WASHINGTON -- He once said, 'There's enough fat in the government that if it was rendered and made into soap, it would wash the world.' In 1981, Ronald Reagan stoked the fire, loaded the cauldron and began melting down Washington.
In the 12 months short two weeks since he became the nation's 40th president, Reagan and his associates have brought to a halt a half-century trend of increasing federal intervention in national life.
Reagan came to office pledging to cut federal spending, red tape and taxes. He did that. He promised to rebuild the military and began that. He said inflation would be brought to heel, and at year's end, prices and interest rates had fallen back somewhat.
He said all of this would rejuvenate the economy, bringing prosperity to the rich and poor alike and unleashing such a flood of tax revenues that the federal budget could be balanced before the end of his first term.
That didn't happen. The economy, in fact, slumped into recession during the first year of 'The Reagan Revolution' and the outlook for the federal deficit in its second year rocketed past $100 billion.
He insists the plan is going to work. His faith in 'supply side' economics remains firm and he has directed his lieutenant to steam full ahead into more budget cuts.
But there were signs of wavering on Capitol Hill, where Reagan won nearly every major battle in 1981 by forging a coalition of White House-loyal Republicans and conservative Democrats.
With all 435 House members and 33 senators up for re-election in 1982, Congress began getting nervous when neither the Wall Street traders nor the Main Street merchants produced a boom in response to Reaganomics.
Thus, Reagan got almost everything he wanted from Congress in the first nine months of the year, but had to compromise on additional budget cuts in the fall. What he gets in 1982, when deeper cuts are slated in social programs whose roots go back 50 years to the Great Depression, depends on whether and how well Reaganomics works.
But he was a magician in 1981. He came to office at a time when many people believed the presidency hardly was worth the effort to achieve it. But with his polished television skills, he made frequent successful appeals for public support. And with a talent for political horsetrading, he got Congress -- narrowly Republican in the Senate and still Democratic-controlled in the House -- to do his bidding.
Congress cut planned spending by $40 billion, approved the largest tax cut and the costliest peacetime military buildup in history, and stood still for a massive rollback of federal rules, regulations and policies that he said had crippled the once-great engine of American free enterprise.
Sometimes he seemed to be different men -- strict in summarily firing all the striking federal air controllers; permissive in prosecuting no one who had failed to register for the draft. He continued to oppose the demands of organized feminists, but appointed the first woman to the Supreme Court.
His foreign policy also fooled a lot of people. He arrived as a hard-nosed Cold Warrior, talking tough to the Russians for months. Then offered to put no new missiles in Europe if the Soviets would withdraw the weapons they already have pointed at the West. He fought like a tiger to get AWACS radar planes for Saudi Arabia, then offered Israel the broadest military cooperation of any president.
The administrators he brought to Washington fell energetically to the job he laid out. Consumerists, environmentalists, educators, scientists, unionists, local and state officials and civil rights leaders howled as the budgets of the agencies and programs that had fed or supported them were cut.
Reagan and his men (he made few high-level female appointments) said all the noise was coming from people who ought to be making their own way instead of depending on Washington for succor.
For the most part, the administration waved aside protest, but when they tried to carve into the benefits of the Social Security system the outcry was too intense. The administration backed off and looked for a way to share the pain of repairing the system with the political opposition.
The official opposition was supposed to be the Democratic Party. Some of its survivors in Washington struggled during the year -- and vow to continue in 1982 -- to rally voices and votes against what they saw as heartless and short-sighted abandonment of programs and policies that promised to fulfill the nation's promise of opportunity, equality and humanity.
But others, confused and demoralized after 1980, simply folded under the Reagan first year onslaught.
In 1932, the people of the United States swept out a philosophy of government that failed to respond to a profound national crisis and installed one that changed the very fabric of American life.
In 1982, the children and grandchildren of those Americans will give their first judgment of a government that is trying to unravel that cloth and weave a whole new pattern for the nation.
Here, from UPI reporters in Washington, are capsule reports of what has been going on in Ronald Reagan's effort to remake Washington.
Congress
It is hard to say whether the rulebook was rewritten on Capitol Hill in 1981 or whether Congress simply stepped back in time to when Republicans and conservative Democrats ran the show.
Whichever, the 97th Congress that took office in 1981 was vastly different from its predecessor. There was a massive power shift from Democratic control to a situation in which the Republicans effectively ran the show.
In the Senate, there was numerical GOP control, 53-47. But in the House, where Democrats had a 242-192 edge, Republicans also ruled with a combination of tight party discipline and a floating alliance with several score conservative Democrats who became known as 'Boll Weevils.'
