Rush into the Breach

"... In the remainder of this year output will be rising more rapidly, prices will be rising much less rapidly and the unemployment rate, while it will probably rise further, will not reach a very high point before it recedes."

With those words, President Nixon sought last week to reassure a nation that has been unnerved about the economy. In a message to Congress, the President predicted that real gross national product would be growing at an annual rate of 4% by the fourth quarter, and that the pace of price increases would slow to 7%. Although that would be a considerable improvement upon the present combination of no growth and double-digit inflation, the price forecast is a bit more pessimistic than the Administration's earlier prediction of a 6% or less inflation rate by year's end. The forecast was a testament to the Administration's inability to devise a truly effective anti-inflationary policy.

Since the departure of Treasury Secretary George Shultz about a month ago, no one has been coordinating Administration economic planning. Last week, Nixon belatedly moved to fill that gap by naming his longtime friend Kenneth Rush as economic counselor to the President. Rush says he will be Nixon's "primary adviser" and "chief spokesman" on economic policy.

The President has known Rush since 1936, when Nixon was a student and Rush a teacher at Duke University law school. Rush later became president of Union Carbide Corp., Ambassador to West Germany and Henry Kissinger's No. 2 man at the State Department. Above all, Rush is absolutely loyal to the President. Earlier this year, when Rush was to meet a high-level delegation from Poland, a friend inquired: "Have you seen the Poles?" Rush replied: "I have, and 40% undecided about the President isn't bad at all." (He was thinking, of course, of public opinion polls.) Rush's most obvious drawback for his new job: he is not an economist.

His most important task will be to straighten out the Administration's economic planning apparatus and to close the public rift between new Treasury Secretary William Simon and Budget Boss Roy L. Ash. "As I see it, my job will be to coordinate various views and stimulate discussion," says Rush. "I would hope that early in the game we would be able to start working toward a common decision, a consensus."

Baying and Yipping. No consensus is yet visible. Simon has loudly advocated that the federal budget for fiscal 1975 be slashed below the $304 billion level proposed by Ash. Ash has sniffed that anyone who thought deep cuts were possible was "baying at the moon." Council of Economic Advisers Chairman Herbert Stein has declared that he too was for substantial cuts and might be considered "yipping at the moon."

Last week Rush took over as chairman of the daily economic-planning sessions attended by Simon, Ash and other top aides. Whether he will be able to quiet the feuding remains to be seen. Si mon, for example, disputes even Rush's description of his duties: "The President has said quite specifically he did not expect a consensus from us." Would Rush's presence have prevented the budget spat? "No," says Simon. "I would still have felt just as strongly one way, and the others would have felt as strongly the other way."

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