TIME: Almanac 1993/TIME Almanac 1993.iso/time/caps/81/81.33

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                °(+â+                                                        ╚September 21, 1981

NATION

Making It Work


Despite choppy waters, the President holds steady on Reaganomics


"Can anyone here say that if we can't do it, someone down the
road can do it?  And if no one does it, what happens to the
country?  All of us here know the economy would face an eventual
collapse. I know it's a hell of a challenge, but ask
yourselves:  If not us, who?  If not now, when?"

With those stern words last week, Ronald Reagan ordered his
Cabinet to find new ways of cutting as much as $15 billion out
of next year's budget and a stunning $74 billion in 1983 and
1984. And with those demands, the President opened Chapter 2
in the history of Reaganomics, the Administration's bold plan
to alter fundamentally the policy directions of the past
half-century and to put the U.S. back on a course of steady,
noninflamtionary growth after years of stagnation and inflation.

When Reagan left Washington in August for a month long vacation
at his California ranch, he had just wrapped up Chapter 1 and
had every reason to feel satisfied, even a bit smug. No
President since Franklin D. Roosevelt had done so much so
quickly to change the basic path of the American economy.
Though critics had confidently predicted that Congress would
never go along with his daring "supply-side" strategy of large
budget cuts and deep tax reductions. Reagan had pushed his
programs through the House and Senate virtually intact.

But back in the White House last week, the President had to face
the sobering reality that his job of overhauling the U.S.
economy has barely begun. Even before the program's first tax
cut was to go into effect, on Oct. 1, doubts about Reaganomics
were proliferating, notably on Wall Street and among
Congressmen, aided and abetted by some economists and editorial
pundits.

Despite the disquiet--even near panic in some sectors--the
economy overall is doing surprisingly well in a number of ways.
Near record interest rates have hampered growth, but most
experts do not foresee anything like a major drop in the
economy. To the contrary, after a period of sluggishness,
industrial production is expected to rebound sharply. TIME's
Board of Economists, which met last week in New York City,
predicted that by the second half of 1982 business would be
growing at a robust 4% annual pace. Alice Rivlin, the director
of the Congressional Budget Office and a guest participant at
the meeting, reported that her office is assuming a 4% annual
economic expansion in the years 1983 and 1984. Said she:  "We
are quite optimistic about the outlook for the economy."

What matters most to most Americans, as polls have shown in
recent years, is inflation--and inflation is coming down.
TIME's economists noted that price increases have slowed from
17.3% in the first quarter of 1980 to 10.8% during the past
three months. It is not so far Reagan policy as much as his
good luck that is responsible, but the economists now expect
that inflation will fall even further next year, to 7.4%, and
that will in good measure be to the credit of his policies, with
a lot of help from the Federal Reserve Board.

Why, then, the sudden outburst of postsummer anxiety, even
before Reaganomics has a chance to show what it can do?
Nearsightedness in a word. And a fear that, in the long run.
Reagan cannot deliver what he has promised. Or, put another
way, a mix of present pain and future lack of faith. A sizable
part of the President's problem stems from the fact that the
most vigorous critics of Reaganomics are focused on the short
run; Congressmen worried about re-election next year, brokers
buying and selling stocks minute by minute, businessmen who need
loans.

But neither Reaganomics nor any plan for restoring business
stability can be expected to work like an economic Valium tablet
and provide instant relief. "It took us 20 years to get into
this mess," says Getty Oil Co. Chairman Sidney Petersen. "We
are not going to get out of it in the next 20 months."  Adds
James Howell, chief economist for the First National Bank of
Boston:  "Wall Streeters remind me of a mother on her daughter's
wedding night. They just need to be a lot calmer, and we'll get
through this."

For now, though, attention is focused on current troubles rather
than on latent--and later--possibilities. Millions of families
cannot afford loans for new homes or automobiles. Thousands of
small businesses are going bankrupt. Says Dwayne Walls, 49, a
home remodeler in Chapel Hill, N.C., who is stuck with ten
unsold houses because of towering mortgage rates:  "I really
don't see any end to 20% money. The bankers just keep telling
me to hang on, but I'm just one little itty-bitty speck in this
whole thing. I don't understand what's going on."

