Nation: Trying to Build Confidence

• Share

Unemployment is down, inflation up. Houses are selling fast, cars moving slowly. Consumers are spending freely, businessmen deferring plans to build plants or buy machinery.

Personal incomes and corporate profits are both rising, while the dollar totters abroad and stock prices nosedive. One survey shows consumer confidence at a five-year high; another puts it at a two-year low.

Such are the jolting contrasts that make the U.S. economy a puzzling picture at the moment—as, indeed, it has been during most of Jimmy Carter's first year in the White House. To the public at large as well as to economists and businessmen, the contradictions appear to mirror an equally mixed-up management of the economy by the Carter Administration. Policy zigged from talking up a tough tax reform to abandoning most of it, zagged from professing unconcern about the dollar's slide to intervening actively in currency markets to prop up the greenback. Noting Carter's propensity for listening first to one economic adviser, then to another, Washington wits began quoting, accurately or not, a scathing description of Franklin Roosevelt supposedly offered by Economist John Maynard Keynes: "The President is like a big, fluffy pillow. He bears the imprint of the last person who sat on him."

More important, businessmen from Wall Street boardrooms to Main Street hardware shops have developed a set conviction that the Administration is unwilling, or perhaps unable, to craft any consistent, coherent economic strategy. That mood of mistrust is dangerous, not just to Carter but to the nation. As the White House now clearly recognizes, consumer spending has done about all it can to prolong the U.S. economic expansion; continued growth in the next two or three years will depend largely on business spending for new factories, new machines and, ultimately, new jobs.

That realization has come hard to Populist Carter, who, in the words of one top adviser, "has a block about Big Business." But it is a natural enough view for his Secretary of the Treasury, W. (for Werner) Michael Blumenthal, who, after a rocky beginning in his post, has in the past few months gained clear pre-eminence among the President's economic aides. Blumenthal is a former Big Businessman himself—he was chairman of Bendix Corp. before he came to Washington—and, though he has never been fully accepted by corporate leaders as one of their own, he knows how his former colleagues in the executive suite think.

It was Blumenthal who successfully promoted a fellow businessman, Textron Chairman G. William Miller, to become chairman of the Federal Reserve Board. It was Blumenthal, more than anyone else, who persuaded Carter that to try to push a sweeping tax reform program through this session of Congress would only frighten businessmen. It was Blumenthal, too, who decided in December that the time had come to intervene in money markets to halt the disorderly rout of the dollar, and who won Carter's approval to start the program while the President was traveling overseas.

Most of all, it was Blumenthal who last fall finally imposed some order on Carter's chaotic policymaking apparatus. Early in the Administration, programs were supposed to be coordinated by an