Share this story
Close X
Switch to Desktop Site

Exiles from Reaganomics and why they left

Do recent defections from the White House economic policy team reflect dissension within its ranks?

Council of Economic Advisors (CEA) chairman Murray Weidenbaum, whose resignation was announced last week, is but the latest in a string of economists who have strapped on their parachutes and bailed out of the Reagan administration.

About these ads

Paul Craig Roberts, assistant secretary of the Treasury for economic policy, left his post in February. Treasury undersecretary for tax and economic affairs Norman Ture departed in June, while CEA member Jerry Jordan's resignation is effective July 31.

The leave-takings don't tie neatly together, say past and present government economic officials. The four men resigned for different reasons - but the departures, these sources say, do reveal something about the way economic policy is decided in the Reagan administration.

Specifically, Weidenbaum and his cohort's defections emphasize these two realizations:

* Strict supply-side theory is no longer a major component of Reaganomics.

Both Paul Roberts and Norman Ture are ardent supply-siders, firm believers in the premise that slashing marginal tax rates will unleash economic growth and investment, broadening the tax base and eventually increasing the Treasury's revenues.

A major reason for both men's resignations was their feeling that the administration was drifting from this view. Last year's tax bill proved to be a rather dull rate-cutting knife, they felt, as the rate cuts were overcome by inflation-powered ''bracket creep'' and Social Security tax increases.

The business community's uncertainty about future tax policy further negated supply-side effects, said Roberts in an interview shortly after his resignation.

About these ads

''There are really no strong supply-side policies in effect,'' said Roberts. ''They were put on the back burner by (budget director) David Stockman over a year ago.''

The resignations of Ture and Roberts left no supply-siders in high government posts.

* President Reagan operates as his own chief economist.

CEA chairman Weidenbaum, at a press conference following the announcement of his resignation, called himself ''an advisor - one of many - to the President.'' He claimed to be satisfied with his impact, saying Reagan gave his advice ''considerable weight.''

But others feel that CEA often got muscled to the corner in policy disputes, as the President picked advice from other sources - such as the US Chamber of Commerce - that agreed with his own firmly held beliefs.

''Reagan steers his own course,'' says Walter Heller, CEA chairman under Presidents Kennedy and Johnson.

As a result, Weidenbaum (and Jordan) may have been working 16 hour days without a correspondingly major impact on administration policy.

''(Weidenbaum) was a good soldier, and I don't think he got the kind of intangible rewards he should have,'' muses an acquaintance of the chairman.

At his press conference, Weidenbaum said part of the reason for his resignation was his post's crushing workload.

''This is an arduous task,'' he said. ''I don't have the support system a Cabinet officer has.''

He denied that he was leaving because of disputes over the economic outlook contained in the upcoming mid-year budget review, though he implied the predictions were more optimistic then he, personally, would make.

Over the past two years, Weidenbaum has reportedly disagreed with several of President Reagan's economic policies - arguing that last year's tax cuts were too large, for example. But the departing chief economist says he's still a loyal supporter of the President's positions.

''I'm as enthusiastic today as I was in January, 1981, about the policies of the Reagan economic program,'' he said.

Weidenbaum will stay on the job until August, when he will return to Washington University's Center for the Study of American Business in St. Louis. He, like the other three departed economists, emphasizes that he is a professor at heart.

''His main point is that academia is his first love,'' says a Washington U. associate of Weidenbaum's. ''He wants to come back to reading, writing, and research.''

Weidenbaum now says he made up his mind in May to resign, but kept the decision private to prevent leaks. President Reagan was informed last month, and , ironically, it was Reagan himself who first broke the news to the public, inadvertently mentioning it to a St. Louis television reporter.

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