A PRESIDENTIAL candidate's economic projections constitute a weighting of future risks. They represent his intentions, and reflect the dangers that he's prepared to run in pursuing them. The astonishing thing about Mr. Reagan's published projections is their inescapable implication of high and sustained inflation.
They are based on calculations by the Senate Budget Committee, which, unlike Mr. Reagan and his advisers, has stated the accompanying inflation estimates explicity. They show the Consumer Price Index rising 10.9 percent in fiscal 1981 -- that's the year starting next Wednesday -- and 9.8 percent in fiscal 1982. It would be nearly three years, in this scenario, before the inflation rate sank below 9 percent. The committee, incidentally, assumes no tax cut in 1981. Mr. Reagan, in contrast, has pledged a big one beginning in January. Since Mr. Reagan's figures also show taxes cut more heavily than spending, his budget deficits would be larger than those foreseen by the Senate committee. It follows that his inflation forecasts must be higher than the committee's.
Last Friday, Mr. Reagan's chief economic adviser, Alan Greenspan, said at a press conference that he does not accept the Senate Budget Committee's inflation figures. A Reagan administration's goals would be somewhat lower, he suggested. But when Mr. Reagan himself was asked about the inflationary consequences of his economic program in the Sunday evening debate, he referred back to that same Senate Budget Committee report and its figures.
The committee assumes a high rate of growth for the national economy -- an unrealistically high rate, we think. That growth rate is useful to Mr. Reagan and his advisers in their effort to demonstrate that they can both cut taxes and balance the budget. But if they use the Senate committee's growth rates, they cannot avoid responsibility for the inflationary implications that the committee prints in the same tables. It is a fair summary of Mr. Reagan's arithmetic to say that it suggests inflations remaining well over 10 percent throughout most of the next presidential term, with the economy meanwhile expanding in high prosperity.
That, of course, is not possible. People react to sustained inflation in ways that make it much worse. Interest soars, wage settlements rise and the dollar falls. A financial crisis would bring an abrupt end to the whole experiment, tax cuts and all.
Republicans point out, altogether accurately, that in 1976 Mr. Carter promised a balanced budget, lower taxes and less inflation. Through a combination of bad luck and bad judgement, he will succeed in none of the three. But it is hardly an improvement to have Mr. Reagan now promising extremely large tax cuts while sedulously ignoring the obvious inflationary consequences.