The liberal economic response to President Reagan's inflation program is not that it isn't needed, but that it uses the wrong strategy. Harvard's Otto Eckstein, president of Data Resources Inc., agrees with Mr. Reagan that this "really is the time for the historic reversal of budget policies." Testifying in Congress, this middle- road economist said: "The times are certainly ready for a new economic policy: In general philosophy and in its overall goals President Reagan's program for economic recovery is the right one."
Walter Heller, liberal economic adviser to Presidents John F. Kennedy and Lyndon Johnson, agrees with the Reagan goals. He takes exception to some of the approaches, in particular the big tax cuts.
On NBC-TV's "Meet the Press" March 8, Mr. Heller insisted it would be "imprudent" to put through the proposed Reagan tax cuts until it is known just how much the budget will be cut. He said he would "guess" that out of $50 billion in cuts sought by the Reagan administration in the fiscal 1982 budget, Congress will agree to about $30 billion.
Heller agreed that economic recovery in 1964 came through the big Kennedy-Johnson tax cut that he formulated, but he noted that inflation was then only 1.2 percent as compared to 12 percent today. As to balancing the budget along with a big expansion of the economy and reduced taxes -- "You just can't do it," he exclaimed. There is likely to be "an inflationary outburst that could be very damaging," he warned.
The administration "is kidding itself," Heller added. "Its forecasts are much too optimistic."
Mr. Eckstein, who was member of the Council of Economic Advisers part of the time that Mr. Heller was chairman, also warns that the administration is taking an overoptimistic view of its program.
Basically, the liberal economists argue that the Reagan program is expansionary -- that the proposed tax cuts will leave more money to spend and this might send prices up.
Whether or not this happens will depend in part on the course of the economy as a whole.
"If there was ample criticism of President Johnson's failure to enact a tax increase to pay for the Vietnam war," Eckstein told the House Ways and Means Committee, "we are now asked for dramatic tax decreases in a period of similar military buildup."
Eckstein, a respected analyst, has prepared three scenarios labeled optimistic, middle road, and pessimistic, depending on forthcomong domestic and world developments. The President's economic assumptions, he argues, are based on "very favorable developments."
The Harvard economist says his own middle-road forecast is also optimistic, but much less so than the Reagan forecasts.
But suppose the pessimistic "third" scenario appears? "It has been the experience of the last 15 years," Eckstein says "that things often turn out a little worse than anyone though." Factors in such a scenario might include a drop in industrial production, rising inflation, OPEC hiking of oil prices, threats of war.
The Federal Reserve Board, it is noted, is pledged to increase interest rates if inflation isn't checked, making it harder to buy cars, homes, and appliances. Under such circumstances unemployment increases.
"The risk to the budget stemming from the economic environment exceeds $100 billion by 1984," says Eckstein. In short, he concludes, the Reagan fiscal program should be "tougher" by about $30 billion a year.
The undercurrent of concern over the risk in the Reagan program, expressed in the Eckstein and Heller testimony, is delaying action in Congress.
Eckstein told Congress: "The President's program for economic recovery is a much- needed reversal in policy." However, he added that Congress should "improve" it by taking out the fiscal stimulus "which is likely to offset the benefits."
In short, these academic analysts are anxiously saying, "Don't let the administration push the accelerater while hitting the brakes."