ALICE RIVLIN - ECONOMIC GURU. Budgets are no wonderland for this Alice
From Alice Rivlin's calendar: Jan. 26-28: Sweden. Publication of book co-edited on the Swedish economy; dinner with the Swedish finance minister.
Feb. 5: The Gerald Ford Library in Ann Arbor, Mich. Interview for PBS series about the Constitution.
Feb. 11: North Carolina State University. Participant in Emerging Issues Forum with businessman H.Ross Perot and Gov. Michael Dukakis of Massachusetts.
Feb. 13: Los Angeles. RAND Corporation, board of advisers on civil justice.
Feb. 18: Puerto Rico. Address business group.
Feb. 23: New York. Time magazine's board of economists.
It's been a busy winter for Alice Rivlin, the economist, author, national economic policy guru, and director of the Economic Studies Program at the Brookings Institution. After 12 years in government and 30 years watching it, Mrs. Rivlin is helping the world sort things out. Known for her intellectual honesty, she travels the globe.
Alan Greenspan, chairman of the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford, calls Rivlin ``one of the relatively few policy economists in the country who gets a triple-A rating.'' Dr. Greenspan, head of the consulting firm Townsend-Greenspan in New York, says that politics often enters into policy analysis. But in Rivlin's case, he notes, ``If she says something is a fact, it's a fact.''
She is also lauded for her straightforward manner, forsaking the jargon many economists routinely use. Columnist David Broder writes, ``She is a rare bird - an economist who writes sparklingly clear English, has a sense of humor, and recognizes that her science is something less than precise or perfect.''
The latest wisdom from Rivlin came late in December during a speech at the American Economics Association, where she outlined several suggestions for budget reform. These included:
Put the budget on a two-year cycle. ``The budget is very complicated and time consuming,'' she explains, ``and one way to improve it is not to spend every year doing it.'' Rivlin says she believes this would make government more efficient because agency heads would not have to spend so much time defending their budgets.
Washington should give state and local governments more autonomy. She is a firm believer in block grants, allowing local officials to spend the money as they see fit.
Combine the policy decisions of the Council of Economic Advisers, Office of Management and Budget, and the Department of Treasury into a single agency. She explains, ``Both spending and taxation policy could be considered at once, the same way it is done in European countries by finance ministers.''
Issue only one economic forecast from the government instead of separate ones from the Federal Reserve Board, Congress, and the White House.
Keep the discipline of the Gramm-Rudman deficit-reduction targets. ``I'm a fiscal conservative - I would not rule out a budget surplus,'' she says.
Rivlin has arrived at these conclusions during a long residence in the capital. She arrived at Brookings in 1957 to work on a PhD in economics from Radcliffe College.
Her first real contact with the government came in 1966 during the excitement of President Lyndon Johnson's ``Great Society.'' She joined the staff of the Department of Health, Education, and Welfare (HEW) to evaluate programs and set goals.
Looking back on the '60s she says, ``Everyone found out how difficult it is to make public policy and implement public programs in this area.'' Rivlin remembers driving to Anacostia, a predominantly black section of Washington, to talk to a school principal about a federal program. The principal's secretary was not in that day so the principal was fielding phone calls, dealing with policemen, and handling disciplinary problems. ``Even though she never did get a chance to talk to me, it was clear she had no idea what the federal program was or what was supposed to happen to it,'' she recalls.
From this and other experiences Rivlin discovered that ``it is very hard to sit in Washington and write guidelines for umpteen thousand school districts.'' This realization has made Rivlin a proponent of greater state and local spending autonomy.
In 1969, she left HEW to become a senior fellow at Brookings. Within two years she had written a book, ``Systematic Thinking for Social Action,'' and cowritten three volumes on the federal budget and national priorities.
With this background, Congress chose her to direct the new Congressional Budget Office (CBO) in February 1975. The office was to keep track of congressional spending, after President Nixon impounded funds for domestic programs he did not support. The agency would also make economic forecasts and analyze budgets. Rivlin testified at budget hearings on Nixon's actions, remembering, ``I was surprised Congress did not have the capacity to evaluate the budget.''
Under Rivlin, the CBO evolved quite rapidly. ``The needs of the budget process were considerable,'' she recalls. ``We needed to answer the questions `What would the budget be like if we go on doing what we're doing,' and `What are the implications for future policy?''' Very quickly the CBO began analyzing budget options in defense, housing, welfare, and other departments.
Economists give Rivlin high marks for these early days at CBO. Georges Rocourt, chief economist at Mercantile Safe Deposit & Trust Company in Baltimore, says, ``No one accused her of tilting the numbers one way or the other. She was professional in an academic sense.''
Today, Rivlin looks at economic analysis differently: ``No forecasts are very good, and probably never will be, because the economy is too complicated and subject to outside forces to be very predictable. It's a complicated system.''
Partially because the system is so complicated, she says, it is open to interpretation. ``Generally any administration is on the optimistic side, while the CBO tends to be in the middle, since it has nothing to defend.''
Rivlin is not very enthusiastic about involving the private sector in running the government, which the Reagan administration has encouraged through private-sector commissions and task forces. Three years ago Rivlin was elected to the board of directors of Burroughs (now Unisys Corporation, the merger of Sperry and Burroughs). The difference between the public and private sectors, she observes, ``is that government at its best is quite careful in its decisionmaking. In the private sector, you go more on your gut instincts.''
Rivlin's ideas have attracted a lot of attention. In 1983, she was chosen a MacArthur Foundation fellow, a nonrestricted monetary award to creative people, which resulted in a yearly stipend of about $48,000. With two years left on the award, she says it has mainly allowed her to travel more. In June 1986 she went to Kashmir to climb mountains.
Rivlin professes to being happy at Brookings. She is not especially eager to go back to government work. ``It's something you live through because it's good for you, not because it's fun.''
Still, when pressed, she admits she could find time for one more entry on her calendar: appointment as director of the Office of Management and Budget.