CNN Perspectives

The Reagan Years: Inside the White House

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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RONALD REAGAN, PRESIDENT OF THE UNITED STATES: I Ronald Reagan do solemnly swear that I will faithfully execute the office of president of the United States.

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ANNOUNCER: A man with simple but profound convictions...

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REAGAN: We the people tell the government what to do. It doesn't tell us.

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ANNOUNCER: ... and a dash of Hollywood charm. As Ronald Reagan celebrates his 90th birthday, a glimpse behind scenes at the Reagan White House.

The story of an American optimistic that set out to give his country its pride back...

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REAGAN: Are you better off than you were four years ago?

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ANNOUNCER: ... and ended up changing the world forever.

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REAGAN: Mr. Gorbachev, tear down this wall.

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ANNOUNCER: We'll take you on a journey through the Reagan presidency as Ronald Reagan and his inner circle would have it remembered and bring you the view from the Ronald Reagan Presidential Library, where the image of an American hero is carefully crafted. Join us for stories from those close to the man they call the Gipper: Michael Deaver, James Baker, Ed Meese, George Shultz, Ken Duberstein.

"The Reagan Years: Inside the White House," a CNN special report.

Reporting from the Ronald Reagan presidential library in Simi Valley, California, Frank Sesno.

FRANK SESNO, HOST: This is a replica of the Oval Office at the Reagan Presidential Library. Here the Reagan legacy is preserved the way he envisioned it.

It's the story of a small-town kid who lived the American dream, a kid who started out in rural Illinois and ended up at 1600 Pennsylvania Avenue.

His presidency would be referred to as a revolution and he would be its central character: To many, a visionary rock-solid conservative who gave America back its strength, pride and confidence. To others, a detached former actor, responsible for big deficits, a shredded social safety net, a risky foreign policy.

We don't strive in this hour to tell the definitive story of the Reagan years. Others will do that. We wanted to hear from some who knew Reagan best: the loyalists, the true believers, the handful of people who saw the revolution from the inside.

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CROWD: We want Reagan! We want Reagan! We want Reagan!

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REAGAN: I will resolutely defend the integrity of...

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REAGAN: For nearly four years, the hopes of the American people...

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REAGAN: And I look forward being able to direct...

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(BEGIN VIDEO CLIP) REAGAN: Everywhere I go I find men and women yearning for new hope and new leadership.

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SESNO (voice-over): When Ronald Reagan ran for president in 1980, the country was tired and torn. It faced economic at home -- 13 percent inflation, a national oil shortage, stubborn unemployment.

It faced national humiliation abroad, with 52 Americans held hostage in Iran.

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JIMMY CARTER, PRESIDENT OF THE UNITED STATES: I think the American people understand...

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SESNO: President Jimmy Carter had tried but failed to tame the economy and free the hostages.

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CARTER: We're doing the best we can.

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MICHAEL DEAVER, DEPUTY CHIEF OF STAFF 1981-'85: It's a tough time. You know, it's hard to remember back that we had double-digit inflation, double-digit interest rates, gas lines that -- that gas pump over there is a symbol of the late '70s and early the '80s. Everybody had to get up on Saturday morning to be sure you got to the gas station to get your gas for the week.

The Reagans said, you know, we shouldn't accept this. Why are we accepting this kind of an America? We deserve better.

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UNIDENTIFIED MALE: I now declare you to be duly installed as governor of the state of California.

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SESNO: Reagan set his sights on the White House after two terms as California governor. That's where he first fought for tax reform and deficit reduction. At the library, the philosophy and the voice of the president himself.

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REAGAN: Ever since I entered the political arena, I have been on something of a crusade: a crusade to get government off the backs of the people.

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REAGAN: We are of the people, we are chosen by the people to see that no permanent structure of government ever encroaches on the people's freedom.

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DEAVER: I think Reagan had a lot of long-held beliefs that were sort of the pillars of what he did and believed.

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REAGAN: We the people tell the government what to do. It doesn't tell us. We the people are the driver. The government is the car. And we decide where it should go.

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JAMES BAKER, CHIEF OF STAFF 1981-'85: And no one was ever going to get him off of those beliefs, fundamental beliefs: lower taxes, peace through strength, freedom of the individual, respect for law.

SESNO: Politics was Ronald Reagan's second career.

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REAGAN: ... sonar, unreliable chart, and they know we're down here.

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KEN DUBERSTEIN: He was a B-movie actor. He wasn't, you know, prime time. He was a B-movie actor.

