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Its main elements are now familiar: the White House is to veto inflationary spending bills, reduce the cost to business of Government regulation and aim to start an era of tighter budgets, declining deficits and moderate, less inflationary economic growth. Meanwhile, the Government will plead with business and labor to hold price and wage increases below the average of the past two years. All this fits Miller's ideas so well that there is speculation that he and Carter have struck a bargain under which the Administration practices tax-and-spending restraint and Miller refrains from a stern hold-down on credit. Miller and Carter have no formal deal but a tacit understanding to roughly that effect.
Unfortunately, the anti-inflationary policy has got off to a stumbling start. In the first regulatory battle, over a proposal by the Occupational Safety and Health Administration to lower the level of cotton dust in mills—a proposal Carter's economic advisers considered too costly—the President gave in to the regulators. The Administration has won a few mostly symbolic pledges from some steel, aluminum-and automakers to limit price rises and executive salary increases. More dangerously, labor has refused to promise wage restraint. Meany calls Bosworth, a prune pleader for a wage hold-down, "that skinny redheaded s—."
Worse, inflation has built up unsettling momentum. One reason is a long series of past blunders by the Carter Administration: backing a huge increase in the minimum wage, promoting Social Security tax increases and thus jacking up business costs, forcing an expensive settlement of the coal strike. Another reason is that food prices are jumping, partly because of supply shortages caused by the brutal winter. Propelled largely by food costs, wholesale prices in June rose at an annual rate of 8.7%.
There are structural imbalances in the economy too that seem inaccessible to either monetary or budget policy. To cite just two: many of the unemployed are unskilled women, blacks and/or teenagers, whom employers are reluctant to hire unless demand reaches inflationary heights; medical and hospital costs seem to rise rapidly and inexorably no matter what is happening to business in general. Miller recognizes that such troubles need special attention, but they are no part of his responsibility at the Federal Reserve.
His formal duties are daunting enough. Eager though he is to promote a steady 4% growth, Miller vows that he will not pour out enough money "to validate the present inflation"—that is, to make credit available to anyone for whatever purpose. If he does, he says, "you will have runaway inflation and double-digit interest rates." If he holds the growth of money supply within his target range of 4% to 6½%, Miller thinks, growth will continue while inflation will run out of monetary fuel. But there is always a chance that growth will suffer instead.