Those high interest rates have paralyzed American financial
markets. Stock prices have fallen to their lowest level in 15
months, and corporate bond values are reaching record depths.
Says David Jones, chief economist for the Wall Street
securities firm of Aubrey G. Lanston & Co.:  "The feeling in the
market is horrible. Prices just keep falling. It's utter
frustration. Hopelessness."

Wall Street's main concern is the bulging federal deficit, which
is $55.6 billion this year and rising. Government borrowing
weighs heavily on credit markets already strained by brisk
demand for business loans, including the huge sums to finance
megabuck corporate mergers like that between Du Pont and Conoco.
The Administration has predicted that the deficit will shrink
to $42.5 billion in 1982, and disappear altogether by 1984. But
those targets are fast slipping away. The Congressional Budget
Office forecast last week that the deficit would be $65 billion
in 1982 and would total an extra $50 billion in 1984. As the
Federal Reserve continues to restrict the growth of the money
supply in its fight to bring down inflation, such unrelenting
credit demand from the Government is bound to keep interest
rates high or force them even higher. As if to underline the
deficit problem, the Senate will open debate as early as next
week on a bill to raise the nation's debt ceiling beyond the $1
trillion mark, a figure whose symbolism, as well as size, is
certain to catch headlines everywhere.

Concern about the deficit, interest rates and the slumping
stock market was enough to persuade Reagan last week to try new
versions on some parts of his economic program. During a
75-min. meeting on his first morning in the Oval Office after
the Labor Day weekend, Budget Director David Stockman told the
President that broad new cuts in federal spending would have
to be made soon if Reagan were to have any chance of fulfilling
his promise to erase the federal deficit by 1984 and restore
business confidence. Said Stockman:  "Wall Street is skeptical
because they have seen a decade of broken promises. We have to
make believers of them."  The President agreed:  "We've got to
hold down the budget deficit and stay on target."

After the meeting, the White House announced that the President
would soon propose major new cuts in federal spending. To
emphasize his determination to balance the budget, Reagan has
tentatively decided to trim $13 billion from his once sacrosanct
defense spending goals over the next three years. His only
alternative would be a politically risky move to reduce Social
Security benefits. Defense, Social Security and interest on the
national debt make up about 60% of the budget, and other
programs have already been slashed to bare-bone levels,
prompting street demonstrations by labor unions and other angry
groups. Without rollbacks in Social Security or military
spending, said Alice Rivlin last week as she testified before
the House on the budget outlook, "you would simply have to close
down the rest of the Government."

Any new cuts in federal spending, however, will face a difficult
time in a Congress that is becoming increasingly uneasy about
Reaganomics. Said Senate Majority Leader Howard Baker last week:
"Already Senators are saying to me, 'What the hell difference
does it make?  If we cut another $10 billion to $15 billion, the
financial community will just come back and ask for another $15
billion cut."

During the month the President was in California, legislators
returned to their home districts, where many of them heard loud
complaints about the level of interest rates. Said House
Republican Leader Robert Michel of Illinois:  "We can't live
with a 20% prime. Something has got to give in the next 90
days."  Added California Republican John H. Rousselot, a strong
Reagan backer:  "On a crisis scale of one to ten, I'd say we're
about seven and climbing."

The President himself sowed many of the seeds of the current
disillusionment by his boundless campaign promises and early,
far too rosy economic predictions. Rather than adopting a
Churchillian posture and admitting that it would take sacrifice
and patience by all Americans to set the economy right. Reagan
has steadily underplayed the pain involved. During last year's
presidential campaign, he pledged that strong growth, less
unemployment, lower inflation and a restoration of American
military might were all just over his supply-side horizon.

Once the new Administration was in office, the happy talk
continued. When the supply-side Reaganauts were preparing to
unveil their economic plan last February, they used imaginative
new computer models to project what would happen when their tax
cuts took effect. The results were absurdly Pollyannaish.
Growth in 1982 was going to surge to 7%, while inflation would
fall to 6.5%.

Businessmen and economists immediately scoffed at the idea that
the problems of sluggish growth and high inflation could be
solved that quickly. Charles Schultze, former chief economic
adviser to President Carter, called the Administration numbers
"wishful thinking."  Murray Weidenbaum, Reagan's top economist
and other officials eventually persuaded the Administration to
tone down its projections. Yet even then, Reagan's aides,
apparently counting on pure psychology to do the job,
steadfastly insisted that high interest rates would fall
sharply once Congress passed its proposals for budget cuts and
tax reductions.

