Stockman Says Reagan Didn’t Grasp Policies

President Reagan was so uninformed on basic economics in his first term that he never understood how taxes related to budget deficits and blatantly contradicted himself in policy deliberations, former Budget Director David A. Stockman says.

In his new book, “The Triumph of Politics: Why The Reagan Revolution Failed,” Stockman paints a picture of a President who did not comprehend the consequences of his own tax and spending policies and who was “misled by a crew of overzealous--ultimately incompetent--advisers.”

Stockman, the principal architect of those policies, does not spare himself from blame for the massive deficits that they unleashed. He concedes that he helped create a “troubling atmosphere of misunderstanding” and failed to communicate adequately some of the dangers to the President.

Soaring Deficits

But as soaring budget deficits threatened in 1981 to cause serious economic problems, Stockman sounded exasperated by a President who refused to consider a tax increase as a response.

After Stockman raised anew the idea of a contingency tax for the 1985 budget, Reagan responded with a 20-minute lecture, leaving the frustrated budget director to ponder: “What do you do when your President ignores all the palpable, relevant facts and wanders in circles? I could not bear to watch this good and decent man go on in this embarrassing way.”

White House spokesman Peter Roussel said the Reagan Administration would have no comment on the book.

In another book to be released at the end of this month, Owen Ullmann’s “Stockman: The Man, the Myth, the Future,” the former budget director is reported to have joked privately that the President might be getting a little senile. While Stockman does not go that far in his own book, he quotes lengthy, rambling private conversations by the President as evidence that Reagan had little or no grasp of his own policies.

Excerpts from Stockman’s soon-to-be-published book were released Saturday by Newsweek magazine, which is publishing them in two installments beginning with this week’s issue.

Stockman, who got a $2-million advance for the book and now is a high-paid Wall Street broker, first criticized Reagan’s economic program in a December, 1981, Atlantic Monthly article. He was quoted as saying the “supply-side” economic theory underlying Reagan’s policies was a disguised version of traditional Republican “trickle-down” economics designed to aid the wealthy in hopes the benefits would filter down to the rest of the economy.

Taken to the ‘Woodshed’

White House officials later told the press that Reagan had taken Stockman to the “woodshed” for a verbal licking but was retaining him as budget director. Stockman writes that he went along with that apocryphal story, which was made public through the news media, because Reagan’s closest aides were infuriated by the article and demanded that he do penance.

Actually, according to Stockman, he was called to the White House and reprimanded only by then-White House Chief of Staff James A. Baker III before being ushered into a private lunch with the President. Reagan, who had read the article, told him that “you’re a victim of sabotage by the press. They’re trying to bring you down because of what you have helped us accomplish.”

In Stockman’s view, Reagan’s reaction, while preserving his scalp, also demonstrated a more important truth--that the President was “too kind, gentle and sentimental” to approve Stockman’s plans to slash government programs.

‘A Consensus Politician’

Stockman writes that what he calls “the Reagan Revolution”--a combination of deep tax cuts and massive reductions in government programs--was doomed from the start because the President “was a consensus politician, not an ideologue. He had no business trying to make a revolution because it wasn’t in his bones.”

The President was swayed by “hard-luck stories” about the impact of budget cuts, he declared, and a revolution “meant complete elimination of subsidies to farmers and businesses. It required an immediate end to welfare for the able-bodied poor. It meant no right to draw more from the Social Security fund than retirees had actually contributed, which was a lot less than most were currently getting.”

Hence, Reagan favored only half of the “Reagan Revolution”--the tax cut. He bought the tax cut, Stockman says, “because it seemed to be validated by an anecdote from his own personal history--the way high wartime taxes had prompted some movie makers to quit after just four films each year.”

That episode, Stockman writes, reflects his judgment that Reagan is an “incorrigible optimist” whose “body of knowledge is primarily impressionistic: He registers anecdotes rather than concepts.”

Reagan’s impression of the impact of high taxes on movie making helped give birth to the tax cut enacted by Congress in 1981. And when that spawned massive deficits, Stockman tried to use them as leverage to press Reagan for ever-deeper spending cuts.

In late 1982, he devised a multiple choice quiz for the President that he hoped would get his message across. The quiz divided the budget into about 50 spending components and gave three spending choices on each, ranging from “a nick to a heavy whack.”

Reagan enjoyed the test “immensely,” according to Stockman. But because he mostly favored nicks over whacks, he “flunked the exam; after making all his cuts, the five-year deficit remained at a staggering $800 billion. Although the projected national debt under his budget would reach $2 trillion by 1988, Reagan’s fist came down hard on the table when the discussion turned to taxes. ‘I don’t want to hear any more about taxes,’ he insisted. ‘The problem is deficit spending.’ ”

Stockman writes that he found it “difficult to politely correct the President of the United States when he has blatantly contradicted himself. The $800 billion worth of deficits were the result of spending he didn’t want to cut out.”

Campaign to Blame Carter

Faced with projections of such staggering deficits, Stockman says, the White House decided to launch a campaign blaming the deficit on former President Jimmy Carter. Stockman quotes Edwin Meese III, then counselor to the President, as saying: “We inherited this mess. Bad as it is, we need to get out how much worse it would be under the old tax-and-spend approach of Carter.”

A radio speech by the President would pin the blame on Carter, and Stockman was directed to supply proof.

But Stockman, in a memo to the President recommending that the speech be canceled, “pointed out that by 1986, the deficit would still be $150 billion even if Congress had enacted every cut in our original budget. As for the mess we inherited from Jimmy Carter, well, oops! Under his policies, the deficit by 1986 would only have been $80 billion.”