The president of the Brookings Institution added his voice yesterday to those calling for wage and price controls to solve the nation's inflation problems.
"I hate them but I do not see the way out without them as part of the attack on inflation," Bruce MacLaury told a New York financial writers group, according to Dow Jones.
MacLaury's statement came less than 24 hours after a similar call by Barry Bosworth, a fellow Brookings economist. Bosworth served as the head of the Carter administration's anti-inflation program from early 1977 until mid-1979.
Brookings colleagues yesterday said they were a bit surprised by MacLaury's position on controls, but said that he has become convinced that in the present crisis normal economic policies will not work.
"MacLaury is a fiscal conservative, a pragmatist not unlike Arthur Burns (former chairman of the Federal Reserve Board)," a colleague said yesterday. Before becoming president of Brookings, a private, Washington-based think tank, MacLaury was president of the Federal Reserve Bank in Minneapolis.
In addition to wage and price controls, MacLaury told the New York group that gasoline rationing was necessary to reduce U.S. oil imports.
In urging wage and price controls, MacLaury did depart somewhat from Bosworth. He told Dow Jones that he would not place controls on interest rates. Bosworth has called for mandatory controls on virtually every sector of the economy.
The call for controls appears to ally the two economists with Sen. Edward Kennedy (D-Mass.), who has called for across-the-board controls in his campaign for the Democratic presidential nomination. Kennedy also has urged gasoline rationing to help solve the nation's energy problems.
Bosworth said Wednesday that he had no part in drafting the Kennedy economic position nor was he working for the candidate.
MacLaury was not available for comment yesterday.
Federal Reserve Board Chairman Paul Volcker yesterday said that his agency's effort to curb inflation by keeping tight control over the money supply was "remarkably on target." The Fed announced a tough tight money policy Oct. 6 aimed at drying up much of the money then available for credit.
Since then, Volcker said bank lending has slowed but cautioned that "one would not expect inflation to react in that short of a period."
In other economic developments yesterday, the Congressional Budget Office predicted President Carter's budget for fiscal 1981 would have a larger deficit than the $15.8 billion projected. The CBO said the increase would range from $3 billion to $8 billion depending on the state of the economy.
The budget office based its estimate on the belief that the proceeds from the "windfall profits" tax now being deliberated in Congress would be smaller than the White House anticipated.
At the same time, CBO said the failure to cut taxes over the next five years would result in "unprecedented growth in revenues" as taxpayers are pushed into higher income tax brackets.
James McIntyre, director of the Office of Management and Budget, told the House Appropriations Committee that inflation will force taxpayers to pay $40 billion more in taxes over the next two years.
Treasury Secretary G. William Miller told the same committee that the administration was committed to the fight against inflation and therefore is not considering any tax cut.