(7 of 10)
Instead, Miller moved swiftly to take charge. Board meetings that rambled on endlessly under Burns begin promptly and proceed crisply with Miller in the chair. He can move outside channels to get things done. Only two days after he was sworn in, he convened an extraordinary meeting of the FOMC in a conference telephone call to reach agreement on a $2 billion increase in West German support for the dollar. Not all is harmony, however; two weeks ago Miller voted against a quarter-point increase in the discount rate at which the Federal Reserve lends to member banks, but lost—a most unusual occurrence. The dispute seems to have been more over tactics and timing than fundamental policy, but it indicates that there may be hot debates in the future as the board tries to decide an exquisitely difficult question: At what point has it squeezed hard enough?
Miller seems to rely on a businessman's instinct rather than recondite financial learning. At one meeting that considered rules for a sale of Government-guaranteed mortgage bonds, he spoke of encouraging legitimate speculation but cracking down on market manipulation by bond houses. Another governor laughingly asked how the difference could be defined. Miller replied: "I can smell it."
He has also repaired the Federal Reserve's strained relations with the Administration. Miller meets regularly with Carter's economic aides (especially Blumenthal, a close ally, with whom he has breakfast at least once a week). Burns did too, but Carter aides complained that he gave them lectures about Administration policy while loftily declining to discuss what the Reserve was doing. Miller debates policy patiently enough to win high marks as a team player.
His advice has been highly effective so far, in part because Miller arrived in Washington just in time to tip the scales in a backroom debate. The Administration had started the year with a misguided program aimed at a continued strong growth, centering on the $25 billion tax cut. It assumed that unemployment was stuck at 7% and that inflation was at least stable. According to Washington gossip, Jimmy Carter has lately mused to aides that he might as well have listened to a fortuneteller in Americus, Ga., as to his economic advisers.
By March, Blumenthal and Barry Bosworth, head of the Council on Wage and Price Stability, were arguing for an about-face to an anti-inflationary policy; Domestic Affairs Adviser Stuart Eizenstat and Mondale contended that the necessity was not great enough to justify alienating various interest groups that would be hurt by spending restraints. Miller, at the independent Fed, was able to voice publicly the arguments that Blumenthal and Bosworth could make only in private, and thus build pressure on Carter. The President responded in April, launching a new policy that is still evolving.