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From the very beginning Darman knew that taxes had to be part of any effort to rein in the deficit. Early in 1989, Darman predicted to a small circle of friends that Bush would eventually sign a bipartisan deal raising revenues, paring defense programs and slashing growth in entitlement programs such as Medicare and agriculture subsidies. Such a pact would curb short-term government borrowing and put downward pressure on long-term interest rates. "Intellectually, I believed it to be right, unequivocally," says Darman. He didn't need to hurry: unexpectedly high tax collections made such a sweeping deal unnecessary in 1989. But deep cuts required by the Gramm-Rudman- Hollings deficit-reduction law made a groundbreaking approach unavoidable in 1990.
His strategy called for both Republicans and Democrats, after hard bargaining, to sacrifice sacred cows for the good of the economy. Darman called it a "no fingerprints" deal: by agreeing to a plan simultaneously, both sides could avoid electoral reprisals. Plausible as it sounded, it overlooked the fact that the rest of the Congress has never been fond of deals cooked up behind closed doors by a handful of carefully chosen lawmakers.
The art of the deal is in the timing. Darman thought it would take months to fashion a budget pact, and pushed Bush to call a summit early in 1990. That way, in the likely event that the negotiations collapsed, President Bush would get the credit for having tried to get an agreement. "It was the right thing to do," says Darman, "and also the politically sound thing to do if the right thing didn't work out." Darman called this "multiple-contingency planning," and it is typical of his thinking. "Life is not so simple," he says. "It does not work in this world that you can go in an absolute straight line. You have to be prepared for many possible paths. Many of these things are totally outside your control."
As the budget summit began in May, Darman also sought to reincarnate himself, if only to avoid accusations of bad faith from the Democrats. He knew that forging a deal would depend on his being, as he put it, "the soul of reasonableness." The new "charmin' Darman" was immediately on display. When Senator Robert Byrd delivered a pompous lecture on the separation of powers at one session in midsummer, Darman afterward presented him with a letter brimming with praise. "He was a complete boy scout," said an incredulous Darman aide.
In contrast, White House chief of staff John Sununu made no secret of his distrust of the Democrats. When Bush convened the talks, Sununu insisted that taxes weren't "on the table." In fact they were, though the White House was loath to admit it.
Thus began a complicated shell game between Sununu and Darman: the chief of staff took a hard line with Democrats to keep Republicans on board, while the Budget Director preached a conciliatory line to keep Democrats at the table.