President Reagan has bluntly told Commerce Secretary Malcolm Baldrige that he intends to stick with his economic program despite business complaints that changes are necessary to lower the federal deficit.
"I broke my pick in the meeting," Baldrige said afterward, according to a well-placed administration source.
Baldrige, while confirming that the meeting had occurred, refused yesterday to characterize its tone or substance. Saying that he regarded his discussions with the president as confidential, he added: "I will neither confirm nor deny any reports about them."
White House aides said that news of the president's response to Baldrige at the March 11 luncheon meeting had created what one official called "a chilling effect" on attempts of other administration officials to convince the president that he should reduce military spending or postpone his tax cut to lower the deficit.
"There's no line outside the door of the Oval Office these days telling the president he ought to change his program," said a White House aide.
The March 11 luncheon was also attended by White House chief of staff James A. Baker III, who has frequently been identified as one of the administration officials who is convinced that the deficit must be lowered to encourage economic recovery.
This was reportedly the central point made by Baldrige, on the basis of several similar representations to him by leaders of the business community.
"He felt he had an obligation to tell Reagan what was really going on in the economy," said an administration official familiar with Baldrige's views.
Another official expressed the view that Baldrige had been "used," although willingly, by White House officials who have tried without success to convince Reagan that some compromises must be made in his program to keep the deficit down. The compromise most frequently suggested is a postponement of the 10 percent tax cut scheduled for July, 1983. Reagan has said repeatedly that he will not postpone the 10 percent cut scheduled for this July.
Baker reportedly was not discouraged by the cool reception Baldrige received, perhaps because he knows from his own experience how difficult it is to talk Reagan out of his economic program.
But it has heightened the concern of a number of major business organizations that an impasse may develop on the 1983 budget that could damage prospects for a sustained turnaround in the economy.
A senior official in a previous Republican administration, who learned of the Baldrige incident from a Reagan insider, said, "If he won't listen to Mac Baldrige--a guy he likes--telling him what's really going on, I don't know who he is going to listen to. People are really worried about how you get through to this guy."