Sprinkel Quits as Head of Reagan’s Economic Panel; Denies Post Lacked Clout

Beryl W. Sprinkel resigned Friday as chairman of the Council of Economic Advisers, a post that many economists believe has lost much of its former clout.

The 63-year-old Sprinkel, an orthodox monetarist and former Treasury official, cited “personal reasons” for his departure as President Reagan’s in-house economic adviser and said he intends to return to the private sector to consult, write and lecture.

The view that the council has been a declining force is “dead wrong,” Sprinkel said Friday, citing promises he elicited from former White House Chief of Staff Donald T. Regan and his successor, Howard H. Baker Jr., that the panel’s chairmanship would not be a “cold seat.”

But the prevailing view in Washington is that Reagan disdained the office, ignored most of its advice and delegated virtually all economic policy-making to Treasury Secretary James A. Baker III. In fact, before Sprinkel assumed the post in January, 1985, it had been vacant for nearly a year.

Nevertheless, Sprinkel, a top Treasury official in Reagan’s first term, accepted the job only after setting the condition that he be “wired into the decision-making process.” He moved to the council when Regan switched jobs with current Treasury Secretary Baker.

Set Conditions

“I told Don Regan, ‘if you’re asking me to go over there to sit on a cold seat with no influence, no respect, I’d have no interest in it,’ ” Sprinkel recalled in an interview. “I said I’d go over only if he could help me get wired back in. Don Regan and the President both promised, and they delivered.”

In part because Sprinkel was rarely quoted in public during his tenure as council chairman, many observers assumed that he had little influence. In his outspoken support of orthodox monetarist views at Treasury, he was a frequent public critic of the Federal Reserve’s tight money policies in the early 1980s.

“Why do you come to this town in the first place?” Sprinkel asked. “I came to exercise influence on economic policies and I found out early on that maintaining a relatively low public profile maximizes the probability of having real influence on the inside.”

It is widely perceived, however, that when Baker moved to Treasury, he took with him the President’s mandate to run economic policy.

Didn’t Get What He Didn’t Want

Reporters covering one of Sprinkel’s rare public appearances on Capitol Hill recall him conceding that he had been completely omitted from the decision-making loop in September, 1985, when Baker met European and Japanese finance ministers to initiate a new policy of a weaker dollar--probably the most important single economic policy decision of Reagan’s second term, as well as one that Sprinkel is assumed to have opposed.

“The fundamental point here is that this President didn’t want any economic advice, so Sprinkel met his needs: He didn’t give him any,” said Barry P. Bosworth, an economist at the liberal Brookings Institution and a former economics aide in the Carter White House.

Bosworth believes that Reagan, in effect, has delegated all economic policy-making to Baker, with the provision that there be no tax increases and no serious cuts in the defense budget.

“The main thing was not to talk about the ‘T word’ (taxes) with the President,” Bosworth speculated. “But it’s not a big deal: No one can force advice down the throat of a President who doesn’t want to listen to it.”

Allen Sinai, chief economist at Shearson Lehman Bros. of New York, noted that “Reagan has been his own chief economist” and that the Council of Economic Advisers and its chairman “have essentially been ignored by Reagan for years.”

Sprinkel said he has urged Reagan to appoint one of the two associate members of the council to replace him when his resignation becomes effective Nov. 30.