Feldstein Involved in Political Battle

Harvard colleagues of Professor of Economics Martin S. Feldstein '62 last week said recent criticism of the chairman of the Council of Economic Advisors was politically motivated.

The professors said that Reagan Administration officials privately support Feldstein's public call for possible tax increases to offset soaring budget deficits.

But they added that White House officials want to dodge this issue because it may damage President Reagan's reelection chances.

"Any of these guys in private would say Marty's right," said Professor of Economics Lawrence H. Summers, who also worked for the council earlier this year. "There is no disagreement over substance."

"I don't know anybody in the economics field who would disagree with Feldstein's domestic policy," said James S. Duesenberry, Maier Professor of Money and Banking. "It's more a political matter."

Return to Harvard

Feldstein took the post as Reagan's top-ranking economics advisor in September 1982. He is expected to return to Harvard next fall, because a tenured professor may take only up to a two-year leave of absence.

But late last week it appeared as if Feldstein's Washington stay might end abruptly.

Feldstein reportedly received warnings from White House officials to withhold public criticism of Reagan's economic policies or resign.

This criticism reached a peak last Thursday, when presidential spokesman Larry Speakes openly ridiculed him at a press conference. When he discovered that Feldstein was at a lunch with other economic advisors, Speakes reportedly said, "He may not make it to dessert."

But Feldstein claims he is simply emphasizing parts of the President's budget message drawn up in January--aspects which the administration now wants to downplay.

Tax Increases

He has continued to discuss in particular a set of contingency tax increases, which would go into effect if proposed spending cuts did not reduce the $200-billion deficit by 1985.

"Marty feels that he is endorsing something that the President has asked Congress to adopt. I don't see anything unreasonable about that position," commented Summers.

"That tax increase is part of the President's program and has never been repudiated," said Feldstein's special assistant Geoffrey O. Carliner '65. "He [Feldstein] is surprised that they have misunderstood him. He does not disagree or criticize policy."

Reagan has previously passed small tax increases billed as technical amendments. But if he were to run for reelection, publicity of the contingency taxes and deficit problems could be harmful to him politically, experts explained.

"The Administration likes to emphasize their plan for a lower deficit, but they never talk about the means, said Summers.

Ideological Clash

Although professors said Feldstein's stances were consistent, they added the Har- vard economist clashes ideologically with other members of the administration.

Feldstein has long been in opposition to Treasury Secretary Donald T. Regan, who contends that tax increases are unnecessary to reduce the deficit, they explained.

Criticixing Regan, Summers said. "There is no remotely plausible economic projection on which the deficit gets our of three digits without a policy change."

"On this issue Feldstein is clearly right," said Francis M. Bator, Professor of Political Economy at the Kennedy School of Government.

Harvard vs. Harvard

Feldstein's chief opposition to open discussion of budget deficits is deputy chief of staff Richard G. Darman '64, a Harvard lecturer in Public Policy.

"Feldstein and Darman have no personal or underlying value disagreement," said Bator. "Their disagreement is very specific to what is going on now."

Summers pointed out that Darman, unlike Feldstein, was "in a heavily political position. He has been angry about Marty's talking publicly about deficits."

One professor who requested anonymity said, "It is natural that the economic advisors are more realistic and presidential sides more optimistic. Those components are more apparent now, since we have a particular optimistic president.