TIME: Almanac 1993/TIME Almanac 1993.iso/time/013089/01308900.031

Text File | 1992-09-23 | 3.7 KB | 72 lines

                                                                                BUSINESS, Page 48

Boskin: "I Have a Lot of Strong Principles"


    The title suggests a position of great influence: chairman
of the President's Council of Economic Advisers. In the past few
Administrations, however, those who held the post tended to wind
up as voices in the wilderness rather than confidants in the
Oval Office. But George Bush's choice for the post, Stanford
University Professor Michael Boskin, 43, is a trusted adviser
and an open-minded scholar who could help restore genuine
authority to the job. Says Robert Litan, a senior fellow at the
Brookings Institution: "For the first time in recent memory,
the incoming chairman is someone who was deeply involved during
the campaign."

    The personable Boskin was one of the main architects of
Bush's flexible-freeze plan for cutting the budget deficit
without raising taxes. To make the freeze work, the Bush team
would have to limit increases on most domestic spending to the
inflation rate and at the same time boost economic growth and
reduce interest rates. Many economists think that combination
would be quite tricky to arrange. Says Lawrence Summers, a
Harvard professor and former adviser to Michael Dukakis: "I
would not want to skate on a flexibly frozen lake."

    While Boskin fits into the conservative range of the
economic spectrum, he is no ideologue. Born in New York City,
Boskin earned his three degrees at Berkeley. Says he: "I am
eclectic, but I have a lot of strong principles." His precepts
center on the belief that "market forces work best, but there
are situations where they don't work perfectly." Boskin's
primary concern about the U.S. economy is its low savings and
investment rate, a problem he attributes partly to the high
deficits of the Reagan era. The economist concedes that the
Reagan Administration's tax cuts did not inspire the increased
saving his research says they should have, but he maintains his
faith in the incentive power of such policies.

    Boskin's most controversial policy preference is reflected
in his call for changes in programs that in some cases amount to
handouts for the well-off, including Social Security and
agricultural subsidies. In his 1987 book, Reagan and the
Economy, Boskin wrote, "Welfare for the wealthy simply can no
longer be afforded." But he realizes that middle-class
entitlement programs are political nitroglycerin, and he has no
intention of embarrassing Bush by launching a public crusade.

    While Boskin seems assured of having Bush's ear, he will
have to share it with two other, better-known members of the
President's economic team: Richard Darman, the designated head
of the Office of Management and Budget, and Nicholas Brady, the
Treasury Secretary. Darman has already emerged as Bush's chief
strategist for the coming slugfest with Congress over the
budget deficit; Brady, a close friend of the President's, has
staked out Wall Street reform and U.S. competitiveness as his
turf. But Boskin may hold his own; he has a rapport with the
President that Darman lacks and more conceptual depth than
Brady.

    Most of his colleagues are pleased that Boskin was selected,
viewing his appointment as a sign that the Bush Administration
will be more accessible to outside ideas than its predecessor
was. Boskin certainly hopes that is the case: "I've always taken
very seriously the research of all schools of thought. I didn't
start out presuming they were wrong, because I wasn't wed to one
camp or another." That sort of thinking should be a boon to the
Bush Administration as it grapples with deficits and other
problems that so far have proved too big and intractable for one
narrow philosophy to solve.