Known And Unknown_ A Memoir Part 12

There is a danger that CEOs and senior executives can get too engaged in details, which can prevent them from having the necessary distance to see trends and the broader picture. When I was a flight instructor in the Navy I noticed novice pilots often took control of an airplane by grabbing hold of the stick too tightly and overcontrolling. As a result, the motion of the plane became jerky. It can be similar in any organization, whether in business or government. An executive who holds on to everything too tightly can lose sight of the larger issues. "Find ways to decentralize" is a guideline I included in Rumsfeld's Rules. "Move decision-making authority down and out. Encourage a more entrepreneurial approach." No one person can make all the necessary decisions in a large and complex enterprise. The best organizations have multiple leaders.h.i.+p centers that are working in tandem toward the same goals.

Robson, Denny, and I encouraged the heads of Searle subsidiaries to tell us their priorities to increase their profits for the longer term. For example, we saw potential in one of Searle's units, then much less known than it is today.

Pearle Vision was first formed in 1961, when an optometrist named Stanley Pearle opened a store in Georgia that not only offered eye examinations but also could produce prescription lenses on-site and sold a wide selection of frames. The division's president, Don Phillips, embarked on a well-conceived plan that used the profits of existing Pearle Vision centers to build new centers and exponentially expand the franchise. The approach allowed us to increase the number of Pearle Vision centers from 240 in 1976 to more than 860 by 1981. We then franchised some of the centers to increase the incentives for store managers. Still later, we took a portion of Pearle Vision public while retaining a majority interest and management control. Our shareholders profited at each stage of the process.

To get clarity and insight into how things were really functioning at Searle I dug down into one division at a time. I had a habit of asking employees from senior managers to lab technicians direct questions, some of which may have seemed intrusive, but it was the best way I knew to gather the information I needed. On occasion, my approach made people uncomfortable, particularly if they didn't have ready answers. But more likely than not, they would have the answers the next time.

Like many companies in the mid-1970s, Searle had acquired numerous subsidiaries. Before I decided what to do with them I resolved to visit most of them personally. A number of the units were related only marginally to Searle's core businesses. One subsidiary's business was to produce and sell sperm from livestock. Its main source of revenue came from an aging bull named Astronaut. As fine a bull as he was, it was clear that this revenue stream was finite. Another was a centrifuge factory in France plagued by labor union activism. I had some inkling that the situation there was difficult when I was advised I should show up for my visit late at night, not during working hours. A visit by top management was not likely to be well received by the workers, I was told. Hostile labor conditions and weak earnings made the decision to divest an easy one.*

I decided to divest Searle of a number of its subsidiaries, even though I knew it would have the effect of temporarily reducing our revenues and earnings, since a number of these companies were profitable. Within a year I had directed the sale of twenty companies. One Rumsfeld Rule I developed is "Prune. Prune businesses, products, activities and people. Do it annually." Perhaps paradoxically, my intent was not to make Searle smaller through these divestments-I wanted to reinvigorate the company and invest in our core businesses to achieve growth.

To reduce costs and improve performance, we initiated a sizable reduction of Searle's corporate headquarters staff, which had the added benefit of decreasing the distance between the top of the organization and our customers. In good times, the company was able to afford a growing corporate payroll, but times had changed. We needed to let some people go and move others from corporate headquarters to the divisions. Keeping in mind the memory of the way Bob Haldeman had summarily requested blanket resignations from Nixon's cabinet and subcabinet the day after his 1972 reelection, I wanted to treat our employees as fairly as possible.

It helped that the cost-cutting measures extended to all corners of the company, even to the executive offices. It was not a pleasant task for a new CEO to have to tell longtime members of the board of directors that it was necessary for them to leave the board, but the reality was that we needed new talent at the top if we were to succeed.

As the one making these decisions, I felt a responsibility to meet with as many of the people being let go as I could. I had already been out of a job several times in my life when I left the Navy and after several political campaigns, so I knew what it was like, particularly with a family to support. My words to them were what I felt would be helpful to me if I were in their shoes. I knew they would have to go home and explain their situations to their spouses, children, friends, and neighbors. I told them the truth-that the decision did not reflect on them. The reality was that the pharmaceutical industry and the company were both changing; U.S. companies, including Searle, needed to adjust to globalization. We were eventually able to provide many leaving Searle with outplacement a.s.sistance services to ease their transitions.

The rapid changes we were making at Searle caused heartburn for some, especially among our traditional investor base. I decided to freeze the company's stock dividend. This was not a uniformly well-received decision, particularly by shareholders who were accustomed to receiving dividend checks that increased over the years. The idea was to gradually move our shareholder base away from investors focused on dividends to investors more interested in the company's long-term growth.

I also decided to increase our investment in Searle's pharmaceutical research and development with the money we received from selling off some of our subsidiaries. One of my concerns was that the research and development division had too few promising new products in the pipeline. A number of the patents on existing products were expiring and would begin to face compet.i.tion from generic drugs. I knew we needed to invest more if we were to be a successful research and developmentbased pharmaceutical company.

