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Subject: Lessons From the Sages of WIN; Clinton's Economic Summit Plan Elicits Memories
Date: Tue, 17 Nov 92 04:36:11 EST
Message-ID: <20.1992Nov17.043611@AmeriCast.com>

Lessons From the Sages of WIN; Clinton's Economic Summit Plan El-
icits Memories of the Ford Administration's<By John M.
Berry<Washington Post Staff Writer= President Gerald Ford, like
President-elect Clinton, faced a host of economic policy deci-
sions when he took office in August 1974. Ford's first move was
to call an economic summit meeting.

 At his Thursday press conference, Clinton explained why he is
doing the same.

 "I'm going to have business leaders here," Clinton said. "We'll
have some people from labor here who understand the changes that
are going on. We'll have some distinguished economists here.
We'll have a lot of people who were part of this campaign and
some people who weren't," he said.

 "And it will be more in the nature of a retreat, in that sense.
I mean, I'm asking people to come here and go to work. You know,
there's not going to be much posturing and show about this; it's
going to be a lot of work."

 That was not the way it turned out for Ford.

 Ford's summit grew and grew, and by the time the meetings start-
ed, there were separate sessions with dozens of economists, bank-
ers and financial market executives, farmers and agribusiness
representatives, small business owners and managers and other
groups.

 The final outcome was a public relations extravaganza in the
ballroom at the Washington Hilton at which Ford listened to re-
ports from each group and announced his Whip Inflation Now (WIN)
program, which proved most notable for the fact that it would fit
on a lapel button and immediately became the butt of jokes.

 "The basic purpose (of the summit) was to air all of the per-
tinent views of the groups that were somehow related to it," re-
called Federal Reserve Chairman Alan Greenspan, who was chairman
of Ford's Council of Economic Advisers, in an oral history of the
CEA published in 1984.  "When you got everybody on the record,
all the various ideas, there really wasn't very much.

 "You will also find, if you go through the transcripts," Green-
span added, "that the economics panel did not foresee what was
going to happen over the next 12 months."

 What happened was a severe recession that was beginning just as
the summit sessions were being held, and no one knew it, includ-
ing Greenspan.

 The economists who gathered in the Roosevelt Room at the White
House for a day-long discussion of the economy's twin problems -
high inflation and weak growth - spanned a wide philosophical
range, from conservatives such as Milton Friedman to liberals
such as the late Walter Heller. Remarkably, their advice to Ford
was quite similar: step up federal spending or reduce taxes a
bit, and urge the Federal Reserve to pump somewhat more money
into the economy. The first step would increase the demand for
goods and services and the second would make it cheaper for busi-
ness and consumers to borrow.

 "A number of people called for tax cuts at the time or increased
federal expenditures, but those were the people who had always
been doing and saying this," said Greenspan in the oral history.
"In all instances, the (forecasting) models were wrong."

 Right or wrong, Ford ignored all the advice anyway. Instead of
boosting spending, he called for spending cuts. As for inflation,
there was WIN, which was basically a public plea by the president
for business and labor to refrain from doing things that pushed
up inflation.

 The notion of a WIN program emerged not from anything anyone
said at any of the summit sessions but from the White House
speechwriting office, and it originally included a call for a
voluntary wage-price freeze.  Greenspan persuaded White House of-
ficials to drop the freeze.

 "I was able to cut out a few of the proposals, but I was unable
to scuttle that whole program," the then-CEA chairman said. "It
was an unfortunate program from the beginning, precisely what
Ford did not need, and probably the low point in economic policy
making in the administration."

 One more durable result of the White House meeting and a second
session in New York was a list of 44 separate areas of government
regulation on which there was unanimous agreement that changing
or dropping them could lead to price reductions.

 Some prominent ones, such as deregulation of the trucking and
airline industries, came in later years. Others, such as market-
ing orders issued by the Agriculture Department, are still prop-
ping up fruit and fresh milk prices in some parts of the country.

 On balance, however, perhaps the best that could be said of the
Ford economic summit meetings, according to one official who at-
tended some of them, was that they "did symbolize that an old ad-
ministration was over and a new administration was in place, and
that it was open to and interested in outside opinions."<02:15
11-17C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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