I FIRST MET WALTER WHEN HE ZOOMED ONTO THE NATIONAL

SCENE AS THE CHAIRMAN OF KENNEDY'S COUNCIL OF ECONOMIC ADVISORS.

WHAT HEADY DAYS! A NEW CAMELOT PRESIDENT; HUMPHREY

~ HIGH TIDE, AND TO TOP IT OFF, OUR WALTER HELLER AT THE

CENTER OF ECONOMIC POLICY. THE WORLD WAS OURS!

WALTER DI DN'T LE'r US DOWN . HE i1AY HAVE BEEN 'EHE MOST

INFLUENTIAL OF ALL THE CHAIRMAN IN THE COUNCIL'S HISTORY .

KENNEDY LOVED HIM, SO DID THE CONGRESS AND EVEN THE PRESS

LIKED HIM. WHAT'S MORE, -- GLORIES BEHOLD! -- WE COULD

EVEN UNDERSTAND HIM!

~f!J ~~D

__--- EQ-~OMIS~ AS A NEW SENATOR, I LIVED IN

REFLECTED GLORY. WALTER WAS BEFORE THE CONGRESS ALL OF

THE TIME. HE BRIEFED EVERY PRESIDENT AND APPEARED ENDLESSLY

ON THE NATIONAL NEWS.

HE WAS BRILLANT. HE COULD MAKE THE COMPLEX SEEM SIMPLE

AND MAKE THE SIMPLE FEEL COMPLEX.

HE PREACHED A HEADY GOSPEL: A WISE PEOPLE COULD SHAPE

A HEALTHY GROWING ECONOMY. WE WERE NOT DOOMED TO SUFFER

GYRATIONS , STAGNATION AND MISERY. I KNOW NOW, MORE THAN I UNDERSTOOD AT FIRST, WHY I

SO ADMIRED HIM.

I DID SO BECAUSE WALTER ALWAYS CARED. ECONOMICS, AS

TAUGHT BY WALTER WAS NEVER THE "DISMAL SCIENCE"; ECONOMICS

WAS NOT AN ABST RACT Ion : IT HAD A PURPOSE, TO HELP PEOPLE,

TO EXPAND OPPORTUNITY- TO ENLARGE JUSTICE; AND TO CARE FOR I THE VULNERABLE.

HE WAS ~A~r=i=-~v~ MARVELOUS TEACHER, NOT ONLY OF PRESIDENTS,

BUT OF STUDENTS AT HIS BLESSED U OF MINNESOTA. JUST BEFORE

HE DIED, HE TOLD HIS FAMILY HOW THRILLED HE WAS TO BE PREPARING

HIS FALL LECTURES FOR HIS FRESHMEN COURSE HERE AT WILLY ,; ~ ,,;;c 'J.L- u...r HALL. l¥HIS IS EXACTLY WHERE WALTER WOULD WANT HIS MEMORIAL

SERVICE TO BE HELD. IN HIS DECENCY SHOWED IN HIS WONDERFUL FACE AND HIS BEAUTIFUL 4 SMILE.

I FEEL THE SAME ABOUT WALTER AS I DID WHEN HUBERT DIED-- -~

- A SAD FEELING OF ENORMOUS LOSS AND A DEEP CERTAINTY THAT / ~ HIS WORK WILL ENDURE. ------~ - ~UOT~SHAKESPEAR~-;,;;;- I',? LIKE _ T ~ ~L~~~!! =~ ~~

- 2 - r:;~~ AG=). , HE SAID -----.. -~-.. ~ .~.---- ... -- ...... --- --

"A STRAIGHT BACK

WILL SLOPE;

A~ EARD WILL q~ vfRfrE; A CURLED PATE

WILL GROW BALD;

A FAIR FACE WILL

WITHER;

A FULL EYE

WILL WAX HALLOW

BUT A GOOD HEART

IS THE SUN AND THE

MOON, OR RATHER

THE SUN, AND NOT

THE MOON, FOR

IT SH INES BRI GHT

AND NEVER CHANGES,

BUT, KEEPS ITS

COURSE TRULY."