The Rpublicans also had a few defections, but GOP leader Bob Michel usually managed to keep his party's liberal-moderate wing -- the 'Gypsy Moths' -- well in line.
The coalition produced some of the most conservative legislation since the 1950's -- major budget cuts, mostly in social programs; a huge tax cut bill which for the first time in memory wasn't skewed toward the lower end of the income scale; and the country's first $200 billion-plus defense budget.
The conservative tide was so strong some cuts were made in Social Security benefits before the elderly rose up in such indignation that even Reagan was forced to support restoration of the $122 minimum benefit.
'We in this House helped bring about a change in the course of American history, and we helped define a new direction for national government and national politics in this country,' Michel said.
Senate GOP leader Howard Baker said, 'This Congress has made more fundamental changes in the public policy of thisnation than any other Congress in decades.
On the other side of the fence was white-haired House Speaker Thomas O'Neill, a card-carrying Democrat, who was convinced Americans would rise up and reverse the Reagan tide as soon as they discovered what had been done to them.
'Do I think the president will have problems with getting his programs nwxt year?' O'Neill asked. 'The answer is yes.'
There was little doubt, however, the key player in Congress this year was not a member of either the House or the Senate. It was Reagan.
Reagan displayed a pied piper's charm for getting what he wanted, including convincing his own party members at times to march lock-step into votes that went against everything they had stood for for years.
The best examples are in the foreign aid area, which Reagan convinced the Senate to approve the sale of AWACS radar planes to Saudia Arabia, and enough normally opposed GOP members of both houses to pass a foreign aid bill.
The economy and foreign affairs dominated the first session of the 97th.
Social issues such as abortion generally took a back seat. With the socially conservative Senate leading the way, Congress took its severest action against abortions and reflected a hardened attitude against school busing and a softened attitude on prayer in the schools. But epic battles on those issues were to come.
Environmental issues also took a back seat. The major environmental issue of the year was Congress' attempt to reauthorize and revise the Clean Air Act, which was passed originally in 1970 and strengthened in 1977.
Despite an early start, committees were unable to finish work and the issue will be taken up next year. Also left unfinished was extension of the Voting Rights law, which passed the House but not the Senate, where Reagan has signaled he will support amendments civil rights leaders claim will gut the measure.
Economy
'Reaganomics' is about to undergo its crucial test.
During his first year in office, Reagan succeeded in putting the main elements of his economic program into place. The next two years will determine how well it works.
Reagan came to office promising a cure for the prolonged and fundamental distress which beset the economy in the 1970s -- a combination of double digit inflation, slow economic growth, high unemployment and lagging productivity.
His formula: Tax cuts to increase incentives to work, save and invest; a sharp slowdown in the growth of government spending to shift resources to the private sector; less regulation of the private sector; and tight control of money growth to curb inflation.
These were to be combined with increased national defense and a balanced budget in 1984.
The program was unveiled in February with a rosy economic forecast, projecting lower inflation and brisk, 4 to 5 percent economic growth in 1982 and subsequent years.
Inflation has begun to subside -- from 13.5 percent in 1980 to perhaps 8 or 9 percent projected by many private economists for 1982 as a whole.
But instead of what it thought would be a 'spongy' economy quickly moving into high gear, the country is in the midst of a recession, with the possibility of unemployment rising as high as 9 percent.
The recession began as a result of high interest rates, which followed the Federal Reserve's tightening of money. It first hit interest-sensitive industries such as autos and housing, then spread to many other industries.
The recession pushed up the federal deficit to more than double the $40 billion predicted earlier, forcing Reagan to say it now is 'unlikely' he can meet his goal to balance the budget by 1984.
The administration and most private economists expect recovery from the recession to begin sometime in mid-1982.
Murray Weidenbaum, chairman of the president's Council of Economic Advisers, says 1983, when the tax cuts reach full effect, 'should be a very vigorous, noninflationary period of economic growth.'
A number of private economists agree, although they say there are some big ifs.
Lawrence Chimerine of Chase Econometrics says a 'meaningful expansion' of the economy with moderate inflation is possible, provided there is no big rise in interest rates when recovery begins -- and that this will mean controlling the deficit in the years ahead.
Richard Rahn, chief economist for the U.S. Chamber of Commerce, says the deficit will not push up interest rates because Reagan's tax incentives will bring a big increase in savings.
A recent series of economic papers publised by the Center for Democratic Policy, a new Democratic think-tank, says the tax cuts will do little to increase saving.
John O. Wilson, director of economic research at the Bank of America, says Reaganomics will increase growth and lower inflation it is sustained.
