Reagan's Vanishing Advisers

By Christopher Byron

Just when he needs help, they are beginning to depart

Anderson, Rashish, Hormats, Ture, Roberts, Jordan. One after another, Ronald Reagan's economic advisers have been emptying out their desks and leaving. Some have left for personal reasons, and others over substantive disputes. But the overall effect has been to underscore an impression of disarray within the Administration's top economic ranks.

With the economy still slumping and interest rates sky high, holes have begun appearing at the State Department, the Treasury and the President's Council of Economic Advisers. Meanwhile, policy-making has become a desperate waiting game, with virtually all options for actions ruled out by the principles of Reaganomics, leaving the top advisers little choice but to hope that a brisk recovery will somehow occur. Says Jerry Jordan, a member of the Council of Economic Advisers, who resigned early this month, citing family reasons: "You have got to remember that the President himself has set economic policy, and he is so incredibly consistent that it really does not matter who the subalterns or lieutenants are."

Jordan's resignation is only the latest in a string of departures that have been going on since early last winter. First to depart was Myer Rashish, Under Secretary of State for Economic Affairs. Long an irritant to right-wing conservatives because of his liberal views on international trade matters, Rashish resigned following a series of personality clashes with Secretary of State Alexander Haig.

Last month Robert Hormats, State's Assistant Secretary for Economic and Business Affairs, also resigned. First appointed to the staff of Henry Kissinger's National Security Council in 1969, Hormats had served in economic posts during the past four Administrations. Among his other complaints, he objected to Reagan's efforts to block or at least delay the Soviet

Union's planned construction of a natural gas pipeline to Western Europe, and announced his resignation.

Also out the door was Martin Anderson, the President's top policy development adviser. A strong advocate of supply-side economics who helped formulate the policy on which Reagan campaigned for the presidency, Anderson left after being effectively locked out of the inner circle of the White House decision-making process. He is now doing research at the Hoover Institution at Stanford University.

The most controversial resignations have been two top Treasury Department supply-siders, Paul Craig Roberts, Assistant Treasury Secretary for Economic Policy, who left in February, and Norman Ture, Under Secretary of the Treasury for Tax and Economic Affairs, who departed in June. Neither has disguised his dismay at the drift in Administration economic policy. Said Ture of the compromise plan to boost taxes $98 billion over the next three years: "The package is damned unfortunate. It is going to be self-defeating." Roberts summed up his gloomy view of Administration policymaking: "There is no policy any more. The policymakers bend whichever way the wind is blowing that day."

Finding replacements has not been easy. After nearly six months of searching, the Administration this week was to name Manuel Johnson, a Treasury official, to succeed Roberts. Explained Treasury Secretary Donald Regan of the delay: "I would make my decision, and then the White House would ask if it could have some input. They would then come up with a qualified candidate, and everything would stop for three weeks while he approached his university dean about a leave and talked to his wife about moving to Washington. Then he'd say no, and we'd be back to Square 1."

The President's three top economic advisers remain in the jobs they have held since the beginning of the Administration: David Stockman as Director of the Office of Management and Budget, Regan as Treasury Secretary, and Murray Weidenbaum as Chairman of the Council of Economic Advisers. But their relative influence in the White House has shifted. Stockman, once the most prominent member of the troika, has relinquished his role as point man on economic policy to Treasury Secretary Regan.

Regan has become a kind of cheerleader for Reaganomics. Says the former chairman of Merrill Lynch & Co.: "I have made a career on Wall Street out of being bullish. If you do not offer people a ray of hope, if you don't offer them the promise that things will get better, then you have got no chance of success."

Regan's optimism seems more muted now than earlier this year, when he confidently proclaimed that the economy would "come roaring back in the late spring." Said he last week: "Things are going to get better if we stick with this program. In the late 1980s or early 1990s, there will be a brighter tomorrow."

The least influential, and visible, of the group is CEA Chairman Weidenbaum, a former economics professor at Washington University in St. Louis. Says one top Washington policymaker bluntly: "He's a compromiser; he gives up too easily." Reports a leading official at the Treasury: "We like him because he generally takes our side against the tax-raising crowd at the Office of Management and Budget. But you never win or lose just because Murray is on your side."

Most of the really bitter infighting has gone on within the steadily thinning ranks of the President's second tier of advisers, where policy is not so much made as carried out. Beryl Sprinkel, Under Secretary of the Treasury for Monetary Affairs, is one key player who seems to alienate as many people as he impresses. A feisty speaker who sometimes verges on pugnaciousness, Sprinkel has repeatedly attacked Federal Reserve Board Chair man Paul Volcker for failing to manage the money supply more smoothly. Sprinkel has also angered Europeans by declaring that the U.S. would not intervene to steady the value of the dollar on international money markets.

Another controversial second-tier adviser is Stockman's chief economist, Lawrence Kudlow. Until last year, Kudlow was chief economist for the Wall Street investment firm Bear Stearns & Co. In a city of towering political egos, Kudlow's stands visible to all. Recently he told colleagues of being "besieged with offers of help and money" to run for the U.S. Senate from New York. Last week he hinted broadly that he had turned down an offer to replace Jordan on the Council of Eco nomic Advisers, saying that his current position is more powerful. Says a top Treasury official of Kudlow: "The gall of the man is beyond belief. Last fall he pushed behind the scenes for higher taxes as hard as he could. Then when he lost, he tried to take credit with Congress for blocking approval."

No matter how bloody the back-room scrapping, there seems very little prospect of a radical shift in policy between now and congressional elections in November. Says Weidenbaum: "Whatever will happen to the economy by then is already in the system. Anything we do now would have its effect after the election." Ob serves Assistant Secretary of the Treasury W. Dennis Thomas: "Historically, fresh ideas on the eve of an election are usually the cause of long-term problems. Carter had three different economic policies in a single year, 1980, and the only person who benefited was Ronald Reagan."

There are signs, though, that once congressional elections are over, the President may move more forcefully than ever to cut spending. Administration budget cutters are already eyeing a big potential slice out of Social Security benefits, as well as sharp new reductions in other transfer programs such as food stamps, Medicare and Medicaid. There is even White House talk of defense spending cuts if necessary.

The goal is to hold the fiscal 1984 deficit to no more than $50 billion, vs. current Administration projections of at least $150 billion. Says one top White House policymaker: "Reagan is the only politician who has a chance to cut entitlements and get spending back on the same track with revenues. The public is overwhelmingly behind more budget cuts, but it is going to be bloody."

Public confidence is essential for any economic policy, especially for the President's tough budget-cutting program. Yet, for now, the many abrupt departures and the often loud public bickering are undermining that kind of confidence and giving the impression of an Administration at war with itself.

-- By Christopher Byron. Reported by David Beckwith/ Washington

With reporting by David Beckwith

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