Harvard economists yesterday praised President Reagan's speech-making ability, but noted his failure to present specific new plans for curing what he called "the worst economic mess since the Great Depression" in an address Thursday night.
Congress must reduce the role of government by cutting spending, reducing tax rates, and slashing federal regulations in order to "restore the freedom of all men and women to excel and create," Reagan said.
Reagan's assessment of the depth of current recession is plausible, members of the University's economics department agreed yesterday, only because he did not say how close today's crisis comes to the Great Depression. They cautioned that the two economic failures were caused by fundamentally different problems.
"It's like comparing apples and oranges," Joseph P. Kalt, assistant professor of Economics explained, adding that today's recession involves low production and low growth, while the depression of 1939 revolved around low employment.
Roger B. Porter, assistant professor of Public Policy at the Kennedy School of Government, who has advised the Reagan administration on the economic package it plans to present to Congress on February 18, said the speech was consistent with Reagan's campaign themes as well as his developing economic programs.
"We're still working on the details and it would have been premature for the President to be any more specific than he was," Porter explained, adding that Reagan is very good at delivering the kind of speeches people can understand.
Reagan's analysis "does not correspond to the facts," because he blames inflation overwhelmingly on the budget deficit, while the basic problems are rising oil prices, expanding consumer credit, and the continuing wage-price spiral, Richard A. Musgrave, Burbank Professor of Political Economy said.
Reagan presented a "distorted picture" of the economy in order to "use the present emergency situation as a way of cutting back the public sector," Musgrave added.
Both Musgrave and Abram Bergson. Baker Professor of Economics, warned that Reagan's planned tax-cuts may fail to prevent the budget deficit from growing unless he also provides adequate reductions in federal spending.
"Tax-cuts will not pay for themselves" by fostering increased production, Otto Eckstein, Warburg Professor of Economics explained, adding that Reagan's decision to avoid numerical goals was "particularly sensible."
The weakest part of the speech was Reagan's presentation of graphs that "looked like something out of Social Analysis 10." Eckstein said, noting that "the President forgot to label the axes.