One of the more underappreciated aspects of the pharmaceutical industry is the time and investment put into research and development. Time and again the pharmaceutical industry has been singled out as a villain in corporate America and as the main culprit in escalating health-care costs. In fact, pharmaceutical and drug costs are less than 12 percent of the total of health-care costs.3 I never cease to be amazed at people, particularly lifelong politicians of both political parties, most of whom have never created anything of value, savaging those who do. Successful pharmaceutical companies have to invest; that is to say they have to put at risk hundreds of millions of their investors' dollars in an effort to discover new therapies to save lives, extend lives, and improve the quality of lives, and, yes, also to try to make a fair return for their investors while doing so. More often than not, many years of trial and error result in dead ends. But with expensive facilities and talented researchers, breakthrough discoveries do occur. And even when efforts are unsuccessful, they learn what need not be tried again. Because of companies like Merck, Pfizer, Searle, Gilead Sciences, and others, millions of people in our country and across the globe are living longer, healthier lives. I never cease to be amazed at people, particularly lifelong politicians of both political parties, most of whom have never created anything of value, savaging those who do. Successful pharmaceutical companies have to invest; that is to say they have to put at risk hundreds of millions of their investors' dollars in an effort to discover new therapies to save lives, extend lives, and improve the quality of lives, and, yes, also to try to make a fair return for their investors while doing so. More often than not, many years of trial and error result in dead ends. But with expensive facilities and talented researchers, breakthrough discoveries do occur. And even when efforts are unsuccessful, they learn what need not be tried again. Because of companies like Merck, Pfizer, Searle, Gilead Sciences, and others, millions of people in our country and across the globe are living longer, healthier lives.

During my third year at Searle, no doubt because of the cost-cutting measures I was implementing, I found myself included in a Fortune Fortune magazine cover story as one of the supposedly ten toughest CEOs in the country. magazine cover story as one of the supposedly ten toughest CEOs in the country.4 In some quarters it probably helps to be considered a tough boss. But I was uncomfortable with it. In some quarters it probably helps to be considered a tough boss. But I was uncomfortable with it.

I never thought that being tough was an appropriate or successful leaders.h.i.+p approach, nor was it the way I managed. While I wanted everyone to feel the sense of urgency I felt, I found we achieved better performance when we treated everyone fairly and respectfully. Rather than being tough, my goal was to be effective, to achieve results, and to be willing to make difficult decisions even when there weren't obvious, attractive options. Searle was becoming a leaner and more focused operation, and we were increasingly able to leverage its strengths. If the message was coming across that the new CEO meant business, I had no problem with that. We had to drive forward and make the now slimmed-down company more profitable. There was one product in the pipeline that we knew could help significantly. The only impediment was the federal government, which was not a minor one.

One of the more unexpected things I discovered as CEO of a pharmaceutical company was that I had to think as much or more about the federal government than I did about our compet.i.tion. I had known on an intellectual level that government was involved in the private sector in a great many ways, but it was only when I was actually in business that I felt the full impact. The government was a partic.i.p.ant in practically everything we did-from the IRS to the Food and Drug Administration to the Department of Justice's ant.i.trust division to the Federal Trade Commission to the Securities and Exchange Commission. We needed government clearance for almost all of our products. We also needed government approvals in each of dozens of other countries where Searle did business.

This was the case with the artificial sweetener Searle had discovered and had been developing for more than a decade. Aspartame was an example of the occasionally serendipitous results from research and development programs. In 1965, a Searle scientist was working on a treatment for ulcers involving amino acids. He happened to have some residual powder from two amino acids on his finger and accidentally discovered the sweet taste of the compound when he licked his finger to pick up a piece of paper.5 We knew that the products from aspartame could help the company, especially since there were questions being raised about the safety of the existing artificial sweeteners, notably saccharine. Searle had put aspartame through an extensive testing process, and the FDA had approved the product for commercial dry tabletop use in 1974. But a year and a half later, eighteen months before I joined Searle, the FDA took an almost unprecedented step when they issued a stay of their earlier approval of aspartame. The FDA had raised questions about Searle's overall research and development activities, which had complicated the situation considerably. There was press speculation that the Department of Justice might indict Searle over allegations that some of the company's research doc.u.mentation might not have been in order.6 Given the cloud cast over Searle, aspartame began to look much less promising than had been hoped. Given the cloud cast over Searle, aspartame began to look much less promising than had been hoped.

I was learning a critical difference between the federal government and the private sector. People in the public sector tend to be praised and rewarded for their efforts or intentions, rather than judged by the results of their actions. What government does is a.s.sumed to be respectable and in the interests of the public. The FDA, for example, is criticized only if it errs and approves a drug that turns out not to be safe or effective-as it should be. But there is no criticism of the FDA if it delays the approval of drugs that are safe and could save or extend lives.

Unlike in government, good intentions are not what are rewarded in the business world-results are. What matters is outputs, not inputs-that is to say, in business millions of dollars in investment mean nothing unless there is a fair return. In government, progress is often judged by how much money is thrown at a problem. Federal education programs, for example, are more often measured by the size of the education budget, not by the results they are producing, such as the graduation rate. And regardless of its mistakes, the federal government does not go out of business. If businesses make mistakes, they suffer, lose money, managers are replaced, or the companies go into bankruptcy. So while the FDA could wait as long as it wished in delaying aspartame, Searle paid the price.

