A story in yesterday's Business section incorrectly stated the rank of Commerce Department undersecretary, the post for which Robert Ortner has been nominated. The No. 2 position is deputy secretary, held by Clarence J. Brown.
On the eve of the 1982 seven-nation economic summit, then-secretary of the Treasury Donald T. Regan and others in the Reagan administration attempted to whip up sentiment that the severe economic recession had ended.
But Commerce Department chief economist Robert Ortner was telling reporters a different story.
The index of 10 leading economic indicators released that morning demonstrated that the recession wasn't over, Ortner said.
"Half of the indicators were up and half down," Ortner said, "and from my personal point of view, the wrong ones were down."
And Ortner, in his usually blunt fashion, turned out to be right. The recession went on for another six months.
On an economic team headed by a president called "the Gipper," Ortner refuses to be a cheerleader and at times calls his own plays. Despite this sometimes troublesome tendency, Ortner recently was nominated to become undersecretary of Commerce, that agency's number two job and an even-higher-profile position that will lend still greater weight to his economic pronouncements.
"I have never been told by Secretary Malcolm Baldrige to shade my comments or put a happy face on numbers," Ortner said. "The only thing Baldrige has suggested to me is possibly that I might like to keep in mind when the president is at an economic summit, Regan is there and Baker, I might be careful about what I say so that I do not inadvertently disagree with them."
Ortner's confirmation has been on hold for almost a month at the request of Sen. Robert W. Kasten (R-Wis.), whose office said the senator had "absolutely no problem" with Ortner's appointment. Sources said he is holding up Ortner's confirmation because he wants the Commerce Department to award a $1 million grant for a marina development project in his home state.
Ortner had no comment on the delay.
Ortner said he is able to get away with his public disagreements with other members of the administration because, as one of the people chiefly responsible for most of the nation's major statistics, "We try to tell it like it is."
For example, the administration had insisted, even before the dramatic drop in oil prices, that the economy would grow at a 4 percent rate this year, although most mainstream economists had said that if it reached 3 percent, the administration would be lucky.
Ortner said during an interview in his office that he was "skeptical about 4 percent this year. The drop in oil prices is good, but the oil industry is pulling back before consumers pick up the pace." Four percent growth "looks more likely now than when" the administration first made the forecast late last year, he added, and private economists agree.
"I think we have an extra responsibility here. We are a statistical agency. We have a responsibility to maintain the integrity of the data," Ortner said. In his new position, he has no plans to change, he said.
"We had a reputation for spouting an independent line," said Robert Dederick, the former Commerce undersecretary who hired Ortner and who now is chief economist for the Northern Trust Bank in Chicago. "People tended to look askance and say, 'Why are these people over there saying these things?' "
"Bob likes to talk a lot," Dederick continued. "The more you talk, the more you tend to say things that are outspoken."
Dederick should know. He, Regan and just about every other economic policy maker in the Reagan administration once had to disown Ortner's remarks that, amid signs the recession was deepening, the Federal Reserve Board should raise money-growth targets to give the economy a boost. Ortner was the first administration official to criticize the Fed's long-range policies.
Ortner came to Washington and the Commerce Department five years ago, leaving a job as chief economist and senior vice president for The Bank of New York, where he studied economic policy and related it to economic forecasting for the bank.
At a time when the Treasury Department was being filled with supply-side economists such as Norman Ture and Paul Craig Roberts, the Commerce secretary was interested in an economist who "was top ranked and an economist who was not married to any one economic theory, an economist who would take a look at the real world," a spokesman for Baldrige said.
"I'm not saying we're not supply-side," the spokesman added, "because we are. Some economists solve economic problems with the money supply and nothing else. In the business world, it's everything." Baldrige, who came from a business background, "wanted advice that took in all the spectrum," he said.
Baldrige settled on Ortner, described by his peers as eclectic.
When asked why he accepted the job, Ortner shrugged his shoulders and replied, "Whatever the reasons were, it was not for the money."
"He's a very solid economist, with well-balanced views," said Allen Sinai, chief economist for Shearson Lehman Brothers, who knew Ortner when Sinai worked for Data Resources Inc. "He's very solidly based as a business economist. He's not doctrinaire."
"The word 'eclectic' means drawing form different areas," Ortner said. "Economics is an empirical science basically. One should use theories that work.
"Almost every theory has worked at one time or another," Ortner continued. "All of them are useful. I'm very happy to draw upon monetarist and supply-side theories and even, I hesitate to say, Keynesian theories. It's important to be flexible. One has to be careful that one makes recommendations that have a good chance to work."
Monetarist economists stress the importance of the money supply on economic activity; supply-siders argue that business and investors respond in significant ways to changes in incentives such as lower marginal tax rates, and Keynesians say fiscal policy is a major tool for stimulating economic activity.
As chief economist, Ortner studies the economic data, contributes to economic policy decisions and makes economic forecasts. He also prepares materials for Baldrige and keeps the secretary up to date on the economy with daily reports that Ortner says "might be the equivalent of term papers."
Ortner's new responsibilities will be more administrative, but he said he would like to incorporate many of the chief economist's duties into his new role.
Ortner is known in the concrete maze of the Commerce Department as a quick wit and jokester. He has been accused of helping write press releases for Baldrige and then saving the best quotes for himself when talking to reporters.
"I agree with President Eisenhower's philosophy: One should take one's job seriously but not necessarily oneself," Ortner said.
"There have been some occasional rough spots," he said of his outspoken ways. "The only way to have avoided all possible questions and criticism is to say absolutely nothing. My job is to comment on economic data, and occasionally and inadvertently there's some shading of difference in comments by me and members of the administration."