Baker Backs Economic Outlook, Predicts 2.2 Million New Jobs

Treasury Secretary James A. Baker III defended Reagan Administration economic forecasts Friday against charges of being too rosy and predicted that 2.2 million new jobs would be created this year.

Appearing before the congressional Joint Economic Committee, Baker ran into skeptical questioning about the Administration’s estimate that the economy would grow by 3.1% in 1987.

Sen. William Proxmire (D-Wis.), who heads the Senate Banking Committee, charged that by making overly optimistic predictions the Administration was ignoring a host of other economic problems and setting the stage for a massive letdown.

“The next morning always comes,” Proxmire said. “When we get it, it’s going to be a real lulu. I think it’s time to get off that happy, rosy cloud that you and the President ride so beautifully and get some gloom and doom.”

Near Other Prediction

But Baker argued that the Administration’s estimates were not far from the mark and that they differed only slightly from the 2.8% growth prediction from the bipartisan Congressional Budget Office.

“I just can’t accept it that we’ve got a too-rosy scenario forecast,” and the Administration is sensitive to the criticism, Baker said. “This year of all years I don’t think we’re coming in here with a too-rosy forecast.”

Translating the percentage figure into jobs, he estimated that 2.2 million new jobs would be created this year if the growth rate is 3.1%.

The Administration has said it expects the jobless rate to drop from about 7% to 6.7% this year.

Against Protectionism

On another subject, Baker said the Administration would work with Congress on trade legislation but would fight anything it viewed as protectionist. “We could not pick a worse time than the present to unfurl the banner of protectionism,” he said.

Baker also repeated that the Administration would fight any attempt to raise money through a general tax increase. House Speaker Jim Wright (D-Tex.) has suggested that the deficit could be cut by freezing some tax rates at 1987 levels and not letting them drop in 1988, as scheduled under the new tax laws.

“Politically, it’s just not going to happen on this President’s watch,” Baker said.