The FDA stay of approval gave compet.i.tors more time to research alternative products to aspartame. It allowed critics of the sweetener to engage in a public relations campaign, raising concerns in the minds of potential customers, investors, and employees. And, importantly, Searle's patent on aspartame continued to run, thereby shortening the number of years the shareholders would have the financial benefits of patent protection if and when the stay of approval was eventually lifted.

My view was that if Searle had been at fault over any of the research doc.u.mentation issues that the government had raised, then we needed to figure out promptly what the problem was, fix it, and move on. The most harmful thing would be the continuing stalemate that was so costly to the company. Since there was a real possibility that the stay of approval on aspartame might never be lifted, we had to wean ourselves from the mindset that aspartame might be an answer to Searle's difficulties and focus on other solutions. The day-to-day management of the legal and regulatory issues surrounding aspartame was handled by John Robson.

After years of testing, the FDA's stay of approval for the dry use of aspartame was finally lifted on July 15, 1981. This was six years after the FDA stay of approval had been issued, which meant that Searle's investors had lost that many years of patent protection on what would become a major product.*

With FDA clearance, we moved ahead and invested in the necessary manufacturing facilities and plans to market aspartame under the trade name Equal. Equal became a national success in short order and then an international success under the trade name of Canderel. Millions of those lightblue packets found their way to supermarkets, homes, and restaurants. That was only the start. There were even bigger things in store for aspartame and Searle, thanks to a company called PepsiCo.

In 1983, the FDA gave approval for wet use of aspartame, which meant it could now be used in liquids in addition to the dry use as a tabletop sweetener. As with equal, Searle's creative marketing team decided to establish a brand name for its use in beverages. We called it NutraSweet and gave it a distinctive red-and-white swirl logo. It was one of the early examples of branding an ingredient ingredient, rather than a product, which thereby boosted the value of both.

The Coca-Cola Company had been among the first to use aspartame in its diet soda Tab. But the company did not use 100 percent aspartame, choosing instead to combine it with saccharin, which was less expensive and more readily available. As a result, we did not allow c.o.ke to use our NutraSweet logo. But if c.o.ke or Pepsi made the decision to go 100 percent NutraSweet in their diet colas, it could change the beverage industry-not to mention help Searle greatly.

As we negotiated with representatives of the soft-drink companies, CBS launched a new attack on aspartame. On the evening news, CBS anchor Dan Rather highlighted some discredited allegations for three nights running in January 1984. Searle had provided CBS and his producers with data and information about the safety of NutraSweet that they did not use. In a letter, Searle's general counsel blasted Rather for "patently absurd" reporting and "manipulative editing."7 It may have been the first time Rather was caught up in such poorly researched journalism, but it would not be his last. Fortunately, the facts were on Searle's side. Aspartame had gone through one of the most extensive food additives tests in history to earn FDA approval. It may have been the first time Rather was caught up in such poorly researched journalism, but it would not be his last. Fortunately, the facts were on Searle's side. Aspartame had gone through one of the most extensive food additives tests in history to earn FDA approval.

Despite the CBS TV attacks, later in 1984 I was contacted by Don Kendall, the CEO of PepsiCo. Kendall confided that a small group at PepsiCo was involved in confidential discussions to abandon saccharin altogether and go with 100 percent aspartame in one of their diet drinks, enabling it to adopt the NutraSweet logo. This was a gamble for the company, since aspartame would increase Pepsi's costs and news reports like CBS's were not helpful in developing public confidence.

Nonetheless, Kendall was inclined to put 100 percent NutraSweet in every can and bottle of their biggest selling low-calorie drink, Diet Pepsi. He thought it would reinvigorate their brand and distinguish them from their compet.i.tors. He asked that Searle help share the cost and risks, agree to a reasonable price for aspartame, and provide a sufficient supply to Pepsi. Knowing how important it was for one of the major cola companies to adopt the product, I agreed.8 Kendall was pleased. "Rumsfeld, you are a genius," he said, adding, "or at least I am going to make you look like one."9 With Kendall's decision on Diet Pepsi-and a substantial advertising campaign about the benefits of NutraSweet-aspartame became one of the most successful new products introduced in the United States during that period, with sales in excess of $700 million by 1985.

NutraSweet was sought out by people interested in managing their weight and maintaining healthier lifestyles. It is now in use in some five thousand products, reaching hundreds of millions of people in more than one hundred countries worldwide. I never forgot the many years and millions of dollars lost while waiting to get that stay of approval lifted by the government.

Over my first six years at Searle, the company's earnings per share, as well as its share price, had increased threefold. The overall picture had improved noticeably, but the core pharmaceutical business remained challenging. It did look like we would have some new products by the mid-1980s as a result of our increased investments in the late 1970s, but Searle was competing against larger companies worldwide that were able to outinvest us in research and development.10 To better ensure a stream of new drugs in the decades ahead, the Searle family and the board of directors began to discuss the notion of a merger with another firm. To better ensure a stream of new drugs in the decades ahead, the Searle family and the board of directors began to discuss the notion of a merger with another firm.

