Treasury Secretary W. Michael Blumenthal told businessmen today that the rush of major policy initiatives from President Carter is over and that the administration will be "prudent" in formulating its economic policies over the next several months.
Blumenthal's address to the American Bankers Association annual convention here appeared to be a major move by the administration to allay the deep uncertainty which has gripped the business community in recent years, resulting in, among other things, a low level of job-creating capital investment.
Blumenthal acknowledged the "troubling paradox" of "on the one hand, good economic recovery in 1977 and reasonably good prospects for 1978 and, on the other, the lowest level of business confidence in a long time."
He said the first step in rebuilding that confidence "is for the administration to spell out for you - in full detail - our economic plans for the next several years."
Those plans will become clear over the next few months and as the administration presents its tax package to Congress and then details its 1979 budget proposals in late January. The fiscal 1979 budget will be the first prepared by the Carter administration, although the President made many changes in the 1978 budget former President Ford sent to Congree three days before he left office last January.
Blumenthal outlined to the bankers six principles "that I hope - and fully expect - will guide the administration in formulating its long-term economic strategy."
Those principles emphasize the importance of the private sector and the need to stimulate investment spending by business, and stress that government must provide a stable environment for business planning.
Blumenthal, who was chairman of the Bendix Corp. before taking the Treasury job early this year, seems the most likely candidate to serve as the administration's chief emissary to the business community, a role vacated late month by former Budget Director Bert Lance when he resigned in the middle of a controversy over practices he engaged in as head of two Georgia banks.
Lance himself spoke to the bankers Tuesday, apologizing in some measure for any difficulties the widespread criticism of his activities - including large overdrafts by himself and members of his family - may have visited on the industry in general.
Blumenthal told the bankers that administration officials are aware that the large number of new proposals - including welfare reform, the energy package and a new Social Security financing program - the President has made, while necessary, has "aggravated uncertainty in the business sector . . . you should know that the pace will now begin to moderate.
"The bulk of our policy agenda is now before the Congress and the nation. It is now a time chiefly for consolidation rather than innovation," he said.
The Treasury Secretary attributed the low level of business confidence to the legacy of the economic turmoil of the early 1970s, including high inflation, deep recession, and inconsistent government economic policies. He noted that corporate profits, when adjusted for inflation, are very low, which contributes to the shortage of capital investment.
He also acknowledged that "a Democratic administration is typically viewed with some apprehension by the business community."
He said the administration's first principle is to limit government intervention in the economy and said that the federal government should not permit its income taxes to take more than 10 to 12 per cent of tax-payer income. He said federal taxes now take more than 13 per cent of taxpayer dollars.
The President said last week he expects to ask Congress for a large tax cut next year.
Blumenthal also reaffirmed the desirability of getting the federal budget into balance but made no mention of the 1981 target the President emphasized in his campaign and in the earl months of his administration.
Blumenthal said a second principle is the need for government to "concentrate on increasing the rate of private capital formation" by lowering taxes on profits and "keeping regulatory medding to a minimum."
A third principle is that government policy should provide "a stable, predictable environment for business planning."