SESNO: Reagan starred in rather forgettable films: "Hellcats of the Navy," "King's Road." It was a career that would be mocked when he entered politics, but it nurtured confidence, style and total ease in front of the camera.

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REAGAN: In "Knute Rockne: All-American," I played football great George Gipp.

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REAGAN: Ask them to go in there with all they've got and win just one for the Gipper.

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SESNO (on camera): His political friends referred to him as the Gipper. And that was a direct hearkening-back.

DEAVER: Oh, yeah. I think...

SESNO: Was he the Gipper?

DEAVER: In many ways he was the Gipper. I mean, I think he -- he loved the analogy because the Gipper was a story of optimism and a story about, you know, picking yourself up and doing it one more time.

I think he saw that as sort of a picture of what he thought America could be and should be.

SESNO: What, in your view, was the turning point in the 1980 campaign?

DEAVER: Well, there's no question: The turning point was "There you go again."

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CARTER: Now we have an opportunity to move toward national health insurance. Governor Reagan again, typically, is against such a proposal.

UNIDENTIFIED MALE: Governor.

REAGAN: There you go again.

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SESNO: What was it in that phrase?

DEAVER: Well, I'll you what it was: As unpopular as President Carter was, the American people weren't really sure they could take a chance on Reagan. But "There you go again, Mr. President" was instantly they said, oh, here's a regular guy. Here's a guy! We can trust him.

And you saw it instantly in the pulse polling we were doing. The needle went like that backstage.

SESNO: In the debate?

DEAVER: In that debate, and the next day just walking out of the hotel you could feel it. Every stop we made the crowds were bigger, they were more enthusiastic. They knew, the people knew he was going to win now, and you could feel it.

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REAGAN: Next Tuesday, all of you will to the polls. You'll stand there in the polling place and make a decision.

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SESNO: He also posed that famous question. DEAVER: Right, right.

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REAGAN: Are you better off than you were four years ago?

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DEAVER: And of course, nobody was.

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REAGAN: Is it easier for you to go and buy things in a store than it was four years ago?

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DEAVER: Not only did everybody know they weren't better off, but the president of the United States had already said it. Carter had said: We're in a malaise. We have to accept a smaller America. Reagan said that's nonsense.

And so when he said, "Are you better off today?" everybody could answer that question individually and say no.

SESNO (voice-over): Reagan would defeat Jimmy Carter in an electoral landslide.

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UNIDENTIFIED MALE: I Ronald Reagan do solemnly swear...

REAGAN: I Ronald Reagan do solemnly swear...

UNIDENTIFIED MALE: ... that I will faithfully execute the office of president of the United States...

REAGAN: ... that I will faithfully execute the office of president of the United States...

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REAGAN: I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing.

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SESNO (on camera): Pretty accurate replica of Ronald Reagan's office?

DEAVER: Yeah. When you walk in here, I mean, you can almost smell and feel it's so real.

DEAVER: Memories?

Oh, yeah.

(LAUGHTER)

I have lots of memories.

The first moment we walked into the Oval Office off the reviewing stand, the inaugural, we were in there in our formal clothes. And he sat down behind the desk, put both hands on the desk that had been Kennedy's, and he looked at me and he said, "Do you have goosebumps?"

SESNO (voice-over): The break with the Carter years was dramatic. On inauguration day, Iran released the American hostages it had held for 444 days.

BAKER: I think it was right after he'd been sworn in, and we got a message that they were coming out, that they were going to let them loose. And I think they did that -- I think the Iranians did that because they were --they had been upset with the Carter administration.

SESNO: And so the Reagan revolution was launched.

BAKER: We were determined to make the best of whatever honeymoon period we had. So we had a 100-day plan that was singularly focused on economic reform: primarily tax reductions, spending cuts and elimination of regulations.

SESNO (on camera): This was Ronald Reagan's mantra.

BAKER: This was it, absolutely.

SESNO (voice-over): From the outset, the president's aides used the imagery around Reagan to project his strength and to reinforce his message. Reagan was the first camera-ready president, and it showed. Together with Nancy, here in her signature color red, the Reagans brought a bit of Hollywood to Washington.

The critics scoffed but too little effect.

DEAVER: You didn't have to do anything with Reagan. I mean, he looked presidential. I always thought of my job (a) as lighting him well and (b) filling up the space around him so that the visual that the public saw in every way we could would tell the story of that particular action, whatever it was.

SESNO (on camera): This photo over here, this red carpet, it's not an accident.