In the fall of 1985, we began talks with Monsanto, a company that had experience in research and development and was interested in moving into the pharmaceutical sector.11 Though a merger seemed within reach, negotiations got bogged down in the hands of lawyers and investment bankers. I was concerned that over time the merger talks would get into the press. I decided to inform Monsanto that we would agree to the sale of Searle common stock, but only if Monsanto's investment bankers and lawyers could get an acceptable agreement signed and announced before the New York Stock Exchange opened the following morning. If not, the deal would be off. Sure enough, the deal was announced the next morning, shortly before the stock exchange opened. Though a merger seemed within reach, negotiations got bogged down in the hands of lawyers and investment bankers. I was concerned that over time the merger talks would get into the press. I decided to inform Monsanto that we would agree to the sale of Searle common stock, but only if Monsanto's investment bankers and lawyers could get an acceptable agreement signed and announced before the New York Stock Exchange opened the following morning. If not, the deal would be off. Sure enough, the deal was announced the next morning, shortly before the stock exchange opened.

I couldn't help but reflect on those early days at the company, by then more than eight years earlier, when many people-including my own mother-wondered if I had made the right decision to join it. But from the first day on the job I liked the idea of taking on a new challenge in an important industry. Thanks to our restructuring plan and Searle's talented employees, we had achieved a solid comeback.

The stock price had increased from $12.50 when I took over to $65 per share, a compound annual return, excluding dividends, of 20 percent.* Searle's profits grew from $35 million in 1977 to $162 million in 1984. Searle's profits grew from $35 million in 1977 to $162 million in 1984.12 I was pleased with the results and greatly valued my time with the company. But I was never completely out of politics and government. They had a way of drawing me back in, usually when I least expected it. I was pleased with the results and greatly valued my time with the company. But I was never completely out of politics and government. They had a way of drawing me back in, usually when I least expected it.

CHAPTER 19

From Malaise to Morning in America.

Since Joyce and I had left Was.h.i.+ngton in 1977, the national political scene had changed markedly. As President Carter's administration seemed to lurch from one crisis to another, his popularity cratered.

Since my meetings with Carter and his new team at the end of 1976, I had had two other noteworthy encounters with his administration. The first came in 1978, when Carter asked the CEOs of large Fortune 500 companies to support wage and price controls to deal with inflation, an effort akin to what President Nixon had attempted. Having been the director of Nixon's Cost of Living Council, I felt an obligation to share my experiences, even if the administration might not welcome them.1 As diplomatically as I possibly could, I explained what I thought of Carter's plan, which was that it was unworkable and unwise. Carter ignored all warnings and went ahead with his "voluntary" wage price controls. Inflation soared anyway. As diplomatically as I possibly could, I explained what I thought of Carter's plan, which was that it was unworkable and unwise. Carter ignored all warnings and went ahead with his "voluntary" wage price controls. Inflation soared anyway.

Then, in December 1979, not six months after Carter signed what he viewed as a landmark arms-control agreement, SALT II, with the Soviet Union's leader Leonid Brezhnev, Soviet tanks rolled into Afghanistan. The invasion stunned Carter, who seemed amazed that the country he saw as his partner in peace would be engaging in such warlike and expansionist behavior. Carter made an infamous and revealing statement that he had learned more about the Soviets in one week than he had during his entire administration.* I found the idea that the President of the United States was surprised by the Soviet Union's capacity for mendacity and aggression embarra.s.sing. The generally sympathetic I found the idea that the President of the United States was surprised by the Soviet Union's capacity for mendacity and aggression embarra.s.sing. The generally sympathetic Time Time magazine characterized Carter's comment as "strikingly naive." magazine characterized Carter's comment as "strikingly naive."3 After I had studied SALT II, I agreed to testify against it before the Senate Armed Services Committee. Given the Soviet Union's past behavior, it seemed to me dangerous to believe that the Soviets would not exploit the treaty in order to pursue their goal of military superiority.4 Eager to ratify the treaty, Carter and his supporters in the Senate dismissed such sentiments, but only until the Soviet invasion of Afghanistan. Eager to ratify the treaty, Carter and his supporters in the Senate dismissed such sentiments, but only until the Soviet invasion of Afghanistan.

As the Afghanistan crisis threatened to unravel U.S.-Soviet relations, I was invited to attend a meeting at the White House with President Carter and Secretary of State Cyrus Vance. The gathering, on January 9, 1980, was billed as an insider discussion. When I arrived I found about forty people, including a range of current and former officials. The discussion was really more of a briefing.5 I was struck by the administration's tone. The Carter team had invested so much into believing that the Soviets were well-intentioned that they found it almost impossible to reverse course. They seemed proud that their subdued, diplomatic response to the Soviet invasion of Afghanistan had been, by their a.s.sessment, "measured" and "predictable," so as not to enflame the situation. But I saw little reason for them to be pleased. Telling the Soviets that, in effect, we would not respond to their provocations was tantamount to a green light for further aggression.

