Business groups urging Reagan to shift gears
As Reagan administration officials scramble to beat deadlines for preparing the 1984 budget, a growing number of business and financial executives are offering policy advice coupled with thinly veiled criticism.Skip to next paragraph
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The criticism is significant because it comes from the corporate and financial communities, which have traditionally been strong supporters of President Reagan. The Committee to Fight Inflation, a bipartisan group including four former US Treasury secretaries and two past chairmen of the President's Council of Economic Advisers, is the latest to weigh in with policy prescriptions and a critique.
''We note our deep concern about the many forces that are now pressing government policy in mistaken directions,'' the panel said in a statement Wednesday.
The group offered plans to scale back budget deficits, cope with the social security system's financing problems, and find potential defense spending cuts. But it was careful not to single out the administration for specific blame.
In a speech to the National Press Club, however, Herbert Stein, committee's cochairman and a former economic adviser to Presidents Nixon and Ford, was more blunt.
The administration ''is oozing away from (its) initial policies, reluctantly and haltingly and without any evident sense of new direction . . . ,'' Mr. Stein charged. ''(It) recognizes that there is no hope of balancing the budget in the foreseeable future. But it does not seem to have, and certainly does not offer us, any alternative principle . . . by which fiscal policy should be guided.''
Meanwhile, several hundred top business executives are preparing an advertising campaign slated to run later this month that calls for major changes in the President's budget and tax policies. A draft advertisement, obtained by the Washington Post, says, ''The federal budget is now out of control. . . . This fiscal course is senseless.''
The group of top executives, led by a Nixon administration commerce secretary , Peter G. Peterson, proposes, among other things, limiting social security payments, increasing taxes on consumption, and chopping defense spending by $25 billion by 1985.
Growing business dissatisfaction with Reagan administration policies is fairly widespread, according to a Gallup poll conducted in December for the Wall Street Journal. Executives were chosen from companies on the Fortune magazine list of the 1,300 largest US corporations. Only 27 percent of the top managers expressed ''a great deal of confidence'' in the President's ability to handle the economy, down from 44 percent the previous December.
Executives at the 200 biggest companies were even tougher on Mr. Reagan. Only 21 percent reported ''great confidence'' in him, vs. 54 percent in December 1981 . While corporate America is voicing less satisfaction with the administration, it also has sharp words for the Democratic opposition.
''The opposition does not offer any discussable alternatives but mainly reiterates old positions in which even it no longer has much confidence,'' economist Stein said.
And of the executives questioned by the Gallup organization, 65 percent said they had almost no confidence in House Speaker Thomas P. O'Neill (D) of Massachusetts. But that was a slight improvement from last year, when 68 percent of the executives expressed no confidence in him.
Ways to narrow projected budget deficits are a key part of the policy changes business groups are proposing. For example, the Committee to Fight Inflation advocates passage of a law in the current session of Congress which would place a steadily declining limit on deficits for the next five years.
Budget officials have been calling business leaders recently, saying the President is close to approving a plan to make future tax increases contingent on future deficits.
A tax on consumption is the way many executives would raise revenue. For example, the group organized by former Commerce Secretary Peterson favors raising government revenues $65 billion in 1985 by increasing energy taxes and excise taxes on alcohol and tobacco.
Not surprisingly, the business groups do not advocate cutting back on the improved depreciation allowances Congress gave companies in the 1981 tax bill.
''We are in favor of taxes which are not likely to retard the recovery,'' says former Treasury Secretary Henry Fowler. He is now chairman of Goldman Sachs International Corporation.
Executives are also calling on the government to deal finally with the social security problem. The Committee to Fight Inflation, for example, proposes a limit on cost-of-living adjustments for social security and other federal retirement programs, a call echoed by the Peterson group.