Cut Deficit, Feldstein Asks Again: Cut in Deficit Again Urged By Feldstein
White House Economic Council Chairman Martin S. Feldstein yesterday told two congressional subcommittees that a decline in the ÛÏrealÛ international value of the dollar would help reduce the swollen trade deficit that is hurting many American industries.</br></br>But reiterating a position that has brought him into public controversy with Treasury Secretary Donald T. Regan, Feldstein said the ÛÏmain hopeÛ for a downward shift in the exchange rate lies in reducing the huge anticipated budget deficit burden over the next few years.</br></br>He ruled out intervention to manipulate the value of the dollar, although he said ÛÏit appeals to a lot of people.Û ÛÏThose who sense the urgency of shifting the dollarÛªs value to a more competitive level will recognize the need for immediate policy action to raise expected future national savings by substantially shrinking future budget deficits or increasing future private saving,Û he said.</br></br>Feldstein was testifying before a joint meeting of the House Banking subcommittees on international trade and on domestic monetary policy.</br></br>Regan, with the approval of the White House, has argued that tax increases to reduce the budget deficit should not be pushed at this time. Moreover, he insists that there is no direct connection between budget deficits and high interest rates, a thesis with which Feldstein disagrees.