"It's working!"--that's what the Reaganauts gleefully say about Reaganomics, claiming credit for the "sparkling" recovery in the economy that finally nudged the July unemployment rate under double digits, to 9.5 percent.


"We know that our economic policies are working, and they are getting Americans back on the job," Reagan allowed himself to boast. "We've turned the situation around and given the American people hope. There's one way we can tell our program is beginning to work: they don't call it Reaganomics any more."


Yes, the economy at the moment is emerging from a deep recession. But it was a recession caused by Reaganomics --a combination of policies that leaves the nation facing huge budget deficits, high interest rates, a U.S. dollar so strong that it cuts export sales, and unemployment levels that are far too high.

This week, stirred into action by record Treasury borrowing, the major banks shattered Reagan's reverie with their boost in the prime rate to 11 percent. Interest rates have already moved up as much as two full points in the past three months. Mortgage rates have reversed a decline, and now hover at the 14 percent level, which is likely to kill off what had been an incipient housing boomlet.

If Reaganomics has done the magic job that White House hucksters tell us it has, why are financial markets so jittery? Wall Street's perceptive Sam Nakagama is blunt about it: there is now "a great unease"--arising in part from fears that this country may suddenly find itself in a shooting war in Central America, which will add dramatically to the budget deficits that Reagan and Congress refuse to tackle.

"The problem of high interest rates --and an overvalued dollar--arises from the attempt to combine large budget deficits with a slow-growth monetary policy," Nakagama wrote his clients. "When expensive aircraft carriers are employed to carry out 'gunboat diplomacy,' the debt markets get uneasy over the idea that they are being financed by issuing more IOUs."

According to a Washington Post- ABC News poll just published, a majority (52 to 46 percent) of citizens approve of the way Reagan is "handling the economy." Half of the respondents said the nation's economy is "getting better," and only 20 percent thought it "getting worse." These are better scores for Reagan than a year ago, when those percentages were approximately reversed. Significantly, the higher the income, the greater the approval for Reagan.

The poll doesn't indicate whether the public buys Reagan's claim that "Reaganomics is working." But only 14 percent thought on Aug. 1 that the recession is over, actually a slight decline from 18 percent in May.

It seems to me that while it is certainly standard political practice to claim credit for everything in sight-- even a moderate recovery whose duration and strength are yet to be tested-- it is not necessary for us non-politicians to give anything away to the politicians that they don't deserve. The public should hold its servants to higher performance standards.

And neither Reagan, nor Reaganomics, nor the Federal Reserve Board, nor Congress deserves any credit for this potentially frail recovery. Government policy exacerbated the recession by fiscal and monetary decisions that were contradictory, and the Fed in mid-1982 began to panic about the debt crisis at home and abroad, and therefore loosened the money strings to avert an international catastrophe.

By abandoning its rigid concentration on money growth targets, the Fed brought interest rates down, and that provided the lubricant for a modest industrial revival at home.

This withdrawal of the monetarist component of Reaganomics was supplemented by a turnaround on tax policy in 1982. Led by establishment Republican senators, Congress took back about $100 billion of Reagan's original tax giveaways. Without that, the enormous federal deficits would have been even farther out of whack, and the Fed would not have been able to launch its easy- money rescue of 1982.

By the same token, what the Fed giveth, the Fed can take away, and Chairman Paul A. Volcker has warned more than once in the past few weeks that the administration's inattention to the deficits brings a "day of reckoning" closer. The bulk of the tax cut is still in place. Tax indexation is still scheduled for 1986. Only token cuts have been made in the huge defense spending programs.

The boost in the prime rate this week could be the tip of the iceberg. So Reagan and his political advisers should quit kidding us--and themselves. We will still be under the influence of Reaganomics so long as the budget deficits are there. Any way you slice it, it's still Reaganomics. And it's not working.