Six weeks ago, President Carter announced a new fiscal 1981 budget that he said was intended to combat inflation. His plan was to trim the deficit to $15.8 billion and forgo a 1980 tax cut -- all to help slow the economy.
Now, with the ink hardly dry on his January proposals, the president is being forced to scrap his new policies in favor of a tougher anti-inflation program designed to satisfy both Wall Street and Congress.
The White House is in the throes of a major policy review that strategists say could lead to proposals for $20 billion in further spending cuts to put Carter's $615.8 billion budget in balacne.
And the president is said to be considering credit controls.
The latest reshuffling is not the first time Carter has flip-flopped on economic policy. There was his now-famous $50 tax rebate in 1977, the paring back of his 1978 tax-cut package and turn to wage-price guidelines in 1978-79.
And, as in these earlier reversals, Carter has been forced into the shift partly because of his failure to deal sternly with inflation. By any measure, this week's review is an admission that previous policy has not worked.
At the same time, however, analysts see little evidence that the extra budget-cutting the president is considering will make any quick, dramatic difference in the overall inflation rate, at least for several months.
Although the budget deficit is important psychologically to help dampen inflationary expectations, economists say the budget already was restrictive in its impact on the economy.
Cutting back on spending won't directly slow sharply rising energy prices, which still are the major inflation villain. Nor will it deal immediately with soaring house prices.
And many analysts question whether imposing credit controls -- a device that usually allocates loans to consumers and homebuyers when money is scarce -- would be of any use in today's market, where credit is relatively easy.
If Carter succeeds in cutting $20 billion from his January budget proposals, he will be accomplishing two things:
He will help calm, at least for the moment, the inflationary panic that has gripped the nation's financial markets in the past few weeks, in the face of mounting oil-price hikes and ominous new inflation statistics.
He will go a long way toward guaranteeing that the long-predicted recession, which so far has proved elusive, finally will arrive. Some economists say the economy must slow sharply if inflation is to abate.
Similarly, while credit controls might not help directly in the current situation, analysts argue they could pave the way for the Federal Reserve Board to tighten credit far more sharply without choking the economy as severely.
Why did Carter go wrong again in his January economic proposals? How did he get into the position of having to scrap his new policies barely weeks after proposing them? Why was this flip-flop necessary?
As in Carter's earlier policy shifts, the problem stems partly from economic errors and partly from political misjudgments.
As they have consistently over the past 3 1/2 years, Carter's top economic advisers again underestimated both the continuing underlying strength of the economy and the virulence of the nation's inflation problem.
The budget the president proposed last January was designed for an economy that is far deeper into recession than now appears to be the case. Carter's advisers feared further tightening would seriously worsen the downturn.
The administration also misjudged the political climate, particularly in the face of the mounting inflation.
The January budget was designed politically to preempt the middle of the road without seriously angering the liberal constituent group that otherwise might support Sen. Edward M. Kennedy (D-Mass.), Carter's chief rival.
As a result, while Carter sought to forgo a tax cut, despite the election year, he didn't continue the previous year's sharp budget-cutting in domestic programs, which had sent liberals howling.
This time, there was enough money in the budget to keep social programs intact.
Failure to move aggressively against inflation has been cited as one of Carter's major weaknesses over the years. The president deliberately avoided any visible anti-inflation program in 1977 and indeed supported some inflationary moves.
He finally was forced into his voluntary wage-price program in 1978, and, later, into last year's sharp cuts in domestic spending.
What the White House didn't count on this time, however, was the reaction of Congress and the public to the January inflation figures, which translated quickly into a demand for a balanced budget.
Over the past several weeks, both liberals and conservatives in Congress have joined in calling for bigger budget cuts, and are seriously considering a suggestion to trim cost-of-living increases in Social Security benefits.
What remains to be seen is how the lawmakers will react when they receive the administration's budget-cut proposals -- specifically, whether the various factions in Congress will be able to agree on what programs should be cut.
That has been the most serious obstacle to budget-balancing efforts in previous years, and it's not certain yet whether the inflation scare is big enough to prompt the lawmakers to cast aside their differences.
Already, both liberals and conservatives have competing budget-cutting plans.
Meanwhile, no matter what Carter decides, Americans can expect inflation to be high for the near future. White House economists are predicting that February's price figures will be as bad as January's 18 percent annual rate.