'But there is concern that the short-term costs of these policies will prove too great, forcing their abandonment before their positive long-run effects appear,' he wrote in a recent economic report published by the bank. -Donald H.
Foreign Policy
Ronald Reagan's inauguration was the catalyst that ended one of the most excruciating periods in recent American history, the hostage crisis in Iran.
But that high spot in diplomatic affairs was not to be repeated. Partly because of domestic distractions, the United States now is confronted with four problems that did not exist when Reagan took office:
-The Polish crisis. Smoldering problems burst into flames, despite warnings from the United States and its allies, when the Solidarity labor movement lost control of its radical elements. The Polish military, in a carefully planned and executed manuever, moved swiftly to bring what the defecting Polish ambassador to Washington called 'silence and darkness' to Poland.
-Relations with Israel, somewhat strained during the Carter administration, reached a new low in the 11th month of the Reagan administration. It was triggered by Israel's surprise annexation of the Golan Heights when Washington was preoccupied with the Polish crisis.
The United States, in retaliation, suspended an agreement under which the two countries were to work out 'strategic cooperation.' A U.S. official angrily said Israel must learn that the United States 'will not rubber-stamp' everything Israel does. Prime Minister Menachem Begin responded with an outburst unprecedented in relations between the two governments, accusing the United States of treating Israel like 'a vassal state ... a banana republic ... a 14-year-old boy.'
-Relations with western European governments deterioriated to where former Secretary of State Henry Kissinger suggested the Atlantic alliance is outdated and ineffectual and the United States may have scrap it for 'other measures and other arrangements.'
Despite the Polish crisis, the largest demonstrations in western Europe in 1981 were aimed at U.S. plans to install nuclear weapons European governments had asked to counter Soviet missiles targeted on western European cities. The administration was both exasperated and puzzled by the European reaction.
-An attempt to improve relations with China fell apart when Reagan, responding to pressure from the ideological right, insisted the United States would maintain its commitment to sell modern arms to the government on Taiwan.
Right-wing Republicans in Congress, cashing in some old political chits, also were able to block a series of appointments to key State department posts. Because of the tug of war, new U.S. ambassadors have not yet been named to important countries such as Indonesia. The man in charge of African policy was not confirmed for five months; the appointment of the head of the Latin American bureau was delayed even longer.
Even more damaging was a territorial and personality spat between Secretary of State Alexander Haig, and the president's key aides, Edwin Meese, Michael Deaver and James Baker.
Foreign representatives in Washington were confused by the feud, and as a result, hedged their bets by using both White House and State Department channels to communicate. This further enraged Haig, who believed he, and he alone, is 'vicar' of the president's foreign policy.
If governments were students, the Reagan administration would get a low 'C,' and a note that 'more attention must be paid.' But governments don't get grades; they get compounded problems -- and that is what Reagan has on his first anniversary.
Defense
Ronald Reagan charged into office with guns blazing in his determination to refortify U.S. military power in 1981. Congress acquiesced in the biggest defense buildup since the Vietnam War.
To keep the public behind its drive to 'rearm America,' the administration did nothing during its first year to reinstitute the draft, and met military manpower goals with pay hikes and re-enlistment bonuses.
Whether the momentum of the nation's biggest peacetime military buildup can be sustained probably depends on the level of public outcry against cutbacks in social services.
Projected defense spending for fiscal 1983 beginning Oct. 1 is $245 billion, up about $30 billion from current levels.
The necessity for the buildup was blamed on the Carter administration's 'years of neglect' of the armed forces -- both strategic and conventional -- and the anti-military syndrome in the country following Vietnam. At the same time, the administration said, the Soviet Union was building up superior forces on land, at sea, in the air and, some said, in space.
'The Reagan administration has embarked upon a program of rearmament which will restore to the defense of the United States the margins of safety we have enjoyed in the past, margins which, historically have helped to prevent aggression and, when lacking, have encouraged it,' Defense Secretary Caspar Weinberger said recently.
'If we can't maintain the peace, then we must face the charge of having allowed the kind of weakness that encourages aggression to occur. This administration is absolutely determined to see to it that that situation never comes to pass.'
The buildup is estimated to cost $1.5 trillion during the next five years, including $180 billion to modernize strategic forces with the B-1 bomber, the MX missile and its eventual bases, a new submarine-launched missile and upgrading the command, control and communications systems.
For non-nuclear forces, the emphasis was on seapower to counter the growing Soviet navy and the direction its challenge to the pride of the U.S. fleet, the aircraft carrier.
The Pentagon may try again to get Congress to reactivate the carrier Oriskany in its quest to get 15 carrier battle groups to sea as quickly as possible. There now are 12.
