Reagan bargaining to keep tory Democrats, make deal on tax cuts

There are signs that President Reagan is keeping a firm hold on the bipartisan coalition in the House of Representatives that shaped his budget victory last week.

Already, according to presidential chief of staff James A. Baker III, in an interview with the Monitor, "There have been informal approaches from the conservatives in the house" with regard to Mr. Reagan's controversial tax package.

Mr. Baker said the President was not "locked in concrete" to his three-year, 10-percent annual tax cut. Instead, he portrayed Reagan as ready to accept an alternative plan if it "does not dilute the stimulative effect" of his own proposal. Indeed, Baker implied that the House conservatives might well come up with an alternative that the President would accept.

Baker described the President's position now as a strong one in terms of the prospects for getting what he wants on the tax package and winning votes on specific spending-cut measures.

"Let's face it," he said, "the President could drop a lot of votes and still win."

On other subjects, Baker indicated that:

* The President might decide to close some surplus military bases to meet defense requirements, even though this entailed political risk.

* The Soviet Union was showing some interest in "meaningful arms reduction" -- the prerequisite for SALT talks set by the President.

* It was "possible" the Republicans would take over the House in 1982, but that there was more likelihood they would strengthen their majority in the Senate.

* Reagan had not said in his campaign that he would keep hands off social security. Rather, Baker said, Reagan wanted to do something to "protect the integrity" of the system -- and that the program he has proposed "does just that."

The text of the interview follows:

Does the President believe he can get his entire tax package through Congress?

I think the President feels buoyed by the result of the budget vote, winning on the House floor by such a substantial margin, bringing 63 Democrats across and not losing one Republican. It means there is a certain amount of momentum out there that augurs well for the tax package.

Now, can he get every little jot and tittle? I'm not certain the President feels he must get all that.

What does he feel he needs?

He wants a tax package that is sufficiently stimulative for what he thinks has to be done with the economy. And that's what is going to be the primary test.

People ask, is the President going to hang tough for three years at 10 percent? If someone came to the President and said, "Mr. President, here's something that I think would be equally as stimulative or more stimulative," the President might say, "Let's hear your plan."

He has said, "I'm not going to be locked in concrete to the exact specifics of the program I've sent up. But I'm going to have to be shown that any changes in that program do not dilute its stimulative effect and that it will do what I think needs to be done to the economy."

As the President moves toward votes on specific spending cuts and his tax package, will he be able to hold together his coalition in the House?

There have already been informal approaches from the conservatives in the House -- from the conservative Democratic Forum and members of that forum -- with regard to the tax package.

The President is making it very clear that his position is not one of one compromise.

Then there may be a bill coming from those same conservatives who came up with the budget proposal that the President liked and embraced?

Yes.

And that could hold the coalition together?

It certainly could. And let's face it, the President could drop a lot of votes and still win.

Senator Dole indicates that the President doesn't have enough votes to put his tax plan over in the Senate Finance Committee.

That's another group the President is going to have to work with. But there is just an awful lot of support out there for his economic package -- as the leadership in the House found out.

How do you react to the assessments from many economists who say that the President's supply-side economics just won't work -- that it will fuel the fires of inflation?

I would say, look, that's a debate that was waged in the last presidential election. That was what the campaign was all about. The President campaigned on 10-10-10 for three-years, supply-side economics. And Jimmy Carter campaigned on the very opposite of that, and people chose to believe Ronald Reagan.

And they said, maybe you haven't proven to us beyond a reasonable doubt that it is going to work, but you deserve a chance to try. Because what we've been doing hasn't worked. So let's see if something new isn't better.

Has the President had any positive effect on the economy thus far?

Yes, he's had a positive effect. Any time you can come in and in one year get spending cuts of $40-plus billion through both houses of Congress and, in effect, achieve the most sweeping fiscal reform in 30 to 40 years, there has to be a positive effect on the economy.

But where do you see this impact?

It's too early. The President was very careful when he first surfaced this program. He said, "We didn't get into this mess overnight; we aren't going to get out of it overnight. So don't look for instant gratification.But you give me my program and you give me a reasonable time to make it work, and it will work."

Must the economy be showing some signs of improvement by the fall of 1982 for the Republicans to avert losses in that election?

I can't answer that. It obviously would be beneficial to Republicans if the economy was showing improvement. And, quite frankly, as a personal opinion, I think it will be showing significant signs of recovery, assuming that the President's program -- or something close to it -- is enacted.

Do you think Republicans will win enough seats in '82 to take over control of the House?

I suppose that's possible. I think it is more likely that the Republicans would strengthen their majority in the Senate.

Didn't the President, during the campaign, indicate he would keep hands off of social security?

