(4 of 10)
Though Washington still rings with praise of Miller, some liberals in the Administration and Congress are grumbling that every new Federal Reserve chairman seems to bring about a recession out of excessive anti-inflationary zeal—and "Miller has to have his recession too." Last week Robert Strauss, Carter's special counsellor on inflation, complained that the Federal Reserve's course was "counterproductive"; and Charles Schultze, chairman of the President's Council of Economic Advisers, expressed fear that any further tightening of monetary policy could hold back economic growth. Otto Eckstein, a member of TIME'S Board of Economists, warns: "There is not a single instance of success in raising interest rates to moderate the economy without creating a major disturbance. The Federal Reserve has carried the policy too far every single time."
The peril is recognized by Miller, but he says that it will become a reality only if the Administration forces him to fight the anti-inflation battle all alone—for example, if Carter & Co. keep running gargantuan deficits and let environmental and safety watchdogs impose ever more costly regulations on business. If the Administration and Congress cooperate by restraining spending, he insists, the Federal Reserve can make enough loan money available for every "productive use," but not so much as to tempt business into inflationary inventory hoarding and payroll padding.
Miller is convinced that if Government will stop feeding inflation by running big deficits, "we can look forward toward a model economy five, six, seven years from now." He has even drawn up a detailed timetable: shrink the deficit further to $35 billion in fiscal 1980, $17 billion in 1981, zero in 1982. In consequence, as much as $ 100 billion that the Government might pour out in deficit spending would be transferred to private industry and consumers for their own, noninflationary purposes. '
In a long talk, Miller outlined other elements of his five-year plan to TIME Economic Correspondent George Taber: "It's important to move our investment level up from the present 8% or 9% of G.N.P. to 12%. That would mean $75 billion more investment per year. We would once again assure ourselves a modern productive capacity and technological leadership. In this model economy, the housing industry must be thought of. To 1.8 million new houses and apartments this year, we should add 100,000 starts a year until we get to 2.3 million or 2.4 million, which is what we really need. Then I'd like to see exports, which are now 7% of G.N.P., grow to 10%. And I'd like to see us seriously address our regulatory burden and reduce it. The consequences will be full employment and price stability and a sound dollar."
Investment should be encouraged, Miller believes, by allowing businessmen to take faster tax write-offs on their new plant and equipment. That change can be enacted only by the Administration and Congress. His whole program is based on the idea that Government spending must be reduced from the current 22% of the G.N.P. to 20% by the early 1980s.