Top Reagan administration officials denied today that the United States wants other industrial nations to use "pump-priming" actions to stimulate their economies.
Instead, the officials said, countries should cut taxes and reduce government regulation of their economies, as the Reagan administration has done.
An ABC-TV interviewer of White House chief of staff Donald T. Regan said, "We are told that the president wants to tell our allies to get their own economies in order, yet the Germans are saying that they are not going to prime the pump with government money because they don't want to increase their deficits. How do you convince them to prime the pump?"
"They don't have to," replied Regan. "What they should do is cut taxes. That's what we tried back in the United States. It worked.
"We had a recovery as soon as we cut our taxes, and we've had the best recovery of any of these nations," Regan said. "And we're advocating the same medicine to all of them. And, as a matter of fact, their people and their industries will respond much more to a tax cut than they will to more government spending."
Treasury Secretary James E. Baker III, who recently swapped jobs with Regan, was asked on an NBC television show if the other nations were likely to speed up their economies to take up the slack created by slower growth in the United States.
In his reply, Baker also tried to draw a distinction between pump priming -- a phrase used to describe efforts to stimulate the total demand for goods and services -- and tax cuts designed to increase incentives.
"I think most everybody holds the view that the expansion we've enjoyed in our country for over 30 months now is tending to moderate," Baker said. "And it would be very helpful if Germany and Japan could help pick up some of the slack.
"Now, you say 'speed up their economies.' We're not suggesting that they do anything that would tend to be inflationary. We're not talking about pump priming. We're talking about measures that would really help them grow at a little bit faster rate at a time when the United States' economy was moderating."
Many economists say Reagan's tax cuts enacted in 1981, particularly in personal income taxes, fueled the recovery more by stimulating total demand than by increasing incentives to work, save and invest, as the administration maintains. Whatever the motivation for the cuts, and whatever their impact on demand, the U.S. government's budget deficit moved deeply into the red and shows no sign of emerging.
In fact, while the United States is seeking faster growth from some of the other six industrial nations represented at this economic summit conference, it is being pressed for the second year in a row to reduce its budget deficit with the goal of lowering interest rates.
Neither of the officials indicated why he thought tax cuts in the other countries might not produce an increase in budget deficits just as in the United States -- despite claims by President Reagan and his aides that deficits would disappear.
Many economists say tax cuts, not just increased government spending, can be used to stimulate economic growth -- pump priming -- without generating inflation if an economy's resources, both labor and production capacity, are not being utilized fully.