It is not that Baker (or VP Bush) were personally opposed to these goals. The problem was that the Establishment, whether Republican or Democratic, is responsive not to solving issues but to accommodating the special interest groups that comprise the Establishment. For the Establishment, preserving power is the primary issue. As The Saker makes clear, in both parties the Anglos of my time, of which George H. W. Bush was the last, have been replaced by the neocons. The neocons represent an ideology in addition to special interest groups, such as the Israel Lobby.
The Republican Establishment and the Federal Reserve did not understand Reagan's Supply-Side economic policy. In the entire post World War II period, reductions in tax rates were associated with the Keynesian demand management macroeconomic policy of increasing aggregate demand. The Reagan administration had inherited high inflation, and economists, Wall Street, and the Republican Establishment, along with Reagan's budget director, David Stockman, misunderstood Reagan's supply-side policy as a stimulus to consumer demand that would cause inflation, already high, to explode. On top of this, conservatives in Congress were disturbed that Reagan's policy would worsen the deficit -- in their opinion the worst evil of all.
Reagan's supply-side economic policy was designed not to increase aggregate demand, but to increase aggregate supply. Instead of prices rising, output and employment would rise. This was a radically new way of using fiscal policy to raise incentives to produce rather than to manage aggregate demand, but instead of helping people to understand the new policy, the media ridiculed and mischaracterized the policy as "voodoo economics," "trickle-down economics," and "tax cuts for the rich." These mischaracterizations are still with us three decades later. Nevertheless, the supply-side policy was partially implemented. It was enough to end stagflation and the policy provided the basis for Clinton's economic success. It also provided the economic basis that made credible Reagan's strategy of forcing the Soviets to choose between a new arms race or negotiating the end of the Cold War.
Ending the Cold War and Bad CIA Advice
President Reagan's goal of ending the Cold War was upsetting to both conservatives and the military/security complex. Conservatives warned that wily Soviets would deceive Reagan and gain from the negotiations. The military/security complex regarded Reagan's goal of ending the Cold War as a threat comparable to Nixon's opening to China and arms limitations treaties with the Soviet Union. President John F. Kennedy had threatened the same powerful interests when he realized from the Cuban Missile Crisis that the US must put an end to the risk of nuclear confrontation with the Soviet Union.
With the success of his economic policy in putting the US economy back on its feet, Reagan intended to force a negotiated end to the Cold War by threatening the Soviets with an arms race that their suffering economy could not endure. However, the CIA advised Reagan that if he renewed the arms race, he would lose it, because the Soviet economy, being centrally planned, was in the hands of Soviet leaders, who, unlike Reagan, could allocate as much of the economy as necessary to win the arms race. Reagan did not believe the CIA. He created a secret presidential committee with authority to investigate the CIA's evidence for its claim, and he appointed me to the committee. The committee concluded that the CIA was wrong.
Reagan always told us that his purpose was to end, not win, the Cold War. He said that the only victory he wanted was to remove the threat of nuclear annihilation. He made it clear that he did not want a Soviet scalp. Like Nixon, to keep conservatives on board, he used their rhetoric.
Curing stagflation and ending the Cold War were the main interests of President Reagan. Perhaps I am mistaken, but I do not think he paid much attention to anything else.
Grenada and the Contras in Nicaragua were explained to Reagan as necessary interventions to make the Soviets aware that there would be no further Soviet advances and, thus, help to bring the Soviets to the negotiating table to end the nuclear threat. Unlike the George W. Bush and Obama regimes, the Reagan administration had no goal of a universal American Empire exercising hegemony over the world. Grenada and Nicaragua were not part of an empire-building policy. Reagan understood them as a message to the Soviets that "you are not going any further, so let's negotiate."
Conservatives regarded the reformist movements in Grenada and Nicaragua as communist subversion, and were concerned that these movements would ally with the Soviet Union, thus creating more Cuba-like situations. Even President Carter opposed the rise of a left-wing government in Nicaragua. Grenada and Nicaragua were reformist movements rather than communist-inspired, and the Reagan administration should have supported them, but could not because of the hysteria of American conservatives. Reagan knew that if his constituency saw him as "soft on communism," he would lack the domestic support that he needed in order to negotiate with the Kremlin the end of the Cold War.
America Playing the Foreign Policy Game
Today Western governments support and participate in Washington's invasions, but not then. The invasion of Grenada was criticized by both the British and Canadian governments. The US had to use its UN Security Council veto to save itself from being condemned for "a fragrant violation of international law."
The Sandinistas in Nicaragua were reformers opposed to the corruption of the Somoza regime that catered to American corporate and financial interests. The Sandinistas aroused the same opposition from Washington as every reformist government in Latin America always has. Washington has traditionally regarded Latin American reformers as Marxist revolutionary movements and has consistently overthrown reformist governments in behalf of the United Fruit Company and other private interests that have large holdings in countries ruled by unrepresentative governments.
Washington's policy was, and still is, short-sighted and hypocritical. The United States should have allied with representative governments, not against them. However, no American president, no matter how wise and well-intentioned, would have been a match for the combination of the interests of politically-connected US corporations and the fear of more Cubas. Remember Marine General Smedley Butler's confession that he and his US Marines served to make Latin America safe for the United Fruit Company and "some lousy investment of the bankers."
Information is Power
Americans, even well informed ones, dramatically over-estimate the knowledge of presidents and the neutrality of the information that is fed to them by the various agencies and advisors. Information is power, and presidents get the information that Washington wants them to receive. In Washington private agendas abound, and no president is immune from these agendas. A cabinet secretary, budget director, or White House chief of staff who knows how Washington works and has media allies is capable, if so inclined, of shaping the agenda independently of the president's preferences.
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