There will be many postmortems on the Carter administration, especially on its economic policy, which more than any other single thing brought it down.
Many of the principals doubtless will write their own version of history, and some of them already have bravely said that in the calmer analysis that the future permits, they will be treated more kindly than they have been by contemporary critics.
Be that as it may, Ronald Reagan will take the oath of office as the next president of the United States on Tuesday largely because enough voters concluded that the economic performance of the nation under Jimmy Carter was miserable.
The biggest failure of the Carter administration was its inability to contain inflation, and that happened because, from the very start, President Carter and his principal lieutenants underestimated the power of inflationary forces at work in the economy and how hard they would be to root out.
Two early Cabinet retirees -- former Treasury secretary W. Michael Blumenthal and former Commerce secretary Juanita Kreps (who didn't always agree with each other) agreed on that assessment in interviews with this reporter when they left in 1979.
The most notable success on the economic front was an effort to hold the line against the more virulent of protectionist forces -- although there was some slippage on that front, too. The administration also had a positive record on the international economic front.
"If you measure whether we had a successful economic policy by the results of the economy, one could hardly describe it as successful," said an administration official in response to my question last week. "But if the measure is whether it appeared at the time to be geared toward the problem at hand, I think it generally was successful -- although not always."
That's about the best face that can be put on it and a good preview of the most likely rationalizations you will hear from Carterites. The main theme will be that Carternomics got overtaken by events beyond the administration's control -- the Organization of Petroleum Exporting Countries and oil prices, the Iran-Iraq war, the Soviet invasion of Afghanistan and crop failures that drove up food prices.
If only one could eliminate energy and food prices from the indexes, how much better things would look! As the late economist Arthur M. Okun used to say, it was the sort of reasoning that suggested the battleship was fine except for the hole where the torpedo had hit.
The real truth about Carter's economic policy is that the ball game probably was lost during the transition when Carter junked a White Paper on economic policy that called for the coupling of his initial stimulus program with stand-by authority to impose wage and price controls.
Carter was persuaded by Economic Council Chairman Charles L. Schultze and by Blumenthal late in 1976 -- before taking office -- that seeking such authority would lead to anticipatory wage and price increases during the congressional debate. The only advocate for carrying through on the campaign commitment was domestic policy adviser Stuart Eizenstat.
For the past two years, starting early in 1979, Eizenstat is known to have urged Carter again to turn to controls, especially after OPEC skyrocketed oil prices beyond all reason. This time, according to those who know, Schultze and Treasury Secretary G. William Miller prevailed, trotting out the standard argument that controls don't work, even for short periods of time. They said that, having passed up a request for controls in 1976 when he might have gotten the authority, Carter was asking for certain defeat -- or at best, a bloody battle -- in 1979.
Thus, in retrospect, the administration put in a stimulus program in 1977 and then followed with a tax cut in 1978 -- and ignored the inflationary consequences. Had they had any way of knowing how much OPEC would boost prices in 1979, some Carter officials now say they wouldn't have opted for a tax cut at the same time.
Until it was too late -- that is, until Carter had to match Reagan's eye-catching tax proposals -- the administration didn't appreciate the need to do something about lagging productivity by stimulating business investment. When Blumenthal proposed a business tax break as part of the illfated 1978 cut, he was chopped off at the legs by Jody Powell.
And when Miller tried in December 1979 to get the president to move ahead with an accelerated depreciation program "so that we'd be in front of that argument, instead of behind it," he was rebuffed on grounds that it would cost the budget too much money, one official revealed to this reporter. Chalk up one for Budget Director James T. McIntyre!
Carter's overall aproach to the problems of "reindustrialization" was flawed. The White House had been urged to appoint an outside independent commission to study the problems of the automobile industry, including robotized lines and other technological advances, and the altered global structure of the industry.
But that was scotched by those officials, with Transportation Secretary Neil Goldschmidt in the lead role, who convinced Carter that the results of the study would be unpredictable and potentially embarrassing in an election year. They wanted -- and got -- a government study, done in a few weeks. It provided some politically useful, if economically meaningless headlines about a government-industry-union "partnership."
There were plenty of other bloopers. Carter came back from the Tokyo economic summit in 1979 and dissembled over the havoc being wreaked by OPEC and the long gasoline lines around the country. He retreated to Camp David, accused the nation of malaise and proceeded to fire some of the best talent in his Cabinet.
A candid history would say that while Blumenthal was a poor manager of the Economic Policy Group, he had just learned his job when Carter fired him. He had stopped talking about dollar depreciation, and with the help of Undersecretary Anthony Solomon had engineered a successful dollar-rescue program. Blumenthal understood that the nation had to get inflation under control and was prepared to have an early recession to fight, if necessary. He feared that Miller was letting monetary policy get out of hand.
But Ham Jordan and Jody Powell helped swing the ax at Blumenthal's head, and that underscored the financial markets' lack of confidence in the administration's ability to manage the economy. The issue was compounded when Carter moved Miller from the Fed into the Treasury slot and then sought to regain the confidence of world markets by installing Federal Reserve Chairman Paul A. Volcker to succeed Miller at the Fed.
Finally, in January of last year, Carter sent a budget estimate to Congress that showed the fiscal 1980 deficit had ballooned -- and there was still no credible anti-inflation policy to deal with it. After one abortive attempt to do something short of controls (the "real wage insurance proposal in 1979), the administration didn't try again.
By this time, Barry Bosworth at the Council of Wage and Price Stability, who earlier had opposed controls, felt it was necessary to have some kind of emergency stop-gap program. Except for Eizenstat, there was no support.
Carter's budget document last year made his forecasts for the fiscal 1981 deficit totally unbelievable to financial markets, and that in turn triggered the shocking run-up in interest rates. By midyear, there had been three Carter budgets -- one promising a balance, another a deficit of $30 billion. (The latest guess is that the fiscal 1981 deficit will be $60 billion).
It is little wonder that one of Reagan's commitments is for a stable economic policy -- one that he will announce early and stick to. He may do no better than Carter did. Consistency, moreover, is not always a virtue, but Carter's total inconsistency on economic issues may have been his worst vice.