The Carter administration intends to shift the center of its economic decision-making process from a formal White House organization to an informal Cabinet-level group.
The plan was disclosed yesterday by Charles L. Schultze, whom President-elect Jimmy Carter has nominated as chairman of his Council of Economic Advisers, at a meeting with Washington Post reporters and editors.
Schultze said he and Treasury Secretary designate W. Michael Blumenthal will direct a "working group" of top Carter economic officials. This group will replace the White House based Economic Policy Board (EPB), which now coordinates the administration's economic decision making and which Carter plans to scrap.
The move will abolish about 45 jobs including the entire Council on International Economic Policy (CIEP). While members of the "working group" will be essentially the same as those on the EPB, the group will do its own staff work rather than rely on that of a White House counselor.
Carter had said, in announcing Schultze's appointment last Dec. 16, that the former Brookings Institution economist would be "the senior person" in deliberations on economic issues and that there would be no separate economic adviser on the White House staff.
But what Schultze made clear yesterday is that the Carter administration will abandon the entire elaborate machinery of formal preparation of "option papers" under the direction of a White House staff.
The Carter policymaking process. Schultze said, "will be less formal," and will attempt to coordinate not only the various elements of domestic policy but to link them with foreign economic considerations.
The policymaking committee, run by Blumenthal and Schultze, will include representatives of the Office of Management and Budget and the Commerce, Labor, and State departments. In contrast to the EPB, it will not meet every day, and will draw "on a small secretariat" provided by these agencies, Schultze said.
It appears to be an expansion of the "Troika" system of the Kennedy Johnson years, involving the Treasury Secretary, CEA chairman, and budget chief.
The "Troika" was later enlarged by one to a "Quadriad," to include the chairman of the Federal Reserve System. Schultze indicated that Fed Chairman Arthur F. Burns would be consulted regularly, and that depending on the subject to be discussed other agencies would occasionally be brought into the "working group."
Ford's EPB, representing eight agencies including the White House, is chaired by Treasury Secretary William E. Simon, with L. William Seidman, assistant to the President for economic affairs, acting as executive director.
Seidman has had a staff of eight or nine, including four professionals, and also drew on the CIEP staff of 35 to 40. Both EPB and CIEP will be abolished by Carter, Schultze said.
Seidman's deputy, Roger Porter, said yesterday that "if they abandon the [EPB] system, it will be a mistake." He said that if the Carter advisers want to present to the President a variety of well-articulated views, "they will have to have an honest broker at the center."
Porter said that even with the EPB and CIEP staffs, "most of the work" was done by Treasury, OMB, and other agency personnel.
Other sources revealed that President Ford himself was preparing to recommend an end to the CIEP, an agency which was supposed to be coordinating foreign economic policy.
Schultze said that for all of the intricate mechanics of the EPB system, involving preparation of policy papers, daily discussions, and revision of the proposals prior to weekly meetings with the President, the Ford administration did not have a unified economic policy.
"The EPB didn't bring foreign and domestic policy considerations together," Schultze said. "The EPB would meet, and then [Secretary of State Henry] Kissinger and Simon went on different routes."
The Carter system, he said, would depend on compatible working relationships among the principals, and Carter's enforcing a rule of "no end runs."
Schultze reported that he had named Brookings economist Barry Bosworth to the staff of the CEA, but had not yet chosen the other two members of the council. He said he did not favor designating one of the council posts as a "public interest" slot, where so-called new alternatives could be explored.
A group of liberal Democrats, in combination with Ralph Nader's consumer organization, had been urging such a move by the appointment of Gar Alperovitz, an economist with the Exploratory Project for Economic Alternatives, located in Washington.
Schultze said, "You do want to get people tolook at longerterm alternatives," but he saw no need to put one member of the council to wrok exclusively on that subject.
Schultze said criticism of the Carter stimulus program as inadequate failed to take into account that it is easier to beef up a program that proves to be too small than to try to taper down a program that turns out to be excessively stimulative.
Counting the "multiplier" effect of the proposed tax rebate, he estimated, "the annual rate of the stimulus will be around $20 billion" in late 1977 or early 1978. That is more than most economists have calculated, he said.
The AFLCIO and economists ranging from conservative Paul W. McCracken to liberal Walter W. Heller have called the Carter package too small. Schultze refused to say whether his won recommendation to Carter has been for a larger stimulus.