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After Regan's attack on Fed policies, the White House pressured the agencies involved to produce some agreed-upon "guidance" that all spokesmen could adhere to. A memo of understanding, signed by Sprinkel and Stockman's top economic aide, Lawrence Kudlow, among others, said that all concerned agreed on a steady slow growth of the money supply, which the Fed was moving to accomplish. The message ended: "Nothing which has been said in recent days indicates a retreat from that commitment." A White House spokesman as much as admitted that concern about economic disunity had been only temporarily stilled. Said he: "I don't think you'll hear much about that—for a few days anyway."
In fact, the discord is being heard on Capitol Hill. Support for the President's economic programs among once loyal Republicans is beginning to weaken in Congress. "There are a lot of different signals,'' complained Republican Representative Jack Kemp of New York. In the House, Democratic leaders, with the help of Republican defectors, last week pushed through an appropriations bill for social programs to cost $87.3 billion in fiscal 1982, some $4 billion more than Reagan had wanted. Though the bill came within a whisker of matching Reagan's first round of budget slashes, it did not include the additional 12% across-the-board cuts the President had asked for last month.
Nevertheless, 39 Republicans ended up voting against sending the bill back to committee for paring. The White House threatened to veto the bill, and House Republican leaders say they have the votes to make the rebuff stick.
In the Senate, meanwhile, three influential Republicans are tinkering with Reagan's revised schedule of budget cuts and "revenue enhancements." The trio, Mark Hatfield of Oregon, Pete Domenici of New Mexico and Robert Dole of Kansas, do not contend that Reagan's proposal is not needed, but only that he made the wrong choices. Said Domenici:
"There's great concern that the President's mix won't work." Though the alternatives being offered by Hatfield and Domenici differ in specifics, both want to slice more out of the defense budget than the $2 billion requested by Reagan. Predicted Dole: "The Democrats are just going to sit back and see what we propose and then tell us how unfair it is."
Clearly Reagan can no longer make Congress do his bidding as easily as he did last summer, but chances are that he will win a large share of his second round of cuts. Even if the defense budget is pruned more than he would like, the Administration's economic program will be far from crippled. Reagan never promised a quick fix for the economy, and despite the growing chorus of worries about Reaganomics, the program needs time to be fully tested. Only then will the country be able to judge fairly whether or not the President's policies work. —By James Kelly. Reported by David Beckwith and Neil MacNeil/Washington