Business: Reagan's Stand: No Compromise

Though Ronald Reagan's chances of winning the Republican nomination are dimming, his campaign has had an impact on the nation's economic policy. The Californian has given exceptionally forceful voice to a persistent strain of Republican thought—and put unremitting pressure on President Ford to follow a rigidly conservative line. Reagan's followers will undoubtedly keep up that pressure throughout the campaign, if Ford carries the Republican banner. And if Reagan defies the odds and walks off with the nomination, the nation will hear a set of economic views that have rarely been voiced with such rigor.

Indeed, a problem confronting any still uncommitted delegate is guessing whether Reagan would be as unbending in the White House as he has been in his campaign pronouncements. If Reagan moderated his line a bit, there would be little ground for an economic-policy choice between him and Ford. Both give high priority to fighting inflation, and would combat it primarily by holding down federal spending. Both pledge to reduce the Government's role in economic life.

But Ford has compromised in seeking his economic goals, and Reagan's rhetoric admits of no compromise. In early 1975, for example, Ford accepted a swelling budget deficit as the price of ending the nation's worst postwar recession. In Reagan's view, budget deficits are something close to the root of all economic evil. Again, Ford last December reluctantly signed a bill that cut oil prices immediately and continued controls for seven years, though they will gradually be lifted. Reagan has never ceased to excoriate Ford for that act. In his view, all controls should have been ended immediately.

Certitudes Unlimited. In Reagan's mind, inflation is the great economic enemy, and the cause of most other ills. Says Reagan, with breathtaking assurance: "Inflation is the cause of recession, and the only cause." And what brings about inflation? "The one basic cause of inflation is Government spending more than it takes in."

So, proclaims Reagan, "the cure is a balanced budget." He argues that the Government should set a specific timetable for bringing spending into line with revenues and stick to it come what may. He implies that he would even accept a renewed recession as the price of carrying out that policy. Says Reagan: "In correcting inflation, I'm afraid there will temporarily be economic dislocation."

Reagan would also go much further than Ford in trying to cut down the Federal Government's size and power. His major proposal is his celebrated plan to turn over to state and local governments all federal activities in education, housing, community and regional development, manpower training and welfare. That would remove from the federal budget programs that now account for spending of around $90 billion a year. Though Reagan has not stressed that plan lately, he has never disavowed it; his aides insist that it has been misunderstood. The impression got around that Reagan would simply dump those programs on states and cities, which would have to raise taxes sharply to pay for them. Actually, Reagan would earmark a portion of the federal income tax collected in each state and locality to be kept there to finance the activities dropped by Washington.