The reality of the new Administration's economic program, of
course, turned out to be far different from Reagan's campaign
speeches and his Government's early projections. Though
industrial production and investment were somewhat higher than
most economists expected in view of the high cost of borrowing
money, the specter of those larger-than-expected budget
deficits soon began to cast a shadow over the whole Reagan
program. Says Donald Miller, vice chairman of the Continental
Illinois Corp.:  "Supply-side economics has been oversold, and
people have come to expect too much."  Adds Conservative
Economist Martin Feldstein, president of the National Bureau of
Economic Research:  "I think the Administration hurt itself by
a series of unbelievable statements, starting with those
optimistic forecasts about growth of the economy."

The credibility problem of Reaganomics is based, in part, on
its origins. In a sense, it was born one evening in December
1974, in the Two Continents restaurant in Washington D.C. Three
men were sipping drinks:  Arthur Laffer, a young economist with
an early-Beatles haircut who was considered a maverick by many
of his colleagues; Jude Wanniski, an editorial writer for the
Wall Street Journal; and Richard Cheney, a White House aide
under President Ford.

Laffer argued that the fundamental problem with the American
economy was that federal tax rates had got so high that they
were beginning to discourage work and investment, and were thus
holding down the supply of goods in the economy. Because the
demand for goods raced ahead of their supply, inflation had
become a chronic problem.

If tax rates were slashed, Laffer said, the result would be a
boom in work, saving and investment. The "supply side" of the
economy would be so stimulated that before long the Government
would gain more revenue than it lost through cutting taxes. To
illustrate his point, as legend now has it, Laffer sketched a
crude diagram on a cocktail napkin on the table. It showed that
if taxes went too high, the Government would take in less
revenue because people would be working less. That first Laffer
curve landed in a wastebasket, but it was destined to become one
of the most controversial concepts in recent economic theory.

Wanniski became Laffer's most avid apostle and spread the gospel
of tax cutting with all the fervor of a circuit-riding preacher.
An important early convert was Jack Kemp, a New York
Congressman and former quarterback with the Buffalo Bills. In
1977 Kemp, together with Senator William Roth Jr. of Delaware,
introduced a bill in Congress to reduce personal income taxes
by almost 33% over three years.

Although the plan was defeated in Congress, the Kemp-Roth bill
gained a loyal support; Ronald Reagan. As the 1980 presidential
campaign began, the tax-cut proposal was the centerpiece of his
economic policy. But when Reagan wrapped up the Republican
nomination, the G.O.P.'s mainstream economists flocked to his
fold, and the influence of Laffer, Wanniski and Kemp waned as
old-line conservatives began having impact. Among the most
prominent:  Alan Greenspan, Gerald Ford's chief economic
adviser; George Nixon; and Arthur Burns, former Federal Reserve
Board chairman. Some of those non-Administration advisers met
with Reagan last week to discuss the new budget cuts.

The traditional economists gradually began to shift Reagan's
program away from the original supply-side doctrine. Laffer
assumed that large tax cuts would not be inflationary because
they would stimulate enough business to compensate for the lost
revenues by significantly increasing the Government's total tax
take. But Reagan's more conservative advisers convinced him
that tax cut--and the inevitable, initially huge budget
deficits--would fuel inflation unless accompanied by measures
to restrain demand. Thus Reaganomics now includes not only a
supply-side tax reduction buy also calls for less Government
spending and strict control over the growth of money.

Although the Democrats had no alternative economic program to
offer--and have yet to produce one--they immediately pounced
on the problems that they saw as inherent in Reaganomics. They
charged that the Administration was papering over the
fundamental conflict between the President's main
goals--stimulating the economy by cutting taxes and slowing down
inflation through tight money--resulting in high interest rates
and sluggish growth. Compounding the difficulty was Reagan's
proposal for a large and simultaneous increase in defense
spending.

As the critics pointed out, Reagan's big tax reductions were
bound to swell the size of the deficit, at least in the short
run. But the Federal Reserve, which controls the growth of
money, has not let credit grow faster to pay for those deficits,
so the Government's borrowing demands are pushing up interests
rates. The result is the current staggering levels, which
threaten to choke off the private investment boom that the tax
cut is supposed to bring about. Says Oklahoma Democrat Jim
Jones, chairman of the House Budget Committee: "My fear is that
the program now put in place by the Administration is the
equivalent of stepping hard on the gas at the same time as you
slam on the brakes. The result will sound spectacular--until
either the brakes fail or the engine blows. It is a gamble of
titanic proportions."