The administration also has concentrated on a Rapid Deployment Force. Congress may be requested to pay for building a huge transport, the successor to the C-5A Galaxy, to give the RDF more airlift capacity. It has emphasized boosting the country's air defense capabilities by replacing older interceptors with the F-15 fighter -- again as part of its modernization program.
To pay for it all, as Weinberger warned as early as March, Americans will have to sacrifice some social services. How long they are willing to make those sacrifices may depend more on the state of the economy than the size of the Soviet threat. -Richard C. Gross --- Arts
The arts and humanities survived 1981 much better than had been expected under Reagan, one of their own.
Now, with their budgets cut back only a fraction of what the former movie actor proposed, they face new direction under his own appointees.
One of Reagan's first proposals as president was to cut the budgets of the National Endowments for the Arts and Humanities, their biggest setback since a big jump in funding during the Nixon year.
The endowment for the arts was funded at $159 million in 1981; Jimmy Carter proposed $175 million for 1982. The endowment for the humanities got $151 million in fiscal 1981; Carter asked $169 million for 1982.
Reagan wanted to slash these by half. Largely through efforts by Rep. Sidney Yates, D-Ill., Congress sent Reagan a 1982 bill providing $143 million for the arts and $130.5 million for the humanities.
Reagan also assembled a White House task force to study the future of federal aid for the arts and humanities, and it recommended a continuation of the programs. Reagan aide Francis Hodsoll, the senior White House liaison to the task force, then was nominated to suceeed Livingston Biddle as chairman of the endowment for the arts.
William Bennett, a conservative and director of the National Humanities Center in North Carolina, won a battle over M.E. Bradford, a conservative English professor at the University of Dallas, to chair the endowment for the humanities.
The Institute of Museum Services was winner in one of the most deft political maneuvers of the year. Reagan had proposed junking the $12 million a year institute, which provides aid to about one in six of the nation's 4,000 museums. But Reagan nominated Lila Cummins Tower, a lawyer, museum buff and wife of Sen. John G. Tower, R-Tex., to be director. Now the institute's future is almost as bright under Reagan as the Pentagon's. -Wesley G.
The assault on federal regulation Reagan promised has happened. The regulators now have less money to regulate with, and fewer rules to oversee.
The casualties range from auto airbags and alcoholic beverage ingredient labeling to more than 900 pamphlets, guides and brochures, including the popular 'Car Book' (later revived privately).
Officials of some agencies like the Consumer Project Safety Commission say they no longer can be sure they are doing their job as the law requires.
The Environmental Protection Agency is facing a 40 percent cut in personnel. The Federal Trade Commission has abandoned attempts to control children's television advertising because of the unfriendly atmosphere in Congress and at the White House.
The Office of Management and Budget claims regulatory relief has saved government and industry from $4.3 billion to $6.4 billion, with more ahead. The administration said the number of pages of the Federal Register, whererules are published, was down by one-third in the first nine months of 1981.
Joan Claybrook, who ran the National Highway Traffic Safety Administration during the Carter years, says the new people are'essentially trying to make NHTSA into a wholly owned subsidiary of the U.S. auto industry.'
She pointed to a recent NHTSA study forecasting a 20,000 per year increase in traffic deaths by 1990 because of the increased use of small cars and said 'Even by their own statistics, they acknowledge there's going to be a tremendous increase in death and injury.
'At the same time, for philosophical reasons and without regard to the health of the American public, they are revoking some of the most critical safety standards on the books,' she said.
In addition to criticizing her successors for scrapping rules designed to require either airbags or automatic seat belts in all cars, Ms. Claybrook says the administration has largely abandoned the recall of defective cars.
She also said the administration has rejected the concept that safety can be built into cars, and is paying only lip service to the national 55 m.p.h. speed limit.
Sandra Willett, executive director of the National Consumers League, says 'Reagan is a good showman but the script which he's reading is dangerous, unconscionable and really undemocratic. Our board calls it lawless and mindless.'
She has two gripes -- consumer groups no longer are able to participate in regulatory decision making, she says, and budget cuts are undermining basic consumer protections and services.
'Consumers do not have access so that we can present objective analytical information to balance the scales. Because there is no public participation funding we can't pull together the subtance,' she said in an interview. -Michael J. Conlon --- Environment
William Turnage, executive director of The Wilderness Society, calls 1981 'the most consequential and damaging year for the environment in the last 30 years.'
Turnage thinks Reagan 'doesn't appreciate the immensity of the changes he's allowing or the enormity of the physical damage they will cause.'
