Before publication last week of his doubts about President Reagan's economic program, budget director David Stockman was a key player in the administration's economic policymaking. Now, his influence appears certain to be less.
But who will take his place?
Despite his reservations about Reagan's plan, Stockman was its most articulate advocate on Capitol Hill. Although Treasury Secretary Donald T. Regan has been President Reagan's designated economic spokesman since January, he has demonstrated less concern with the economic issues than either Stockman or Murray Weidenbaum, chairman of the president's Council of Economic Advisers, sources say.
Nevertheless, Regan was on the right side of this fall's fierce internal battle over whether to propose sizeable tax increases to help reduce the huge budget deficits now expected. Urged on by supply-siders in the Treasury Department, he argued against Stockman's proposals for tax increases and won. This victory meant that even before the Stockman storm blew up, Treasury officials were enjoying a rise in their standing within the administration.
Now Reagan reportedly intends to use the Treasury Secretary to present his overall economic view. And senior Treasury officials likely to play a part in formulating that view include both monetarists and supply-siders. For the moment, their philosophies coincide as both camps downplay the importance of shrinking the government's budget deficit. But if monetary policy becomes the center of the economic debate next year, as many observers expect it will, there could be clashes within the Treasury with Regan forced to choose among his aides.
The supplyside group is headed by Norman Ture, Undersecretary for Tax and Economic Affairs. Ture, a former economic consultant, argues the supply-side line that the Reagan tax plan will give an enormous boost to savings and investment, and thus make it easier to finance the government deficit with lower interest rates.
However, insiders contend that Ture is not as fervent a believer in supply-side magic as Assistant Secretary for Economics Paul Craig Roberts, a former Wall Street Journal editorial writer. Roberts campaigned fiercely against Stockman's push for tax increases and recently anticipated President Reagan's complaint that Congress was to blame for the present recession by not cutting taxes more deeply and sooner.
So far, Roberts has won few converts among other administration economists. But the president's commitment to the tax bill, and reluctance to move away from the supply-side promise that inflation can be cured while the economy grows strongly, gives Roberts an advantage.
Ture and Treasury Undersecretary for Monetary Affairs Beryl Sprinkel are staunch supporters of the Federal Reserve's tight money policy. Sprinkel has argued for some time that the budget deficit is a less important factor in controlling inflation and interest rates than monetary policy. He is probably less optimistic about whether the economy can grow quickly in the near term in the face of a very restrictive money policy than is Ture, sources say. He is also more likely to keep supporting tight money, even at the cost of continued sluggish economic performance.
Weidenbaum likes to be described as forging a compromise between opposing views within the administration, sources say. He has argued for a more realistic economic forecast than the optimistic scenario favored by Treasury officials, but opposed tax increases of the size advocated by Stockman, other officials have said. A more traditional economist than many others within the adminstration, he has reportedly shared more common ground with Stockman than Regan on economic policy issues.
Jerry Jordan, who under Weidenbaum is responsible for macro economics and economic forecasting in the CEA, is a strong monetarist. Until now he has worked more easily with Stockman's economic adviser, Lawrence Kudlow, than with Roberts, sources say. He is likely to keep pressing for support of a tight money policy.
Within the White House, domestic policy adviser Martin Anderson has had little impact on economic policy and does not usually take a firm stand in policy debates, officials say.
Reagan has rejected Stockman's fears that the president's economic program of tax cuts, and defense spending increases will lead to intolerably large federal deficits, which in turn will send interest rates higher again as soon as the economy begins to recover next year. But many economists believe that the president and his economic team will have to face this dilemma eventually, even if the chief worrier is not at the forefront of policy making.