DEAVER: No. That was the background that we used for the press conferences, and there was a reason for it. But you see, the whole visual there is formality and power, high ceilings, pillars, crystal chandeliers, red carpet. It's a place of importance. It's obviously the White House, and important things happen there. That's what it says. SESNO: What do you say to people who say there was too much choreography in this White House, too much placing Ronald Reagan in places of symbolic importance?

DEAVER: Well, I'd disagree with people who'd say that. I think Americans want their president to look like a president.

SESNO (voice-over): Reagan played his role with enthusiasm. He would become known as the great communicator. But his message of budget cuts and less government was not universally accepted. Civil rights and labor leaders, peace activists and environmentalists took to the airwaves and sometimes to the streets. But Reagan believed in his mission unflinchingly, a mission that was nearly cut short.

The assassination attempt when "The Reagan Years: Inside the White House" returns.

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SESNO: It is America's nightmare and it almost happened in the early days of the Reagan presidency. He was coming out of a Washington, D.C. hotel. His would-be assassin was waiting nearby. Here at the library, there are reminders: The bullet-proof vest that Reagan did he not wear, the x-ray that was taken moments after he arrived at the hospital.

For those who were there, the memories remain vivid.

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DEAVER: I was standing right beside him as we came out the door. It was a horrible moment, because I went around the back of the car and Hinckley was shooting over my right shoulder. It was a moment of utter confusion.

EDWIN MEESE, COUNSELOR TO THE PRESIDENT, 1981-'85: The bullet went along the side of the car and passed between the open door and the car, a space of about an inch or less. And as it was going along the side of the car, it has flattened out, so it was kind of like a jagged dime, is what it looked like.

SESNO (voice-over): At the library, in Reagan's own voice, recollections of the first harrowing moments.

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REAGAN: As the crack of the gunfire echoed in the street, Jerry Parr, the head of our Secret Service unit, slammed me into the car and pounced on top of me. The pain was excruciating and my first thought was that he'd broken my ribs. Neither of us thought I'd been shot.

MEESE: He was coughing blood, so they thought maybe he had injured himself when they had thrown him into the car. It wasn't until they examined him in the hospital that they found that it was in fact a bullet wound that had entered his side and had entered and had nicked, penetrated his lung.

When I got there, they were just wheeling the president out of the emergency room. And he looked up and said, kind of a smile, he said, "Who's minding the store?"

SESNO: President Reagan made it through surgery, but the worst was yet to come.

BAKER: I don't think it was the wound itself that was much worse than people thought at the time. I think it was the staff infection that he contracted two or three days after being wounded that almost -- that was far more serious than people realized at the time and that frankly could well have cost his life.

SESNO (on camera): The country, the world didn't know really how serious that became?

BAKER: Well, we didn't -- I don't recall knowing how serious it was either until after the fact.

SESNO: Was that deliberate, to keep that information from the public?

BAKER: Well, it wasn't deliberate on our part. We found out afterwards, or at least I found out afterwards. I don't know -- I don't know the extent to which any others knew about it at the time. I mean staff. I know -- I'm sure Nancy knew.

SESNO: Do you remember walking into that hospital room?

BAKER: I do remember walking into that hospital room.

SESNO: What did you think when you walked in there?

BAKER: I thought that he didn't look too great, but he looked great enough to sign a bill. We brought -- brought a piece of legislation over so that we could prove to the country that he was well enough at least to sign legislation presented by the Congress.

DUBERSTEIN: I had pushed Jim Baker and Mike Deaver to make sure he signed the dairy price support bill, the first real piece of legislation of the Reagan economic recovery program, because it had to go into effect before April 1st.

BAKER: I have a copy of that legislation that he sent he with his note on it. "Dear Jim, this piece of legislation I have signed the day after just to show there was no pause in our operation -- Oops!"

And then he signed it Ron.

SESNO (voice-over): Humor, yes. But also in his own way perhaps a sense of destiny. From the hospital, an unseen, largely unknown overture to the Soviet leader, Leonid Brezhnev.

DEAVER: He wrote a letter in the hospital to Chairman Brezhnev, 4 1/2 pages I think on legal paper laying in the hospital bed. The national security people took it and about three days they brought it back. It had been totally rewritten by the Kremlinologists over in the State Department.

Reagan read it, still in his bathrobe, pajamas. And he said, "Well, I guess that they must know more about this than I do." And I said: "Screw them. They didn't get elected. You're the guy that got elected. You wrote the letter. Why don't you just send your own letter?"

And he looked at me and he took the letter back, and he said, "Mike's right; send my letter."

And then he looked at me and he said, "Thank you."

I said, "Thanks for what?"