Those present from the administration seemed unclear about what they were going to do next. During his briefing, Secretary of State Cyrus Vance announced emphatically that it was U.S. policy to not sell weapons to the Soviet Union. I was astounded that the Secretary of State felt compelled to make that point.

As I expressed at the gathering, was anybody seriously suggesting or even contemplating selling arms to the Russians?6 When Carter spoke, his manner was grave. He suggested that the Soviet invasion was more serious than when the Soviets invaded Hungary in 1956 or Czechoslovakia in 1968. Someone even suggested reinstating the draft. Carter mentioned retaliatory options such as reducing the number of Soviet personnel allowed at their Was.h.i.+ngton emba.s.sy or restricting Soviet aircraft flights.

Though I was discouraged, I declined an opportunity to criticize the President before the television cameras that were outside the White House immediately after the meeting. With Soviet tanks rolling into Afghanistan, I felt it was not the time to highlight the Carter administration's mistakes.

Eventually, Carter ordered an embargo on grain s.h.i.+pments to Russia, which had the chief result of angering American farmers. The action also contradicted his previously stated position that "food should not be used as a weapon" in international disputes.7 He also announced an American boycott of the 1980 Olympics in Moscow. Then, in an address to the nation outlining what apparently he thought to be his tough new policies, Carter offered this memorable line: "Fis.h.i.+ng privileges for the Soviet Union in United States waters will be severely curtailed." He also announced an American boycott of the 1980 Olympics in Moscow. Then, in an address to the nation outlining what apparently he thought to be his tough new policies, Carter offered this memorable line: "Fis.h.i.+ng privileges for the Soviet Union in United States waters will be severely curtailed."8 Winston Churchill he was not. Winston Churchill he was not.

I believed that Carter should have increased the U.S. defense budget in response to the Soviet invasion of Afghanistan, set aside arms-control negotiations, worked with our NATO allies to encourage them to take an interest in problems outside the area covered by the NATO treaty, and provided a.s.sistance to Pakistan and other Afghan neighbors who could offer a hand to those Afghans resisting the Soviet forces. It also struck me that it might be helpful if Carter would stop making obviously inaccurate statements, such as that Soviet leader Brezhnev "shared our aspirations" when Brezhnev had demonstrated time and again that he did not.9 Proving again that weakness is provocative, on November 4, 1979, Islamist fundamentalists in Iran took sixty-six Americans hostage in the U.S. emba.s.sy in Tehran. Desert One, a U.S. attempt to rescue the hostages, ended with a tragic helicopter crash in the Iranian desert and the deaths of eight American servicemen. Between that failed mission and Carter's weak response to the Soviet invasion of Afghanistan, his decisions confirmed in the minds of many Americans that they had elected a president who lacked a sufficient understanding of the world we inhabited.

Ronald Reagan made his third run for the presidency in 1980. I readily agreed to serve as a member of his national security advisory committee during the campaign.10 As one of the individuals Reagan was considering as his vice presidential running mate, I was asked to speak that summer at the Republican National Convention in Detroit. I pointed out the mistakes the administration was making, including canceling the B-1 bomber, as well as the importance of recognizing the Soviet military buildup and our need to match it. I said Carter was "sleepwalking during four years of America's decline." As one of the individuals Reagan was considering as his vice presidential running mate, I was asked to speak that summer at the Republican National Convention in Detroit. I pointed out the mistakes the administration was making, including canceling the B-1 bomber, as well as the importance of recognizing the Soviet military buildup and our need to match it. I said Carter was "sleepwalking during four years of America's decline."11 At the convention, I was a.s.signed a handler from Reagan's campaign, whose a.s.signment was to shadow me at all times so that Governor Reagan could reach me on the phone if he decided to select me.* But the vice presidential possibility getting the most talk at the convention was Gerald Ford. Ford had rebounded greatly in the public's esteem since his loss to Carter. Perhaps it was a case of buyer's remorse. Still, I thought having Ford as vice president was not a good idea for either Ford or Reagan. It suggested that Reagan needed someone to look over his shoulder. It also could have been awkward for Ford, having served as president, to be relegated to the number two spot. Some suggested that a Reagan-Ford ticket amounted to a sort of "co-presidency." It would be like putting four hands on the wheel of the s.h.i.+p of state, which was a sure prescription for confusion. But the vice presidential possibility getting the most talk at the convention was Gerald Ford. Ford had rebounded greatly in the public's esteem since his loss to Carter. Perhaps it was a case of buyer's remorse. Still, I thought having Ford as vice president was not a good idea for either Ford or Reagan. It suggested that Reagan needed someone to look over his shoulder. It also could have been awkward for Ford, having served as president, to be relegated to the number two spot. Some suggested that a Reagan-Ford ticket amounted to a sort of "co-presidency." It would be like putting four hands on the wheel of the s.h.i.+p of state, which was a sure prescription for confusion.

I received a phone call from Governor Reagan. "Don, I want to thank you for being willing to be considered," Reagan said, "but I've decided to go with George Bush."

"Thank goodness!" I said, to his surprise.

