That Monster Deficit

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triraming defense and raising revenues. The Democrats will be harping about the Republican deficits in the presidential campaign, but it will be a hard case to make. Congressional Democrats have moved slowly to reduce spending, and polls show that the public holds Congress even more responsible than the President for all the red ink.

American businessmen are concerned about the deficit. Says Chrysler Chairman Lee lacocca:

"It is a scandal. I don't know what It's wacko time." The public is likewise worried. "We've got to do something," says Leon Kaplan, a Los Angeles auto mechanic.

"Sooner or later, these deficits are going to catch up with us. I'm not worried about me. I've lived half my life now, own a house, drive a couple of nice cars. But I worry about my children." A survey of 1,000 registered voters conducted for TIME by Yankelovich, Skelly & White found that 64% consider the deficit a major issue, and 23% regard it as the most serious problem facing the U.S.

The budget gap alarms Wall Street. Says Robert Farrell, chief market analyst for Merrill Lynch: "In just a few weeks, the investany other to call public attention to the def icit dilemma is a member of the Reagan Administration. As chairman of the Presi dent's .Council of Economic Advisers (CEA), Martin Feldstein has been a combi nation of gadfly, maverick and doomsayer, a Cassandra amid a passel of Pollyannas, an adviser who insists on proffering un wanted advice. He has warned repeatedly that the deficit will stunt economic growth and that taxes may have to be raised.

Those are tocsins that the Administration does not want tolled at all, much less publicly, repeatedly and in the midst of an election campaign. Yet Feldstein has gone right on making unpleasant noises. While the President has promised to move force fully against the deficit after the election, Feldstein argues that it would be a big gam ble to delay taking action. "The longer the deficits are allowed to persist," he says, "the greater are the risks to our economy."

Despite a quiet, unassertive manner and a round, cherubic countenance that —has been compared with a Cabbage Patch doll's, Feldstein has — become one of the most celebrated and controversial chairmen in the 38-year history of the CEA.

While past chairmen may have disagreed with the White House, they have generally kept their differences private. The job, of course, is to advise the President, at whose pleasure the adviser is assumed to work. But Feldstein, who just 18 months ago was a little-known economics professor at Harvard, has become the Administration's chief whistle blower.

In that role, he has had almost continuous confrontations with Treasury Secretary Donald Regan, who is the President's chief economic cheerleader. Rarely, if ever, has an Administration had two top officials who so publicly and so flatly contradicted each other. Feldstein has maintained that deficits "push up interest rates. Regan has said that they do not.

Feldstein contends that the budget shortfall causes the dollar to be overvalued, inflicting severe damage on American export industries. Regan counters that the dollar is not overvalued and that its vigor is merely a reflection of the strength of the U.S. economy.

In testimony before