He said, "Thanks for reminding me." He said: "You know, since I've been shot, I think I'm going to rely more on my own instincts than other people's. There's a reason I've been saved."

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QUESTION: What are you going to do when you get home?

REAGAN: Sit down.

(LAUGHTER)

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SESNO: On April 11th, 12 days after being shot, the 70-year-old president returned to the White House.

(on camera): What were emotions on the lawn that day?

DUBERSTEIN: Tears of joy, of recommitment. Reagan was back -- coming back and coming back strong.

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CLERK: Mr. Speaker, the president of the United States!

(APPLAUSE)

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SESNO (voice-over): Two weeks later, riding a wave of public support and sympathy, President Reagan addressed a special session of Congress and relaunched his economic plan.

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REAGAN: Tonight I renew my call for us to work as a team, to join in cooperation so that we find answers which will begin to solve all our economic problems and not just some of them. (END VIDEO CLIP)

DUBERSTEIN: We saw him willing to roll up his sleeves, not that he wasn't before, but even more intensified. I think that really energized him coming out of the assassination -- his life had been spared by God.

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REAGAN: The economic recovery package that I've outlined to you over the past few weeks is, I deeply believe, the only answer that we have left.

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SESNO: Even as Congress debated his economic proposals, a threat of a different sort, one that shed light on how Reagan would operate under pressure.

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UNIDENTIFIED MALE: The court's order applies to each of you. The court's order forbids continuing or participating in this strike.

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SESNO: This, too, is recalled in Reagan's own voice.

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REAGAN: The air-traffic controllers strike of 1981 was the first emergency I faced as president. Besides being unlawful, it endangered the safety of thousands of passengers and threatened serious harm to our already troubled economy.

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SESNO: In August 1981, Ronald Reagan took an uncompromising stand against striking air-traffic controllers who threatened to shut down the nation's airlines.

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REAGAN: I must tell those who fail 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.

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SESNO: Striking workers complained of growing demands and dangerous levels of stress on the jobs. Their issues centered around wages, retirement benefits and hours.

Reagan followed through on his threat to fire the striking workers with little apparent remorse. Organized labor was furious, the public unsure.

(on camera): What do you most remember from those few days?

BAKER: What I most remember was -- was the concern that some of us on the staff had that maybe there would be some serious political downside to it. As it turned out, there was a serious political upside to it, because the American people ended up supporting the idea of a president who was willing to stand up to that kind of behavior.

It was a good example I think of the political sagacity of President Reagan.

MEESE: As much as anything in the first year, that convinced people in other capitals around the world, including Soviet leaders, that they had a person of real substance that they were dealing with here.

SESNO: Did he sense at the time, do you think, that that was going to be a defining moment of his presidency?

MEESE: No, Ronald Reagan was not a particularly introspective person. So I don't think he looked at these things as, is this a defining moment or is this an important political movement.

SESNO: And he never looked back on firing those air-traffic controllers?

MEESE: He didn't look back, because again he was convinced it was the only thing he could do under the law. He didn't worry, worry unnecessarily, or bemoan what had occurred. He looked onto the next challenge and what the next thing he had to do.

SESNO (voice-over): Coming up, President Reagan faces mounting unemployment and criticism that he's to blame, when "The Reagan Years: Inside the White House" continues.

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SESNO: Uncle Sam, fat and happy. This little fellow was in many ways Ronald Reagan's constant companion. The Reagan revolution's main enemy was big government, and Reagan believed that regulation, paperwork, taxes were the real impediments to prosperity and national strength. Some even in his administration believed it simplistic and naive. But Reagan was immovable.

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REAGAN: Big government is neither healthy nor efficient, and it is not what the founding fathers had in mind when they created the United States of America.

(END VIDEO CLIP) MEESE: The economic recovery program had four major elements. And the biggest, by far, was the tax-rate reduction. He had wanted 30 percent rate reduction over a period of three years. He got ultimately 25 percent.

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REAGAN: I ask you now to put aside any feelings of frustration or helplessness about our political institutions and join me in this dramatic but responsible plan to reduce the enormous burden of federal taxation on you and your family.

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DUBERSTEIN: Reagan was coming from his very simple proposition: If you lower the tax rate, then more people will work, there will be more income in the economy, and everybody's lives with be better.

SESNO (voice-over): But everyone's life did not get better. Though he won a three-year, 25 percent income-tax cut, by 1982, Reagan faced a deepening recession, mounting unemployment and homelessness, a contentious Congress, and growing public skepticism. Reaganomics, the critics, said wasn't working.

