The Treadury Department can only be strengthened by the switch of jobs between it and the White House. In James A. Baker III, it gets an extremely able administrator capable of imposing a consistency and purpose that Treasury policy has not often shown in the past four years. But he will be working in an administration that regards it an open question whether it really wants any economic policy, or needs one.
Meanwhile, the imbalances in the country's economy continue to grow. The most obvious of them is the federal budget deficit, but the more immediately dangerous is the deficit in international payments. That one leaves the United States vulnerable to sudden changes of mind on the part of foreign investors who do not necessarily have much concern for stability here. Working at the Treasury in the months ahead is going to be like doing duty in a firehouse. As long as inflation stays relatively low and business keeps expanding, there won't be much to do beyond the usual routine -- polishing the fire engines' brass, in effect -- because the president doesn't see the need to do much. But if inflation starts to rise or the economy to slide, the bells will ring at the Treasury, and the secretary will have to move very fast in highly technical operations that, to Mr. Baker, are not familiar.
He will need, first of all, to recruit a stronger corps of specialists than the Treasury now possesses. The Treasury has not been well staffed in recent years. The erosion in the structure of senior civil servants had been going on for some years before this administration came to office. In the past four years, there have been visible gaps at the political level as well, particularly in the crucial areas of monetary affairs and international finance. If the dollar's very high exchange rate should suddenly drop, the strength of the performance in those offices would make a great difference to the administration and the record that it will leave in American politics.
Beyond the ability to respond with technical skill to an emergency, the next secretary of the Treasury will need to think carefully about the administration's machinery for making economic decisions. That machinery isn't in good working order now. One of the principal jobs, the chairmanship of the economic advisers, is vacant. The Office of Management and Budget has only a limited role. Above all, there's the growing atmosphere of indifference to all the money troubles. The view at the White House is that those carping economists, with their dire predictions, are wrong once again and things are going along very nicely. So they are, for the moment. But if that should change, it might change very quickly.