Toward the end of Tuesday night's NBC presidential debate, George Bush delivered a discourse on monetary policy blithely unaware that he was setting a budget trap for himself that will be sprung sometime during the presidential campaign.
Rep. Jack Kemp, fighting to catch up with front-runners Bush and Robert Dole, posed an intentionally provocative question: since the administration-backed ''budget compromise'' had certainly not prevented the dollar and stock market from falling a day earlier, what would Bush do about it as president?
Unlike the rest of the vice president's careful words in the debate, his answer here startled those who understood it. Bush said the falling dollar was a ''fiscal'' problem, adding: ''I don't think the government ought to try to set the value of the dollar vis-a`-vis other currencies at all. I don't think we ought to say the dollar is so much and the yen is so much. I think we're going to see our exports go up.''
The significance was lost on ''spin doctors'' who crowded the Kennedy Center stage after the debate to influence reporters. It was lost even on Bush's own political aides. In effect, he was advocating a free fall of the dollar to fight the trade deficit, restraining its impact by a tight budget policy.
That runs counter to backstage efforts by the vice president's friend and former campaign manager, Treasury Secretary James Baker. Baker wants to convene finance ministers and central bank heads of the seven leading industrial democracies (G-7) before year's end to carve out a new informal monetary accord setting ranges for currency exchanges. Since that is what Bush said should not be done, an explanation is surely required.
But that is not the real trap he set for himself. How can Bush rule out a monetary solution for the dollar and limit himself to the budget when he also has ruled out any tax increase, a central tool in fiscal policy? His answer is his call for a ''line-item veto,'' but that escape route is one that neither Kemp nor Dole will permit, much less the Democratic candidates.
William Brock, Dole's new campaign manager, believes that Bush made a serious mistake when he joined Ronald Reagan's edict against tax increases. True, Dole puts himself in danger of violating the primal Republican commandment of thou-shalt-not-tax. But Bush's stand could become no less dangerous for him if he insists the cure for the dollar lies in a fiscal policy that rules out higher taxes.
Kemp's advisers could not believe it when the congressman recently told them he had read somewhere of Bush's views supporting a free-falling dollar. Kemp accurately predicted Bush would admit as much if he were asked in the debate. But where does Bush get his monetary views? If they sound suspiciously similar to Harvard professor Martin Feldstein's, it is no accident, because his advice has been frequently sought by Bush.
That is truly astonishing considering Feldstein's 1984 departure from Washington after a turbulent two-year hitch as chairman of the Council of Economic Advisers. There was dancing in White House halls. Not only had he advocated tax increases, but contrary to usual practice he continued to do so after the president said no, no, no.
Whether he realizes it or not, Bush has gotten himself in a hard dilemma by accepting half of Feldstein's formula and rejecting the other half: he accepts a dollar drifting down to 120 yen or lower, but rejects Feldstein's higher taxes.
That apparent confusion mirrors Jim Baker's own shakiness. Piqued by German refusal to lower interest rates, the secretary last month talked down the dollar and sent markets south; now, he is trying to stitch together a new G-7 pact. He privately derides as pathetic the congressional budget ''compromise'' that Bush praised so fully. But the secretary needs it as a display of U.S. re-solve for other G-7 nations to getthe money accord Bush decried. Indeed, the Nov. 30 dollar-and-stock plunge was attributed to fear by the markets -- where Bush is now placing his faith -- that the G-7 might not meet.
The Federal Reserve Board under Chairman Alan Greenspan (a longtime Bush adviser) is committed to a stable dollar. Fed governor Wayne Angell has proposed basing monetary policy values on a basket of commodities and will release his plan Dec. 10. Finally, the president went on record for stable currency when the dollar was collapsing.
That George Bush, steadfast soldier through Iran-contra, should abandon his president on the dollar is more like economic blindness than apostasy. His antitax, anti-intervention posture may have been intended to imitate the Great Communicator, but it baits his budget trap.