Pragmatism Shapes Bush Economics. Policy shift seen as a sharp divergence from the economic opportunism of the Reagan era

REP. John Conyers, a Democrat from Michigan, was surprised. Office of Management and Budget Director Richard Darman told him that ideology would play a smaller role in OMB activites than it did under President Reagan - activites that include allocating funds, reviewing the work of federal agencies, or reviewing government officials' testimony.

Mr. Darman also told Representative Conyers the new administration was willing to work with Mr. Conyers, including giving President Bush's input on controversial legislation called the Paperwork Reduction Act. Part of the legislation limits the ideological thrust OMB can have on the regulatory work of federal agencies. ``It seemed like a cooperative spirit,'' says a Conyers staff member. Five months into the Bush administration, other members of Congress are walking around with smiles and similar stories.

For example, the Bush team no longer automatically pulls out the free-trade banner when looking at sticky trade issues. Recently, US Trade Representative Carla Hills said the United States would punish Japan for not sticking to an earlier agreement to open its market to US telecommunications equipment. In its eight years, the Reagan administration took similar trade action against Japan only once over semiconductors. This shift is popular in Congress. ``I'm pleased with the way they have started out,'' says Sen. Lloyd Bentsen (D) of Texas.

The shift in policy has already upset Beltway conservatives. Paul Craig Roberts of the Center for Strategic and International Studies accuses the Bush administration of ``opportunism'' and ``playing to the media.'' He says the administration's formula for success is to provide solutions amenable to a variety of individuals. ``Then you tell the media how pragmatic you are,'' Mr. Roberts says.

A former senior White House official, who wished to remain anonymous, describes a White House that is ``rudderless''. He says the President's staff is still trying to figure out ways to apply his ``kinder and gentler'' theme to the economy.

But the new approach at the White House has won over some skeptics. Probably the most widely heralded example of the administration's new approach is Treasury Secretary Nicholas Brady's plan on third-world debt. Under James Baker - now secretary of state - there was little talk of debt reduction. Mr. Brady's plan envisions a sizable, although as yet unstated, amount of debt reduction. The plan has been praised by both Democrats and Republicans.

Beltway observers also praise the quick compromise Darman reached with Congress over the budget. The White House agreed to cuts in defense while Congress said it would help reduce expenditures on entitlements. A compromise was reached allowing the administration to adhere to its ``no new taxes'' promise while Congress searches for a way to raise $5.3 billion in new revenues. ``It does appear to be compromise instead of confrontation,'' says Stan Collender, a budget analyst for Price Waterhouse.

This is sharp divergence from the way President Reagan's White House operated. As Gary Bass of OMB Watch notes, ``Dick Darman stays away from making policy pronouncements. He looks to find solutions.'' This is not to say the administration can't dig in its heels.

President Bush remains adamant about not going along with an increase in the minimum wage to $4.55 an hour over three years. The presidential veto may get its first test this week after the Senate and House meet in conference to settle some differences in the legislation. Mr. Bush has said he will only accept $4.25 an hour.

The White House has also drawn a line in the sand over the thrift bailout. It wants the funding to be counted as an off-budget item. The House Ways and Means Committee, however, passed the legislation late last week and mandated that it be on-budget but exempted it from the Gramm-Rudman deficit-reduction target. The Treasury said Secretary Brady will recommend a presidential veto unless the bill is changed as it moves through Congress.

Policy at OMB can likewise cause waves. Only two weeks ago, Darman's domain drew fire when a government scientist said OMB had ordered him to change his testimony about the greenhouse effect. This embarrassing affair ended up on the nightly news with the administration appearing to censor it own employees.

Such inconsistencies make OMB observers a little nervous. OMB policy thus far, says Mr. Bass, ``is like gelatin - it is very wiggly and takes a while to set.''

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