(on camera): In October of 1982, unemployment actually hit 10 percent. BAKER: Yes.

SESNO: That was when the president's polls took probably their most significant hit of presidency. How difficult was that?

BAKER: It was very difficult. It was very difficult. And it was the only time in the eight years of the Reagan presidency that I remember seeing him really -- really sort of down.

DEAVER: All of things that he said were going to happen, the things that were going to get better, were not getting better. His budget had, in fact, not caught up with the recession in the country as fast as he thought it would.

SESNO (voice-over): At the White House, they coined a phrase: "Stay the course." Beyond those gates, however, many doubted and some demonized the president.

(on camera): Was he thin-skinned when he would be burned in effigy or people would say that Ronald Reagan was heartless, or that he was responsible for daddy being out the work, or the family having to go on welfare or show up at the soup kitchen?

BAKER: He could get very upset when he was challenged directly on those types of issues.

DUBERSTEIN: He thought it was totally unfair. He thought this was the media at its worst, that they were trying to ramrod something against him to try to show that it wasn't going to work. What I remember most vividly from that time is the story that he told and told and told about the optimistic kid and the pessimistic kid.

MEESE: The pessimist went to his room. And in his room was this tremendous array of new toys: trucks and dump trucks and railroad trains and all kinds of great toys. And the father just left him alone in there. And then he took his other son and he put him into his room. And there was this big pile of manure.

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REAGAN: They then went in and followed in -- and where the boy was with the toys. And he was sitting there crying. And they said, "What are you crying about?" He said, "Well, I know somebody is going to come and take these away from me."

And they went down to the room with the optimist, and he was on that top of that pile of stuff and he was throwing it over his shoulder as fast he could." And they said, "What are you doing?" He says, "There's got to be a pony in here somewhere."

(LAUGHTER)

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DUBERSTEIN: He told that story incessantly It was just not for himself, but for all of us. Got to keep our optimism up. We're going to make it.

DEAVER: I think Reagan probably talked the country back into prosperity for about a year there before it all clicked in.

SESNO: Did he ever doubt himself?

DEAVER: Never.

SESNO: Did you ever doubt him?

DEAVER: Probably, yes. Probably. I didn't have confidence he had. There -- I don't think there was anybody around him that took the long view of things. All of us pretty much took the short view.

SESNO: How great a temptation to change course in those early days?

BAKER: There was some temptation to change course. But it never would have happened with Ronald Reagan.

SESNO (voice-over): Not only were Ronald Reagan's policy under intense scrutiny, so was his management style.

(on camera): Up here, we have these three magazine covers: "The 9-5 Presidency: Is it working?"

DEAVER: Right.

SESNO: What was Ronald Reagan's working style, his management style? DEAVER: Well, I think it had been -- both in the White House and as governor -- what he would call chairman of the board. He had his principal lieutenants that he put a lot of confidence and responsibility on. It was 9-5 probably in the Oval Office. But he would go home with stacks every night. He was a voracious reader.

MEESE: He felt that if somebody had given him something to read, that it was his responsibility to read it and master it and be ready for the meetings. And that's why we had to sometimes caution people on the White House staff to give him only things that were absolutely necessary.

SESNO (voice-over): Reagan liked anecdotes and charts better than fat briefing books. His closest aides say sometimes he could be detached or aloof. Most times, it worked. Some times, it got him into trouble.

BAKER: Was he a delegator? You bet. Was he a big-picture person? You bet. Was he concerned with the -- all of the specifics of the daily schedule and the nuances of every policy issue? Was he a policy wonk? No.

SESNO (on camera): Did you ever feel, though, that his delegation or his lack of knowledge of the specifics of the details got in the way of his doing his job?

BAKER: No. Maybe occasionally it might have. But I don't -- I can't come up with a specific for you.

SESNO (voice-over): Reagan would have his fair share of controversies and scandals. That's when his reliance on his beloved Nancy would be become especially important. Mrs. Reagan was his most dedicated supporter. She would weigh in on his schedule, sometimes consulting an astrologer. She watched over the staff. After the Iran-Contra affair, it was Nancy Reagan who led the effort to oust Chief of Staff Donald Regan.

BAKER: She was the loyalty enforcer. She really looked out for him. She had good political antenna. Sometimes she would focus on something that was politically germane or important. Occasionally, she would get into policy -- not very often. She had a really significant influence on President Reagan. And she was his very best friend. And she was very important to him in many, many ways.

But one way was in judging people's loyalty and in judging their ability to perform well for him. After all, she had been one who had promoted my presence in the chief of staff job. In the first instance, we wanted make sure it wasn't something she was going to be opposed to. Because if she had been opposed it, it probably would never have flown with the boss.

