Nation: Conservative Conservatism

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Laffer and Wanniski have now been shunted aside, and Kemp, while he still campaigns hard for Reagan, is no longer regarded as an influential issues adviser. The current program was shaped by study groups organized by Martin Anderson, a conservative economist who was an adviser on domestic affairs in the Nixon Administration. The panels included Alan Greenspan, former chairman of the Council of Economic Advisers and a member of TIME's Board of Economists, George Shultz, former Secretary of the Treasury, and Charls Walker, a leading tax expert. The group is sometimes joined by Arthur Burns, conservative chairman of the Federal Reserve Board from 1970 to 1978. The advisers acknowledge that the extra revenues generated by speedier economic growth will not offset the impact of the tax cuts, hence the sharp reductions in spending to avoid huge deficits.

Actually, Reagan's new program bears some resemblance to Carter's: both talk of reducing regulation, and the first-year tax cut that each proposes is roughly the same in dollar amount. There is one key difference. Ironically, Carter boasts that compared with Reagan's, his plan is tilted more toward encouraging business investment and less toward giving consumers more money to spend. Quips Alfred Kahn, Carter's anti-inflation adviser: "I'd like to know the night and the hour when the Republicans and Democrats exchanged economic philosophies."

For all its new realism, however, Reagan's five-year plan is still risky and open to bitter Democratic assault. Carter began the attack last week, blasting "the Reagan-Kemp-Roth tax proposal" before a group of New Jersey editors as "absolutely ridiculous . . . highly inflationary."

The attack on Reagan's economics is likely to focus on two questions. First, the charge that tax cuts on the scale that Reagan is advocating will reduce federal revenues far more than he calculates. The Carter Administration's Office of Management and Budget earlier put the cost to the Treasury by fiscal 1985 at $285 billion, compared with Reagan's claim of $192 billion. So enormous a reduction, the Democratic argument goes, would either produce ruinously inflationary deficits or force spending cuts so outsized that the Government would be unable, in Carter's words, "even to continue the routine programs that are designed to help the American people to a better life."

In the nature of economic forecasting, an arcane art that relies on calculations of production and income projected years into the unknowable future, neither side can prove its case. But even some Republicans are worried that Reagan has committed himself too strongly to major tax cuts too far in advance. Former President Gerald Ford left a dinner in Reagan's Chicago hotel suite last week to tell reporters that it was unwise to decide now how much to cut taxes in 1982 and 1983 because "I don't think we can see down the road to what the situation will be in 36 months." Democratic orators seized on his remark. Vice President Walter Mondale sniffed that "even Ford said he could not support" Reagan's tax proposals.