President Carter and his top economic policymakers may be beginning to get their act together.
Although most critics remain to be convinced, there now are some early signs that what some officials concede was the confusion and in-house waffling that characterized the first 23 months of the administration's economic policymaking finally may be on the wane. The key question is, can the administration persuade outsiders it has changed?
Carter and his policymakers had three major problems during their first 1 1/2 years in office.
The main one had to do with inflation: Neither the president nor his close political lieutenants seemed to understand how urgent the inflation problem was, and they essentially ignored it. As a result, Carter made policy decisions that often exacerbated inflation -- from signing expensive farm legislation to proposing an inflationary cargo-preference bill.
Second, the administration's economic policymaking machinery was in disarray. Top advisers were divided over how to deal with the economy, the policymaking group had too many cooks to function effectively, and aides who weren't secure in their own recommendations left too many decisions up to Carter. Worst of all, there was no one in charge.
Finally -- and perhaps just as crucially -- the administration was almost hopelessly inept at communicating its policies, a key element in mustering broad-scale support. Top officials were virtually inaccessible, and were closemouthed when they did meet with outsiders. Almost no one knew how to deal with Congress. And there was no one to serve as Carter's economic spokesman.
Not all of these problems have been resolved, by any means. But critics concede the administration's performance in the last two major policy actions -- the new anti-inflation program and the president's dramatic dollar rescue plan last month -- have reflected at least some improvements. And conversations with some former critics have confirmed there's been change.
There are these developments:
After 23 months, Carter and his top advisers finally appear genuinely convinced that inflation is the nation's foremost domestic problem and that bringing it under control requires persistent attention. Insiders who previously were frustrated by Carter's attitude insist he's "gotten religion" on inflation. Even his key domestic aides have jumped on the bandwagon.
The cabinet-level Economic Policy Group is functioning more effectively. Where previously almost a dozen top officials had a hand in key decisions, today policymaking has been narrowed to the old Johnsonstyle troika -- the Treasury secretary, chairman of the Council of Economic Advisers and budget director -- with others called as needed. Staffing also has been improved.
Policymakers have learned to be more forceful in presenting their plans to Carter. Until recently, top advisers had been so divided they could not agree on a firm set of recommendations, so they simply presented a broad range of choices and let Carter pick what he wanted -- defaulting all serious influence. "We were giving him too many options," one insider concedes.
In last month's dollar-rescue effort, for example, key policymakers narrowed their presentation and pushed Carter strongly to take bold steps to stem the slide in the markets -- with the added success of keeping it all a surprise. As a result, the plan so far has worked. And top economic advisers recently joined forces to urge that defense spending be pared.
Although Carter still hasn't named a formal economic spokesman, there has been some shakedown in the roles of top policymakers. Charles L. Schultze, the CEA chairman, now is regarded as strictly an inside man, while Treasury Secretary W. Michael Blumenthal is emerging as policy chief and Carter's most effective outside spokesman. (Blumenthal engineered the dollar-rescue plan almost single-handedly, without even consulting White House political lieutenants.)
Carter's other key advisers have been relegated more or less to running their own departments. While Labor Secretary Ray Marshall was instrumental in proposing the new wageprice guidelines, Blumenthal and Schultze still do most of the broadscale economic planning. And while McIntyre is in on the troika sessions, insiders say he sticks mostly to budget matters.
The White House, for the moment at least, has quit sniping at Carter's advisers. Earlier, policymakers often found themselves criticized and undercut by White House staffers, with Carter press secretary Jody Powell declaring at one point that Blumenthal did not have authority to negotiate with Congress on the tax bill. (This month, White House aides say Blumenthal is back "in.")
For all the talk about high interest rates, there's been an improvement in the administration's coordination with the independent Federal Reserve Board. The two sides worked closely together on the anti-inflation program (primarily the decision to tighten the budget) and dollar-rescue plan. While Fed members may not agree with Carter, at least they're kept informed.
Although these sorts of improvements may seem standard for an incumbent administration, they could prove an important step for the Carter White House, which has suffered a score of political setbacks as a result of some public perceptions that it was bumbling and inept. To some critics, even the Ford administration seemed organized by comparison.
The administration's performance initially surprised most onlookers, because -- on paper at least -- the Carter team seemed to be the best qualified in some years:
Schultze, an imaginative and experienced economist, was on everyone's list of potential CEA chairmen; Blumenthal had a Ph.D. in economics and had been a trade negotiator and successful businessman; Marshall was an expert on manpower programs; and Commerce Secretary Juanita Kreps was a recognized economist with some ties to the business community.
Further, the administration had a strong backup team of bright young subcabinet appointees who showed unusual promise: Richard N. Cooper, undersecretary of State for economic affairs, and William D. Nordhaus, a member of the Council of Economic Advisers, both were regarded as brilliant in their fields. And several middle-level Treasury officials had excellent reputations.
But the administration spent its first year in office with no one knowing who was on first and who struck out. Schultze and Marshall drew up the initial stimulus program, but Blumenthal and former budget director Bert Lance pushed hard to get Carter to withdraw his $50 rebate plan. Schultze pressed for a guidelines program in 1977, but was opposed on all sides.
Moreover, outsiders couldn't sense where top officials stood. Schultze, who had no stomach for political maneuvering, defaulted as policy coordinator to become the president's "private" economic consultant; Blumenthal was so reticent he was regarded as an enigma; and Kreps, Marshall and other key advisers seemed to go off on their own.
The effort also was hampered by the fact that the administration seemed bent on dealing with a variety of comprehensive -- and often contradictory -- new legislative initiatives at once. The initial economic stimulus program, the big energy plan and the massive tax-reform proposal Carter first contemplated all had elements that conflicted with one another.
Most important, Carter himself was virtually oblivious to the coming threat of inflation. When decision time came on key economic questions, the president too frequently put inflation second. The result was a string of White House actions that analysts say contributed substantially to placing the administration in its current bind.
To top it all off, the administration has suffered from a serious public relations problem: how to communicate what it's doing.
The past year's dollar slide, for example, stemmed in large part from White House ineptitude in getting across its concern about the dollar. Although officials were merely trying to remain neutral so as not to tamper unnecessarily with the markets, foreigners incorrectly interpreted this as recalcitrance, and sent the dollar down further.
Because of bad communications with Congress, the administration flatly muffed its chance to head off a cut in capital gains taxes last session, and nearly blew chances of getting any tax cut at all.
And officials' persistent refusal to make themselves accessible resulted in another apparent White House flipflop over the new wage-price guidelines program. Policymakers were so up tight about leaks that they refused to point out until it was too late that the 5.75 percent figure they were reported considering for a price standard was not the actual guideline.