Oh, the uses of adversity! In Washington the sound of the falling stock market was muffled by the scramble to reap political profit from financial failure. Almost everyone claimed that the market's rapid decline proved he had been right all along -- about something or other -- and that the market was ''calling'' for just what he had already suggested.
Those who always ''knew'' that big budget deficits would lead to ruin were convinced now of how right they had been. Those who had chiefly worried about trade deficits saw confirmation of their views in the foreign markets' fall. Partisans of a stable dollar congratulated themselves for having taken prudent measures to insulate our currency against such volatility, while their opponents warned of just the opposite. Everyone sought to use the problems and fears created by the market's slide to extract from the Reagan administration concessions they previously had found difficult to win.
By week's end, several theories had emerged on what had happened, what caused it, who was to blame and what should be done to remedy the situation.
Congressional Democrats generally saw the crisis as profound, expected worse to come and believed it was all a clear result of Ronald Reagan's big deficits, low taxes and ''cockeyed'' supply-side economic policies. The solution, they argued, was to give more power to the Democratic Congress and pay more attention to the Democratic agenda. They moved quickly to demand and receive a long-sought face-to-face meeting with the president, during which they sought and perhaps extracted assurances that Reagan would consider tax increases as part of the search for deficit reductions.
At week's end, the caution of experts that tax hikes might precipitate a recession weighed less with Democratic leaders than their longstanding conviction that higher taxes are necessary. House Speaker Jim Wright said the ''acid test'' for the administration would be its willingness to consider $12 billion in tax increases. ''Surely if they're not willing to accept that much, they're not serious,'' he said.
As usual, the administration's view of the situation was muddied by internal disagreement. The president doubted the long-range significance of current market movements and wondered aloud whether the market's decline was because ''the market overpriced itself and is now making a corrective change.'' Reagan doesn't believe that big deficits caused the precipitous decline or that higher taxes would have averted it. But he thinks he knows who's to blame: the Democrats with their habit of sabotaging his budgets and pursuing the policy of ''spend, spend, spend'' on domestic bureaucracies.
The president strongly doubts that higher taxes are what the market is ''calling for,'' and he is as disbelieving as ever that traditional Democratic approaches promise anything but inflation and recession.
Treasury Secretary James A. Baker has responded to the crisis (which his comments helped to precipitate) in a characteristic way: by attacking in the press administration colleagues, especially White House budget director Jim Miller. Baker has dusted off his old scenario about the struggle between ''purists'' who share the president's views and ''pragmatists'' like himself who would rather switch than fight -- about anything. Though Baker has offered no explanation of what caused the stock market decline, his behavior invites the inference that he shares the Democrats' views about both the causes and the cure.
Naturally I have my own views about these questions. I, too, feel sure the stock market proves I was right all the time: confidence counts. It caused the dollar to rise one week after Ronald Reagan's 1980 election and the market to rise with an expanding economy. Declining confidence, divided government, harsh polemics and the erosion of presidential authority have taken their toll -- just as I always knew they would.