His assessment is typical of environmental leaders who almost unanimously single out Interior Secretary James Watt and his policies for criticism. Ann Gorsuch, the Environmental Protection Agency chief, and John Crowell, the lumber company lawyer now heading the U.S. Forest Service, are giant steps backward for the environmental movement in America, they say.
Each major national conservation groups ha denounced Watt. The Sierra Club gathered more than 1 million signatures for his ouster.
Environmentalists vow to make Watt an issue in the 1982 congressional elections. 'The whole mood and climate of debate has changed. James Watt has made it a partisan issue,' said Turnage.
Watt's agency, for the first time, has issued oil and gas leases in a wilderness area and seeks to extend the 1984 cutoff date for wilderness mineral exploration.
He has clashed with Gov. Edmund G. Brown, Jr., over leasing federal waters off California's northern coast, opened recreational areas to mining and drilling, and imposed a moratorium on parkland acquisitions.
'Change must be brought about to restore America's greatness,' says Watt, who believes he is in the mainstream of environmentalism. 'To produce and produce, to conserve and conserve with the power of the marketplace doing the work -- this is the only wise policy.'
Despite what he calls 'a firestorm of opposition' from the media and narrow special interests, Watt says his pro-development policies enjoy the support of the president, Congress and state governors.
Quick to counter-attack, Watt recently drew a distinction between 'liberals and Americans.' And a key subordinate in the strip mining program likened environmentalists to homosexuals and 'ideological eunuchs.'
'There's been a complete reversal in government policy -- against the environment,' Turnage said. Government's philosophy of resource stewardship has turned away from protection and conservation and toward development and commercialization, he said.
'We're going to fight him at every single turn -- 1982 will be the decisive year,' Turnage said.
Minorities, women and youth
Reagan never has enjoyed widespread support among organized minority and women's groups, and his first year did little to change that.
In civil rights, Reagan's policies have further estranged him from those two groups.
Two personnel actions symbolized both his efforts and his troubles: the appointment of Mrs. Sandra Day O'Connor to the Supreme Court and the ouster of Arthur Flemming as chairman of the U.S. Commission on Civil Rights.
Mrs. O'Connor's historic appointment was warmly received by women's groups, but they continued skeptical about his commitment to equal rights for women. The Equal Rights Amendment, cornerstone of the women's rights movement, still needs ratification by three states -- and still is opposed by Reagan.
The administration also continues to support anti-abortion measures, and while Reagan sidetracked legislation on the issue to focus on economics, 1982 could produce some bruising fights with women's groups.
Much more clear cut has been the administration's effort to change the government's civil rights enforcement role.
Flemming, a Republican with ties back to the Eisenhower administration, has been one of the most outspoken advocates of affirmative action in employment and education and busing to achieve school integration. The administration opposes both.
'We are not going to compel children who don't choose to have an integrated education to have one,' according to William Bradford Reynolds, assistant attorney general for civil rights.
Reynolds has also said he is looking for a test case to reverse a 1979 Supreme Court decision permitting voluntary ending of job discrimination.
Such a reversal, Flemming said in a parting shot at the administration, 'would place in jeopardy literally thousands of functioning affirmative action plans currently in operation throughout American industry and government.'
Although young people are among the groups least likely to vote, Reagan faces a decision early this year that could mobilize large numbers either for him or against him -- draft registration. A special panel is preparing a report on whether he should continue the registration program begun by Jimmy Carter.
If he decides to continue it as part of the administration's effort to enlarge U.S. military strength, it may be necessary to prosecute some of the estimated 800,000 youths who have failed to register. Such trials could be politically embarrassing in a tough election year. -David E. Anderson --- Education
The Reagan administration's goal for the Education Department was to abolish it. Secretary Terrel Bell's proposal to turn it into a Cabinet-level foundation is favored by White House and budget officials, but Reagan has not yet endorsed it.
Carrying out the president's campaign promise to axe the department was slowed by resistance on Capitol Hill, where conservatives want less and liberals more.
'We haven't moved fast enough in settling the future of this department,' Bell said in a recent interview. But he expects the department to be abolished and its functions dispersed to other agencies by the end of the 1982 fiscal year, and predicted he will be gone by next Christmas.
Bell said his department probably spent so much time on budgets and rule-making that it neglected its role in 'enhancing learning.'
'The Department of Education has made a commendable change in direction,' the conservative Heritage Foundation said in a recent progress report. But critics -- including the nation's top education groups -- charged the administration's financial aid cuts will keep thousands of students out of school.
Congress, despite administration urging, kept the biggest education programs out of the block grant system. It cut the 1982 department budget to $12.9 billion, $1.4 billion less than the last fiscal year.
