While the bloated Reagan transition bureaucracy in Washington continued its slap-happy ways, Rep. David Stockman journeyed to New York Dec. 18 to begin a mission of profound consequences for the new administration and the nation's economy.
As President-elect Reagan's choice to head the Office of Management and Budget, Stockman was there to get acquainted with captains of Wall Street's great financial houses. But he was also there as head of a new, unannounced Reagan administration "policy coordinating task force," to convince the money men they ought to be bullish on America.
Stockman's is actually the task force dealing with the economic emergency, one transition group whose mission and membership have not been revealed in press releases. Its goal is visible economic improvement -- including a revived bond market -- within 90 days. That length of time, rather than the cliche-worn 100 days, is used to demonstrate the desperate need for action now.
"We are not selling pain and misery," said one Stockman adviser who accompanied him on his daylong journey through Wall Street's board rooms. They were selling hope, based on radical steps to gain control of the budget, restrain the regulatory bureaucracy and slash tax rates.
At Stockman's side on the Wall Street tour, in addition to his advisers, was his close associate, Rep. Jack Kemp, the tireless apostle of tax reduction. Together they described plans for those 90 days intended to restore confidence, restrain inflation and rebuild a favorable business climate. It is hoped the money men will respond with investment decisions that quickly would succor the stricken bond market.
It was a tough sell. Wall Street is saturated with cynicism and pessimism that sees nothing but "pain and misery" ahead: stratospheric interest rates and a sluggish economy, topped off by hyper-inflation at the 20 percent level.
There is also ignorance in abundance. Stockman's post-election memorandum ("avoiding a GOP economic Dunkirk"), which called for emergency action at a pace comparable to Franklin D. Roosevelt's fabled hundred days, was misread by businessmen who perceived in it a threat of extralegal actions -- such as shutting down the banks, as FDR did in 1933.
Stockman's visit to Wall Street was made partly to end such nonsensical speculation. It was also to reiterate for the umpteenth time that a wage-price freeze is definitely not on Ronald Reagan's list of options for dealing with the emergency.
But after making the rounds downtown Dec. 18, Stockman ran into static when he and Kemp dined in New York that night with some leading exponents of supply-side (pro-tax-cut) economics. Among those present were businessman Lewis Lehrman, politician Jeff Bell, scholar Irving Kristol, journalist Robert Bartley and business consultants Jude Wanniski and Richard Whalen. Even economist Alan Greenspan, no supply-sider but an ardent free-enterpriser, dropped by.
Some of the more doctrinaire supply-siders complained that Stockman was so intent on budget cuts that tax reduction was being sidetracked. The truth is, however, that even Kemp has dropped earlier misgivings about massive budget reduction on grounds that his tax plan cannot be credible without it.
Furthermore, Stockman and Kemp tried to disabuse the titans of Wall Street of their zeal to control the budget at the expense of widows and orphans. Stockman outlined budget options preferable both politically and economically to the favorite of financiers: reducing cost-of-living allowances for Social Security recipients, thereby punishing the most helpless victims of government-fed inflation.
Stockman will have important collaborators -- particularly if Lehrman (whom he met for the first time Dec. 18) is named chairman of the president's Council of Economic Advisers, as now seems possible. Lehrman would bring an understanding of monetary policy lacking in almost all politicians, including even Stockman. Treasury Secretary-designate Donald Regan will join in once he gets thoroughly briefed on the situation he faces and finishes explaining to conservatives that he didn't really mean it when he contributed all that money to Jimmy Carter and other Democrats.
Don Regan and Stockman have engaged in productive, congenial discussions (most recently with Kemp in Kemp's office). In time, a Regan-Stockman-Lehrman economic troika could prove formidable. But for now, the burden is on Dave Stockman, a 34-year-old bachelor workaholic, to devise immediate battle plans for avoiding that economic Dunkirk that looms not only for the GOP but for the entire nation.