Byzantine Fight for Power

Like characters in a novel by Allen (Advise and Consent) Drury, two of the Nixon Administration's most powerful figures are grabbing for the sweeping economic policymaking authority once wielded by departing Treasury Secretary George Shultz. The contenders are Roy Ash, 55, once president of Litton Industries, now director of the Office of Management and Budget, and William E. Simon, 46, a former Wall Street bond trader, now federal energy czar. Simon is on the verge of winning an early round: President Nixon this week is expected to name him to succeed Shultz at Treasury, a job that apparently Ash wanted. But neither man is likely to get Shultz's other titles of Economic Counsellor and chairman of the Council on Economic Policy. In a continuing move away from super Cabinet posts, the White House will probably leave those jobs vacant. So Simon and Ash are almost sure to carry on for several more months a backstairs guerrilla war for top policymaking authority.

Complete Surprise. While the battle rages, the elaborate system that Shultz used to coordinate economic policy is falling into disarray. Since Shultz announced that he will leave in May, key officials have strayed from the Administration's economic line or even collided with it head on. Cost of Living Council Chief John Dunlop, for example, once indicated willingness to accept stand-by authority to reimpose across-the-board wage-price controls. Though Congress is moving instead to kill controls altogether (see following story), Dunlop's stand briefly upset other Administration planners, including Shultz, who want controls to die. One Government economist grumbles: "Dunlop would never have done what he has been doing before Shultz announced he was leaving."

Another symptom of the void at the top was Agriculture Secretary Earl Butz's unilateral decision two weeks ago to buy $45 million worth of beef for the Government's school-lunch program, in an attempt to prop up beef prices. Butz's decision came as a complete surprise to the COLC'S food policy committee, which is chaired by Shultz, and provoked an angry reaction from Dunlop, who has greeted recent declines in prices of grain and livestock with undisguised pleasure.

The disorganization is unlikely to end until the Simon-Ash struggle produces a clear winner. In classic Washington fashion, that struggle is being fought almost entirely behind the scenes. Tension between the two men has flared openly only once, in February, when

Ash made an optimistic statement about the energy crisis. Simon, on television, smilingly warned Ash to "keep his cotton-pickin' hands off energy policy." Next day Ash retorted: "We don't pick cotton at OMB. We run the plantation."

Since then there has been no public bickering between the two, but both have been vigorously campaigning to line up support from the President and his key aides. Two weeks ago Ash flew to the Florida White House for a weekend discussion with Nixon about the future of economic policymaking machinery--and presumably his desire to play a larger role in it. Simon then closeted himself with White House Chief of Staff Alexander Haig, who is apparently in Simon's corner.

A battle of leaks also seems to be going on. Simon's followers suspect that a recent Evans and Novak column calling Simon's Federal Energy Office a badly administered "house of cards" was inspired by Ash & Co. There has also been a damaging anti-Ash leak, though not necessarily from Simon's partisans. White House Congressional Liaison Man William Timmons wrote an angry confidential memo that chewed out Ash for allegedly distorting the President's position on the controversial consumer-protection bill passed by the House last week. Although the note had to travel only from Timmons' office on the first floor of the White House to Ash's office on the second floor, a copy somehow slipped into the hands of Consumer Advocate Ralph Nader, who promptly made it public.

Whoever wins the Byzantine battle, the actual course of economic policy is not likely to change much. In the international sphere, neither Simon nor Ash would have the autonomy that Shultz did; Secretary of State Henry Kissinger will become a much more active maker of international economic as well as diplomatic policy. Domestically, Simon and Ash are both ardent free marketeers; they share Shultz's belief that no additional efforts are needed now to stimulate the economy.

In fact, in the Administration's view, the economy is surprisingly healthy. Preliminary estimates are that real output of goods and services dropped in the first quarter at about a 6% annual rate. But much of the drop was accounted for by a sharp slowdown in the rate at which businesses have added to inventories; final sales to consumers were probably off only about 2%, and the damage was largely confined to a few economic sectors, notably the auto industry. Moreover, housing starts and new orders for manufactured goods are rising at a surprisingly robust pace, and the unemployment rate in March inched down to 5.1% from 5.2% in February. To Otto Eckstein, a member of TIME'S Board of Economists and no admirer of the Administration, the evidence indicates that "this business cycle is near its trough and the economy may already be beginning its upturn."

Inflation, however, is as rampant as ever; the wholesale price index in March shot up at an aggravating compound annual rate of 16.8%. Simon had jurisdiction over oil prices as head of the Federal Energy Office, but as Secretary of the Treasury he will be dealing with the full problem of inflation for the first time. He will apparently follow the same freewheeling approach that won him acclaim at FEO. For example, he does not rule out tax changes that would increase the take-home pay of most workers, with the aim of dissuading them from pressing for a round of disastrously inflationary wage hikes. Simon will also retain strong influence, if not formal control, over energy policy. He will probably remain Nixon's senior energy adviser, and the leading candidate to succeed him at FEO is Deputy Administrator John Sawhill--who is regarded as a turncoat by some of Ash's admirers; originally expected to be an Ash follower, he has become a wholehearted Simon backer. Simon's influence will thus rise even if he loses the main bout with Ash--but who controls economic policy awaits the outcome of one of Washington's most fascinating tales of palace intrigue.

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