I had feared Reagan was going to say he'd picked Ford. As it happened, the Reagan-Ford talks had collapsed after the idea of a co-president began to surface on television.

I told Reagan I was pleased that he decided not to go with Ford.

"Oh no, Don," Reagan replied, "Jerry and I decided that together." It was typically generous of Ronald Reagan to put it that way.

No one was more skillful at surveying the damage of the Carter years-toppled allies, emboldened enemies, and a diminished America-than the Great Communicator. Reagan conjured up four years of gas lines and high unemployment following Carter's tax and spend economic policies. He declared that Iranian fundamentalists and Soviet aggressors had made advances as a result of American inept.i.tude. "Are you better off than you were four years ago?" Reagan asked the American people during the campaign. On election day, voters decided they were not, and put Ronald Reagan in the White House.

In the fall of 1982, as Searle was beginning to show a measure of success, I received a call from Ed Meese, who was counsellor to the president in the Reagan White House. The President and his new secretary of state, George Shultz, wanted me to serve as President Reagan's emissary on the Law of the Sea Treaty.

The so-called United Nations Convention on the Law of the Sea was designed to codify navigation rights in international waters. But it had grown into something considerably more ambitious, with a provision that would put all natural resources found in the seabeds of international waters under the collective purview of the treaty's signers-a scheme that would result in substantial wealth being put into the hands of what was ominously called the International Seabed Authority.

Shortly after Reagan was inaugurated, he was invited to join a ceremonial treaty signing by some 160 nations in Jamaica. Reagan's first secretary of state, Al Haig, reportedly asked the President who he thought should represent the United States. To nearly everyone's surprise, Reagan announced he was not ready to agree to the treaty. Reagan believed rewards and investment incentives should go to those nations that had the specialized technology and capability to mine the ocean floor, not to the "Authority."*

Reagan's reversal of U.S. policy led to consternation at the Department of State, to which Reagan asked, "But isn't that what the election was about?" Once I heard that story I knew that we had a vastly different president in the White House.

I met with Reagan in the Oval Office to receive his guidance on my new a.s.signment. The President was gracious and personable. He had instincts about what he wanted to accomplish but, not being an expert on the treaty, he did not get into the details.14 Still, Reagan hit the important points he wanted me to convey to the leaders of the larger industrialized nations on my mission. It was the "experts," after all, who had put our country into this unfortunate position on the treaty in the first place. He wanted me to reset the American position and gain the support of key foreign leaders to join him in opposition to the seabed mining section of the treaty. All of the momentum, of course, was pus.h.i.+ng those countries in exactly the opposite direction and toward the fanfare of the treaty-signing ceremony. Still, Reagan hit the important points he wanted me to convey to the leaders of the larger industrialized nations on my mission. It was the "experts," after all, who had put our country into this unfortunate position on the treaty in the first place. He wanted me to reset the American position and gain the support of key foreign leaders to join him in opposition to the seabed mining section of the treaty. All of the momentum, of course, was pus.h.i.+ng those countries in exactly the opposite direction and toward the fanfare of the treaty-signing ceremony.

I made several trips to Europe and Asia to make Reagan's case. Two meetings particularly stood out as a study in contrasts. One was in Paris with France's socialist president, Francois Mitterrand. True to form, as I outlined President Reagan's objections to the treaty on free-market grounds, I could see Mitterrand growing increasingly enthusiastic about the aspects of the treaty we found most offensive.15 A few days later I met with Prime Minister Margaret Thatcher at 10 Downing Street in London. I explained my mission and Reagan's concerns. Quite briskly, Mrs. Thatcher bore right into the heart of the matter.

"Mr. Amba.s.sador, if I understand correctly, what this Law of the Sea Treaty proposes is nothing less than the international nationalization of roughly two thirds of the Earth's surface," she began. "And you know how I feel about nationalization."

"I do indeed, Prime Minister," I responded. Mrs. Thatcher had made transferring nationalized businesses, from utilities to mining companies, back to the private sector a hallmark of her premiers.h.i.+p.

She smiled. "Tell Ronnie I'm with him."16 Contrary to early expectations, Reagan ended up being quite successful in his efforts to defeat the seabed mining provisions in the Law of the Sea treaty. A number of the key countries I visited as his special envoy, including Germany, j.a.pan, and the United Kingdom, did not sign. As of this writing, it still remains unsigned by the United States. The experience provided a useful lesson, as I indicated in Rumsfeld's Rules, that "in unanimity there may well be either cowardice or uncritical thinking."

In 1986, as Reagan neared the end of his second term, I started giving the possibility of running for president serious thought. I surveyed the field and felt that, based on my years of public service and my time in the private sector at a Fortune 500 company, I offered a breadth of experience that a number of the possible candidates lacked. I talked the idea over with Joyce and a few close friends-some of whom had been involved in my long-shot bid for Congress back in 1962-and decided to explore the possibility.

The logo for my brief presidential campaign was, appropriately, a dark horse.

I considered informing President Reagan personally about my decision, but I didn't want to put him in an awkward position, considering that his vice president, George H. W. Bush, was the leading candidate. Instead, I went to see one of Reagan's close friends and advisers, then Attorney General Ed Meese.