No.What he said, and said consistently, was that "I want to do something to protect the integrity of the social security system. The system is bankrupt, and we need to treat with that. But I am going to do so in a manner that does not reduce the benefits of participants in the social security system."

And the program does just that. It brings long-range stability and security to the system without cutting the benefits of participants.

You can say, well, he makes it harder for those who come into the social security system later to take early retirement at age 62. He does. And he encourages people to work to age 65. But he doesn't cut back on receipts of present beneficiaries.

But what of the political risk in this?

I don't see any. I really don't. Because I don't see him running against a campaign promise or anything he has suggested in the campaign.

But won't there be some real political risk if he decides to close down some military bases -- as now seems indicated?

There may be some political risk in that. But people were saying three months ago that he can't get his budget cuts through the Congress because there is too much political risk in going for those kinds of cuts.

Closing military bases is doing nothing more than making further budget cuts. Closing military bases that are not needed in order to meet your defense requirements --sure, there is some political risk.

Does the President talk much about political risk when he is deciding what should be done?

He is concerned about political risk with relation to getting something through Congress. And he's interested in consensus-building for his programs.

But he's not concerned about the political risk in how what he is doing is going to impact on some future political election. That's what he told the Cabinet during the transition.

Is Secretary of State Haig now very much a part of the Reagan team?

Absolutely. And not only is he very much a part of the Reagan team, but the suggestion you have seen in some quarters that this administration has not been vigorous in the conduct of its foreign policy because of the early procedural differences over turf -- and that sort of thing -- is totally inaccurate.

If you look at a check list of areas of the world in which this administration has dealt with foreign policy matters, you would see it is a very full menu for the 125 days or so we have been in office.

Is foreign policy shaped toward eventually bringing about strategic arms limitation talks?

The President has said all along that he would be willing to sit down with the Russians when they show some evidence of wanting to sit down in good faith, when they show by their actions that they are really interested in talks leading to meaningful arms reduction.

As you know, the secretary of state discussed this on his recent trip to Europe in connection with theater nuclear forces. And the US will be sitting down with the Russians to discuss theater nuclear weapons.

Could the two nations return to SALT talks in a year or two?

We'll just have to wait and see.

What kind of physical shape is the President in now?

He is in great shape, picking up steam all the time, doing more and wanting to do more. He's even gotten to the place where he has begun to resume his exercises: pull-ups and chest exercises that he used to do every day.

How often do you see him?

We have the morning meeting now, and we have the national security meeting now, and we have the close-of-the-day briefing -- but his day may close by 1 or 2 o'clock in the afternoon while he is convalescing.

You've worked closely with the President for more than 100 days now. What kind of an executive is he?

You've read about his chairman-of-the-board approach. I happen to believe it is a good one. You know, Jody Powell said when the President was in the hospital that people don't realize that presidents don't spend 90 percent of their time making decisions; they spend 90 percent of their time preparing themselves for making decisions. That's what this president does.

I think that policy-making under President Reagan is possibly different than it has been under other presidents. he is a man of intense conviction who has some deeply held beliefs that he's held for a long, long time. You know, when someone asked him about being president, he said, 'The nice thing about being president is that I now have an opportunity to put my beliefs into action.'

I tell you this: He is an absolute joy to work for. He makes people feel good. You can't be in a room with Ronald Reagan without feeling good. And the main reason he has been successful so far in getting his absolutely revolutionary program through Congress, to the extent he has so far, is because of the force of his personality.

President Carter was criticized for not delegating enough. Now some critics of Ronald Reagan are saying he delegates too much. What do you say to that?

Well, I would disagree with that. You would have to judge after more time elapses. But so far his style of governing has been very successful in terms of achievement and in terms of the public perception of this man as a real leader.

Is there a "kitchen cabinet" -- friends from California --

There certainly is a large number of old friends that have advised him for a long time who continue to advise him on an informal basis. They don't meet as such. And some of them have come into the administration.

What is the relationship of the President with former President Ford these days?

He has a very good relationsip with President Ford. And President Ford, as you know, represented President Reagan in a recent trip all around the world, taking messages to the heads of state of the countries he visited. He reported to President Reagan in person after returning and later reported further by letter.

They also talk on the telephone. Whenever there is a need to communicate, one of the other will pick up the phone.

Mr. Ford is one of his main advisers then?

Absolutely.

Is there any relationship between the President and Mr. Carter.

There has been no communication that I'm aware of.

We have a liaison with former presidents here on the staff. President Carter was promptly notified with regard to the assassination attempt and he is kept posted on major governmental matters and actions.

Have there been any communications between the President and Richard Nixon?

There have been telephone conversations with MR. Nixon, yes. Sporadic. You can't charaterize those as frequent or infrequent.