President Reagan said yesterday that "not a thing" bothered him about the performance of Federal Reserve Chairman Paul A. Volcker, reiterating that "we just haven't considered" whether to reappoint Volcker when his term expires this summer.
However, getting rid of Volcker might be a good political move, Treasury Secretary Donald T. Regan hinted to a separate group yesterday.
Regan was asked at a meeting with reporters whether it would help Reagan to appoint a new Fed chairman now that the economy is recovering, leaving the blame for the recession with Volcker, a Carter appointee. "That's good political thinking," the Treasury secretary replied, adding with a laugh, "but I'm not a politician."
After a spate of speculation that a majority of White House officials favored a new Fed chairman, Reagan moved last week to squelch rumors about Volcker's departure, saying he had personally reassured the Fed chairman that he had neither considered the matter nor decided against reappointing him. This cheered some of Volcker's backers.
Yesterday, Reagan said, "There has never been a discussion in the White House about this . . . we just haven't considered it." The president's comments have not stopped the rumors, though.
Regan appeared yesterday to rule himself out of the running for Volcker's job, saying that he was "absolutely not" a candidate. Asked if he might consider the job under any circumstances, the Treasury secretary said "perhaps if I were flogged in public."
He also downplayed suggestions that replacing Volcker might upset financial markets, pointing out that previous well-respected Fed chairmen, such as William McChesney Martin and Arthur Burns, had been replaced in the past without undue turmoil in financial markets. If Volcker were replaced by a "strict disciplinarian," financial markets would not worry about future inflation, Regan said.
The Treasury secretary warned that the recent Senate bill to postpone withholding on interest and dividends, passed after a huge campaign by the banks to repeal the law to introduce withholding in July, would be extremely burdensome and lead to a "nightmare of bureaucracy." Upon analysis, the banks may find that the Senate bill "will prove to be worse than withholding," he said.
It will "turn the IRS loose in a way that most people don't want the IRS turned loose," by requiring banks to withhold automatically on accounts of those taxpayers discovered to be misreporting who do not respond adequately within 45 days to the IRS query. Financial institutions would have to check each new account name and taxpayer number against a list of misreporters, Regan said. He and the president "are still opposed to doing away with withholding," he said. The Senate voted 91 to 5 to postpone the withholding.
He also inveighed against Congress for rejecting Reagan's budget proposals, saying "we're trying to point out to the Senate . . . we don't agree with them at all." Large budget deficits in the future are the "greatest threat" to the nascent economic recovery, Regan told reporters. "We can have 17 Paul Volckers in charge of the money supply, but" if the deficit continues at its present level, "we're not going to get interest rates down."
Despite his strong words about the deficit, Regan ranked narrowing the budget gap fourth on a list of fiscal priorities that he gave reporters in answer to a question. He put domestic spending cuts first; increasing defense spending "somewhat" second; and preserving Reagan's tax cuts and resisting tax increases third. If the first three were done, the deficit would automatically fall, he said.
Congress should now concentrate on formulating a budget for 1984 so that agencies and departments could start to plan, Regan said. He strongly criticized the budget process, complaining that "I've been here for 2 1/2 years, and submitted three budgets and not one of them has passed" in its original form. He said that the president was at the moment preoccupied with international affairs.