan called the Egyptian "a man whom history will undoubtedly label one of the 20th century's most courageous peacemakers."

Sadat had more than just ceremony on his mind, however.

At his first official meeting with Reagan, he urged the inclusion of the Palestine Liberation Organization in future peace talks.

Palestinian participation in the cease-fire now in place between Israel and P.L.O. guerrillas in Lebanon, he said, was a "great achievement." Sadat reminded the President that the 1978 Camp David agreement called for Palestinians to be brought into the negotiations this year.

Secretary of State Alexander Haig, however, ruled out any such move. He said that the U.S. would continue to honor its commitment to Israel to have no formal contact with the P.L.O., until the P.L.O. recognized the legitimate existence of the Jewish state.

State Department policy-makers have been frustrated that the White House, preoccupied with Reagan's economic program, has done nothing to develop a Middle East policy, and that the President has displayed a degree of innocence about the issues involved. If nothing else, the specialists at State hope that the cordial meeting with Sadat helped focus Reagan's attention on the intricacy and urgency of the region's problems.

Sadat also urged the U.S. to build upon Saudi Arabia's recent cooperation in forging the Lebanese ceasefire. Even though the Saudis have berated Sadat for signing the Camp David accords, he urged the Senate Foreign Relations Committee to support Reagan's proposal to sell Saudi Arabia five new AWACS surveillance planes. For his part, Reagan stressed the importance of bringing moderate Arab nations, particularly the Saudis, into the peace process. Said he: "We have to convince them that we can be allied with them as we are with Israel and that we're not biased on the part of one nation alone." He also sent a letter to Capitol Hill leaders stressing the importance to U.S. policy of the AWACS sale, and asking them not to "prejudge our proposal before it is presented."

Sadat used several maps to illustrate the growing Soviet presence in the Persian Gulf region and Africa and pressed for more U.S. aid and military equipment. The U.S. must be firm in resisting Soviet expansion, he said, but he made a strong plea that anti-Communism not be equated with opposition to national liberation struggles. As he told the Council on Foreign Relations in New York City: "The U.S. should support liberation movements everywhere. The case in point is now Namibia. We pressed our friends in Washington to put more pressure on South Africa to comply with the United Nations resolution [calling for South Africa to grant independence to Namibia], and we expect a prompt response."

Another top priority for Reagan this fall will be formulating a policy on arms-control talks with the Soviets. Last week he reiterated his view that the SALT process was flawed because it has not helped bring about a genuine reduction in strategic weapons. Said he: "I don't want to talk about arms limitation. I want to talk about arms reduction. And I think, until we do, it's ridiculous." The Administration is committed so far only to resuming talks with the Soviets about controlling nuclear weapons based in Europe.

Reagan last week introduced a major new factor into any future arms-control talks: he decided to proceed with construction of the enhanced radiation warhead, commonly known as the neutron bomb. President Carter deferred production of the weapon in 1978 but allowed development of its components. On Friday, the U.S. began informing its NATO allies of his decision and pledging that the weapons will not be deployed in Europe without allied approval. But one Administration official noted: "Of course the Europeans are going to wonder when the other shoe is going to drop." The neutron bomb, which kills humans but does not cause major destruction of property, is designed as a tactical weapon for battleground use.

The President also faces decisions about other future U.S. defense systems, such as the MX missile and the advanced strategic bomber. Because opposition to a land-based MX system remains strong among officials in Utah and Nevada, where it would be located, an alternative scheme to place the missiles on air-transport planes remains very much alive. Reagan is scheduled to make an announcement on MX basing soon after his Sept. 3 return to Washington.

Also awaiting the return of Reagan and the Congress in September is a passel of potentially explosive domestic is sues. Among them:

The Clean Air Act. Environmental Protection Agency Chief Anne Gorsuch last week outlined changes the Administration wants to make in the 1970 law. Next year's automobile emission standards for some pollutants would be rolled back to limits in effect in 1977. The rule designed to prevent significant deterioration of current air quality would be relaxed so that industries could expand in areas where pollution is now below the national maximum. And new coal plants would face less stringent sulfur-emission requirements.

Gorsuch claimed that the nation's air quality would continue to improve, but "at a more reasoned pace." Environmentalists immediately assailed the plan. Said Richard Ayres, chairman of the National Clean Air Coalition: "This is a sugar-coated prescription for dirty, unhealthy air." Reagan defended his environmental policies and those of beleaguered Interior Secretary James Watt last week, branding critics "environmental extremists." Said he: "What Watt's trying to do is a little bit like getting a mule's attention--you hit him in the forehead with a two-by-four first."