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REAGAN: You can tell it's working because, as I have said several times already, they don't call it Reaganomics anymore.

(LAUGHTER)

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SESNO: Reagan deflected criticism with one-liners. He was more creative and confident than many people realized. And he often poked fun at himself.

(BEGIN VIDEO CLIP)

REAGAN: I'm not going to exploit, for political purposes, my opponents' youth and inexperience.

(LAUGHTER)

(END VIDEO CLIP)

BAKER: Oh, he had a terrific sense of humor. And I have some doodles that he drew. And he was really a very good doodler. And he drew some doodles in a Cabinet meeting. And he signed it at the bottom. It said, "Jim, you see I don't sleep thorough all Cabinet meetings. Sometimes I doodle though some of them" -- signed "Ron."

SESNO: Ultimately, under Reagan, the economy turned around. The stock market boomed. Millions of jobs were created -- and what was at the time the longest peacetime economic expansion in U.S. history. But Reagan's economic legacy was tainted by record deficits that more than doubled the national debt and by finger-pointing with Congress over who was responsible.

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REAGAN: Failure to cope with this problem now could mean as much as a trillion dollars more in national debt in the next four years alone. That would have average $4,300 in additional debt for every man, woman, child and baby in our nation.

(END VIDEO CLIP)

SESNO (on camera): Ronald Reagan presided over big deficits that more than doubled the national debt.

BAKER: You do have to accept that fact. But you have to explain also that the reason we got those deficits, the reason those deficits were generated was because the Congress would not cut spending in the way and to the extent that Ronald Reagan wanted it cut.

SESNO (voice-over): Abroad, Reagan faced the Cold War, the adversary he referred to as the Evil Empire: the president and the challenge, when "The Reagan Years: Inside The White House" continues.

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(COMMERCIAL BREAK)

SESNO: This nuclear cruise missile is now a museum piece. It was decommissioned as part of an arms deal with the Soviets in 1987. By then, Ronald Reagan was calling for deep reductions in nuclear arsenals. He had come full circle, having arrived in Washington a committed cold warrior.

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REAGAN: The West won't contain communism. It will transcend communism. It will dismiss it as some bizarre chapter in human history whose last pages are even now being written.

(END VIDEO CLIP)

BAKER: We were adversaries. We knew exactly what our foreign policy position should be, because if the Soviet Union was for it, we were against it -- and vice versa.

(BEGIN VIDEO CLIP)

REAGAN: I urge you to beware the temptation of pride and label both sides equally at fault, to ignore the facts of history and the aggressive impulse of an Evil Empire, to simply call the arms race a giant misunderstanding and thereby remove yourself from the struggle between right and wrong and good and evil.

(END VIDEO CLIP)

BAKER: We were acutely aware of the argument that was made that he a was shoot-from-the-hip cowboy who might get us into a war. He talked about the Soviet Union as an Evil Empire. And all of the intellectual elite on the East Coast said: Oh, tosh, tosh, tosh, lookie there, there is that ignorant cowboy whom we -- actor whom we have elected president, making all these undiplomatic statements about the Soviet Union.

Well, it turned out he was right.

SESNO (voice-over): Reagan was right in his prediction that the Iron Curtain would fall. But first he would preside over an unprecedented military buildup: nuclear and conventional, tactical and strategic, the MX missile and the B-1 bomber. It was the vocabulary of the time.

(on camera): Square Ronald Reagan's desire to reduce nuclear weapons with his big military buildup and deployment of nuclear weapons.

GEORGE SHULTZ, FMR. REAGAN SECRETARY OF STATE: Well, in order to be effective in your diplomacy, you have to have strength. And he understood that. So he built up American strengths.

DEAVER: Probable some of the most moving visuals of Reagan had to do with foreign policy and national security. When Reagan went to the DMZ in Korea, and he was in fatigue jacket, and was there with the sand-bagged sort of lookout post, it was a very presidential visit. Reagan relished that role of commander in chief. It was something he was very proud of. Probably if he had had his way, he would have some kind of a military event on his schedule everyday. But you had to be very careful that you didn't tip that balance so that he looked like a warmonger.

SESNO (voice-over): Those sentiments encouraged peace activists and the political left to take to the streets in the U.S. and around the world. But Reagan was undeterred and did not blink at fighting communism elsewhere: in Granada and in Central America, in Angola and in Nicaragua -- efforts there to fund anticommunist rebels. The contras would lead to Reagan's worst scandal. It came to be known as Iran-Contra.

