Economic adviser will face rebuilding job
Beryl W. Sprinkel, President Reagan's choice to head the Council of Economic Advisers (CEA), can be expected to help rebuild the embattled agency, keep a watchful eye on the Federal Reserve Board, and ensure that any policy disagreements with the President remain under wraps, according to those who know him. Mr. Sprinkel has been nominated as CEA chairman at a time when a number of major economic policy questions facing the administration remain unresolved.
For example, recent comments by Treasury Secretary James A. Baker III indicate a shift in the administration's position on the best approach for tax reform. And the President must shortly rule on a staff proposal not to seek an extension of the so-called voluntary curbs on Japanese auto imports, which expire March 31.
Since the administration took office, Sprinkel has been undersecretary of the Treasury for monetary affairs. Prior to that, the University of Chicago-trained economist spent 28 years at Harris Trust & Savings Bank in Chicago.
The blunt-spoken Sprinkel is one of the nation's best known monetarists. Monetarists argue that excessive growth of the nation's money supply is the chief culprit in causing inflation.
Among other things Sprinkel argues that the Fed should follow a policy of slow, steady growth of the money supply. He also asserts that unfettered free markets work best.
Even those who disagree with Sprinkel's economic views give him solid marks as a professional.
``Technically he is a very solid and competent person,'' says Robert Gough, senior vice-president at Data Resources Inc., a large economic forecasting firm.
Sprinkel's ability to get along with White House chief of staff Donald T. Regan is at least as important as his professional skills, many observers say. Sprinkel reported to Mr. Regan when Regan was Treasury secretary.
Early in Sprinkel's term at Treasury, he landed himself in hot water with Regan over his blunt comments on controversial issues. These included his outspoken criticism of the Fed and ardent opposition to US intervention in currency markets.
After Regan rebuked him, Sprinkel adopted a low public profile. And Regan ended up being one of his strongest supporters for the CEA post.
``He is a team player,'' notes Jack Albertine, president the American Business Conference.
In Sprinkel's attempts to affect administration policy, ``much will depend on the relationship Beryl continues with Don Regan, as well as his relationship with [Treasury Secretary] Jim Baker,'' says Murray L. Weidenbaum of Washington University. Mr. Weidenbaum was President Reagan's first CEA chairman and shared an apartment with Sprinkel before both men's wives moved to Washington.
Sprinkel's appointment is seen as one sign of Regan's continuing interest in and influence over economic policy. Regan ``wanted somebody he has worked with and knows well. There is not any question that the chief of staff has a lot to say about economic policy,'' Mr. Albertine says.
Strong support from the White House will be needed, because Sprinkel faces the task of rebuilding an embattled CEA.
When Martin S. Feldstein resigned as CEA chairman in July, his blunt remarks on administration policies had so annoyed Reagan that the President toyed with the idea of abolishing the council.
White House spokesman Larry Speakes told reporters last week that because the CEA is a ``statutory creation, we couldn't abolish it, so the President decided to use it to the fullest extent.''
Secretary Baker will be the administration's chief economic spokesman, however, with Sprinkel providing private advice to the President, Mr. Speakes said.
When Sprinkel was nominated for the CEA position, only one of three slots on the council was filled. That one member, William A. Niskanen Jr., has said he will resign since he did not get the chairman's job. The White House says it soon will name two additional members and bring the professional staff back up to full strength.
Sprinkel's departure leaves Baker with greater freedom to pick his own team at the Treasury Department. Department sources say the undersecretary's job will be reconfigured before it is filled.
While Baker is still putting his stamp on the Treasury Department, he has already begun speaking out forcefully on economic issues. Last week he issued the most specific criticism to date from a high administration official of the Treasury's draft plan for tax reform.
The effort to attain economic neutrality -- whereby all companies are taxed at the same rate -- ``creates some serious problems with respect to capital formation . . . and perhaps with respect to small business,'' Baker told the House Budget Committee last week.
He also said the President would not sign the Treasury plan if Congress passed it unchanged. Treasury officials later said Baker was not implying that he opposed the plan, merely that the process of drafting legislation was incomplete. -- 30 --