Share this story
Close X
Switch to Desktop Site

Reagan team prepares 'jolt' for sluggish US economy

Specifics of the Reagan economic battle plan that would give an upward "jolt" to the economy began emerging on the first full day of the new administration. In an extraordinary tough address to the National Press Club here Jan. 21, David Stockman, the youthful director-designate of the Office of Management and Budget, said that economic plans were under way and would be presented to Congress "in about three weeks."

Mr. Stockman, who previously urged Mr. Reagan to declare an "economic emergency," said that major legislative proposals would be made on several fronts. Stockman gave a rapid-fire account of an alarming picture of America's fiscal affairs. He denounced any "temporizing" with proposed solutions and called for "major surgery" to "jolt" the economy. He declared some entitlement programs (direct federal aid) would have to give way to reality in a "dismal" situation.

About these ads

Asked if the administration still supporterd the Kemp-Roth tax program, he replied that "if we don't cut taxes, I don't see how we can get the economy off dead center."

Would oil and gas be decontrolled? Mr. Stockman replied that final decisions have not been made but that "certain commitments" had been made in the campaign and that it is being made pretty clear that "those commitments will be implemented shortly."

The Stockman remarks shed further light on the comprehensive economic package the new administration is preparing to meet what President Reagan in his inaugural address called an "economic affliction of great proportions."

The President is aware of the so-called "momentum factor" at the start of a new administration and his advisers recommend bold new tax and economic steps recalling the electrifying Roosevelt takeover in 1933, called "the 100 days."

Mr. Reagan assailed big government in his inaugural address and immediately imposed a total hiring freeze on new civilian employees, reenforcing the Carter partial freeze now in effect. Reagan's tone was militant as he attacked "one of the worst sustained inflations in our national history."

Reagan assistants are aware that at the start the nation avidly watches a new president as he seeks to turn campaign pledges into reality. Liberation of the hostages has produced a national euphoria in the United States that may give President Reagan more time to put his economic package together.

Reagan did not deal with economic details in his address, and Wall Street met the day with a sharp loss of 20 points. The business community appears to be waiting along with the rest of the nation for positive assurances from the White House. A joint investigation by Peter D. Hart Associates, a Washington polling firm, and the Wall Street Journal indicates that the public has only mild expectations for the new administration and will not demand miracles from the new President.

About these ads

Comments from members of Congress show a restlessness indicating that Reagan must act promptly or run into a credibility problem. He has endorsed the Kemp-Roth bill calling for a 30 percent across-the-board cut in personal income taxes over the next three years. Can this be achieved without more inflation?

The President's distate for "big government" expressed itself repeatedly in his inaugural address. The words "new beginning" were printed at one point within quotation marks as though they were a counterpart to President Franklin D. Roosevelt's "New Deal." Reagan repeated one line he has used many times: "In this present crisis, government is not the solution, it is the problem." It brought applause, as it has in earlier addresses.

When Reagan was at the Capitol last Sept. 15 he and congressional Republicans offered "a solemn covenant with the American people" of five parts to be put into effect "within a year from today." Now comes the time he must try to make good on those pledges to:

* Cut money the Congress spends on itself.

* Cut federal expenditures to reduce waste, fraud, and abuse and aid in the anti- inflation battle.

* Make an across-the-board cut in individual income taxes (the Kemp-Roth proposal).

* Increase incentives for savings, investments, and creation of capital.

* Increase military expenditures to assure peace and stability in the world and make US foreign policy credible.

Reagan has done a better job of making friends with top congressional leaders than Jimmy Carter did four years ago. Even so, he is likely to have trouble with Congress in getting his economic program through, particularly the tax cut proposal, which carries the danger of more inflation.

The President's prehensive economic package is likely to dominate the first session of Congress. The situation is compared with Mr. Carter's hastily prepared emergency energy program. His failure to win cooperation of Democratic legislative leaders in advance helped delay it. Only parts were adopted.

Reagan must send his own budget for fiscal year 1982 to Congress by March 15. He also will send Congress proposed revisions of the 1981 fiscal year budget within two weeks.

Congress must act shortly on a proposed $10,200-a-year pay raise for itself, along with increases for Cabinet members and senior employees. Carter recommended these boosts. The time limit for action: Marc h 8.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.