Treasury Secretary Donald Regan and Federal Reserve Board Chairman Paul Volcker remained steadfast today in their differences over monetary policy.
But Regan issued what he termed a "clarification" of remarks published last Sunday in an interview with The Washington Post, an interview Volcker called an "unusual public communication by the secretary of the Treasury." Both men were here to address the American Bankers Association annual meeting.
Meanwhile, in Washington, sources said that a group of four top administration economists -- Lawrence Kudlow in the Office of Management and Budget, Jerry Jordan of the Council of Economic Advisers and Treasury Undersecretaries Norman Ture and Beryl Sprinkel -- drafted a statement Tuesday, for use by White House spokesmen, that essentially backed the Federal Reserve's policy of keeping slow, steady growth in money.
Speaking to reporters before his talk at the ABA convention, Volcker said he had received no communication from "the administration per se" about any disagreement over policies for tight control over money and credit growth.
The central banker then mentioned Regan's interview with The Post. "I thought it was unusual," he said of the Treasury secretary's statements, "but not unprecedented" -- a reference to criticism of Fed policy by previous administrations.
Volcker said he was unmoved by any suggestion that the Fed should loosen its policies. Volcker emphasized repeatedly his view that previous attempts to conquer inflation have failed because "those efforts were not pressed strongly enough, or long enough, to turn the tide."
A "sense of retreat would not only aggravate the present problems, but could set back the prospects for restoring growth and stability for years to come," Volcker said. "Let me not leave any lingering questions in your minds. The Federal Reserve has no intention of backing away from its commitment to reduce inflation by restraining and disciplining the process of money creation. We intend to see it through."
Another time he said, "Clearly we have not won the battle yet."
Enter Regan. Last week, the Treasury secretary told The Post the current "flat period" in the economy may be a recession and that therefore, "a change has to be made" by the Fed in its money-supply reins to permit economic growth. Regan repeated that message today.
Regan said he is not advocating "easy money." But, when asked by a reporter if he had been misquoted, Regan stuck by his earlier statements to The Post, in which he called for the Fed to aim at slightly more rapid money-supply expansion.
The statement from the four administration economists said, "A steady, slow rate of money growth, in contrast to the excessive pace of recent years, continues to be a necessary objective of the president's economic recovery program. The Federal Reserve has moved in this direction, and our support for this trend remains strong." It added that the authors wished "to emphasize that nothing which has been said in recent days indicates a retreat from that commitment."
In his talk to the bankers, Regan said the administration is not "retreating from our call for a slow, steady monetary policy . . . only expressed the position in the interview that the Fed must be careful at this point to stay with their monetary growth policy . . . That means the Fed will have to be alert.
"I stress this clarification because the quickest way to prove that the nay-sayers are right is for this administration to do what others have done again and again -- buckle under the heat," Regan then added.
Finally, to a round of applause from several thousand bankers, Regan said the administration will stick by its tax and budget policies.
"We have no intention of deleting, delaying, or backing off from the three-year, 25 percent tax rate cut . . . the deficit must be brought down to its target level of about $43 billion in fiscal year 1982 and toward balance in fiscal year 1984," he said.
Regan claimed his views about Fed policies are no different from what he says in private to Volcker, at meetings every week.
Subsequently, when asked how the administration would "insist" that the Federal Reserve loosen its money-supply reins, Regan said he would use "verbal power," leaving the impression that the two officials remained somewhat at odds despite efforts to emphasize agreement on monetary and fiscal policies.
The bankers, whose convention ended today, elected Manufacturers Hanover Trust Co. Vice Chairman Llewellyn Jenkins as their new president. The New Yorker took over from Lee Gunderson, president of the Bank of Osceola in Wisconsin.