Nixon's No. 1 Economist

RAUL WINSTON MCCRACKEN is a leading figure in America's new elite: the activist intellectuals, who simultaneously serve universities, corporations and Government. In all three of these areas, he helps to make high policy. He is, variously: 1) a full professor at the University of Michigan, 2) a board member of half a dozen companies and consultant to many other firms, 3) the author of countless economic monographs and books, 4) an adviser to government officials. Still, when Richard Nixon last week named him to the position of the chairman of the President's Council of Economic Advisers (salary: $30,000), McCracken accepted the post eagerly. As he said to a close friend, "How can a guy say no?"

McCracken has had a number of previous tours of duty in Government. Iowa-born and Harvard-educated, the 52-year-old economist worked for the Commerce Department and later for the Minneapolis Federal Reserve Bank before joining Michigan's faculty in 1948. Nixon became acquainted with McCracken when he was a member of the three-man Council of Economic Advisers under President Eisenhower from 1956 to 1959. After he returned to Michigan, McCracken befriended a number of educators, auto company executives and newspaper publishers, some of whom dine with him every month in an informal club, relish his summations of the economic outlook. Since Election Day 1968, he has directed Nixon's policy task forces.

The Small Giant. Now McCracken will head a 45-man staff. Though the council is a pygmy among Washington agencies in terms of size, it can be a giant in influence. Started in 1946 by President Truman, the council rose to real power when John F. Kennedy appointed Walter Heller to be chairman in 1960. Heller was the leading advocate of the Keynesian "New Economics"--the policy of flexibly adjusting taxes, Government spending, and the money supply to influence the economy --and he sold Kennedy on the idea of cutting taxes to stimulate business and employment. His successors, Gardner Ackley and Arthur Okun, have acted as important policymakers within the Johnson Administration. President-elect Nixon says that he will give "a major role" to the council, and he hails McCracken as "a centrist, a man who is pragmatic in his economics."

As Nixon's economists go, McCracken leans slightly to the left. But he can hardly be considered doctrinaire. He will likely recommend the use of the same tax-and-monetary tools relied on by the New Economists, but more sparingly. He believes that the Democrats have thoroughly mismanaged the economy, particularly by relying too much on changes in tax rates to "tune" the state of business. The current 10% tax surcharge helped convince him that tax increases are not only difficult to ram through a constituent-minded Congress but usually have slow effects when finally enacted. "We are beginning to realize," says McCracken, "that fiscal policy is simply not available to us in the real world to influence short-run changes in business activity."

With that observation in mind, McCracken will probably emphasize the utilization of adjustments in the money supply to stimulate or restrain the economy. One of his thorniest economic problems, of course, will be inflation. Any concerted drive to stop the price spiral would involve deflationary steps that could increase unemployment. McCracken would probably be willing to see the jobless rate rise slightly above the current 3.6% in order to cool the feverish economy. But he is unlikely to tolerate the 5%-plus rate that some economists and businessmen think is nec essary. In a recent speech, he noted that the people hurt most by job cutbacks would be impoverished Americans, primarily Negroes. Therefore, he says, "We must learn to live with an uneasy compromise between inflation and unemployment."

Troubled Prosperity. McCracken fully appreciates the fact that economic policy is made in the context of broader social problems. That realization was sharpened last year when he took a leave from Michigan to teach at three Southern Negro colleges. His social awareness is only one reason why Paul McCracken's appointment last week was widely applauded. For McCracken also brings to his new job a conviction that the U.S. economy, which has been going through a rather troubled prosperity, should be steered onto "a steadier course.

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