MEESE: First of all, you had Iranian initiative, which was a means of trying to communicate with moderate leaders within the Iranian government, and also to try to get their help to locate in Lebanon some of our hostages that had been taken by the Hezbollah. At the same time, we had the support in Central America of the freedom fighters who were seeking to restore democratic government in Nicaragua.

SESNO: So a secret rogue operation was begun: arms for hostages, the sales of weapons to Iran, the proceeds to the Nicaraguaran rebels, despite a congressional ban on funding. Reagan's denials only made it worst.

(BEGIN VIDEO CLIP)

REAGAN: We did not -- repeat -- did not trade weapons or anything else for hostages.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Will you solemnly swear...

(END VIDEO CLIP)

SESNO: The operation came under the direction National Security Council staffer Oliver North.

(BEGIN VIDEO CLIP)

OLIVER NORTH, NATIONAL SECURITY COUNCIL: I saw that idea of using the Ayatollah Khomeini money to support the Nicaraguaran freedom fighters as a good one.

(END VIDEO CLIP)

SESNO: The president's closest aides say Reagan did not know the full extent of the operation. But after investigation and months of hearings, President Reagan reluctantly acknowledged his administration had broken faith with the American people, trading arms for hostages and, in effect, negotiating with terrorists. (BEGIN VIDEO CLIP)

REAGAN: There are reasons why it happened, but no excuses. It was a mistake.

(END VIDEO CLIP)

SESNO (on camera): Did Ronald Reagan ever really fully accept the depth of the problem of Iran-Contra?

SHULTZ: I don't know the answer to that. He could see when he talked about it publicly, the American people didn't accept what he said. And he always felt that; I will try to do the right thing. And even if it's controversial, I can explain it. And if it's the right thing, the American people will wind up supporting it.

And here came this case. And he could see that people weren't buying it. And that was -- that hurt.

SESNO (voice-over): Iran-Contra was a disaster. But another initiative turned out very differently: Reagan's growing relationship with the reformer from Moscow, Mikhail Gorbachev.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This would be Mr. Gorbachev's car now, with the red flag on it, with the Soviet flag.

(END VIDEO CLIP)

DEAVER: You look back at those films. And there is Reagan in freezing weather, standing on the steps ready to greet the general- secretary, the first Russian leader he has ever met. And Gorbachev's old Russian ZiL car comes in. And he gets out, all bundled up with hat and so forth, and there is Reagan. The symbolism was incredible.

SESNO (on camera): Did you choreograph it that way?

DEAVER: I didn't choreograph it. I wasn't there. But that's what happened.

SESNO: It was choreographed that way?

DEAVER: It was choreographed that way, absolutely.

SESNO: To convey what?

DEAVER: To convey American strength.

SESNO: Did the Soviets catch onto that?

DEAVER: Too late.

SESNO (voice-over): It was a striking sight: Reagan, the lifelong anticommunist, and the new-style Soviet leader trying to do business and negotiate. It was Reagan's idea for nuclear weapon shield known as the Strategic Defense Initiative -- SDI to its supporters, Star Wars to its detractors -- that strained the relationship nearly to the breaking point. A sweeping negotiating session in Reykjavic, Iceland in October, 1986 broke up in gloom and a sense of failure.

SHULTZ: I remember, at the end, Gorbachev said to the president, "If we eliminate ballistic missiles, why do you want to have a defense against them?" And President Reagan said: "Because people know how to make ballistic missiles. And there will be rogue states and oddballs around." And he said, "If we develop this, we will share it with you." And Gorbachev said: "Mr. President, you won't even share milking-machine technology with us. How can we expect you will share this technology?"

SESNO: While Reagan and Gorbachev wore the grim look of adversaries at Reykjavic, the summit had actually established broad areas of agreement. A year later they met again, this time in Washington. The first meeting went poorly. Reagan was ill prepared. Gorbachev spoke at length and in detail. Then a Reagan flourish:

DUBERSTEIN: When Gorbachev arrived in the Oval Office, Reagan suggested to him that he wanted have a minute privately with him. Reagan showed me the baseball. And it was autographed by Joe DiMaggio. And Reagan said he wanted to explain an American idiom to Gorbachev: Either we keep our firm ideological positions or we can play ball. Mr. Gorbachev, don't you want to play ball?

And Gorbachev, according to Reagan said, "Yes." "Da." "Let's play ball."