Traditional Keynesian economists were the sharpest critics.
Said John Kenneth Galbraith, a professor emeritus at Harvard;
"The Administration has promised vigorous expansion through
supply-side incentives in combination with monetary policy that
works through high interest rates and a powerful contraction of
the economy. This contradiction can only be resolved by divine
intervention--a task for the Moral Majority."  Adds Walter
Heller, who was President Kennedy's chief economist:  "Only an
ostrich could have missed the contradictions in Reaganomics."

Yet even some leading conservative economists predicted that
the Reagan program would soon run into trouble. Said Robert
Lucas, professor of economics at the University of Chicago:
"This Administration has committed itself to a whole series of
tax cuts, and it's going to be hard as hell for them to reverse
course. They have locked themselves into some very tough
arithmetic, especially since they have been overoptimistic about
the benefits of the tax cuts."

TIME's Board of Economists agreed at its meeting last week that
American business faces some difficult times in the next few
months. But once beyond these choppy waters, the prospects for
the economy in terms of growth and reducing inflation are
markedly brighter. However, there will undoubtedly be stress in
the short term.

Growth. After expanding at annual pace of 8.6% in the first
three months of the year, U.S. production of goods and services
fell at a 2.4% annual rate during the second quarter. TIME's
economists expect little or no growth for the rest of the year.
From 1982 on, business activity is expected to be stronger.

Inflation. The board optimistically projects that price rises
will fall from the 10.8% annual rate of the past three months
to about 8% at the end of the year. A bumper crop harvest will
hold down food costs, and the continuing ample supply of oil
improves the energy outlook. Said James McKie, a University of
Texas energy expert:  "I think the prospect is for level or
somewhat declining prices for oil unless there is some major
supply disruption."  Otto Eckstein, chairman of Data Resources,
a business consulting firm, estimated that oil prices, after
being adjusted for inflation, will fall by 3% annually for the
next two years. Finally, the board members expect that Federal
Reserve Chairman Paul Volcker will maintain monetary discipline
to guard against any new burst of inflation.

Interest Rates. Volcker's tough policy will keep the cost of
borrowing money high. The TIME board predicts that the prime
rate for business loans will edge down slowly from the current
20 1/2% to 17 3/4% by the end of the year. But intense upward
pressure on rates will come from strong federal borrowing. The
economists agree with the Congressional Budget Office that
without new budget cuts, the deficit will reach about $65
billion next year, some $23 billion more that the White House
has predicted. Said Joseph Pechman, director of economic
studies at the Brookings Institution in Washington:  "The
financial markets are telling us that the Administration
deficit forecasts are pie in the sky."

The board recognized that continued high interest rates will be
necessary, for a while at least, to curb inflation. Said
Schultze: "We cannot cure inflation painlessly."

That pain is already intense for businesses dependent upon the
easy availability of low-cost loans. Auto sales this year are
running 30% below the same period in 1978. Home construction
for the year is expected to plummet to its lowest level since
1946. "The housing recession is now 34 months old and
counting," says Jack Carlson, chief economist for the National
Association of Realtors. "We've never had one that long
before."

So far this year, 11,076 companies, most of them small, have
gone bankrupt. That is 42% more than during the same period in
1980. Most big companies have been able to handle their cash
flow problems. The balance sheets, though, are getting tighter
and tighter. Warns William Silber, a New York University
professor of finance:  "With interest rates at these levels,
there could be major bankruptcies within months."

Once familiar company in danger is Pan American World Airways,
which has lost $217.6 million in the first half of this year.
In a desperate attempt to raise cash, the company last year
sold its Manhattan headquarters for $400 million, and in August
it got an additional $500 million for its profitable chain of
97 Intercontinental Hotels. In another attempt to stay aloft.
Pan Am last week slashed its domestic fares by up to 68%. The
move may be futile, though, because other airlines quickly
followed Pan Am, setting off a new price war in the skies.

