Abolish CEA? Who will counsel White House on economics?
Washington — A staff of 21 private economists is a luxury President Reagan says he may be able to do without. The President is considering a plan to abolish the President's Council of Economic Advisers (CEA), a small but previously influential band of forecasters who provide economic advice to the nation's chief executive.
The administration's stated rationale for abolishing the CEA is that it would cut costs and eliminate duplication with economists at other departments such as Treasury and Commerce.
But the proposal also reflects unhappiness with the way former CEA chairman Martin S. Feldstein used his position to criticize administration policy. Also at work is the President's often stated skepticism about the value of economic forecasts and forecasters.
Relations between the council and the White House were tense during Dr. Feldstein's 21-month tenure as council chairman. The position has been vacant since Feldstein left in July to return to Harvard University as an economics professor and to a position as president of the National Bureau of Economic Research.
Feldstein angered members of the White House staff and Treasury officials with his blunt warnings about the danger of large federal deficits and the need to raise taxes, along with other steps, to staunch the flow of red ink.
He also upset administration officials by publicly advocating policies, such as a standby tax increase, which the President had not repudiated but were no longer on his political agenda.
''I have under consideration whether I want to fill that position or not,'' the President told the conservative newspaper Human Events in an interview to be published this Saturday. He told the interviewer that ''yes'' he was considering doing away with the CEA and that he could get needed advice from the Treasury Department. Treasury gives ''some pretty capable economic advice,'' Reagan said.
Word that the administration is even considering the abolition of the CEA has set off a howl of protest from previous council chairmen, from some private economists, and from members of Congress. They argue that the President needs a source of reliable economic advice free from the departmental bias that forecasters attached to Cabinet departments may have.
The council joins other agencies the President peviously has targeted for abolition. So far the White House has been unsuccessful in its bid to get Congress to disband the Departments of Energy and Education, although it still favors such a course. Abolishing the council, which was established in 1946, also would require congressional action.
White House spokesman Larry Speakes said Tuesday that the administration would ''have to deal with the legislative realities of the mood in Congress'' in abolishing agencies.
One alternative to closing the CEA would be for the President to keep the council in its current low-profile position and select a new chairman who would defer to Treasury Secretary Donald T. Regan on matters of economic doctrine.
Getting rid of an in-house staff of economic advisers and justifying it in part as a way to trim the budget deficit, is ''laughable,'' says Murray L. Weidenbaum, Reagan's first chief economic adviser. There are ''thousands of economists on the federal payroll'' and only a handful at the CEA.
The CEA's budget for the current year is a relatively modest $2.5 million.
Talk of eliminating the CEA ''is more of a reflection on the President than on the Council,'' says Walter W. Heller, former chairman under Presidents Kennedy and Johnson.
''The President needs the Council. This one doesn't know it. In terms of formulating better policy, the President ought to use the only agency in government on economics that has no ax to grind,'' Dr. Heller told a group of reporters at breakfast.
Unlike economists in other agencies, ''the people at CEA have no consituency. So presumably they come at the analysis with complete objectivity and disinterest in the ideology of issues,'' says Robert Gough, senior vice-president at Data Resources Inc., a forecasting company.
Sen. William Proxmire (D) of Wisconsin, a member of the Joint Economic Committee, says that the CEA is ''extraordinarily important because it does provide a statement about the economy from a group of people who have expertise.''
Referring to former CEA chairman Feldstein, he noted, ''It's very hard for any president to pay attention to messengers bringing the bad news."