From the beginning, the chemistry between Mike Blumenthal and President Carter's Georgian aides didn't mix. An intellectual and economist, used to thinking in global dimensions, Blumenthal didn't hit it off with Ham Jordan and Jody Powell, whose instincts first went - and go - to protecting Carter's political image.
Powell and Jordan consistently accused the Treasury of leaking things to the press - or at least, trying to claim special credit, reaching for headlines.
"As long as Mike could pick up the phone and talk to the President," one aide said, "Blumenthal felt he could ride out any sniping from the White House staff."
But increasingly, according to some of Blumenthal's fellow Cabinet officers. Carter himself became irritated with Blumenthal's style. At Cabinet meetings, Blumenthal was candid and direct. "I've seen the President squirm at some of the things Blumenthal would say," according to one official. "Carter may say he wants to get the facts, with no window-dressing, but sometimes he doesn't want to hear them."
Another Cabinet officer said: "When Mike talked at a Cabinet meeting about economic issues, he seemed dominating, almost lecturing."
Yet, only two months ago, as the administration was assessing economic policy, Carter asked Blumenthal what was wrong, and Blumenthal responded with a memo saying the President needed a chief economic coordinator who would bring to the President only the most important issues, a man who would have a blank check on other issues.
He should be that man, Blumenthal said. But if Carter wanted to designate someone else as the chief policymaker and spokesman, he would step aside. After thinking about it for three weeks, Carter on May 30 designated Blumenthal as his chief economic spokesman.
But Blumenthal's insistence on the role was to prove costly. His pressure for the job further irritated the White House staff. As recently as the return trip from the Tokyo summit, when Jody Powell was shown a Korean company place-card for a Blumenthal aide that mistakenly abbreviated the word "assistant" as "Ass.", Powell grinned: " you can say that about anyone at the Treasury."
The history of the bad blood between Blumenthal and the White House staff not only goes back a long way, but was exacerbated by the Bert Lance affair. Blumenthal told his Comptroller of Currency, John Heimann, not to pull any punches in the investigation of Lance, whereupon the Georgia Mafia accused Blumenthal of disloyalty.
From that time on, Blumenthal's credibility was assaulted countless times. Late last July Blumenthal - sensing accurately that Carter's total opposition to a capital gains tax cut would be overridden by a combination of Republicans and Democrats on Capitol Hill - tried to negotiate a deal.
Powell snapped to reporters that Blumenthal didn't have the power to commit the President. The flap left the Hill in confusion and weakened Blumenthal to the point where his resignation might have been forced then if Carter had had a ready substitute available.
But Blumenthal's problems were not all of the White House staff's making. although unprepossessing in personal relationships, and a good companion in social gatherings, he had a penchant for irritating his administration associates who considered him more than a bit arrogant.
One Cabinet officer said: "He never missed the opportunity to tell me how much more important he is than I am. I know it, but I didn't have to be hit over the head with it."
Illustrative of the charge that he was not a team player: When Robert S. Strauss was appointed special trade representative, he invited Blumenthal - who had been a trade negotiator during the Kennedy years - to form a kind of partnership in which Blumenthal would help Strauss learn the trade business, and Strauss would help Blumenthal when he needed it on the Hill. Blumenthal declined, and the relationship with Strauss (who grew more important in the White House relationship) cooled.
Later on, of course, of of the many indignities that Blumenthal had to suffer was that it was strauss who was named to direct Carter's first anti-inflation effort, when Blumenthal himself wanted the job. Blumenthal privately took some satisfaction when the Strauss anti-inflation effort came to nil, and Strauss was replaced in that assignment by Alfred E. Kahn.
One of the major problems that Blumenthal had to confront for most of last year was the sharp decline of the U.S. dollar which most analysts here and abroad feel he helped to precipitate with speeches and interviews "talking the dollar down." Blumenthal contends to this day that he was misunderstood and misinterpreted. But the record is clear that he said that he wouldn't object to other currencies appreciating, and would not interfere with the market processes to build the dollar to an artificial level. His own Treasury associates concede he was naive.
For a long time - although they now feel badly over his being fired - Blumenthal's former businesscolleagues were high critical of his performance at the Treasury. They complained that he did now know enough about financial markets. If he had he wouldn't have allowed the perception to prevail that t,e dollar ought to move down. They faulted him, as well, for pursuing tax reform rather than business tax cuts.
But Blumenthal appeared to have rallied his stock in financial markets and with Carter when the dollar "rescue-program" that he and Undersecretary tanthony Solomon put together last Nov. 1 appeared to be a stunning success, against all odds. Washington joked - not inaccurately - that Blumenthal's fate was tied up with the dollar, and so long as the dollar was strong, his job was secure.
Ironically, one of the factors in the dollar dip in the past few days was financial market concern that he would be dumped.
To observers, Blumenthal seemed more relaxed when he was abroad at economic summit meetings, or international financial gatherings. He reveled in the key role he played inbringing into being the new U.S. economic relationship with China.
Domestic economic policy management proved more difficult, and probably his downfall. He was a free market man, for example, arguing only last week for decontrolling oil prices against the more practical objections of the "pols" who saw that as a disaster for the 1980 campaign.
As as recently as two months ago, he insisted that the economy was overheating - a judgment that appears to have been wrong - and got himself into the position where Federal Reserve, Chairman G. William Miller complained to Carter that he was being publicly pressured, against the Fed's better judgment, to tighten money.
That forced Carter publicly to call Blumenthal off, yet another humiliation. In the end, Miller's policy prevailed. Now, Miller, himself an independent operator, has Blumenthal's job, and inherits Blumenthal's problems. CAPTION: Picture; MICHAEL BLUMENTHAL...history of conflict