President Reagan is being presented with a chance to shape economic policy for the next decade with two upcoming appointments to the Federal Reserve Board.
But the President also faces a dilemma--should he go with a supply-sider interested in economic growth or appoint someone more concerned about the battle against inflation.
Since the term for a Federal Reserve Board governor is 14 years, Reagan's choices will be influencing economic policy long after he leaves office.
In making the decision, the President will not be faced with a shortage of candidates willing to accept a prestigious appointment to the central bank's seven-member board.
Reagan will actually have two appointments to make to the Fed in coming months. One vacancy exists already with the resignation last month of Lyle Gramley to accept a job as chief economist of the Mortgage Bankers Assn.
The Administration will get another appointment next January when the term of J. Charles Partee expires.
With those two appointments, Reagan will have nominated a majority of the board. His two earlier choices came from the supply-side camp--Vice Chairman Preston Martin and Martha Seeger, both of whom have often dissented from the anti-inflation policies being pushed by Federal Reserve Chairman Paul A. Volcker.
Supply-siders believe in sharp cuts in tax rates and an easy monetary policy to stimulate the economy. Monetarists, on the other hand, advocate steady money growth as a way of guarding against inflation.
The Reagan Administration has often been pulled in opposite directions by these two economic philosophies.
In his first term, the President pushed for the deep tax cuts that supply-siders such as Rep. Jack Kemp (R-N.Y.) favored. But Reagan also reappointed Volcker to a second four-year term as chairman, in part because of the credit that Volcker is given in financial markets for his successful battle against the double-digit inflation that wracked the economy a few years back.
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And Reagan this year appointed Beryl Sprinkel, the leading monetarist in the Administration, to be chairman of the President's Council of Economic Advisers.
So far, the Administration is saying nothing publicly about its search process, but that hasn't stopped speculation about who the choices will be.
One person often mentioned as a leading candidate is Manuel Johnson, assistant Treasury secretary for economic policy and a favorite of many supply-siders.
Other favorite candidates of supply-siders are Alan Reynolds, chief economist at Polyconomics, a New Jersey economic consulting firm; former New York gubernatorial candidate Lewis Lehrman, and Wendell Wilkie Gunn, a former White House aide and now an economic consultant.
Several monetarists also have been mentioned as possible candidates.
One of these is Wayne Angell, an economics professor at Ottawa University in Kansas who is also a part-time farmer and banker. Angell is being pushed by Senate Majority Leader Bob Dole (R-Kan.), who even put out a news release to promote his man.
In addition to Angell, other monetarists whose names have been touted are W. Lee Hoskins, chief economist at PNC Financial, a Pittsburgh bank holding company, and James Meigs, who is retiring as chief economist at First Interstate Bancorp in Los Angeles.
Observers said they expect White House chief of staff Donald T. Regan, a former Treasury secretary, and the current secretary, James A. Baker III, to play key roles in making the decision.
While the Administration has known of Gramley's impending departure since late June, it still has not come forward with a nomination, leading some observers to believe that this shows the debate raging behind the scenes.
"This is normally an appointment a President fills with relish, but it sounds like there is a real battle going on between the monetarists and the easy-money people," said Michael K. Evans, head of Evans Economics, a Washington consulting firm.
There has been some speculation that the Administration may decide to split the difference--filling one vacancy with a monetarist and the other with a supply-sider.
But David Jones, an economist at Aubrey G. Lanston & Co., a government securities dealer, discounted this theory. He predicts that Reagan is likely to seek out successful bankers or businessmen for the Fed posts, rather than economists in either camp.
"I don't think the President is too receptive at this point to economists. The President doesn't want to sit around and listen to a lot of doctrinaire debate," Jones said.
One other factor to be considered will be geography. Under law, no two Fed governors can come from the same Federal Reserve district.
Gramley represented the Kansas City district and Partee represents Richmond, Va., which covers Washington, D.C. Other districts currently unrepresented are Cleveland, Atlanta, St. Louis, Minneapolis and Dallas.