The administration won big cuts in student aid programs for the needy and an income test and higher interest rates on guaranteed student loans. It beefed up repayment efforts, although investigators reported there are serious problems collecting back debts, including unpaid loans from more than 5,700 doctors.
In civil rights, under Bell's dictum to settle cases by cooperation instead of confrontation, the department ended an 11-year-old North Carolina college desegregation case by accepting terms rejected by the Carter administration.
It settled old civil rights suits in West Virgina, South Carolina, Delaware and Missouri, and ended three university sex discrimination cases by coming to terms before formal litigation began.
Bell yanked Carter administration rules requiring bilingual education, prompting howls from minority groups, and wanted to exclude employees from Title IX school sex discrimination rules -- a proposal rebuffed by the Justice Department and roundly criticized by women's groups.
At year's end, Bell was urging the Justice Department to exempt from anti-discrimination laws colleges whose only federal aid is loans to their students. Bell estimated the change would affect only about 500 schools out of 8,000, but women's groups and others said it would set a dangerous precedent.
The Education Department estimated its rules reductions -- including abolition of student dress codes -- cut the paperwork burden by 18 percent in fiscal 1981. -D'
Justice
Attorney General William French Smith got a slow start at the Justice Department, but by year's end had come up with major policy shifts in civil rights, antitrust, immigration policy and crime control.
The most significant change was in civil rights where the department called for an end to forced busing and preferential hiring for minorities. Smith said government-ordered busing and quotas have proved ineffective.
Instead, the department plans to seek voluntary school desegregation andagreements with employers to increase the recruitment pool of qualified minorities. The new policy drew loud cries from civil rights activists and black leaders as a major retreat from the progress of the past decade.
Smith said the new immigration policy, focusing on curbing illegal migration to the nation's shores, has 'so far worked remarkably well.' He is seeking legislation to reduce illegal immigration by expanding opportunities to work lawfully in the United States and by prohibiting employment of illegal aliens outside these programs.
Smith, who had a major hand in formulating the policy, said the flow of illegal aliens from Haiti had slowed to a trickle. In November, 47 illegal Haitians arrived in the United States. A year earlier, there were about 1,000.
The area of violent crime has received closest attention. Smith said the administration intends to increase the federal effort against drug trafficking, including a closer working relationship between the FBI and the Drug Enforcement Administration.
And the department is supporting a proposed crime code to impose federal jurisdiction over murder for hire, large-scale arson and the leadership of organized crime.
Smith also signaled a policy change in the antitrust arena, when he said that 'bigness is not necesarily badness.'
In a surprise move, the Justice Department held up the prosecutions of young men for failing to register for a draft. Officials said indictments were being delayed until the White House decides whether to move ahead with the draft registration program. Judi Hasson --- Energy
Reagan made oil decontrol his first major policy decision and ended 1981 with a plan to redeem his campaign pledge to junk the Energy Department.
A worldwide oil glut and sinking OPEC prices turned decontrol into an early GOP political coup, despite protests of some congressmen and consumer advocates.
Reagan faces a fight in Congress to dismantle the energy agency and give the choice pieces to the Commerce Department, although some officials discount the effect. 'All it's going to mean is that Malcolm Baldrige will be the secretary instead of Jim Edwards,' said one assistant energy secretary.
But Richard Munson of Solar Lobby called the plan a 'charade intended to cloak the demolition of solar energy and conservation programs.' And 13 mostly Republican senators don't want Commerce to take over DOE's atomic weapons program.
The administration's energy policies, particularly an aggressive new oil and gas leasing program pushed by Interior Secretary James Watt, won high marks from industry.
The booming coal industry, which easily weathered a spring strike, got relaxed strip mining rules. The ailing nuclear industry was buoyed by an atomic energy policy that ended a ban on commercial spent fuel recycling.
But the Diablo Canyon fiasco, in which design errors surfaced soon after the California plant received a license, stole the momentum from a Reagan push for faster reactor licensing.
Reagan backed the $3 billion Clinch River Breeder Reactor, a boon to the utilities and a departure from his rule against subsidies for commercial energy projects. He also approved public subsidies for a North Dakota coal-to-gas plant and two Colorado shale oil plants, despite campaign criticism of synthetic fuel programs.
Reagan also endorsed a plan to shift much of the financial risk of building the proposed $40-billion Alaska gas pipeline from investors to U.S. customers.
But he backed away from a fight to decontrol natural gas. A gas windfall profits tax, the price Congress may demand for approving accelerated decontrol of old gas, is anathema to Reagan. Some observers think mounting budget deficits might cause a change of heart.
