A president who merits his moniker

Nixon's Economy - A Tangled Web
October 2, 1998

For 20 years after his unprecedented resignation, Richard Nixon relentlessly campaigned for the verdict of history. Above all, he asked to be evaluated apart from the disaster of Watergate (a proposition endorsed by President Clinton and Henry Kissinger at Nixon's funeral, being men not without their own interest). Nixon's faithful supporters always try to shift the debate to his foreign policy initiatives. Indeed, Nixon himself often said he wished to be remembered for his opening to China. But how can we have Nixon without Watergate?

Two new books consider Nixon's plea - one on domestic affairs, the other on foreign policy. Allen J. Matusow is an accomplished 20th-century historian, most noted for his searching critique of liberalism's failings in the 1960s. William Bundy is a prominent "insider", a former foreign policy official during the Kennedy-Johnson years and editor of Foreign Affairs magazine from 1972-84.

Nixon would not have liked their findings. Both point to the overall failure of his policies, and both recognise that Watergate's baleful effects cannot be disentangled from his presidency. Nixon without Watergate is an impossibility. He ran his administration before June 1972 with a political calculus. Once Watergate erupted, domestic political imperatives propelled almost all his actions, whether to increase the money supply or to make peace in Vietnam.

Matusow's excellent, tightly constructed study links Nixon's economic policies to the service of his political fortunes. He ardently pursued a political realignment, based on a new coalition of the traditional Republican base now coupled with blue-collar Catholics and "a constituency of uneducated people", acknowledging their continued faith in beneficent government, but appealing to their new-found conservatism on "social issues". This meant denouncing campus, anti-war, and ghetto protestors. He played the race card to the hilt, opposed abortion (mildly), and called for aid to parochial schools. All this, Nixon believed, would cause a seismic shift in American politics, as the former have-nots now had arrived, increasingly conservative and fiercely protective of their status compared with those who had not yet "made it". Nixon largely succeeded in obliterating old class lines in politics, and created a more conservative social order.

Ronald Reagan reaped the benefits of Nixon's politics, and Bill Clinton has trimmed Democratic sails to accommodate the new order. As Matusow shrewdly notes, the economic policies of Nixon's presidency inspired a reassessment of economic policy, a reassessment Reagan exploited as the nation floundered through six post-Nixon years of economic stagnation and out-of-control inflation.

Nixon proclaimed himself a Keynesian just at the moment that inflation and slow economic growth had discredited traditional liberal economic policies. But Matusow understands that Nixon's political needs, not ideological confusion, was the heart of the matter: "The zigs and zags of policy gave the appearance of ideological confusion. Politics provided the coherence, and because politics was the point, Nixon cared more about the symbolism of his programme - how it played in Peoria - than about actually passing it." Old reliable Nixon always could provide a political commentary, however obtuse, to any arcane matter. When meat prices rose in 1970, Nixon had a ready explanation: "I think you will find that chain stores which generally control these prices nationwide are primarily dominated by Jewish interests. These boys," he continued, "of course have every right to make all the money they want, but they have a notorious reputation in the trade for conspiracy." The president primed his people for a massive investigation when prices fell of their own accord. Perhaps the invisible hand of the Jewish Tooth Fairy did it.

The story illustrates the primitivism and, more basically, the lack of real interest by Nixon in economic policies. However he could help a vital interest group that supported him, or possibly might support him, whether it meant closing the gold window, instituting wage and price controls, or either fuelling or containing inflation.

Matusow has given us a penetrating account of the politics and internals of economic questions in Nixon's time. But actions, or even the lack of them, have consequences, and Nixon's have affected us for more than two decades. Consider: the growing imbalance in foreign trade, pushing the United States from the world's major creditor player to the world's major debtor; his plea that the Federal Reserve dramatically increase the money supply in 1972 with the resultant push to the inflationary cycle; how he connived with Congress for a 20 per cent rise in social security benefits, one month before the 1972 election; and to fend off his congressional critics and have a free hand abroad, he supported the institutionalisation of entitlement programmes that increased from about 6 per cent of the GDP in 1969 to more than 10 per cent by 1975.

Despite dramatic surges in the American economy in the past few years, we still struggle with the effects and traumas of policies of both the Vietnam and Nixon eras. Matusow acknowledges that storm signals had been up for some time. Vietnam had become a fiscal drag, promoting excessive money growth and budget deficits, misdirecting resources, and enabling a resurgent Europe and a booming Japan to challenge American commercial supremacy. American free-trade shibboleths of the past hardly accorded with the reality of protected foreign markets.

But sadly, Nixon had no firm economic ideas and commitments, often ignoring informed advice. Economics can be a dismal game and well-intentioned advisers sometimes missed the mark in their analysis of growing problems. Policies of gradualism did not interest Nixon, particularly as he linked their short-term lack of success and his loss of mid-year elections in 1970. Instead, he adopted an easy-money policy that stoked the already smouldering inflation.

Nixon's economic decisions brim with irony. The economy bedevilled him with disappointment, first with inflation in 1969 and then recession, even stagflation in 1970. Nixon's solution? The disaster of wage and price controls which, ironically, he had always opposed, even during the second world war. The story reads like a libertarian parody of the regulatory state. In the 1972 election year, Nixon's run of good luck included a wholly unexpected economic boom. But that gain created unanticipated excess demand that exploded into dramatic inflation by 1973, leaving Nixon with diminishing popularity just as Watergate imposed its inevitable decline on his credibility. The new political situation consumed Nixon, and he and his advisers left the economy to drift and further imperil him.

