A clue to future administration strategy against inflation is the fact that Robert S. Strauss was named President Carter's jawboner-in-chief without the advice and consent of an understandably miffed Treasury Secretary W. Michael Blumenthal.
Blumenthal thought the notion of an anti-inflation "czar" had been killed by the president two weeks earlier. What he did not know was that the influential circle of non-economists now advising Carter on economic policy - Vice President Walter F. Mondale plus senior White House aides - at the 11th hour talked the president into naming Strauss "special counselor on inflation."
That Strauss's main task will be jawboning against higher prices and wages underlies Carter's intention: talk inflation to death - a dubious strategy in the opinion of many economists, including Blumenthal. It also positions Strauss, the millionaire lawyer-politician, to pass Blumenthal, the millionaire businessman-economist, as the president's top economic operative.
The explanation of Strauss's rise is his pattern of success, particularly visible in an administration where failure has been conspicuous. Blumenthal is blamed inside the White House for talking down the dollar last year and for not forecasting resurgent inflation. While Strauss robustly leads cheers for the president, Blumenthal sometimes seems less than ecstatic about the glories of Jimmy Carter.
Although Strauss cannot approach Blumenthal in economic or business expertise, he commands more confidence in the business community. The mood there was reflected in a March 6 presentation to his Wall Street brokerage firm by economist William H. Janeway. Contending that Blumenthal "is quasipublicly criticizing Carter himself all over Washington and around the world," Janeway said the new Washington "focus" should be on Strauss.
Strauss was one of two prototypes suggested as anti-inflation czar nearly two months ago in a White House memorandum drafted by Henry Owen, economic specialist on the National Security Council staff (the other prototype was former labor secretary John Dunlop). The Mondale - White House staff group, fearful of consigning anti-inflation policies to the economists, liked Owen's idea. Blumenthal naturally screamed. When the option paper came to the president just before he left for Venezuela, he checked the box marked "no".
With that annoyance behind him, Blumenthal moved to other battles - winning some, losing some. He persuaded Carter to make a bigger fuss over inflation than the Mondle - White House group originally wanted. But he failed to get a presidential pledge for a lower budget deficit or a presidential delay on the highly explosive national health plan.
Meanwhile, Strauss scored a considerable public victory. He put on a virtuoso solo performance in forcing big steel to roll back its original price increase. Following successful jawboning of coal operators, that persuaded the White House that the talents of Trade Ambassador Strauss should not be limited to haggling with the Japanese over color television sets.
There was presidential staff talk about moving Strauss into the Executive Office Building next door to the White House to involve him more closely in decision-making. Instead, Henry Owen's czar scheme was dusted off. Why not give the job to Strauss, but limit it to jawboning?
On Monday afternoon, April 10, less than 24 hours before the president's anti-inflation speech, Strauss-for-czar was presented to Carter by Mondale and White House aides Hamilton Jordan, Jody Powell and Stuart Eizenstat. The abstract concept the president had rejected on paper was suddenly endorse by him as a flesh-and-blood job for Bob Strauss.
Nobody told the secretary of the treasury. To his intense embarrassment later, Blumenthal could not mention the Strauss appointment to economic reporters he briefed on the president's speech Monday night; not until Tuesday morning did the White House inform Blumenthal.
Such embarrassment could be repeated in the future. Although the White House says it intends Strauss to be solely a jawboner, others in the administration feel he will invevitably evolve into economic coordinator close to Owen's original concept. Strauss has never matched Carter in enjoying Cabinet government and would love to get Cabinet-level departments marching to the same economic drummer.
"Well, Bob finally has a challenge big enough for him," a friend says with only mild facetiousness. It may, in fact, prove too big. With Blumenthal unsuccessful in slashing the budget, Strauss's jawboning will be the major weapon against inflation. That could make his fabled miracle of reviving the Democratic Party after the 1972 debacle look like child's play.