'That would be the second Trojan horse, simply putting a new tax on consumers that the oil companies would collect,' said Bob Brandon of Citizen-Labor Energy Coalition.
The market place was better to energy consumers last year than regulation. Controlled electricity and gas prices jumped while oil slumped.
But Brandon said consumers 'fared very poorly this year' both with the administration and Congress. 'They've seen efforts to continually increase their energy bills and at the same time cut back on programs that help.'
Labor
On Aug. 3, Reagan stood in the White House Rose Garden and made a terse statement about a strike by nearly 12,000 air traffic controllers.
'I must tell those who failed to report for duty this morning, they are in violation of the law and if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated.'
The strikers did not come back. They were fired and their union, the Professional Air Traffic Controllers Organization, was barred from recognition. The nation's air traffic system continued to operate - although at a reduced pace -- without major accidents.
The firing of 11,400 PATCO members dominated relations between the administration and organized labor in Reagan's first year.
It ended any Reagan hope to solidify support many rank-and-file union members gave him in 1980 and touched off hostility that rages to this day.
Many union leaders were angry at PATCO President Robert Poli for calling a nationwide strike without consulting them, but that paled next to Reagan's work-or-be-fired ultimatum.
Just before Christmas, Reagan waived federal regulations to allow fired controllers to return to other government jobs, but union officials called it a 'cruel hoax' since budget cuts had eliminated most job openings.
Reagan also began an effort to mend fences with the labor movement, but labor's mood was barely cordial.
AFL-CIO leaders were called to the White House in December to discuss both the controllers situation and the weakening economy. Two weeks later AFL-CIO President Lane Kirkland again met with Reagan over Poland.
But with unemployment at 8.4 percent in November and 9 million Americans out of work amid predictions of even higher joblessness in 1982, labor views 'Reaganomics' skeptically.
Major bargaining is ahead in the trucking, automobile, rubber, and electrical industries, and union leaders, reacting to the recession, predict an emphasis on job protection and cost-of-living clauses instead of large wage increases.
Labor Secretary Raymond Donovan, confirmed by the Senate by the closest vote of any Cabinet member after denying allegations of having ties to organized crime, ran into more trouble in December. Fresh allegations surfaced that the construction firm he headed had made payoffs to unions in his presence.
The FBI conducted a preliminary investigation to see if a special prosecutor should be appointed for a full-scale probe, and Donovan has broken a long silence to declare he wants a special prosecutor named.
In budget cutting affecting jobs, the administration wiped out the Comprehensive Employment and Training Act jobs program, which had nearly 350,000 persons on the payroll when Reagan took office; eased up on the emphasis occupational safety and health standards and moved to weaken standards to end job discrimination. -Drew Von Bergen --- Transportation
Reagan's most decisive victory in transportation came in the air traffic controllers' strike.
The president has strong views about federal workers violating their no-strike oath; he reportedly had to be restrained by his advisers from firing the strikers before they actually staged their walkout Aug. 3. Polls showed Americans generally went along with his argument that workers who break an oath should be fired.
The strike actually helped many airlines, by forcing them to operate more efficiently. 'When you have to eliminate flights because of restrictions on the ability to handle them, you obviously eliminate those that are less profitable,' said Robert Joedicke, a New York analyst.
The Air Transport Association is happy with Transportation Secretary Drew Lewis and Federal Aviation Administrator J. Lynn Helms.
'In Drew Lewis and in Helms, there's very perceptive understanding of industry needs,' said spokesman Dan Henkin. 'Andthe industry is particularly pleased with having an open door to present their views.'
One of Lewis' first jobs was to decide how many pilots were needed in the new generation of jetliners now under construction, an old dispute that led the Air Line Pilots Association to threaten a one-day walkout. Lewis got the pilots to agree to accept a two-person cockpit crew instead of three.
He also has started to get the government out of the railroad business by arranging for the eventual divestiture of Conrail, a Northeast freight carrier formed from seven bankrupt railroads in 1976. It has cost the government $6 billion.
His effort to cut back Amtrak -- a cherished creation of Congress - were less successful. It was one area not cut when Congress passed a $71 million transportation money bill before adjournment.
More regulation cutbacks are expected for the ailing auto industry. The administration has already rescinded many regulations, including one that would have required automatic restraints in all cars.
Some of the biggest transportation fights are yet to come.
Reagan and Lewis repeatedly have voiced support for charging user fees for transportation services now subsidized by the public. The administration's first effort in that area -- to impose a 12-cent-per-gallon increase on aviation fuel taxes which help pay for airport development -- met with a resounding 'no' from Congress, where many members are private pilots. The department is expected to come up with a more moderate proposal.
