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The list is as closely guarded as the gold in Fort Knox, since millions of dollars could be made if someone got advance information. Besides, the Administration would not be unhappy to see some speculators against the dollar get burned. Says Harald Malmgren, a former State Department trade negotiator who runs an economic consulting firm in Washington: "The Administration has got to increase the fear of a downside risk so that people will be worried that they might have to buy dollars back at a higher price later. If done properly, it won't take that much money to accomplish the objectives."
But whatever immediate steps the White House takes—borrowing from the International Monetary Fund against the gold the U.S. has on deposit, extending the U.S. credit line with foreign central banks, coordinating intervention with other nations to support the dollar—the fundamental problems will remain. The two biggest: the 1979 federal budget deficit of more than $40 billion, and an inability to cut oil imports and thus the $30 billion trade deficit. Last week the compromise on natural-gas pricing approved by House-Senate conferees ran into serious opposition in the Senate, putting in doubt the passage of the energy bill. More generally, Carter has to convince a doubting world that he can manage the U.S. economy and, especially, bring inflation under control. The outlook is not promising. The Administration has just about given up on the jawboning conducted by Inflation Fighter Robert Strauss. "Bob and his mirrors have accomplished all they can," admits a top policymaker. "We've got to give some more substance to the fight against inflation."
An interagency group of officials is now working up a "Phase Two" program, which will be submitted to the President by mid-September. They have been instructed to explore every possibility except wage and price controls. "President Nixon did the easy one when he put on controls," says a participant. "But that didn't work, and everything else is difficult." One measure under consideration is the so-called TIP plan (tax-based incomes policy), which would give a tax break to companies that hold down wages and prices. But such a scheme would be a nightmare to administer. Admits a Treasury official: "We'd end up with as many pages in the federal register as if we'd put on wage and price controls."
Another possibility is to copy the successful British action of coupling a general tax cut with a pledge from labor to hold down wage demands. But unions are much more decentralized in the U.S. and probably could not be bound by such an agreement.
The fiscal 1980 federal budget is being scrutinized for cuts, since a deficit is financed by an inflationary expansion of the money supply. With the goal of trimming the deficit to below $40 billion, the Administration plans to impose strict new spending ceilings on most agencies.