Former Reagan Budget Chief Likes Democrat's Tax Cut

Democrats in Washington are starting to say things that even a Reaganite like James C. Miller 3d could love.

Mr. Miller, who was budget director in the Reagan administration, even conceded that a tax cut recently proposed by Democratic Sen. Lloyd Bentsen of Texas may help jump-start the economy.

"If I were back in the administration, I would welcome his proposal because he has opened the door" for change, said Mr. Miller, who currently heads a free-market advocacy group called Citizens for a Sound Economy.

Somber Demeanor for the '90s

Accused of being overly optimistic while drafting budgets for President Reagan from 1985 until 1988, Mr. Miller today is gloomy. He blames the Bush administration for not doing enough to remove regulatory costs and barriers that are a drag on the economy.

"The good news is that we're not going to have a double dip," he declared. "The bad news is that expansion will be very tepid, and will remain tepid far into the future.

"For the long term, I think the uncertainties created by the regulatory process and the prospect of yet more tax increases hang over businesses and consumers in ways that are dampening prospects for economic expansion," he said.

He sees lower taxes as an antidote, and so he approves of Sen. Bentsen's plan to restore tax benefits to Individual Retirement Accounts as a way to stimulate savings.

"Our tax code is rigged in one direction," he said, promoting consumption at the expense of investment. Privatizing functions currently under federal control, such as deposit insurance, would also stimulate the economy, he said.

He urges banks to take over student lending, freeing up the government to serve the truly needy, act as a guarantor, and collect outstanding loans.

At Citizens for a Sound Economy, Mr. Miller often promotes tax reforms as well as proposals to limit congressional terms, such as the initiative that Washington state voters rejected this month. While some other directors of the Office of Management and Budget have gone on to lucrative corporate jobs, Mr. Miller said he prefers advocating public policies and lecturing at George Mason University.

May Seek a Victory on the Ballot

"I don't miss the fights or the long hours," he said, "but if I come back to government, I will most likely come back as an elected official."

Mr. Miller, a Northern Virginia resident, won't reveal specific political plans. However, some of his views would not be well received by Virginia's vast military establishment, which encompasses the Pentagon, the Quantico Marine base, and a naval stronghold around Norfolk.

He maintains that bankrolling defense is a top government priority, as it was in the 1980s, but he has strong ideas about ways to curtail military expenditures, including reforming the procurement process and closing superfluous bases.

"The crocodile tears that have been shed over minor base closing" are evidence of congressional waste and irresponsibility, Mr. Miller said. "Using the defense budget as a vehicle for pork spending has got to stop."

Ms. Hockstader writes for the Medill News Service.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.