Many savings and loan associations, which have always been the
mainstay of home financing, are also hurting. To keep their
deposits, these thrift institutions must pay as much as 16%
interest, though many of the old mortgages on their books earn
them less than 10%. As a result, an estimated 85% of all S and
Ls are losing money. Administration officials are confident that
most of the S and Ls have large enough capital reserves to tide
them over until rates fall. But some financial experts are not
so sure. Says the president of one of the largest U.S.
commercial banks:  "It could be a major setback to Reaganomics
if a bloody disaster of failing S and Ls were allowed to happen.
We are on the verge of that now, and it could so hurt
confidence that everything accomplished by Reaganomics to date
could be wiped out."

Last week the West Side Federal Savings and Loan in New York
City and the Washington Savings and Loan in Miami were acquired
by National Steel Corp.'s financial subsidiary. The Government
played matchmaker by paying National Steel subsidies--currently
around $9 million a month--until its new partners return a
profit.

As businessmen suffer more and more from the sky-high interests
rates, pressure will build for Federal Reserve Chairman Volcker
to ease up on the monetary brakes. Although monetary
responsibility is supposed to be one of the keystones of
Reaganomics, the Administration has hinted on several occasions
in the past few weeks that it might consider a somewhat looser
credit policy. Treasure Secretary Donald Regan first mentioned
this possibility in an interview last month. At a California
fund raiser, the President said that high interest rates were
"hurting us in what we are trying to do."  In an interview with
FORTUNE magazine, the President called for "some loosening" of
the money supply, while admitting that "we can't dictate to the
Fed."

Among Reagan's advisers, battle lines are already being drawn
between the monetarists, who back Volcker's tough stance, and
the supply-siders, who are afraid that tight money will not
give the tax cuts a chance to work their magic. If they in fact
change policy, it may be from very tight to merely tight. Says
a White House aide:  "There is an attitude by some of the
supply-siders within the Administration that the monetarist have
until the end of the year. Then we may have to jawbone the
Fed."

But forcing the Federal Reserve to adopt a looser money policy
might be an extremely shortsighted strategy. As Reagan Adviser
Greenspan warns:  "If the Fed eased, it would reignite
inflationary expectations."  Though interest rates would come
down for a while with a program of easy credit, they would then
probably rise quickly once again because financiers would be
anticipating still higher inflation and demand still more
interest. In the end, rates could well go higher than they are
now.

As has happened so often before, the Federal Reserve is caught
in a no-win situation. It will have to continue to battle
inflation by keeping money tight, while fighting off critics who
say that such a policy is plunging business into a recession.
In the view of a number of economists, it would be unfortunate
if the Federal Reserve Board were to change course now, just
when its policies are beginning to help make a definite dent in
inflation. Reagan told his Cabinet last week that he shares
that view. "I want to see the Fed continue monetary restraint
and be the fourth leg of our economic program."

Tough money management and high interest rates have also
bolstered the value of the dollar abroad. Many Europens and
Japanese have converted their money into American currency to
take advantage of attractive investments in the U.S. Since
January the dollar has risen by as much as 36% against other
major currencies. That in turn has helped hold down U.S.
inflation by making imports cheaper, though American exporters
are having a harder time selling their wares abroad.

European moneymen recognize that Reaganomics is a risky
strategy. But they believe the President has turned the U.S.
economy in the right direction and admire his boldness. Says
Giorgio La Malfa, Italy's Budget Minister;  "Supply-side theory
is an important new departure, which deserves to be fully
tried."  Even in West Germany, where Chancellor Helmut Schmidt
has been strongly complaining about high U.S. interest rates,
there is much admiration for Reagan. Says a top official in the
West German Economics Ministry:  "Reaganomics has reminded the
West that by strong decisive leadership, it is possible to
change perceptions of economic policy among the public."

Perhaps the most promising sign that Reaganomics may be working
is the slowdown in wage demands. Since wages make up a major
portion of the cost of any product, a decline in the pace of
salary increases should slow down the rate of price rises.
Average hourly earnings were jumping at a pace of almost 11%
during the last quarter of 1980, but in the past three months
the rate of increase was about 7%. If this trend continues, it
could be the key to a reduction in inflation and interest
levels.

Most immediately, though, the future of Reaganomics will be
determined by how Congress reacts to the second round of Reagan
budget cuts. Quick approval could go a long way toward
convincing Wall Street skeptics that the Administration will
stick with its policy and not retreat at the first sign of
resistance.

