Reagan's Stand: No Compromise

Though Ronald Reagan's chances of winning the Republican nomination are dimming, his campaign has had an impact on the nation's economic policy. The Californian has given exceptionally forceful voice to a persistent strain of Republican thought--and put unremitting pressure on President Ford to follow a rigidly conservative line. Reagan's followers will undoubtedly keep up that pressure throughout the campaign, if Ford carries the Republican banner. And if Reagan defies the odds and walks off with the nomination, the nation will hear a set of economic views that have rarely been voiced with such rigor.

Indeed, a problem confronting any still uncommitted delegate is guessing whether Reagan would be as unbending in the White House as he has been in his campaign pronouncements. If Reagan moderated his line a bit, there would be little ground for an economic-policy choice between him and Ford. Both give high priority to fighting inflation, and would combat it primarily by holding down federal spending. Both pledge to reduce the Government's role in economic life.

But Ford has compromised in seeking his economic goals, and Reagan's rhetoric admits of no compromise. In early 1975, for example, Ford accepted a swelling budget deficit as the price of ending the nation's worst postwar recession. In Reagan's view, budget deficits are something close to the root of all economic evil. Again, Ford last December reluctantly signed a bill that cut oil prices immediately and continued controls for seven years, though they will gradually be lifted. Reagan has never ceased to excoriate Ford for that act. In his view, all controls should have been ended immediately.

Certitudes Unlimited. In Reagan's mind, inflation is the great economic enemy, and the cause of most other ills. Says Reagan, with breathtaking assurance: "Inflation is the cause of recession, and the only cause." And what brings about inflation? "The one basic cause of inflation is Government spending more than it takes in."

So, proclaims Reagan, "the cure is a balanced budget." He argues that the Government should set a specific timetable for bringing spending into line with revenues and stick to it come what may. He implies that he would even accept a renewed recession as the price of carrying out that policy. Says Reagan: "In correcting inflation, I'm afraid there will temporarily be economic dislocation."

Reagan would also go much further than Ford in trying to cut down the Federal Government's size and power. His major proposal is his celebrated plan to turn over to state and local governments all federal activities in education, housing, community and regional development, manpower training and welfare. That would remove from the federal budget programs that now account for spending of around $90 billion a year. Though Reagan has not stressed that plan lately, he has never disavowed it; his aides insist that it has been misunderstood. The impression got around that Reagan would simply dump those programs on states and cities, which would have to raise taxes sharply to pay for them. Actually, Reagan would earmark a portion of the federal income tax collected in each state and locality to be kept there to finance the activities dropped by Washington.

In formulating his economic policies, Reagan has relied heavily on the advice of Martin Anderson, who took a leave from his post as senior fellow at Stanford University's Hoover Institution to join Reagan's campaign full time at the start of the year (after the $90 billion proposal had been made). Anderson, who will turn 40 next week, served as the personal deputy of Arthur Burns, chairman of the Federal Reserve Board, when Burns was a White House Counsellor to President Nixon. Reagan has also consulted some well-known economists, including Hendrik Houthakker of Harvard, a former member of the Council of Economic Advisers, and Murray Weidenbaum of Washington University, a member of the TIME Board of Economists.

Shaky Grasp. Despite the quality of his advice, there is reason to doubt Reagan's grasp of economic complexities. Some of his statements are extreme--and not only on the budget. On energy policy, he says: "We need to begin pumping every barrel of domestic oil we can get our hands on, begin using our vast coal reserves with both intelligence and innovation, and begin shifting our sights to the one sure source that will carry us through the next decades--nuclear energy." Those views are worth serious attention, but Reagan goes on to say that if all that is done, the U.S. "could surpass the Middle East as the world's chief exporter of energy." Given the fact that proven oil reserves in Saudi Arabia alone are 4.5 times those in the U.S., that statement is a flight of pure fancy.

Critics often point out that during Reagan's eight years as Governor of California, state spending more than doubled, to $10.2 billion. Reagan replies, correctly, that he nonetheless turned a looming deficit into a sizable budget surplus (he went along with huge tax increases in order to do so). On the national scene, he claims credit for having pushed Ford into some positions more conservative than the President wanted to take. For better or worse, Reagan has struck a responsive chord in Republican thinking that may not win him the nomination, but that will still be a force to reckon with if he loses.

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