Word: feldstein
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...week of rosy economic news, Feldstein 's warnings rouse...
...White House, the upbeat mood was marred by some nagging warnings from an in-house Cassandra. For weeks, Martin Feldstein, chairman of the President's Council of Economic Advisers, has been cautioning that unless taxes are raised to cut the nearly $200 billion deficit projected for fiscal year 1984, the good economic news will turn sour. Moreover, Feldstein has been sounding off in public. Irked, the President's senior advisers tried to muzzle him last week with a public reprimand, which then degenerated into gratuitous ridicule. Their heavyhandedness succeeded only in drawing attention to Feldstein's message...
...good news strengthens the hand of Feldstein's chief rival for the President's ear on economic matters, Treasury Secretary Donald Regan. "The President thinks Don Regan's advice is better. Don not only tells the President what he likes to hear, but it turns out he was right," says an aide. What Regan tells Reagan is that the President can cut taxes, increase military spending and still have a sustained economic recovery. Regan won a round earlier this year when Feldstein drastically underestimated the strength of the recovery, earning himself the nickname "Dr. Gloom." More recently...
...Feldstein sees it, the White House must act quickly-in the 1985 budget that it will present in January-to reassure the financial markets. Already the markets are betting that high interest rates will soon push inflation, now running at less than 5%, toward double digits. For the short term, however, most Wall Street analysts are more bullish than Feldstein. If anything, consumers are more confident. Retail sales are running 20% over last year at some stores. Says Richard Thomas, president of First Chicago Corp.: "When people are not worried about losing their jobs, they are more relaxed about spending...
...embrace everything Feldstein backs. His support for massive social budget cuts in the face of defense funding increases, especially his insistence that Social Security should be slashed, are in line with Reagan's program. But we admire his willingness to do his job of impartial economic forecasts, stare down petty intimidation and stick to the truth despite the party line. The University can be proud that its professor of economics has at least given some Veritas to an Administration otherwise lacking...