The best thing that a number of leading economists have to say about Lawrence B. Lindsey's views on monetary policy is that they do not know anything about them.
Nonetheless, the 36-year-old Lindsey, a champion of supply-side economics and a member of the White House staff, has emerged as the leading candidate for the vacant position on the board of the Federal Reserve Board, which sets short-term interest rates, controls the nation's money supply and oversees the U.S. banking system.
The post would be a plum for the former non-tenured assistant professor at Harvard University, whose career has been distinguished more by his policy role in advocating tax cuts than by his work in academic economics.
In fact, his unorthodox background may be exactly what propels him to the seven-member board of the Fed. Administration sources say that Treasury Secretary Nicholas F. Brady, who initially favored a business executive, has opposed the nomination of more distinguished academic economists, while Lindsey's supply-side views have won him the support of John Sununu, the White House chief of staff.
Lindsey's prospects might also be enhanced by his steady support for deep cuts in the capital gains tax rate, an issue near and dear to the heart of President Bush.
As a graduate student at Harvard in the late 1970s, Lindsey was a prote'ge' of Martin Feldstein, who became chairman of President Reagan's Council of Economic Advisers in 1981 and who took Lindsey to the council as a researcher.
Lindsey returned to Harvard and completed his dissertation in 1985. It argued that cutting income tax rates raises revenue and increases work incentives for Americans who earn more than $200,000 a year. Opinions of the paper vary widely: Although it won a prize from the National Tax Association, some leading academic economists have challenged its methodology.
While at Harvard, Lindsey also became acquainted with Roger Porter, now assistant to Bush for economic and domestic policy. Porter brought Lindsey to the Bush White House as his special assistant for economics. From that post, Lindsey has disparaged last year's budget deal, which included tax increases to reduce the burgeoning federal deficit. His main responsibility has been to work with the competitiveness council headed by Vice President Dan Quayle.
Word of Lindsey's possible nomination has dismayed many economists who had hoped that Bush would name an expert on monetary policy during a critical time for the economy and the nation's banks. Most favor Council of Economic Advisers member John Taylor, whose candidacy was initially promoted by CEA chairman Michael J. Boskin.
Lindsey's recent book on tax policy, "The Growth Experiment," has drawn critical reviews.
In the book, Lindsey attacks what he calls profligate politicians and asserts that the 1981 tax cuts "contributed only trivially to the booming deficits of the '80s." Instead, he says that the tax cuts of 1981 were the "prime force" behind the economic expansion that began at the end of 1982, "simultaneously subduing inflation and reducing the burden of government on American businesses and families."
He also asserts that the Fed's interest rate and money-supply policy did little to reduce inflation in 1982.
"He takes the view that the inflation of the early '80s was broken, not by tight monetary policy, but by tax cuts reducing costs of production," said Rob Shapiro, an economist at the Progressive Policy Institute, a think tank. "I'm sure that will lead to many interesting discussions at board meetings," he added wryly.
Henry Aaron, a senior fellow at the Brookings Institution, a nonpartisan research organization based in Washington, called it "an excellent tract, but it is wanting as policy analysis."
"He is an unreconstructed supply-sider," said Joseph J. Minarik, executive director of the congressional Joint Economic Committee. "He has a lot of interesting rhetoric in there, but when it gets down to the numbers and if you compare his models to what happened, he's way off."
Many economists say, however, that Lindsey may be a better economist than many other people who have been named to the board of the central bank. They also note that Manuel H. Johnson, another supply-sider who became the Fed's vice chairman, was initially viewed as a weak choice, but that he later earned respect at the Fed.
Lindsey's supply-side views provide little clue to his monetary policy views. Many supply-siders favor a loose monetary policy of easy credit. But a splinter group of supply-siders believe tax cuts alone should be used to spur the economy while maintaining a tight monetary policy.
One administration official says that "he's not going to be a 'let's jump on the accelerator' type of guy,' " but he will be more inclined to lower interest rates and increase the money supply than the two most cautious members of the Fed's rate-setting Open Market Committee, H. Lee Hoskins and Robert T. Parry.