"The Roughest Year"

By Otto Friedrich

In a sense, the Man of the Year is almost always the President of the United States, no matter who that may be. He accomplishes deeds great and small. He receives credit and blame for things he did not do. He has the most powerful job, the highest visibility and, inevitably, the greatest influence on the news.

That still was partly true for Ronald Reagan in 1987, particularly when he joined Soviet Leader Mikhail Gorbachev this month for the grand rituals of signing away all the world's intermediate-range nuclear missiles. Nonetheless, this was a disappointing year for the President, who turned 76 and underwent three new bouts of surgery. Although he remained in the spotlight, he lingered there largely as a victim, a passive witness to the erosion and disintegration of his own fading Administration.

Just a year earlier, when America blazed with celebrations for the 100th birthday of the Statue of Liberty, Reagan had seemed the most popular President in years. But after a steady flow of congressional hearings on the Iran-contra arms scandal, of war threats in the Persian Gulf, of huge budgetary and trade deficits, of a declining dollar and a crashing stock market, his own stock fell. A CBS/New York Times poll at the end of November reported that 45% of the citizenry approved of the way Reagan was doing his job, down from 52% only six weeks earlier.

So in TIME's annual effort to evaluate the biggest news stories of the year, the common theme running through the large-type headlines of 1987 was Ronald Reagan. He was there not so much for his accomplishments as for his lack of them. "Terrible, terrible," said Nancy Reagan, herself a victim of cancer, in a year-end interview with the Washington Post. "Overall, I guess the whole year has been the roughest."

At the start, Reagan was full of defiance about the sale of U.S. missiles to Iran. That effort, obviously aimed at winning the release of American hostages in Lebanon, had been an embarrassing violation of his repeated pledges never / to negotiate with terrorist regimes, but Reagan simply denied it. "We did not -- repeat, did not -- trade weapons or anything else for hostages," he said. After a three-month investigation, however, a presidential review board headed by former Texas Senator John Tower found that the "initiative became in fact a series of arms-for-hostages deals."

Reagan cooperated with the Tower commission, but when asked whether he had specifically approved Israeli sales of U.S. missiles to Iran, he first said that he had, then that he had not, then that the "simple truth is, I don't remember." On the basis of such evidence, the Tower commission condemned Reagan's careless "management style" and complained that the "President did not seem to be aware of the way in which the operation was implemented."

The President finally conceded his error. "I told the American people I did not trade arms for hostages," he said. "My heart and my best intentions still tell me that's true. But the facts and the evidence tell me it is not."

Selling weapons to Iran was bad enough. Using the profits to arm the Nicaraguan contras was an outrage to many members of Congress, which had banned such aid. That transgression became the focal point of the summer-long investigation by a joint congressional committee. Once again, Reagan's statements were contradictory. On several occasions, he denied knowing how the contras obtained their illegal aid. Then he startled listeners by saying of private Nicaraguan funding "I've known what's going on there. As a matter of fact, for quite a long time now, a matter of years . . . It was my idea." The committee was unable to link Reagan to the illegal aid, but the panel's conclusions were damning: "The common ingredients of the Iran and contra policies were secrecy, deception and disdain for law. A small group of senior officials . . . destroyed official documents and lied to Cabinet officials, to the public and to elected representatives in Congress." At year's end, Reagan reverted to his policy of denying what he had previously admitted. "Never at any time," he said, "did we view this as trading weapons for hostages."

The Faithful Hussar

Among the other runners-up for Man of the Year would have to be the figure at the center of the Iran-contra scandal, though there was some uncertainty about who that might be. Rear Admiral John Poindexter, who had been forced to resign as the President's National Security Adviser, testified that he was in ^ charge of the operation and that he had decided, for Reagan's protection, not to tell the President all the details. But there were many in Congress who doubted that the cautious and rules-bound admiral would undertake such a risky venture on his own. Some thought the key man must have been CIA Director William Casey, but Casey developed brain cancer and died before he could be questioned.

The nearest thing to a central figure, then, was Marine Lieut. Colonel Oliver North, who had organized both arms operations and thought that combining them was a "neat idea." North was a can-do, much decorated veteran of Viet Nam. Though Reagan had fired him from the National Security Council, he had also called him a "national hero." North became an overnight television star when he appeared in his uniform and medals and began his often emotional testimony by saying "I came here to tell you the truth -- the good, the bad and the ugly." North admitted he had engaged in international fund raising for the contras, a campaign that included his staging slide shows for would-be donors. Other officials cadged money from foreign millionaires like the Sultan of Brunei (with characteristic adroitness, the fund raisers temporarily lost the Sultan's $10 million donation, which turned up in the wrong Swiss bank account).

North admitted he had shredded evidence and altered crucial documents. He admitted he had repeatedly lied to the Congress: "Lying does not come easy to me. But we all had to weigh in the balance the difference between lives and lies." The TV fans loved him for the dangers he had passed. They rushed to buy Ollie North posters, and a few even talked of his running for President. That may be difficult if, as widely expected, North is indicted in 1988 by Special Prosecutor Lawrence Walsh. By now, the Olliemania of midsummer is little more than a distant memory, and a California entrepreneur who lost $30,000 in unsold Ollie dolls is converting his leftover inventory into Gorbachev dolls.