The department also is reworking proposals to charge boaters increased fees for Coast Guard services.
And Lewis is pushing for a 5-cent increase in the federal gasoline tax, now 4 cents. One penny of the increase would be set aside for mass transit.
Agriculture
Agriculture Secretary John Block lost a battle to eliminate direct cash subsidies to farmers when harvest-time market prices fall below price targets when Congress -- on the last night of the session -- passed an $11 billion, four-year farm bill.
Initially, Block wanted a bill without sugar price supports and with major changes in peanut supports. He lost those when the administration traded away its positions in return for southern votes for Reagan's economic package.
In the end, the bill's target price levels were too low for wheat farmers and it included sugar price supports. But Congress did Block's work for him on peanuts. He got his biggest success in reducing price supports for milk, where overproduction had cost nearly $2 billion in the last fiscal year.
The new farm law will sever the connection between milk supports and parity. 'We are not going to abandon this parity concept without a pretty hard fight,' vowed dairy lobbyist Patrick Healy. And he was right. The final House vote in favor of the farm bill was 205-203. 'For dairy farmers, this bill is an economic Dunkirk,' said Rep. James Oberstar, R-Minn.
The consumer movement liked the dairy provisions because they will hold down retail milk prices for, but opposed the bill because of added costs from sugar supports.
The Agriculture Department spurred controversy with school lunch proposalsintended to give local schools flexibility but which were interpreted to permit using ketchup and relish as vegetables. Reagan withdrew the proposals.
Budget cuts increased lunch prices for children from middle income and wealthy families by 10 to 25 cents per day. The most dramatic cuts were $1.3 billion in food stamp benefits, with increases in income ceilings for eligibility and delays in inflation adjustments.
Block's major thrust to raise farm income was in promoting farm exports, which make up 20 percent of all U.S. exports. But exports were sluggish due to the weak world economy, the strong dollar and high interest rates.
One of his happiest moments was Reagan's withdrawal of the grain embargo against the Soviet Union, but by the end of the year Block had faced a new embargo possibility if the Russians intervened in Poland.
Jim Riggle, an Illinois Agriculture Department official, said farmers are confident that Block is doing a good job for them. 'He's doing everything he can in the political context he is in,' Riggle said. -Sonja Hillgren --- Science and Space
Eight months after Reagan took office, a spacecraft called Voyager 2 took beautiful and detailed photos of the ringed planet Saturn - another spectacular success in efforts by U.S. scientists to explore the solar system.
Three months later -- just before Thanksgiving -- the Reagan budget office recommended the United States abandon planetary exploration. The proposal from budget chief David Stockman called for canceling the only remaining new planetary project -- Galileo in 1986 to explore Jupiter and its moons.
The one project allowed to continue under the November plan would be Voyager 2's unprecedented rendezvous with Uranus in 1986. Voyager was launched in 1977 during the Carter administration.
Government sources say leaders of the National Aeronautics and Space Administration apparently have since convinced the White House Galileo should be kept alive, noting half the $600 million cost already has been spent.
Also left intact is an earlier decision to leave space probe studies of Halley's Comet in 1986 to the Russians, western Europeans and Japanese.
Reagan, however, is continuing to support the space shuttle program. The project begun in 1972 by Richard Nixon and funded by successive administrations is seen as the key to the nation's future in space, from a military as well as civilian standpoint.
Cutbacks in the planetary program are the most visible of plans to trim a broad range of government-funded science and research programs.
Dr. Frank Press, president of the National Academy of Sciences and former science adviser to Carter, said Reagan's September proposal for more cuts in the fiscal 1982 budget 'sent a wave of apprehension through our national laboratories and major research universities. Alarm is deep and pervasive.'
Earlier cutbacks hit hard at social science and science education projects, but the threats of across-the-board slashes and additional future cuts touch virtually all civilian research efforts to some degree.
An unprecedented gathering of nearly 100 top scientific leaders told the White House late in October budget cuts in scientific programs would do 'irreversible damage' unless basic research is protected.
Dr. George Keyworth, a physicist and now Reagan's science adviser, saysAmerica's science establishment remains 'generally healthy.'
But he says the United States no longer can expect to be pre-eminent in all scientific fields. He says that in view of the current economic situation, the growth that science enjoyed in recent years cannot continue. Keyworth argues America's scientific endeavor ultimately will benefit from selective budget cuts, 'just as the occasional pruning of a tree can promote, rather than retard, its health.' -Al Rossiter Jr.