SESNO: The result: the INF Treaty, the first deal ever to eliminate an entire class of nuclear weapons. Despite the progress and Reagan's relationship with Gorbachev, the president could not mask his sometimes undiplomatic attitude towards communism, a system he despised. Perhaps the most memorable example: a defiant line in a speech at the Berlin Wall. It was a challenge some of Reagan's advisers argued against.

DUBERSTEIN: It was the State Department. The objection that this was too inflammatory, that it would not help Gorbachev dealing with everybody. And I walked down the hallway to the Oval Office. I said: "Mr. President, the State Department is complaining about this line in the draft speech. You are you the president. You get to decide." And he got this big smile, looked down, read it and said, "I think I will leave it in."

(BEGIN VIDEO CLIP)

REAGAN: Mr. Gorbachev, tear down this wall.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

SHULTZ: Well, this is a remnant of the Berlin Wall. But if you saw the whole thing, you would realize what a inhumane, horrible thing it was. And to say that it divided Europe, to say that it divided mankind and was inhuman, German people on both sides of wall, it was a terrible thing.

And when Ronald Reagan said, "Tear down, Mr. Gorbachev," that came right from the heart, I'm sure.

SESNO: On November 9, 1989, the Berlin Wall fell. Ronald Reagan's presence was felt that day, when the Cold War symbolically came to end. But Reagan was no longer on center stage. He was retired and had returned home to California.

When we return: the impact of the Reagan years and memories of the man.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

SESNO: Ronald Reagan's presidency was marked by controversy. He crusaded against deficits, yet he piled up the biggest in the nation's history. He was fiercely an anticommunist, yet he sat down with the enemy and cut weapons. He spoke often of his own humble origins and delivered an economic boom. Yet he never really connected with the nation's poor and disenfranchised.

Still, Reagan left office a popular president. Maybe it's because people saw that, on matters of principle, Reagan never wavered. Government was too big. Americans were taxed too much. At home and abroad, it was all about strength. Or maybe it's because he was that optimistic he often spoke about. For him, America really was the shining city on the hill. For him, there really was a pony in there somewhere.

(BEGIN VIDEOTAPE)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The president of the United States.

(END VIDEO CLIP)

MEESE: Ronald Reagan really didn't give much thought to how he would be remembered or his place in history or anything like that. He was more -- he was active. He wanted to do things and go onto the next thing. This idea of kind of wringing his hands or worrying about how he would be looked at in history, I don't think ever crossed his mind.

BAKER: Ronald Reagan was bigger than life. I mean, he filled the screen when he was on television. He filled the screen when he was speaking to the American people.

(BEGIN VIDEO CLIP)

REAGAN: A final word to the men and women of the Reagan revolution, the men and women across America who, for eight years, did the work that brought America back: My friends, we did it.

(END VIDEO CLIP)

DEAVER: I really do think that one of the greatest accomplishments, if not the greatest accomplishment, is getting America to believe in itself again. He used the bully pulpit to make people believe in themselves again.

DUBERSTEIN: One the great things about Ronald Reagan is that he knew himself. And he knew his strengths. And he knew his liabilities. And he was comfortable with himself.

BAKER: I never saw him in the Oval Office with his coat off. I would see him in that little study in the side, off the Oval Office, but never in the Oval Office.

DEAVER: I remember years ago, in Sacramento, when he was first elected governor. And we had a national news program that wanted to come out and shoot a day in the life of the governor. And so I choreographed the thing. And I said, "OK, now I want you to take your jacket off and sling it over your shoulder and walk pensively through the park." And he looked at me and he said, "I can't do that."

And I said, "What do you mean you can't do that?" I said, "It's Kennedy-esque." And he said: "Well, it probably is. But it's not Reagan-esque."

(BEGIN VIDEO CLIP)

REAGAN: Today, I say as long as this gate is closed...

(END VIDEO CLIP)

DUBERSTEIN: I picture him at the Berlin Wall leading America and the world to end the Cold War. I see him in the well of the House of Representatives giving a State of the Union address. I see him with that sharp salute to the Marines. What you see about Ronald Reagan is a true American hero, not simply an actor -- but because of acting, also being one hell of a president.

BAKER: I recall back on Capitol Hill when Vice President Bush was sworn in as president. And I remember standing there on the steps and just being overcome with sobs and tears watching the Reagans leave the Capitol and go down and get on that helicopter. It was a very emotional and sad time.

(BEGIN VIDEO CLIP)

REAGAN: I have spoken of a shining city all my political life. We made the city stronger. We made the city freer. And we left her in good hands. All in all, not bad -- not bad at all.

(END VIDEO CLIP)

(END VIDEOTAPE)

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