President Carter said at his press conference yesterday that "the main concern" on the economic front is the rate of inflation, "which is tied directly to the degree of responsibility of the federal government in handling excessive spending."
In free translation, this means that a root cause of inflation is the persistent federal deficit - a theory that Democrats have shunned and Republicans, notably former Treasury Secretary William E. Simon, have expounded.
Carter's chief economic advisers have in the past rejected this theory. They have attributed the current rate of inflation largely to relatively uncontrollable factors such as rising food and fuel costs.
On Capitol Hill, unfluential Democratic liberals - who refused to be quoted - said that the carter statement reflects a lack of sophistication about economic affairs. Arthur M. Okun, Brooking Institution economist and chairman of the Council of Economic Advisers under President Johnson, said in a telephone interview:
"I can't believe that any of President Carter's economists told him that the Present inflation rate can in any way be linked to budget deficits."
In an interview on Jan. 19, just prior to taking office, Treasury Secretary W. Michael Blumenthal, told The Washington Post that people "too easily" link budget deficits and inflation.
"We are presently running a bigger deficit than last year," Blumenthal said, "and this year it is historically high, yet we have a falling rate of inflation, still much too high."
An economic adviser to the President said yesterday after reading Carter's press conference remarks that, taken in their entirely, there was no intention to enunciate a change in policy.
The main intent, he said, was to warn Congress that the ability to fund necessary programs in the future was tied to prudence in federal outlays at the present time.
Earlier this week, in an interview with Washington Post reporters and editors, Office of Management and Budget Director Bert Lance said that "the hard decisions" that would assure a balanced budget in fiscal 1981 would have to be made in fiscal 1979.
Nevertheless, Carter's language in a prepared statement at the outset of the conference linking inflation and deficits has not appeared before in testimony or speeches by administration officials.
The traditional Democratic explanation of the large federal deficits of the past few years has been that they are a product of recession, which reduces government receipts and increases expenditures - especially for unemployment compensation. Each extra 1 point on the unemployment index, according to government data, adds about $18 billion to the federal deficit.
Thus, according to standard Democratic economic dogma, budget deficits are the end product of economic malise, not the cause, as Carter appeared to suggest yesterday.
In another part of his statement, however, Carter adhered to the "liberal" line - that is, that government policy should be directed to "a strong economy," one with "high employment," in which "the budget ought to be balanced."
"It sounds," said one outside economist, "like a statement written by a committee - a little bit of this and a little bit of that."