How George Shultz Escaped Two Scandal-Plagued Administrations Unscathed

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As a young journalist, a friend of mine scored a fellowship at the Hoover Institution, at Stanford University, where he was urged to call on the faculty for visits. He scheduled an appointment with George Shultz—the former Nixon and Reagan Cabinet secretary who died last weekend at the age of 100—a senior fellow there. But as my friend crossed the quad to Shultz’s office, he found he could recall just two facts about the man. One was that Spy magazine had showcased Shultz in its popular “Separated at Birth” feature alongside the Cowardly Lion. The other was that Shultz, as a Princeton alumnus, had the image of a tiger tattooed on his rear end.

These would not be the two facts I would highlight about Shultz, himself a lion of the foreign policy establishment. I would, rather, point out that he was the only person to serve in two of the most scandal-ridden administrations in modern times and emerge not only unscathed but with his reputation enhanced.

Shultz’s historic role in moving the Reagan administration from a hard-line, even militaristic stance toward the Soviet Union to a more conciliatory posture has obscured his role in the Nixon administration. But his story of steadfastness in the face of corruption begins there.

An economist who had logged time in the Eisenhower administration, Shultz originally served Nixon as secretary of Labor. Nixon didn’t know Shultz, then dean of the University of Chicago business school, but had heard he enjoyed respect from management and labor “as one of the nation’s outstanding mediators,” as he recorded in a memo (spelling Shultz’s name wrong, with a c, as many people would continue to do).

Despite his prominence, Shultz doesn’t appear much in most Nixon administration histories. That’s mainly because he stayed out of trouble. Efficient and low-drama, he impressed the president enough to be named director of the Office of Management and Budget when Nixon created the office in 1970. In a White House rife with schemers, Shultz earned a reputation for playing it straight. When he took over OMB, one Nixon aide cheered the move, explaining, “Now there will be someone there besides the purely politically oriented and the paper‐movers. It puts a substance man close to the president.”


At OMB, Shultz butted heads with Nixon’s White House operatives who were looking to politicize the office. On one occasion Nixon decided to curtail funding for the Massachusetts Institute of Technology, one of several universities he saw as a hotbed of antiwar activism. Chief of staff H.R. “Bob” Haldeman sent orders to assistant directors at OMB to do so. Stunned by the interference, they refused and talked of resigning. Shultz went to bat for them, and Haldeman backed off. Another time, White House aides targeted OMB staffers they suspected of leaking information to the syndicated columnist Jack Anderson, whose scoops often embarrassed Nixon. Again, Shultz used his clout to get the dirty tricksters to back off.

By 1972, Shultz’s professionalism earned him another promotion, to Treasury secretary. Here he oversaw Nixon’s economic policy. Designed mainly by the previous secretary, John Connally, the policy was saddled with the unfortunate Leninist moniker “the New Economic Plan” and turned out to be mostly a failure. But as Nixon pursued détente with the Soviet Union, an auspicious development, Shultz took a strong hand in promoting economic exchanges with the rival superpower, winning high marks.

As Watergate engulfed the Nixon presidency, Shultz again confronted more White House efforts to politicize his department. A self-confessed “paranoiac,” Nixon had his political aides compile lists of “enemies”—politicians, journalists, academics, left-wing activists, celebrities and others; he would then order aides to have the IRS and other government agencies harass these unlucky foes. Tax audits were a favorite demand.

From the start, Nixon had wanted an IRS commissioner who would serve as his political lackey. “I want to be sure he is a ruthless son of a bitch,” he told his aides as he prepared to hire someone for the job in 1971, “that he will do what he’s told, that every income tax return I want to see I see, that he will go after our enemies and not go after our friends.” But Shultz and the two IRS commissioners who worked under him, Johnnie Walters and Donald Alexander, resisted pressure to use the IRS to carry out political vendettas. (So did their predecessor, Raymond Thrower.)

Shultz and Walters did, however, cave somewhat in at least one important case: that of Larry O’Brien, the Democratic Party chairman whose offices at the Watergate building were burgled in June 1972. Later that summer, Shultz and Walters allowed an internal review of O’Brien’s taxes, which showed—to Nixon’s extreme disappointment—that nothing was amiss. Two IRS agents then interviewed O’Brien at a Washington hotel. They failed to produce any damning information.

Despite this sop to the president, Nixon grew increasingly angry with Shultz. “What is George’s—what’s he trying to do, say that you can’t play politics with the IRS?” he asked in one recorded conversation from the summer of 1972. In another, from the fall of 1972, the president insisted his men do more to get at his enemies’ tax returns: “There are ways to do it! Goddamn it, sneak in in the the middle of the night!” He also talked of having Shultz fire everyone at the IRS so he could install loyalists, “and if he doesn’t do it, he’s out as secretary of the Treasury. And that’s the way it’s going to be played.” On still another tape, Nixon fulminated about Shultz, “He didn’t get secretary of the Treasury because he has nice blue eyes.” And yet again: “I don’t want George handling anything political, because he doesn’t know his ass from first base.”

Ultimately, the Senate Watergate investigation found at least one suspicious audit of one of Nixon’s enemies besides O’Brien. Jack Caulfield, one of Nixon’s rogue security operatives, admitted under oath that he bypassed the rectitudinous Shultz and went through an assistant IRS commissioner, Vernon “Mike” Acree, to audit the journalist Robert Greene of Newsday, whose paper had investigated Nixon’s best friend, Bebe Rebozo. In the end, Nixon’s repeated demands to have the IRS harass his enemies were among the impeachment counts that led to his resignation in August 1974. By then, Shultz had left the sinking ship.

