Senate Majority Leader Howard H. Baker Jr. (R-Tenn.) yesterday prodded the Reagan administration to make two major shifts in defense and monetary policy that would ease concern over the economy among Republican Party leaders during the 1982 elections.
In a speech to the Republican National Committee, Baker said President Reagan should meet personally with Federal Reserve Chairman Paul A. Volcker on monetary policy. He also said Reagan should persuade foreign leaders to make more equitable arrangements for mutual defense.
Baker said it was time for Reagan and Volcker to "sit down and get away from this business of acting like they are so independent they never communicate . . . . We've got to get this economy going again, we've got to synchronize" the efforts of the administration and the Federal Reserve Board.
Earlier this week Volcker indicated that the Federal Reserve will not ease its tight monetary policy despite increasing pressure from Treasury Secretary Donald T. Regan, who has attributed the current economic downturn to "the erratic pattern of money growth" during the last two years.
Baker also said it was time for U.S. allies to begin shouldering a greater share of the cost of their defense burdens.
Baker singled out Japan. "I would like to see the president of the United States and the prime minister of Japan sit down and simply arrive at a fair allocation of the costs of defending the Free World," he said.
Reagan should tell the Japanese, "We will do our part, but it is time you do yours," Baker said. This approach "is tough talk" and would mark a "fundamental change" in U.S. policy, he said.
With the sharp increase in defense spending under Reagan, pressure is building in Congress for such a shift.
Baker noted that when former Senate Democratic leader Mike Mansfield of Montana annually proposed legislation to force U.S. troop reductions in Europe a decade ago, he was always defeated by wide margins. Today, he said, such a move would pass the Senate easily.
The uneasiness of GOP leaders over the economy was evident in questions posed to Baker.
Gordon M. Nelson, Republican national committeeman from Massachusetts, said, "The Republican Party has been running for at least a generation on a platform of balanced budgets. Now we're going to be criticized for throwing money at defense."
Baker acknowledged that Republicans "will be vulnerable" to attack on high deficits in next fall's election campaigns, "But the truth is they aren't our deficits . . . . We're paying the piper for programs that have been on the books for years."
Republican leaders have been complaining privately all week that the economy will hurt GOP election chances.
"Ninety percent of the election will be tied to the success of the Reagan economic program," said Vern Neppl, a longtime Republican leader from Minnesota. "If things continue in the present course we're going to be in serious trouble."
But when Murray L. Weidenbaum, chairman of the Council of Economic Advisers, met with state party leaders yesterday, only 23 seats were filled in a large hall.
Weidenbaum predicted a major economic upturn "by late spring, surely early summer."
Republicans will go into the 1982 elections with their biggest financial war chest in history. National party Chairman Richard Richards yesterday distributed a $34.8 million 1982 party budget, the largest ever.
It included $7.8 million for local and state elections, $1.3 million for polling, $2.8 million for a field staff to aid candidates, $884,000 to train candidates, $334,500 for research on Democrats and $2.5 million for White House support, including campaign trips by the president.