David A. Stockman, director of the Office of Management and Budget, was worried. Despite success for the Reagan program on Capitol Hill, Mr. Stockman saw trouble ahead. The deficit was going to be bigger than predicted. Financial markets were falling.
''There was a certain dimension of our theory that was unrealistic,'' Stockman confided to a reporter.
The reporter was William Greider of the Washington Post. In the December issue of the Atlantic Monthly, Mr. Greider tells of Stockman's growing concerns with President Reagan's economic policies. While much of the story was already known, it was Stockman's own words, quoted in the article, that surprised official Washington. Here are some the key Stockman quotes, as told by Greider.
On the Reagan program:
The reason we did it wrong - not wrong, but less than the optimum - was that we said, Hey, we have to get a program out fast. And when you decide to put a program of this breadth and depth out fast, you can only do so much. We were working in a 20 or 25-day time frame, and we didn't think it all the way through. We didn't add up all the numbers. We didn't make all the thorough, comprehensive calculations about where we really needed to come out. . . .
The hard part of the supply-side tax cut is dropping the top rate from 70 to 50 percent - the rest of it is a secondary matter. . . . Kemp-Roth was always a Trojan Horse to bring down the top rate. . . .
Supply-side is ''trickle down'' theory.
On the $35 billion spending cut:
There was less there than met the eye. Nobody has figured it out yet. Let's say that you and I walked outside and I waved a wand and said, I've just lowered the temperature from 110 to 78. Would you believe me? What this was was a cut from an artificial . . . base. That's why it looked so big. But it wasn't.
On the sigificance of budget victory:
It has really slowed down the momentum, but it hasn't stopped what you would call the excessive growth of the budget. . . . The budget is a sort of rolling history of decisions. All kinds of decisions, made five, 10, 15 years ago, are coming back to bite us unexpectedly. Therefore, in my judgment, it will take three or four or five years to subdue it. Whether anyone can maintain the political momentum to fight the beast for that long, I don't know.
On soaring defense costs:
Defense is setting itself up for a big fall. If they try to roll me and win, they're going to have a huge problem in Congress. The pain level is going to be too high. If the Pentagon isn't careful, they are going to turn it into a priorities debate in an election year.