Dozens of Nixon officials faced prosecution for Watergate-related crimes, but not Shultz. His clean reputation earned him a return ticket to government after Ronald Reagan assumed the presidency. Following Al Haig’s short, stormy tenure as secretary of State, which ended abruptly in 1982, Reagan turned to Shultz, who filled the role for the next 6½ years. Today, historians generally give Reagan relatively good marks on foreign policy, mainly for embracing and cooperating with the change that Mikhail Gorbachev brought to the Soviet Union, Eastern Europe and the superpower rivalry. In Reagan’s early presidency, however, Americans worried about the president’s bellicosity and apocalyptic rhetoric, seemingly rooted in his superficial grasp of policy.

From the outset Shultz worked to temper Reagan’s cowboy instincts. Relations with the Soviet Union were at their worst point since before the Cuban missile crisis. No summit had been held since the Carter administration. Reagan’s foreign policy team was a hive of infighting, with hard-liners and moderates clashing constantly. Shultz patiently moved the president away from a dogmatic anti-communism and martial posture, including increased defense spending, and by 1985, with Gorbachev’s emergence, restored open channels between the superpowers. Within two years he negotiated the landmark Intermediate Nuclear Forces treaty, drawing down the nations’ ground-based nuclear arsenals. The pact reversed the arms race that had plagued U.S.-Soviet relations and paved the way toward the end of the Cold War.


But if helping to resolve the Cold War stands as the high point of Reagan’s presidency, another chapter of his foreign policy—the Iran-Contra scandal—represents the nadir. In that convoluted affair, operatives at Reagan’s National Security Council, in violation of the president’s stated policy against negotiating with terrorists, sold arms to Iran in return for the release of hostages. Compounding the scandal, U.S. officials used the proceeds to fund the Nicaraguan rebels known as the Contras, defying the so-called Boland Amendment, a congressional prohibition against financially supporting them that Reagan had signed into law in 1984. Pundits had a hard time deciding which half of the scandal was worse.

The exposure of the two interlinked incidents—as well as a series of subsidiary offenses—almost destroyed Reagan’s presidency. It led to congressional investigations, a special prosecutor and a wave of indictments not seen since Watergate. Juries convicted top NSC officials Robert McFarlane, John Poindexter and Oliver North of serious crimes, along with several lesser officials. Defense Secretary Caspar Weinberger was on the verge of being prosecuted for perjury and obstruction of justice when George H.W. Bush—on the last Christmas Eve of his presidency—pardoned him and five others. Bush, it was widely suspected, feared Weinberger’s upcoming trial would implicate Bush himself, who had been vice president during the trade. Reagan at first claimed not to know about the scandal, but in his inimitable way eventually admitted he had. “A few months ago I told the American people I did not trade arms for hostages,” he said. “My heart and my best intentions still tell me that’s true, but the facts and the evidence tell me it is not.”

Overall, according to PolitiFact, 33 Reagan administration officials were indicted amid multiple scandals. (PolitiFact put Nixon’s tally at either 28 or 68, depending on who counts as significant.) But amid all this wrongdoing, Shultz again emerged relatively untainted. Knowing his opposition to arms transfers to Iran, the hard-liners tried to keep him out of the loop of the arms-for-hostages trade. When the scandal broke in November 1986, Shultz urged Reagan to come clean and chided him when he misled the public about what had happened. He also moved to wrest control from the NSC over the administration’s counterterrorism policy, persuading Reagan to refrain from future arms deals with Iran. His strengthened hand within the administration then allowed him to advance his nuclear diplomacy with the USSR.

On the Contra end of the scandal, Shultz supported the Nicaraguan rebels but again warned hard-liners like Weinberger and CIA Director William Casey, as well as Reagan, about methods that would skirt the law and could even constitute an impeachable offense. As in the Nixon administration, Shultz wasn’t wholly pure. He went along with legally dubious efforts like getting Saudi Arabia to help fund the Contras. But his repeated counsels of good sense and ethical behavior during the whole affair let him emerge standing tall after the decimation of the president’s foreign policy team.


Shultz was not a saint. He made errors and had blind spots—including getting wrapped up in the Theranos scandal in his 90s, seduced by Palo Alto’s romance with tech into supporting a fraudulent startup. But when it came to politics and world affairs, he remained a fount of good judgment, if not wisdom. In this, he stood almost alone among surviving Reagan foreign policy officials in recent years. Some continued with their renegade ways (Oliver North became a right-wing media personality and NRA official). Others showed their true colors as unprincipled hacks (James Baker, after helping to block a full and fair recount of the 2000 election in Florida, swallowed his concerns about Donald Trump’s hijacking of the Republican Party and quietly supported him). But Shultz’s reputation gave him credibility to forcefully criticize the direction in which Trump was taking the country with his hypernationalistic “America First” policies, upholding the need for Republican as well as Democratic support for American engagement with and leadership of the world.

As for the Princeton tiger, the rumor about Shultz’s fleshly artwork was confirmed to reporters years ago by Shultz’s wife. “When the children were young,” she said, “they used to run up and touch it and he would growl and they would run away.”

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