WALTER'S GREAT HEART KEPT ITS COURSE TRULY. IT DIDN'T

REFLECT LIGHT; IT PRODUCED IT.

WE WILL MISS HIM, ALWAYS.

- 3 - Heller: Presidential Persuader

brightest of the lot, the one who not only reach full employment under the bur­ double-spaced pages to the pr.esldent. I understood something while you were den of that heavy income tax - which thought I'd just give them to him, tell go, explaining it to him but retained it. And at the time ran to 91 percent marginal him a little bit about It and then let him if you had a meeting with him three rates. It was then, in March 1961, that I read it and tell me what changes to mist months later and went over the same began pushing for a major tax cut, make. But he was a speed reader, and ground, he would say 'Yeah, I've got which President Kennedy eventually by now he was pretty savvy on the eco­ reminisce((about that, let's go on from there.' proposed in 1963. That was the first nomic front. Of course, economic advis­ time in history that a President specifi­ ers always claim their President Is Q. The Kennedy tax cut. which cally endorsed and adopted the Keyne­ savvy, but Kennedy really was. Al­ his public career. touched off an economic boom that sian approach - the first President though, always within limitations. NYT 6/21/87 lasted almost a decade, Is generally who was willing to say that a deficit But. instead of having a little conver­ regarded as the seminal economic could be a good thing. I know, because I sation and dismissing me he said, 'No. AL TER W. Heller, chief eco­ event of the 1960's, perhaps of the wrote the words for him. I had a fasci­ I'll go over it right now.' nomic adviser to Presidents postwar period. Do you regard It as nating experience WIth him on it. Now you have to remember that the W Kennedy and Johnson, came of such? Was It your Idea, as history tax cut was a totally Innovative thing. age in the postwar era when many of seems ready to concede? Q. What happened? Old you have because we had no recession. The econ­ the most creative economic thinkers A. As far as our activities in. the 60's, a difficult time converting the omy was moving up. We had a substan­ were drawn to the theories of John everything started with - it's immod­ President to Keyneslanlsm? tial defiCit, and never before had any Maynard Keynes. But Mr. Heller. who est to say so, but it was - my tax cut. It A. In a sense I felt that the milestone President had the wit or wisdom to put died last week at the age of 71, was un­ was born on my desk, and at the time in the education of a President in ap­ in a tax cut in an expanding economy usual in that he was In a position to not with the cooperation of my two col­ plied Keynesian economics occurred in with a big budget deficit. apply those precepts. Moreover. he was leagues on the Council, Kermit Gordon January 1963. Anyway, we were standing there - an enormously personable man with a and James Tobin. At the last minute, four days before it he on one side of his desk and I on the soothing manner that served him well It was Clear that we were not going to had to be printed, I took 22 typewritten, Continued on Page 13 in convincing Presidents to follow his ~ i prescriptions, even when they clashed with political expediency. On a visit to New York earlier this year from his native Minnesota, Mr. Heller talked with Ky le Crichton, the Business Forum editor, about his ca· reer as a PresIdential counselor. His reminiscences provide a fascinating 2 Rms., glimpse into the Inner circles of power and a reminder of how great policy ElK, decisIOns are often made by people who may have had something more Impor· lant on their minds that day . Microwave,

Q. You have called yourself an 7 M.P.G. "educator of Presidents." A. This is perhaps self-serving, but I was struck last spring when somebody ByN. R. introduced me as the economist who ad­ vised more Presidents and Presidential candidates than any other economist. I Kleinfield guess that's right. Going back to Adlai Stevenson, I worked - well, he didn't think much of economics and working with him as an economic adviser was not a terribly demanding thing - but I Page 4 was one of the inner coterie there, and worked with Humphrey, Mondale, Ken­ Ip, nedy, Johnson and Carter and so on.