A respected figure among conservatives, Meese was a thoughtful man who always seemed to put loyalty to President Reagan ahead of his own ambitions. "Ed, I'm considering running for the nomination," I told him. "I thought I'd let you know."

Meese expressed his appreciation that I informed him personally. Although he said he was likely to stick with Bush, he welcomed me into the race. "It's important to have alternatives available in case something happens," he commented. I knew our conversation would find its way to President Reagan.

There was another person I wanted to speak to before I made any announcements. I flew out to meet with President Ford at his home in California. Despite Bush's considerable advantage as the sitting vice president, Ford felt the 1988 contest was open. Very kindly, he told me that he had been describing me to his friends as the "competent" choice.17 But considering my time away from the public spotlight, Ford wondered how I could get from where I was to where I wanted to go. But considering my time away from the public spotlight, Ford wondered how I could get from where I was to where I wanted to go.

Having partic.i.p.ated in several presidential campaigns over the years, I was well aware that putting one together from scratch was a monumental undertaking, especially without being a front-runner and not currently in elective office or carrying a famous name. Bush had made light of the so-called vision thing, but I felt it was important for a candidate to be able to explain why he had decided to run for the country's highest office.

I believed my national security background qualified me to uphold the Reagan standard of "strong and decisive leaders.h.i.+p" with respect to the Soviet Union and the other threats that were gathering around the globe.18 I also wanted to focus on opportunities for all Americans, building on my experiences in Congress and the private sector. I also wanted to focus on opportunities for all Americans, building on my experiences in Congress and the private sector.

My hope was to emerge at the top of the second tier of candidates, while the two front-runners, Bush and Bob Dole, faced off. It was a page from the playbook of my first congressional primary, when my plan had been to run ahead of the other second-tier candidates, and then try to persuade them to drop out and support me, leaving me in a one-on-one race with the front-runner. As in 1962, a great many things would have to fall my way for that plan to work. For one thing, the other second-tier candidates would have to falter. Second, I would have to raise sufficient funds to be able to hang on through Super Tuesday and beyond.

After having served by then as a member of Congress, an amba.s.sador, White House chief of staff, secretary of defense, and a private sector chief executive officer, running for president was humbling. I remember going to speak to college Republicans at the University of Northern Iowa. The schedule my campaign group prepared said that three hundred students might attend. But almost no one showed up. The seats were empty, with the exception of the college Republican chapter president and a few of his friends. There, as at other events, my small staff may well have outnumbered interested voters.19 I partic.i.p.ated in all of the presidential candidate forums to try to boost my candidacy, but they received very little coverage, because Bush, wisely pursuing a front-runner's strategy, usually didn't attend. I partic.i.p.ated in all of the presidential candidate forums to try to boost my candidacy, but they received very little coverage, because Bush, wisely pursuing a front-runner's strategy, usually didn't attend.

It was hard to raise money with low name recognition, but of course it was hard to increase name identification without spending money. Ironically, the new public-financing laws enacted in the wake of Watergate, supposedly to keep money from distorting the political process, favored inc.u.mbents. It made fund-raising for lesser known candidates an even steeper uphill climb. I now was barred by law from contributing more than $50,000 to my own campaign if I wanted to receive federal matching funds, which I knew I would need. In Illinois, I needed to deposit $6,000 on a $600-a-month office. "Multiply that 1,000 times around the country," I said at the time, "and you see what candidates are experiencing."20 I soon became concerned about running a campaign deficit. I had read about Democratic Senator John Glenn's debt-ridden 1984 presidential campaign, and it raised concerns in my mind.21 Knowing Glenn from his days as an astronaut, I called him and asked about his campaign experience. He told me he had given the maximum a candidate was legally able to contribute to his own campaign, so to pay off his debts he had to try to raise additional funds. But few new donors were reaching for their wallets to contribute to a campaign that had already ended in a loss, and many of those who had contributed to his campaign already had given the maximum the law allowed or they could afford. The result was that members of Glenn's campaign staff and a number of vendors were stiffed. It was a tough situation for an honorable man like Glenn, particularly since he had the financial capability to pay the debts personally. But many did not know the new campaign law prevented Glenn from doing so. Knowing Glenn from his days as an astronaut, I called him and asked about his campaign experience. He told me he had given the maximum a candidate was legally able to contribute to his own campaign, so to pay off his debts he had to try to raise additional funds. But few new donors were reaching for their wallets to contribute to a campaign that had already ended in a loss, and many of those who had contributed to his campaign already had given the maximum the law allowed or they could afford. The result was that members of Glenn's campaign staff and a number of vendors were stiffed. It was a tough situation for an honorable man like Glenn, particularly since he had the financial capability to pay the debts personally. But many did not know the new campaign law prevented Glenn from doing so.22 If my campaign went on through the primary and we were not able to raise enough money, I knew I would be in the same position. As a conservative concerned about debt, the hypocrisy of running a campaign on a deficit was not appealing, particularly when I knew it would not be legal for me to personally pay it off. I concluded that I should not go forward, and announced my decision in April 1987, eight months before the first primary vote was scheduled.

