That Monster Deficit

(3 of 11)
Congress, the Treasury Secretary, once the chairman of Merrill Lynch, ridiculed Feldstein as an ivory-tower professor who has spent too much time in the library. Regan has often dismissed Feldstein's fears about the deficits. "I wish those economists would sit back and relax," he said on one occasion. "This will be one of the greatest recoveries in history."

Where Regan is concerned, Feldstein holds his fire in public, but privately he can be condescending—and worse—toward the Treasury Secretary. Aides say that Feldstein speaks of Regan as a slow, recalcitrant student who must be patiently tutored and humored. He does an imitation of how the Treasury Secretary loses his temper, pounds on the table and utters a stream of expletives.

While Feldstein has infuriated Regan, he has aroused equally intense ire at the White House. Not since Budget Director David Stockman was taken to the woodshed for revealing doubts about Reaganomics in the Atlantic Monthly in 1981 has the Administration been so embarrassed, and harassed, by one of its economic gurus. The President's aides accuse the economist of being disloyal and giving ammunition to the opposition during an election campaign. Says one staffer: "He's made the CEA a four-letter word around here." On several occasions, the White House has censored advance texts of Feldstein's speeches and ordered him to cancel television interviews. The President has become so annoyed that he never consults Feldstein one-on-one, and the CEA chairman is often excluded even from small strategy meetings.

Atop policymaker who is one of Feldstein's handful of Administration allies thinks that many White House aides have become unreasonable and downright unfair to the economist: "They're saying he wants to get his national name recognition up to 40% and that he's determined to go down in the history books as the man who tried to stop those deficits. It's pretty nasty stuff. It's not really justified."

Over at the Treasury, Regan's staff professes to be amazed that Feldstein has lasted this long. Says one official: "He's incredibly arrogant. We can't understand why he hasn't been fired." He almost was last fall, but Administration campaign strategists fear that sacking Feldstein, who long ago announced plans to return to Harvard in September, would be politically more hazardous than keeping him on a while longer. The President has said that he does not want to make a "martyr" of the economist. Feldstein may be pushing his luck, though. Says one White House aide: "Sometimes it seems as if he's testing us to see just how far he can go. We don't know if he wants to be fired or not. Sometimes it seems like he does."

If the words have been hot and the tempers short, the importance of the issue justifies the emotions. "The deficit is the crucial economic problem." says Jerry Jasinowski, chief economist of the National Association of Manufacturers. "It is the central obstacle to a continued healthy economy."

The sheer size of the budget gap is al most beyond comprehension. In its weekly newspaper, the American Bankers Association tried to put a $180 billion deficit into perspective by calculating that in order to spend a billion dollars, a shopper would have to use up $100 a