"Obviously," says a top aide to President Carter, "you don't go into an election without an economic policy," -- especially since Ronald Reagan dangles tantalizing tax cuts before the voters.
Mr. Carter's advisers believe the Reagan program -- featuring a 10 percent across-the-board income tax cut effective Jan. 1 -- is dangerously inflationary.
For the President to parrot that criticism, however, may do him little good, unless he can offer something attractive in return.
So far, Mr. Carter's policy has urged Americans to keep a stiff upper lip -- no tax cut, frugal government spending, tight money -- in an all-out effort to control inflation.
As the campaign rolls on, that line of talk may be increasingly hard for many voters to take, aware that their overall tax burden is due to jump next year.
"Between 1980 and '81," says a senior White House adviser, "you will have a fiscal drag of about $45 billion on the economy through increased taxes."
In other words, that much extra money -- over and above the tax load of this year -- will come out of the pockets of families and corporations and flow to the US treasury.
"Higher payroll [social security] taxes," says the presidential aide, "will total $15 billion. Another $15 billion will come from bracket creep, as inflation pushes taxpayers into higher brackets."
Finally, the official adds, oil companies will cough up about $15 billion, through the windfall profits tax pushed by Mr. Carter and enacted by Congress.
Taking $30 billion more from taxpayers means they will have that much less to spend on goods and services, just as the economy is struggling to escape the mire of recession.
"So the question is," says the White House official, "how much of that drag do you want to offset? And how?"
All of this fuels the Washington rumor mill that President Carter is about to unveil, perhaps this week, something fresh in the way of economic policy.
A top aide dampens this speculation, saying privately that Mr. Carter's advisers simply are not yet agreed on a package to present to the President.
Meanwhile, the economy itself signals that the recession -- while still upon us -- may have bottomed out and that elements are falling in place for recovery.
Housing starts are up.So are car sales, at least slightly. So-called leading indicators -- orders for machine tools and equipment, new building permits, the stock market, among them -- are on the plus side
And unemployment, which the White House concedes may touch 8.5 percent by the end of the year, inched up only marginally in July, from 7.7 to 7.8 percent.
Inflation is coming down, though in a way that some administration officials fear may give a wrong signal to Americans.
The consumer price index, indeed, is growing less rapidly than the 18 to 20 percent pace of the first quarter of 1980. Consumer prices may be rising at only a 9 or 10 percent annual rate by the end of the year.
But the hard-core, underlying rate of inflation -- nourished by rising labor costs -- may be going up. That is what worries Mr. Carter's economic officials and convinces them that inflation remains the nation's No. 1 economic danger.
They want a tax cut to encourage investment by businessmen in new job-creating plants and equipment. In theory, this should enable US workers to boost productivity.
White House planning so far has centered on business tax cuts, with faster depreciation likely to be the centerpiece of whatever "supply side" tax program that finally emerges.
This means that companies would be able to write off the cost of new buildings, machinery, and other equipment faster than present law allows.
Legislation now moving through Congress -- the so-called 10-5-3 plan -- calls for a 10-year writeoff for buildings, five years for major machinery, and three years for vechicles and light equipment. Mr. Carter's advisers would not go this far, but do favor some form of faster depreciation.
No decisions have been made, says a senior White House official, on personal income-tax cuts. There is no thought yet of scaling back the 1981 social security tax increase, which will drain money both from workers and employers.
"Yet," the official concedes, "unless there is some relief, it is hard to foresee a resumption of strong consumer spending. And, without that, business tax benefits are not likely to induce managers to invest heavily in modernization."