Experts forecast a long winter for Reaganomics; Sockman affair puts new pressure on President
President Reagan's economic policies face rough sledding as winter finds the economy on a downhill run (analysis below). His policies are being questioned as never before, in light of controversial statements by Budget Director David Stockman - statements which Stockman admitted were ill advised.Skip to next paragraph
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The political weather turned cold for President Reagan this week, as the economy headed into a winter recession.
Mr. Reagan basically wants to stand pat with his economic plan until January. But forces here are crowding the President, straining the credibility of his economic strategy at the very time he asks for patience until the economy revives.
Admissions by the administration's whiz-kid budget director, David A. Stockman, in an Atlantic Monthly article have given what many politicians here call ''devastating'' shape to longstanding doubts about the structure and intent of the President's program.
So seriously were Stockman's comments taken at the White House - as belittling Reaganomics and jeopardizing future battles with Congress - that Stockman offered to resign. Mr. Reagan refused to accept the resignation, but put Stockman before the press to explain himself.
Loyal Republican leaders on Capitol Hill, rebuked by the President this week for failing to speed through his latest budget-trim requests, are finding it tough to hold in line deficit-fearing members of their party. And they are hearing from the GOP's constituency among small businessmen and farmers, hurting from high interest rates.
Mr. Reagan now needs the Democrats, either to blame or to lean on. But his crushing victories over them this year have left him isolated. He absolved the Democrats of an obligation to stand with him, observers here say. The Democrats sought face-saving compromises on the budget and tax cuts. But stripped of that they now have an excuse to let the President shift for himself in search of a ''midcourse'' correction.
''Coalitions shift in politics,'' says Congress expert Norman Ornstein of Catholic University. ''Someday you'll need them. Later it will be clear Reagan made a mistake in pushing for three dramatic wins. The first was all right. But he kicked the Democrats twice when they were down. He's not down, but he's stumbling. And he's given them every reason not to help.''
''We offered compromise,'' says Kirk O'Donnell, aide to House Speaker Thomas P. O'Neill Jr. (D) of Massachusetts. ''O'Neill has always said we looked to the middle ground. He took the heat for letting Jones (Democratic budget leader James Jones of Oklahoma) and Danny (tax legislation leader Dan Rostenkowski of Illinois) go more than halfway to compromise. Now we're not complicit in the results.''
The Democrats see White House abandonment of a balanced budget by 1984 as undermining the GOP legislative strategy. ''When you give up the goal of a balanced budget, you lose the rationale for budget cutting,'' Mr. O'Donnell says.
For the Democrats, the most helpful political event of the year was the administration's hastily offered, then withdrawn, social security reform proposal, say the party's strategists on the Hill. For the Republicans, the worst event was their victory on the tax bill, which has set the stage for deficit and inflation pressures.
''Reagan's stubbornness'' is a major factor in the President's isolation, says Mr. Ornstein. ''He just doesn't want to back down now. He doesn't want to send a signal to the financial markets that it's business as usual on inflation. And he's hopeful interest rates could drop a little by the end of December, that things will look better.''
Meanwhile, the Stockman-Atlantic Monthly episode complicates the White House's hope to just hunker down until the first of the year. Mr. Stockman reportedly conceded that, early on, he knew a balanced budget goal would prove elusive. Administration sources say that Stockman was asked, by a Cabinet member , to tell the President this last summer during a Cabinet session, and he did.
Stockman's reported comment that the administration's supply-side theory was ''trickle-down'' economics, and his impression that his team's economic working data were sketchy, can only feed doubts about Reaganomics.
''Stockman made himself look disloyal or devious,'' said Ted Van Dyke, president of the Center for Democratic Policy.
The Stockman episode, coming on the heels of White House inharmony involving Secretary of State Alexander M. Haig Jr., pushes the President into a more beleaguered stance, on both the domestic and foreign-policy fronts.
''For the moment, doing nothing is the best policy,'' says Rudolf Penner, a Republican economist with the American Enterprise Institute. ''Right now, with the recession gaining speed, it would be dreadful to debate tax increases,'' Mr. Penner says. He does not see how the G0P could get action on a second budget resolution.