Back in the Saddle Again /

By Ed Magnuson

The occasion has become an annual tradition that marks the end of summer: a ranch outing in California given by the President for members of his staff, local Republicans and the traveling press corps. Looking serene and relaxed in his cowboy duds, Ronald Reagan chitchatted his way through a crowd of nearly 500, posing patiently for pictures with spouses and children. On one of the final days of his vacation, the President gave no indication that yet another testing time awaits his Administration when official Washington returns to business this week. A seemingly uncertain White House faces an unusual confluence of difficult tasks: preparing for the summit with the Soviets in Geneva, negotiating with Congress on a policy toward South Africa, reviving the dormant campaign for tax reform, and keeping even the modest deficit- reduction program from dissolving into a veto-ridden stalemate. Reagan's staff is aware that the success of his second term may be at stake. "It will be a crucial three or four months; we all know that," concedes a White House aide. "It's going to depend heavily on the President."

But has Reagan, still recuperating from his July cancer surgery, absorbed the urgency of the situation? Stuart Spencer, Reagan's longtime political consultant and one of the rare associates with nerve enough to bring the President bad news, returned from a recent lunch at the ranch apparently converted to the President's habitual optimism. Spencer brushed off forebodings that Reagan's second term might be slipping into the kind of doldrums that affected Dwight Eisenhower's last four years, starting in 1957. "Eisenhower was tired of being President," Spencer argued. "This guy loves it and works at it. He's a different cat, a different animal than other politicians." Indeed, Reagan is returning to Washington as a campaigner, stopping for a Labor Day rally in Independence, Mo., and then flying off again to Raleigh, N.C., on Thursday to pitch for tax reform. Coincidentally, as though being prepared for the return of the President and the legislators, both the White House and the Capitol were undergoing cosmetic repairs.

As Reagan fires up crowds on his planned weekly speaking schedule, perhaps he can regenerate the political clout created by his spectacular election victory last year. But Washington-wise politicians of each party agree that he has let that advantage dissipate over the past eight months. Rather than / committing a single, crippling blunder, the complacent President failed to point his Administration in new directions. Instead of revitalizing his capable team of advisers, Reagan let it break up, and then lost more time as Donald Regan settled in as the new chief of staff. The President stirred a storm of controversy in May by insisting on visiting a German military cemetery at Bitburg where SS officers were buried. He and his Administration were also diverted by situations beyond their control: the hostage crisis in Beirut, the operation to remove a cancerous polyp from his colon.

The price for this series of distractions will be paid on Capitol Hill, where the unresolved legislative agenda is a minefield of potential trouble. Reagan has threatened to veto appropriations bills emerging from Congress that exceed the spending limitations agreed upon in the anemic deficit- reduction package passed by Congress in early August. As many as 13 spending bills, including costly farmsubsidy legislation, could reach Reagan's desk. If the legislators were to override his veto on any of them, it would be the first such defeat of his presidency, further eroding his influence. Still, he seems ready to take a strong stand. Last week he stuck to his budget deal with Congress, freezing next year's pay for some 2 million federal civil service workers.

On tax reform, one potentially historic innovation of Reagan's second term, House Speaker Tip O'Neill has promised to produce a bill before Christmas. But Senate Republican leaders show no similar disposition. They are still smarting from the President's refusal to back them last month after they agreed to a delay in Social Security cost of living adjustments to cut the deficit. Says Iowa's Republican Senator Charles Grassley: "He needs to give us a clear understanding of when he will be with us and when he won't, if he expects us to walk the plank for him."

The President must also contend with a drive in Congress to protect U.S. industries from foreign competition. More than 200 trade bills have been introduced, and protectionist sentiment is becoming so strong that it could overshadow all other political issues this fall. While Reagan, with considerable reason and courage, has opposed protectionist measures and last week decided against helping the domestic shoe industry (see ECONOMY & BUSINESS), he is taking a heavy political risk. Part of his problem is that he has let the trade issue get away from him, instead of forcefully dealing with it earlier in the year, when a clear-cut Administration policy might have alleviated some of the pressure.

Reagan has similarly failed to grapple thoughtfully with the increasingly emotional question of how to distance his Administration from the repressive policies of South Africa's white government. The Administration's "constructive engagement" approach and Reagan's impulsive rhetoric have helped stimulate demands for sanctions against South Africa. Congress seems likely to approve a package of such penalties next week, and Reagan will then face another no-win veto decision that could be politically damaging.

The President's lack of sophistication on the issue was demonstrated last week in a radio interview in which he called the South African government a "reformist administration" and contended that the segregation of public accommodations in South Africa "has all been eliminated." White House Spokesman Larry Speakes later conceded that the President should have said that "some" rather than "all" accommodations have been integrated. That still would have suggested more racial progress than South Africa can claim.

These serious external challenges are compounded by the Administration's continued internal difficulties. Chief of Staff Regan has developed little rapport on Capitol Hill, particularly with Senate Majority Leader Robert Dole. Instead of seeking agreement, each tends to bristle and confront the other. That is a sharp contrast to the relative harmony between their two predecessors, James Baker and former Senator Howard Baker. Regan's take-charge aggressiveness recently led three of his trusted former aides at the Treasury Department to warn their old boss that he needed to tone down his public image, arguing that it was hurting the President. Apparently unwilling to encourage any potential challengers, Regan has limited the power of the few veteran hands he has recruited to the White House, including Political Adviser Ed Rollins and Legislative Strategist Max Friedersdorf. Both plan to leave before the end of the year. With Budget Director David Stockman already gone and White House Counsel Fred Fielding expected to depart, the quality of advice reaching the President is slipping.

The challenge that awaits Reagan on his return to Washington includes an irrevocable factor: even this most resilient of Presidents is running out of time. The period in which he must regain the initiative or see his last term fade into lame-duck stagnation appears to be dwindling rapidly. Political considerations will dominate the capital once the new year begins and midterm congressional elections approach. But as Reagan negotiates with Congress this fall, he must also prepare for his all-important summit with Soviet Leader Mikhail Gorbachev. The President has often been highly successful when tackling one or two major issues at a time, such as his drive for tax and budget cuts early in his first term. Whether he can handle multiple showdowns with Congress and get ready for Gorbachev, too, remains to be seen. Conceding that difficult months face the Administration, particularly on enacting tax reform, one of its strategists seemed to be stretching for a rosy perspective. Said he: "We can still make it if everything, but everything, goes smoothly." That would require quite a turnaround from what has so far proved to be a rough second term.

With reporting by Sam Allis/Washington and Laurence I. Barrett/ Santa Barbara