Rating Bush Economic Policy: Hot Air!

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`ONCE the do-nothing President Reagan retires, the pragmatic President Bush will begin to get a handle on the budget deficit and the balance-of-payments deficit."

Remember those cheery Wall Street predictions? How do they score two months into the Bush presidency?

Alas, the realists are proving to be right. The election-period hot air is revealing itself to be only hot air.

1.The Bush plan for a flexible freeze of budget expenditures, aimed at avoiding new taxes, is getting nowhere. Neither party in Congress takes it seriously.

2.The Bush proposal to cut the capital-gains tax rate down to 15 percent looks dead in the water. Over the President's four-year term, it figures to be a revenue loser, not a budget balancer. The other plans to coax out higher private savings and promote productivity miracles - for example, reactivating individual retirement account (IRA) privileges to free the fruits of long-term savings from taxation - could be afforded only if the Bush lips could bring themselves to say: "Let's put in value-added and other taxes on the masses of consumers, so that we can afford to motivate abstemious savers."

In short, the Bush program is so far d'ej`a vu, the Reagan program all over again. However, I see no convincing signs that the public is blaming George Bush for anything, any more than they blamed Ronald Reagan, the "Teflon" president.

The public couldn't care less about growing public debts and growing foreign ownership of American assets. Full employment is here and the economic expansion rolls on.

Indeed, the economy is overheating. Prices, and even wages, are starting to accelerate again.

The authorities at the Federal Reserve are beginning to have nightmares over the return of inflation.

The older hands at the 12 regional Fed banks have been nervous for many months now. Even the Reagan appointees to the Federal Reserve Board in Washington are starting to disbelieve their palaver about supply-side growth that will balance the budget and clamp down on prices.

Wall Street dumps its bonds and stocks when good job news hits the newspapers. …