Social Security. This issue has thus far caused Reagan more political headaches than any other. And he has yet to begin to get to the heart of the problem. Last week he tried again to contain the popular damage caused by his elimination of the $112-a-month minimum benefit, which goes to workers who have not contributed enough to become entitled to regular payments. He promised to propose special welfare supplements, which would not come from the Social Security fund, to help the "truly needy" whose benefits were cut. But looming even larger is the fact that the financial base of the fund seems headed for bankruptcy in a year if nothing more is done. Reagan will have to press for a bipartisan solution to minimize--or at least equally distribute--the political fallout from any changes.

The voting Rights Act. Reagan says he expects to support a full extension of this important civil rights law with only minor modifications. Some Southerners had urged that a provision of the law that forces Deep South states to obtain Justice Department approval for any change in election laws be applied nationwide. Reagan originally supported the idea, but says he is now convinced it would make the law too cumbersome to enforce.

Education. Reagan has promised to abolish this year-old Cabinet department, and last week its Secretary, Terrel Bell, suggested that the deed be done by transferring the programs to a new Government foundation, similar to the National Science Foundation. Bell prefers this approach over the option of returning the Education Department to the Department of Health and Human Services in the form of the old HEW.

Crime. The White House feels that new laws to fight violent crime are both necessary and politically popular. One sure aspect of the package Reagan plans to offer: an attack on the drug problem through both tougher enforcement and new narcotics information projects. Interestingly, the crime package might also contain provisions to promote higher employment among urban youths through tax breaks for inner-city enterprises.

Social Issues. The greatest controversies of all may come from a potpourri of conservative concerns sacred to Reagan's New Right supporters if not necessarily to the President, which include abortion, school prayer and busing. Already introduced in Congress are a Human Life Bill, which would protect the rights of the unborn from the moment of conception, and a Family Protection Act, which seeks to reinforce "traditional" moral values by giving parents more control over such things as sex education. Reagan and his advisers indicate that they will support but not take the lead in fighting for this type of legislation.

As Reagan noted, the nation has not heard the last of economics. In order to fulfill his promise to balance the budget by 1984, the President will have to make even sharper spending cuts. By Administration estimates, which many private economists feel are too rosy, almost $30 billion more in reductions will be needed for 1983. Even the Defense Department has been instructed to prepare a list of possible cuts. Says Meese: "No program is immune." Despite the public outcry, the presidential counsellor claims "the cuts so far have been relatively minimal, not by any means draconian."

Even staying within the 1982 limits will require constant scrutiny to assure that forthcoming House appropriations bills do not exceed the budget ceilings first set. Already, appropriations bills are coming in over target. Says Office of Management and Budget Spokesman Edwin Dale: "We still have a big struggle left this year."

In pursuing his economic program, Reagan demonstrated an impressive ability to keep public attention--and his own--fixed on a single subject. Act II will be harder to choreograph. Says one close adviser: "As an outgrowth of the election, it was possible to keep the focus unblurred and put other issues on the back burner. Now, there will be more balls in the air."

Reagan's congressional coalition of Republicans and conservative Democrats may not hold together on many future issues. For that reason, Reagan plans to maintain a lower profile in coming months. Explains one aide: "We can't keep spending the President's good will on every issue that comes up." Instead of leading the charge, he may be more reactive, allowing others in the Administration, or his supporters in Congress and the New Right, to step into the spotlight--if events permit.

Reagan may find that he is a tough act to follow. With clearly defined goals, broad support and his own timetable, he constructed a coalition that enacted his economic plan. The next tests will come on problems--foreign policy, defense, the environment, social issues--where the goals are harder to define, the timing can be determined by others and the players are even more intractable than the Democrats on Capitol Hill. Any half-decent playwright can turn out a good first act. After that, the characters and the events often have a way of getting out of hand.

--By Walter Isaacson. Reported by Douglas Brew and Gregory H. Wierzynski/Washington

*The last presidential vacation of such duration was Richard Nixon's 31-day stay at San Clemente in 1969. But Nixon, unlike Reagan, took along most of his staff, wore a coat and tie constantly, designated his home the Western White House and clearly ran the Government from there, as people and paper shuttled constantly cross-continent on red-eye flights. When President Thomas Jefferson was criticized for his long vacations, he cited George Washington as his precedent for escaping the swampy capital in August and September. Said he: "Grumble who will, I will never pass those two months on tide-water."

With reporting by Douglas Brew, Gregory H. Wierzynski/Washington

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