This second congressional battle of the budget promises to be
tough. It could, in fact, crack the solid Republican support
that Reagan enjoyed this summer. Conservative hawks might balk
at reductions in projected military spending. Other Republicans
might flinch at deeper cuts in already lean social programs.
Observes Democratic Congressman Morris Udall of Arizona:  "There
are 20 or 30 liberal Republicans in the House who are
embarrassed with their constituencies. They can't go on
[supporting Reagan] forever."

The Democrats last week were naturally blaming the Republicans
and Reaganomics for all of the financial troubles. Said House
Speaker Tip O'Neill:  "They left here completely happy last
month; they got exactly what they wanted. Now the onus is on
them."

Rather than slash the budget any further, some Democrats would
prefer to roll back part of the tax cuts already passed.
Colorado Democrat Gary Hart introduced a bill in the Senate last
week that would postpone any personal tax cuts until the budget
is balanced.

Despite the loud congressional protests and the worries along
Wall Street, the President's program so far appears to retain
generally broad public support. A Gallup poll released last
week showed that Reagan's approval rating of about 60% has not
slipped during this summer's economic slowdown. Interviews by
TIME correspondents around the U.S. last week also showed the
public's willingness to sacrifice in order to get the economy
on the path to steady, noninflationary growth.

More and more people seem to recognize that exorcising inflation
can be neither instant nor painless. Says Paul Sullivan, who
owns a sportswear manufacturing firm in Methuen, Mass.:  "The
steps that the President is taking are necessary. It may be
tough now, but we can weather it."  Say James Graham, a high
school teacher in North Little Rock, Ark.:  "People are going
to have to bite the bullet now, or there isn't going to be any
bullet to bite in ten years."

This attitude can even be found among some of the people who are
most directly affected by tight money. Says David Brown, a
homebuilder in Englewood, N.J.:  "I do not want to see my
business destroyed, but I'm willing to bear the interim pain if
it will help the economy in the long run. We're bleeding. But
I think that high interest rates are necessary to slow down
inflation."

Corporate executives generally remain as convinced as ever that
future prosperity is worth some hardship now. Says Robert
Noyce, vice chairman of Intel, a semiconductor manufacturer:
"We're somewhat concerned about the transitory period of tight
money, but it's part of the medicine we have to take to get the
economy to improve."  Adds Goff Smith, chairman of Amsted
Industries, a Chicago-based equipment supplier:  "It's going to
hurt a little, but we ought to be glad for a little suffering
if it brings the inflation rate down."

To critics who counsel the abrupt abandonment of Reaganomics,
some economists suggest a look at the alternatives. Says Walter
Hoadley, former chief economist for the Bank of America and now
a resident scholar at the Hoover Institution in Stanford,
Calif.:  "If the Administration backs away from its program
under pressure, then the picture gets much worse. Inflation
will take over America. Then there goes the dollar, interest
rates, everything."

The seven members of TIME's Board of Economists generally agreed
that Reaganomics can work--that the program can curb inflation
and revive business growth--if it is given enough time and if
Congress implements the full program. Greenspan warned that the
policy will not really be in place until lawmakers pass the
President's second round of budget cuts. Feldstein said that
inflation would not be tamed unless monetary policy remained
strict and consistent for several years. Liberal economists on
the board were concerned about the social cost of the program;
Heller, for one, argued that the policy will place an unfair
burden on the poor, who are dependent on federal assistance
programs. But the board's liberals also conceded that
Reaganomics will hold down Government spending and thus have a
chance to stem inflation.

And that, as any economist is sure to agree, would be quite a
feat. For nearly two decades, repeated and abrupt changes in
economic policy were a major cause of erratic growth and
persistent inflation. Administrations for Lyndon Johnson to
Jimmy Carter adopted anti-inflationary programs, but these
proved to be either ineffectual or too brief to achieve
significant returns. Result:  chronic stagflation.

Reaganomics is clearly not the painless quick fix that the
President promised during his campaign and the early weeks of
the Administration. The program will take time, and it will not
be easy. Reagan admitted as much last week during his talk to
the Cabinet about further budget cuts. Said he:  "Some people
are frustrated because we don't see instant recovery. We can't
be stampeded now by frustration or fear. We have to stay on a
steady long-term course." Reaganomics can work, its namesake was
saying, if the American public--and politicians--are patient
enough to let it work.

--By Charles Alexander. Reported by David Beckwith/Washington,
with other U.S. bureaus