POLICY: Seeking New Solutions

After months of punishing inflation and sputtering production, public confidence in the Nixon Administration's management of the economy is fast running out. Last week, in a flurry of activity at San Clemente, the President sought to restore credibility to his programs. He held a well-publicized round of meetings with his top economic aides, Adviser Kenneth Rush, Budget Director Roy Ash and Herbert Stein, chairman of the Council of Economic Advisers —in what amounted to an economic summit meeting. This week the President was expected to make a major nationwide speech on the economy.

New Leaders. In addition, it seemed all but certain that the President would soon bring fresh leadership to the White House and name Alan Greenspan, a respected conservative economist and unofficial Nixon consultant, to succeed Stein as CEA chairman. The appointment will probably be announced soon. If, as expected, Greenspan is approved by the Senate Banking Committee, he will take up his new duties by September, when Stein returns to the faculty of the University of Virginia.

Unlike almost all past CEA chiefs, who were academics, Greenspan is a Manhattan business consultant who heads his own firm, Townsend-Greenspan & Co. Quietly persuasive, erudite and a master of detail, Greenspan will join the White House after declining several previous invitations with the understanding that his views will carry substantial weight. Among many economists, Republican and Democratic, Greenspan's appointment would be seen as a gain for the Administration. Walter Heller, who under President Kennedy was probably the most effective CEA chief, believes that Greenspan has "as good qualifications as any conservative economist you can find."

A staunch free-marketeer, Greenspan abhors wage-price controls, approves of a firm rein on money supply.

Thus, philosophically, he is not likely to quarrel with the present direction of Administration policy. But he will probably work for a shift in emphasis. As a member of TIME'S Board of Economists, Greenspan once summed up what he believed were the three key elements in economic management: "The budget, the budget and the budget." Greenspan will probably push strongly for a sterner approach to reducing Government spending. To him, almost every budget item—Social Security and health and welfare payments, military outlays, crop supports—should be considered for pruning.

Greenspan will face an imposing challenge in his new job. Last week, for example, the Government disclosed that consumer prices in June climbed 1% over the previous month, or at a scorching annual rate of 12%. The Commerce Department reported that the nation's output of goods and services, after dropping 7% in the first quarter, fell another 1.2% in the second. Though according to the most popular definition two consecutive quarters of decline in gross national product add up to recession, many economists do not believe that the slide has reached that stage yet.