After Kissinger's famous interview comparing himself to the Lone Ranger, Nixon raged about his vain, self-aggrandising assistant. He told another aide that he would send Kissinger "back to Harvard, that's where he belongs. I've put up with everything I am going to put up with. This is the end." What a relationship. Of course, it was not the end. That came during Nixon's excruciating last days in the White House when he reportedly asked Kissinger to kneel and pray with him, naturally imploring Kissinger to keep the matter confidential. The moment predictably showed up in Bernstein and Woodward's The Last Days. Nixon constantly threatened to dismiss his aide, while Kissinger, despairing and exasperated, talked of resigning. Trust and mutual respect, it seems, were not shared values between the two.

Bundy, who deals at length with the collaboration of this odd couple, downplays their personalities. But their persona is essential to understanding the conduct of American foreign policy in these years. Nixon without doubt was the top dog, but Kissinger was his indispensable point man. Kissinger strove to keep friend and foe happy; cordiality and small talk never were Nixon strengths. Outwardly, the two seemed so different, yet what united them is most important. Both were largely outsiders, monumentally insecure, obsessive about their reputations, secretive, and vainglorious.

The US's preoccupation with Southeast Asia during the Nixon years obscured important developments elsewhere. For example, Willy Brandt's ostpolitik was significant and had important ramifications two decades later. We now can more fully appreciate Brandt's important role in the development of detente and the eventual collapse of the Soviet empire. The broad range of Nixon and Kissinger's dealings with the Soviet Union, the convoluted relations with the shah of Iran, the duplicitous dealings with the Kurdish rebels, the contempt for Japan, that most loyal of allies, the dark, sinister workings with the Chilean military to overthrow Salvador Allende, and the largely successful ventures in the Middle Eastern labyrinth, receive their due here.

Bundy is an insider passing judgement on other insiders. That alone makes the work interesting. He was of that "establishment" that Nixon professed to hate but longed to be part of. His father had been Henry Stimson's principal aide; his father-in-law was Dean Acheson; he was a particular favourite of Allen Dulles; and his younger brother, McGeorge, was Kennedy's and Johnson's national security adviser. Bundy himself was a major architect of America's disastrous Southeast Asian policy in the 1960s. And that policy was deeply rooted in a fear by the two presidents he served that to allow a communist takeover of Indochina would inspire domestic agony similar to the early 1950s when Republicans (notably, Nixon) raised the question, "Who lost China?" President Johnson waged the Vietnam war fully aware of Harry Truman's decline during the Korean war. Yet it is strange to find Bundy saying that neither Nixon nor Kissinger anywhere recognised "nationalist factors in situations with communist labels". Is it fair for him to scoff at Kissinger's sudden realisation in February 1973 that China and Vietnam had been historical antagonists? Where was that understanding in, say 1965-69, when Johnson (and Kennedy before him) believed that Beijing (or sometimes, Moscow) controlled Hanoi? Bundy never publicly broke with establishment leaders over the war, but this book represents at least a belated correction.

For Bundy, "it is hardly news that Nixon was a 'political animal,' often first and almost always." Nixon was hardly unique. Domestic and political events constantly affect any president's foreign policy; Bundy seems to prefer that foreign policy operate autonomously. Certainly not in the US. By June 1973, Watergate had severely crippled Nixon. Coincidental to his summit with Leonid Brezhnev, he had to confront the devastating testimony of John Dean. A month earlier, he recognised he might not survive Watergate, and resignation or impeachment were very real possibilities. The passage of the War Powers Act of 1973 over Nixon's veto aptly illustrated his impotence.

Walter Scott's couplet, "Oh, what a tangled web we weave/When first we practice to deceive!" shapes Bundy's title and thesis. Bundy has the "Tricky Dick" of earlier political lore moving to a larger, international stage, practising that deceit, but now with much more at stake. Perhaps it began even before Nixon assumed the presidency, when he used Anna Chennault as a go-between with General Nguyen Van Thieu to discourage South Vietnam from joining any Johnson peace initiative in October 1968. In a rare burst of passion, Bundy believes that Nixon's actions prevented Hubert Humphrey from winning the election and impaired any chance for a settlement in Vietnam. Robert Gates, later George Bush's director of central intelligence, had a similar view. The Nixon years, he wrote in his memoir, were "a time of secret deals and public obfuscation (and deception), all reflecting more accurately than they imagined the personalities of its principal architects."

Nixon trumpeted the Vietnam peace settlement as "peace with honour", despite leaving North Vietnam in place in the South, poised to conquer the whole country. For Bundy, such deceit was dangerous and had profound consequences. Nixon's misrepresentation of his policies and his actions were at odds with what he told Congress and the American people, and weakened his authority, his leadership, and ultimately, his historical reputation.

All this is to say that Nixon's foreign-policy achievements are a legend of his own mind. Bundy's book is a corrective response to Nixon and Kissinger's self-serving memoirs. Nixon deceived Congress and the public all too often. Congressional limitations on detente, Indochina, and presidential war powers represented "failures of trust brought on by years of neglect and deception". That pattern of deception, Bundy writes, was "in the end doomed to failure". Nixon's career largely was a pattern of deception; appropriately, he failed because of it. And Watergate is the icing on the cake of his policy failures.

Stanley I. Kutler, professor of history and law at the University of Wisconsin, is the author of Abuse of Power: The New Nixon Tapes.

Nixon's Economy: Booms, Busts, Dollars, and Votes

Author - Allen J. Matusow
ISBN - 0 7006 0888 5
Publisher - University Press of Kansas
Price - £31.50
Pages - 323

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