Treasury Secretary W. Micheal Blumenthal fears that White House chief of staff Hamilton Jordan will politicize the administration's economic policies, according to friends and associates.
Blumenthal reportedly is afraid this will happen after a brieft honeymoon for Blumenthal's successor, Federal Reserve Chairman G. William Miller.
Blumenthal, supposedly President Carter's chief economic spokesman, had so despaired of producing a "decent" economic policy for the balance of Carter's term, it was said, that he would not have stayed on had he been asked.
According to these reports, Blumenthal acknowledges that the president's economic instincts are good, based on a correct and conservative approach, and that Miller is the best possible appointee for the powerful Treasury job. In fact, Blumenthal recommended Miller to Carter last year for the Federal Reserve chairmanship.
But how it will work out now, with Jordan in an enhanced role, remains in doubt, because, in the Blumenthal view, Jordan will be calling the shots, and he does what he thinks is politically best -- whatever pollster Patrick Caddell tells him.
Coincidentally, it was learned that before Carter turned to Miller, he offered the Treasury job to two Republicans -- David Rockfeller, chairman of the Chase Manhattan Bank, and Reginald Jones, boss of General Electric. A year ago, before naming Miller to the Federal Reserve post, Carter had offered it to Jones.
Blumenthal is said to think that Miller initially will get substantial backing and authority from the White House. But he is known to feel that the Jordan-Miller relationship is bound to be put to a severe test, and that if there are not some strains and struggles, somebody will not be doing his job.
In his own tenure as treasury secretary before being ousted in last week's Cabinet shakeup, Blumenthal reportedly felt there were periods when he was distracted by controversies with the White House while he was trying to deal with potential panic in financial markets,. In effect, he has told friends, he had to fight in two directions. This reportedly was the circumstance that led him to conclude he could not stay on, whatever the president decided.
Blumenthal's bitterness about Jordan doesn't extend to President Carter whom he admires as dedicated and sincere.He reportedly wishes that his relationship with all of the White House staff had been as good as his relationship with Carter.
Blumenthal intends to be circumspect about critizing the president and his policies, though there were subtle warnings in a speech Blumenthal delivered in Chicago yesterday to the National Urban League that the president must not surrender for political gain the fight against inflation.
Blumenthal thinks it regrettable that Miller took the Treasury job without any conditions, a mistake that the outgoing secretary is understood to feel that he made at the beginning of his relationship with Carter. When Carter told Blumenthal last week that Miller would be his successor, Blumenthal is understood to have told the president it was important for Miller to play the lead role in economic policymaking, independent of Jordan.
Blumenthal is understood to have had the frankest kind of conversation with Carter about his relationship with Jordan and with press secretary Jody Powell. Carter apparently was equally direct in referring to the "incompatibility" between Blumenthal and Carter's political staff.
Friends say that Blumenthal told Carter explicity, as his parting advice, that Jordan was not qualified to be involved in making econimic policy, advice to which the president reportedly listened without comment. At last Tuesday's Cabinet meeting, according to reports, Carter praised Jordan extensively, recounting the value of his part advice and saying he considered him like a son. But it is understood that Blumenthal considers Jordon naive, inexperienced and a poor politician.
Blumenthal has told the Treasury staff in a breif memorandum that it would be "inappropriate and improper" for them to fill out the now-famous "report cards" devised by Jordan. Having passed that word on to the White House, Blumenthal, it is understood, received word from Jordan's office that Blumenthal would not be required to submit the forms for his staff.
Blumenthal is said to have joked, in reference to this episode, that he has "deep-sixed" the report cards, in an allusion to the Nixon Watergate period.
BlumenthalContinues to insist to friends that there never was a single instance of disagreement between him and the White House on a substantive issue, though that doesn't mean there was no internal give and take in policy debate.
For example, as he made plain in the Chicago speech yesterday, he believes in decontrol of all oil products -- "the sooner the better" -- whereas Jordan and White House economic aide Stuart E. Eizenstat and others think immediate decontrol would be political suicide. At the Camp David meeting a warning by Democratic economist Arthur M. Okun that decontrol of gasoline would push the price to a disatrous $1.60 a gallon appeared to have been a very important factor in the president's decision against Blumenthal's recommendation.
But Blumenthal was not alone. Interestingly, his position was supported by Jody Powell, as well as by Energy Secretary James R. Schleisinger, and in a qualified way by Charles Schultz, chairman of the Council of Economic Advisers.
The way Blumenthal sees it, according to those who have talked to him, his problem with the White House started with his refusal to interfere in the investigation of Bert Lance, Carter's close friend, whose banking relationships came under the scrutiny of Comptroller of Currency John Heimann.
Blumenthal gave orders to Heimann, who is on the Treasury staff, that there be neither a whitewash nor a witch hunt. But the political staff at the White House never could accept that, Blumenthal is thought to feel.