They were the domains of the Federal Reserve which could act without

They were the domains of the federal reserve which

This preview shows page 8 - 10 out of 19 pages.

key to the nation's economic health, had a lower profile early in the Reagan years. They were the domains of the Federal Reserve, which could act without presidential or congressional approval. Chairman of the Federal Reserve Paul Volcker, a Carter appointee who quickly won Reagan's ISSUES WITH THE PRESIDENT
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(Reagan's press secretary, James Brady, was permanently injured with a bullet to the brain; a Secret Service agent and District police officer were also wounded.) Secret Service agents diverted the presidential limousine that was in route to the White House to a hospital, a move that probably saved Reagan's life. Reagan, gasping for breath but ever the trouper, walked into the hospital, then collapsed. Later he won the plaudits of the nation when his jokes on the operating table were relayed to the public, including a quip to an worried Nancy Reagan, "Honey, I forgot to duck." On the operating table Reagan told the doctors he hoped they were all Republicans. The doctors appreciated Reagan's humor, but they were not laughing. The bullet had missed Reagan's heart by less than an inch. Americans responded to Reagan's gallantry with an outpouring of support that helped the White House and its congressional supporters rally support for passage of the administration's tax and budget cuts. Of course, Reagan's program did not pass merely out of sympathy. Polls showed that the tax cuts were popular with voters, and the White House team, led by Baker, moved deftly to maximize its political advantage. Reagan provided an added incentive for the Boll Weevil Democrats in the House by promising not to campaign in the mid-term 1982 election against any Democrat who voted for both his tax and budget bills. After compromises that slightly lessened the tax cuts and restored some of the proposed budget cuts, Congress quickly passed both bills. The heart of Reagan's economic program was now in place. He had obtained a 25-percent reduction in taxes over three years. Supposedly, Congress had also made $38 billion in budget cuts but these were more than offset by other spending increases stemming from the administration's military spending and congressional pork-barrel projects. Along with passage of his economic program, Reagan won an important victory in his first year when he challenged the nearly 12,000-member Professional Air Traffic Controllers Organization (PATCO). The controllers had called an illegal strike, threatening to bring the nation's air traffic to a standstill. Even though PATCO had been one of the few labor unions to support him for President in 1980, Reagan fired the strikers when they defied a back-to-work order. This left traffic control of the nation's skies in the hands of managerial staff, a few loyal controllers, and new hires. Some critics predicted a rash of dire accidents, but this did not happen and Reagan emerged from the controversy with the reputation of a strong leader who was able to make tough decisions. Firing the PATCO strikers also sent a clear message to corporate America, which was encouraged to bargain more firmly with organized labor and hold down wages that had skyrocketed in the inflationary decade of the 1970s.
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