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In San Francisco, both Regan and Federal Reserve Chairman Paul Volcker addressed the annual convention of the American Bankers Association. Regan made his now familiar pitch for the Fed to live up to its stated policies, adding that "I'm not saying anything publicly that I have not said for weeks in private." But Volcker pointedly rejected Regan's advice and stated flatly that he would not start pumping additional money into the economy. Volcker also denied that Regan had privately asked him to boost the money supply. Aside from their policy differences, there is little love lost between the two men. Volcker declined to appear at a joint press conference with the Secretary and left the San Francisco Civic Center shortly before Regan arrived to give his speech. "Volcker does not think Regan is the greatest Treasury Secretary in the world," grumbles one Treasury official. "Volcker thinks he knows more about economic policy than anybody else, even God."
But the squabble between Regan and Volcker is merely symptomatic of the disagreements that have been simmering for months among Reagan's economic advisers. From the beginning, critics of the Administration have complained that Reaganomics is riddled with contradictions. They predicted that the President's twin offensives, stimulating the economy by slashing taxes and braking inflation through tight money, would result in continued high interest rates and sluggish growth. The supply-siders and monetarists in the Administration kept an uneasy peace as the White House marshaled its forces to push Reagan's economic program through Congress last summer.
The united front began to crumble in September as it became clear that the package of tax and budget cuts was not making Wall Street bullish. The reason: high interest rates and fear of ballooning federal deficits. Stockman, who saw the spiraling interest rates as a way to justify his budget-cutting offensive in September, began blaming the rates on the deficits. When his plans for shaving Social Security benefits proved politically suicidal, the OMB chief committed himself to a supply-side heresy: he suggested a delay in carrying out some of the tax cuts just passed by Congress.
Regan then uttered his own heresy against Reaganomics by suggesting that the deficit could be pared by raising billions of dollars through jiggering the tax system. Though the President's message last month called for only $22 billion in ill-defined "revenue enhancement" measures, TIME has learned that Regan initially instructed his aides to find ways to raise $50 billion in new revenue over the next three years. Supply-siders fear that these measures will never be passed and Congress will instead opt to erase some of the individual tax cuts. Supply-side economic theory will then never have been tested at all.
Administration officials deny that its economic advisers are speaking in disparate voices. "There is a major, underlying core of agreement on the program that has been there all along," says Martin Anderson, White House adviser for domestic affairs. "No one disagrees with the broad thrust." Adds Weidenbaum: "We're all in tune. There are no ideologues among us."