In the struggle for Ronald Reagan's ear and brain, some of his earliest supporters are disaffected. Styling themselves "pro-growth" because they favor a bold, sweeping program of deep, permanent cuts in tax rates, they warn that Reagan is being "Thatcherized."
That is, the pure "supply-siders" suggest that if Reagan turns instead to a policy of austerity emphasizing spending cuts and high interest rates, the United States will meet the same disaster that has befallen England under Prime Minister Margaret Thatcher.
The unreconstructed ultraconservatives brush off assurances from George Shultz, chairman of Reagan's economic policy committee, that the president-elect is sticking to the Kemp-Roth tax-cut proposal calling for three consecutive 10 percent slices in personal tax burdens, beginning in 1981. They suspect he'll go for the first Kemp-Roth stage in good style, but be "flexible" when it comes to the later years.
In this context, "flexible" means that Reagan would pare back the intended reductions, especially in the upper brackets. "It all depends on whom Reagan appoints not only to the Cabinet jobs but to the sub-Cabinet, where policy is carried out," said one of the early -- and increasingly disaffected -- Reagan supporters. "The real danger is that Reagan may lose his tax policy during the transition."
This supporter fears that Reagan will rely on Ford and Nixon "retreads" like Shultz, Arthur F. Burns, Charls Walker, William E. Simon and Alan Greenspan as the big wheels in the new administration. "If these guys get the top jobs," he said, "they'll invent 10,000 reasons why deep and permanent tax cuts ought to be stifled or watered down."
Nonsense, Reagan aide Caspar Weinberger told me in a telephone conversation. "Reagan will fight hard for Kemp-Roth, and I think he'll get it," Weinberger said. Another Reagan aide, one of the "retreads" who participated in last weekend's top-level discussion in Los Angeles, said: "The crazies not only are paranoid, but they misrepresent the facts."
In that session the Reagan economic advisory group recommended to Reagan that he stick with the basic Kemp-Roth proposals, dropping one controversial element that would have drastically lowered the initial tax bite on unearned income, such as interest and dividends. Some Reagan advisers also counseled against indexing tax rates after 1983, on the reasonable thought that this might put the goal of a balanced budget out of sight forever.
"We can make significant reductions in the fiscal 1981 budget," Weinberger told me. "For a long time, we've heard nothing but rhetoric about budget cutting, and the time has come to do something about it. I sense a totally new attitude on the Hill that makes me hopeful."
What really bothers the supply-siders who worship at the Arthur Laffer-Jack Kemp altar is that the "retreads" have what amounts to a lock on the top job assignments. "It's possible that Reagan needed the supply-side issue when he was getting started, and now [that he's won the election] he doesn't need a Jack Kemp," said one of the new guard bitterly.
What the conservatives to the right of Reagan would like, and apparently are not going to get, is a newcomer like New York businessman Lewis Lehrman at the Treasury. Unless all the signs coming out of the Reagan camp are wrong, there isn't a chance that anything like this will happen. Front-runners for the Treasury job include Simon ("He's pushing very hard for it," said an insider), Walker and New York Banker Walter Wriston. (On Capitol Hill, Republican chieftains pray that it's not Simon, who is regarded as arrogant and a poor diplomat.)
Greenspan, who was Ford's Economic Council chairman, has also been mentioned for the Treasury slot. But at least one influential member of the advisory team is pushing Greenspan for the job of director of the Office of Management and Budget.
A black economist on Reagan's education task force, Stanford professor Thomas Sowell, may have the inside track for the CEA job. Also mentioned are former CEA members Paul McAvoy (tough on deregulation) and Burton Malkiel. Milton Friedman, very close to both Reagan and Shultz, apparently will choose to remain in an elder statesman's role rather than move into the CEA chairmanship.
What the supply-siders still hope to see is a CEA slot -- if not the chairmanship -- for Arthur Laffer, originator of the Laffer Curve (the theoretical under-support for the Kemp-Roth bill), or for conservative tax specialist Norman Ture.
The bottom line -- one that the stock market seems to understand -- is that Reagan is going forward with a whopping tax-cutting program, and is still talking budget cuts as if he intends to deliver them. Whether all this is the real answer to moving the American economy forward is another issue. But for the moment, Reagan seems to have convinced everybody that getting Washington's fiscal house in order is the main solution to inflation.