From the sidelines, I watched the campaign unfold. In the Iowa caucuses, Dole from neighboring Kansas won, but Pat Robertson was a surprising second. Bush ran third. Then came the New Hamps.h.i.+re primary, where Bush had his longstanding New England roots and connections, his family name, and the money that came easily to an inc.u.mbent vice president and front-runner, allowing him to flood the airwaves and pull out a win, in part by attacking Dole as a secret tax raiser. Dole's campaign began to falter.

At that point, I faced a decision. I could endorse no one, or I could endorse Bush, the likely winner, or I could endorse Bob Dole. I thought Dole would be a better president, so I endorsed him. So did Al Haig, another candidate who dropped out of the race about when I did. Bush went on to win the nomination and easily defeated his lackl.u.s.ter Democrat opponent, Ma.s.sachusetts Governor Michael Dukakis.

For me, the bright spot in the new Bush administration was the secretary of defense. I had not spent much time with d.i.c.k Cheney since I left Was.h.i.+ngton in 1977. He had since been elected to Congress from Wyoming while I was working in Chicago. Contrary to what people might have expected, considering our relations.h.i.+p, I don't recall having any conversations with Cheney about the Defense Department during his four years in the Pentagon running it. He may have been sensitive to President George H. W. Bush's att.i.tude toward me and kept his distance. In any event, Cheney and I were each busy with our respective careers, his in Was.h.i.+ngton, D.C., and mine in business ventures from New York to Silicon Valley.

CHAPTER 20

Our Rural Period, Interrupted.

In 1988, fourteen years after my dad died, my mother, Jeannette, was in the pa.s.senger seat in a car accident. The doctors thought she would recover, but bedridden, her inactivity led to pneumonia. Mom died at the age of eighty-four. She was a wise, wonderful, supportive figure throughout my life. She had been healthy before the accident, and my sister Joan and I weren't ready to lose her. Still, I was grateful that each of our children had had an opportunity to know her well. At age fifty-six, both of my parents were now gone, which left me with a deep sense of loss.

In 1990, I became the chief executive officer of General Instrument Corporation (GI), a New York Citybased supplier of electronics to the cable and satellite television industry. GI had been acquired in a leveraged buyout by Forstmann Little & Company. Ted Forstmann's unusual talent was in finding companies he believed could be significantly improved by bringing in new management. He raised money from investors, which he would then borrow against to get more funding, so he could purchase companies for what he believed was less than what they could be worth. Forstmann Little would eventually take the company public again at a higher value than its purchase price, pay the original investors and any loans, and use the profit to make still more acquisitions. GI was an interesting challenge, since I knew no more about electronics than I had about pharmaceuticals when I joined Searle. A scientist working for the company, Dr. Woo Paik, had developed a breakthrough technology: the world's first all-digital high-definition television. Once again Was.h.i.+ngton intruded. The Federal Communications Commission (FCC) effectively forced General Instrument and our partner, the Ma.s.sachusetts Inst.i.tute of Technology, to combine with Zenith, AT&T, Thomson, Philips, RCA, and NBC to form what was called the Grand Alliance for digital high-definition television. The theory was that we would collaborate on fas.h.i.+oning an American standard for HDTV and share in the royalties. Apart from the damage that decision by the FCC did to GI's leading position-since GI was the company that had developed all-digital HDTV-the government's unhelpful involvement also contributed to the delay of the technology's introduction in America for close to a decade.1

In 1992 William Jefferson Clinton defeated President George H. W. Bush when he sought reelection. Clinton, a young Democrat, was elected with less than half of the vote. An intelligent man with excellent political instincts, Clinton had a talent for locking you in his gaze and saying insightful things you were interested in hearing. He had a pa.s.sion for domestic policy and could hold forth on the subtleties of single-payer health care without losing his audience. But Clinton had a manner somewhat different from presidents I had especially admired, such as Eisenhower, Ford, and Reagan. They were modest people who seemed almost surprised to be in the White House-in Ford's case, it was genuine surprise. By contrast, Clinton seemed to have been aiming for the presidency practically since childhood, and he appeared not at all surprised that he had attained it.

In his first four years in office, Clinton raised taxes on the American people after promising a tax cut-a reversal that had proven perilous for his predecessor. The Clinton team's military operation in Somalia ended in retreat and emboldened Islamist extremists. The administration responded indecisively to a series of terrorist attacks, including the first bombing of the World Trade Center in 1993. Having confronted the problem of terrorism as President Reagan's Middle East envoy, I couldn't help but think back to what had happened in Lebanon and how it had brought America's credibility into question.

Due to the policies of the Clinton administration-including a plan to have the federal government take over the American health care system-Republicans gained ground during the first years of his term. In 1994, the leaders.h.i.+p of a then little known congressman from Georgia named Newt Gingrich brought the GOP control of the U.S. House of Representatives for the first time in decades. Gingrich combined the intellectual firepower of his academic background with a zeal for commonsense solutions. He could rattle off ideas like a machine gun.