Reagan Aides Abandon GOP Stance on Deficits: Economic Adviser to ...
President ReaganÛªs top economic advisers yesterday abandoned the traditional Republican stance that government deficits are the main cause of inflation, warning that it would be a ÛÏdisasterÛ if any basic change were made in the presidentÛªs economic policy.</br></br>William A. Niskanen, a member of the Council of Economic Advisers, stunned a conference sponsored by the American Enterprise Institute by arguing that ÛÏin general, concern about the [federal] deficit has been misplaced.</br></br>This new administration pitch was received by the AEIÛªs conservative establishment with only a slightly camouflaged sense of shock.</br></br>Herbert Stein, President NixonÛªs chief economic adviser and chairman of yesterdayÛªs session, retorted: ÛÏIt seems to me that President Reagan is the only member of the administration who believes that deficits are inflationary.Û administration is being buffeted by controversy over leaked budget es-Û÷ timates showing $100 billion-plus deficits annually for the next three years.</br></br>Calling for ÛÏa new perspectiveÛ on the budget, Niskanen suggested that instead of a goal of a balanced budget, the nation ÛÏshould be prepared to accept a deficit of $60 billion-plus ... for the current policy horizonÛ to prevent a contraction in ÛÏthe net worth of the federal government.Û