Federal Reserve Board chairman Arthur F. Burns said in New York yesterday that he would almost certainly accept another term as chairman and might stay on the board as a member in any event.
Burns' term as chairman of the seven-member board of governors expires Jan. 31, although his appointment as a member does not run out until 1984.
The administration and the powerful chairman have been waging an on-and-off battle over the central bank's conduct of monetary policy, which many administration economists fear will boost interest rates so high that economic expansion could be choked off.
Burns said he would "seriously consider" staying on the Fed board even if he was no reappointed chairman, according to Associated Press. "I am not in a hurry to leave. The work we do is much too important," he said.
he told a news conference, however, that he would "be very pleased to be asked" to continue as chairman and "almost certainly would accept." His remarks were the first public message to President Carter that the 73-year-old economist wants to keep his job. There is considerable opposition to his reappointment within the Carter administration, although the President has said he has not yet decided what to do.
Earlier, in a prepared speech, he made a conciliatory gesture to the President, saying that he expects the administration's economic policy that he has strongly criticized in recent months "soon will take on a more constructive character."
But Burns continued to defend the central bank's policies that have resulted in a sharp climb in short-term interest rates as the money managers sought to restrain an explosion in the growth of the money supply.
He called criticism of Fed policy, much of which came from the administration, as "mechanical Keynesianism" that is always worried about boosting total demand for goods and services "by the quickest possible means," without considering other consequences.
Burns said such an approach spawned the now-rejected $50 tax rebate "scheme" last winter and "again inspired a good deal of thinking this autumn about how to keep economic recovery going next year."
In his statement yesterday Burns told a meeting of the American Council of Life Insurance that "over the next several months I anticipate that decisions in Washington will at last reduce uncertainity, improve the state of business confidence and encourage capital formation."
Last month, in an unusually sharp speech, Burns described the Carter administration's economic policies as ineffective and said the administration had contributed to the uncertainties that undermined business confidence and restrained investment in job-creating plant and equipment.
But yesterday the central banker said that he believes "President Carter fully appreciates the importance of substantially lessening the psychological and financial obstacles to business investment."
Burns, who meets frequently with the President, did not say what caused his perception of the administration's policies to change.
But he noted that "even now, there are some indications that investment in heavy machinery and in industrial construction projects is beginning to revive, and this tendency is practically bound to be reinforced by the more constructive turn of economic policy that now appears to be emerging."
Burns said he expected both tax policy to take on a "more constructive character."
The administration had cancelled plans to put a major tax reform package before Congress but has been talking about a major personal and corporate tax cut next year to stimulate an economy it fears is faltering.
Burns has said he would oppose a major personal tax cut because it would substantially increase the federal deficit and worsen inflation. He said the increase in puchasing power would not do anything to boost investment spending.
But Burns said the need to reduce business tax "has become especially acute" in order to offset big increases in energy and social security taxes and to "neutralize the massive over-payment of income taxes that stems from applying standard accounting rules to our inflation-ridden economy."
Burns said substantially increased capital spending is needed both to provide new impetus to the current economic expansion, create more jobs and prevent capacity shortages from occurring in the future.
But Burns said that even with the needed investment, it is doubtful that the unemployment rate will drop to an "acceptable" level within the near future.
The unemployment problem will remain especially acute for blacks, especially black youth, he said. He called the 40 er cent jobless rate among black teenagers and the 20 per cent rate among young black adults a "tragic failure of our economic society."
Burns said the society must deal with the "formidable array of structural ractors" that impede the smooth functioning of labor markets, including minimum wage laws that prevent unskilled youths from finding jobs.
He called for an experiment in "say, a half dozen cities with a view to demonstrating actual consequences of a lower minimum wage of young people." Unions have fought a lower minimum wage for unskilled young people arguing that employers would simply substitute lower-paid young workers for older workers.
Burns also argued that government will have to "come to grips with other artificial restrictions to employment opportunities" such as unnecessary licensing requirements that often make it "difficult for people, especially members of minorities, to enter fields that otherwise would accommodate many additional workers."