The Determined Peacemaker

The basic idea behind financing the contras was to force major concessions from the Sandinista regime, and perhaps to overthrow it entirely. After much maneuvering in Washington, Reagan in August announced his peace plan, which called for an immediate cease-fire and required the Sandinistas to give up all Cuban and Soviet-bloc aid, open negotiations with the contras, release all political prisoners, restore civil liberties and hold elections soon. Reagan was pleased to regard this as a bipartisan plan because it had won the co- sponsorship of Democratic House Speaker Jim Wright.

What it had not won, however, was the support of Central America. The same week that the Reagan-Wright plan was announced, the Presidents of five Central American nations gathered in Guatemala City and signed a plan of their own. This was largely the handiwork of Costa Rica's President Oscar Arias Sanchez, a soft-spoken, stiffly formal politician who had taken office only 15 months before. Arias labored quietly and relentlessly to come up with a peace agreement that all the region's combatants might endorse. Arias' plan was much easier on the Sandinistas than the U.S. proposals had been, but it did require a cease-fire in November, restoration of civil liberties and a dialogue with all opposition groups once they have laid down arms. Though the White House promptly criticized the Arias plan as unenforceable and thus dangerous, his measure undeniably superseded the Washington blueprint. Even Wright abandoned Reagan and called U.S. demands on Nicaragua "ridiculous."

For his efforts, Arias was awarded the Nobel Peace Prize. But as he went to Stockholm to accept it in mid-December, he received the unsettling news that Nicaraguan President Daniel Ortega Saavedra had announced plans for a large military buildup. Arias denounced the move as a violation of the Guatemala accord. At about the same time, U.S. congressional leaders approved a compromise measure to renew nonmilitary aid to the contras through February. The contras, meanwhile, launched what they called their biggest offensive of the war. All in all, Arias' prizewinning peace plan was starting to look shaky.

The Bear That Ate the Billions

One of the biggest elements in Reagan's landslide re-election was the widespread belief that he had brought the U.S. a kind of permanent prosperity. Reaganomics -- which meant cutting taxes and incurring deficits beyond anything John Maynard Keynes ever dreamed -- struck some experts as voodoo economics (as the future Vice President George Bush christened it in 1980), but the boom rolled on. A doubled national debt of more than $2 trillion? Trade deficits of more than $15 billion a month? What did that matter, when inflation had been cut to about 4.5%, unemployment to 5.9%, and the Dow Jones soared well over 2000?

Then came Oct. 19, Black Monday. The Dow Jones passed 2000 in the other direction and went into a free fall, tumbling a record 508 points in one day. In that single trading session, half a trillion dollars of wealth simply disappeared. And the crisis came close to being an even worse disaster. With no buyers at all for a number of major stocks at times during the day, there was serious talk of shutting down the market entirely.

Memories of the great Crash of 1929 prompted considerable anxieties about whether this new bear market would lead once again to a major recession -- or worse. As in 1929, many of the experts declared that the economy was fundamentally strong and predicted better times ahead. But the market recovered only a fraction of its October losses, the record trade deficits continued, and the dollar kept sinking. It was partly a question of public confidence, and the ebullient optimism that had helped to re-elect Reagan now appeared a thing of the past.

The Unstoppable Epidemic

One of the major stories of the year had no identifiable face, no watershed event. Yet the AIDS epidemic was indisputably one of the most important developments of 1987 -- as it was in 1986, as it will be in 1988. Surely Reagan cannot be blamed for this one too?

Not everyone would exonerate him completely. Year after year, he asked for less money to fight AIDS than Congress eventually voted, and not until this year did he devote a single speech exclusively to the disaster. And as Randy Shilts wrote in a widely praised 1987 book, And the Band Played On, governmental indifference and inactivity played a major part in the alarming spread of AIDS. As of mid-December, more than 48,000 Americans had contracted the incurable disease -- an increase of 20,000 for the year -- and more than half of those had died of it.

To deal with the epidemic, Reagan appointed a presidential commission of 13 people, many with dubious qualifications. After three months, the chairman, a doctor, resigned in frustration and was replaced by an admiral. The commission's final recommendations are supposed to appear next summer. Beyond that, the Administration busied itself in imposing compulsory AIDS tests on certain defenseless groups (federal prisoners and would-be immigrants, for instance), a move that compromised civil rights without accomplishing much of anything. Gay rights groups excoriated the Administration for inactivity, and the New York Times concluded that Reagan's lack of a coherent policy on AIDS was "beyond comprehension or excuse."

^ The roughest year afflicted not only the First Family but also several friends and followers. It was a rough year for Reagan's onetime close aide Michael Deaver, who was convicted of perjury; a rough year for Attorney General Edwin Meese, under official investigation on suspicion of corruption; a rough year for Federal Judge Robert Bork, nominated to the Supreme Court but humiliatingly rejected by the Senate. Well, time passes. Next year at this time, Ronald Reagan can look forward to packing his bags and heading westward into the sunset, just as he and his fellow heroes used to do in Warner Bros. pictures. Out in Santa Barbara, Calif., he can happily spend his days chopping wood and telling stories about the good old days and, being an honest man, the bad ones.