Q. Of all the Presidents and .I Presidential aspirants you have known, who was the smartest? A_ Mondale was, ~ would say, the THE NEW YORK TIMES, SUNDAY, JUNE 11, 1987 F 13 Reflections on a Career as a Presidential Counselor

Continued (rom PaRe I Q, "Heller conalders the about (our miles from the ranch other - and he flipped through the present Income tax structure not house, and George Hamilton i. slttlna speech In perhaps no more than 10 only Inequitable, but uneconomic up Ihere. Hamilton, who had told me minutes, maybe less, and then tossed It too. It ImpedH economic effl· the night before that he hadn't had a to me and said 'that's fine.' I said, clency by dlatortlnl economic gun In his hand for live years, tapped laughing, 'My God, Mr. President, decision.. So a tax reform, he be­ me on the shoulder and asked me If I you're sure shOWing a lot of confl· lieves, would Improve the econ­ was nervous. I lied through my teeth dence In me.' omy's overall efnclency" ," The and said no. But I was the spotter - He said 'Sure, why not?' dlacuaalon hun't chanled much the President driving - the best auto­ ' 1 said, ' Don 't you know I have you throulh the yea .... bat It? mobile driver I've ever seen. He saying something In there that no gunned It over dirt roads, through other President hal ever said - that A. I wrote the first article on tax re­ water, at 50, 60 miles an hour. form In 1951. At that time we needed a deficit under certain circumstances Q, In a white Lincoln? can be a good thing ; that there are additional revenue for fighting the constructive deficits and destructive war In Korea without Innatlon. So I A. A white Lincoln convertible. And deficits and It depends on the circum· .uggested eliminating all these dlf· he goes right on with our conversa· ferent categories of tax preferences stances? lion of the night before. No matter He said 'Well , all right, let me take Instead of raising rates. what he was domg, whether he was Within a year or two, Joe Pechman another look at that.' And so he went gomg to the tOilet or whatever, he'd back and he looked at that part, and took that, converted It Into a thor· conllnue the conversallon. Out of the oughgoing examination of where the he changed one sentence, just very 22 hours that I spent at the ranch, I base was being riddled with these moderately, and then he tossed It spent 17 hours with him. And so he back to me and said 'let's go.' special provisions and calculated that said, while barreling a long these dirt you could reduce the rates by 40 per· roads, I understand you want me to Q, You said wt the best youna cent If you closed all the loopholes ask (or a tax mcreut'. What do you minds were attracted to econom· and preferences. want me to do, call Congress back luln the wake of the Depreulon. mto speCial session? This IS Decem· Q. One otller part 01 thla INI ber. And rcscmd those excise tax reo A. Yes, and then the best minds In article haa a familiar ring to IL It the field were very literally attracted peals? He was very wily. Those were states that "an excltlnl new con­ temporary excise taxes dating from to the Kennedy Administration. When cept In economlca. , ," Jim, Kermit and I were assembling 1933. and we were so glad to get rid of the Council of Economic AdvIsers we A. Oh, yet. them he knew damn well I wouldn't had almost no turndowns. Almost advocate thai. Q. "with Vaal ImpUca!lonll for And I said, no, no, not that Mr. without exception, whoever we asked public policy, , ," President Kennedy naming Walter Heller chainnan of the Council of Economic Advisers, was glad to serve with us. I maglne a PreSident. Let's have a surtax on the A. Of course. council that had Jim and Kermit and Income tax. Well, he said, I can't get a a staft with Ken Arrow and Bob handful of vote. on t!lther SIde o( the Q, "Ia the Investment In human narily dlltlcult to devlsc good pro­ want to bring your mcmos ovcr hcre liam McChesnry Marlin. for raising a isle of either House of the Congress Solow. I operated it as much as I caplta~ knowledle, skllla and In· grams in that field. We did our best, In a wheelbarrow.' So I developed this the discount rate. on that. And so he dldn 't a.k (or It could as coordinate counCil, quite a ventlon, rather than In tanaJble which wasn't tcrribl y good. staccato style for him . where the stuff When I arrived hc was Ju st (ulmi· until January o( 1967, and because contrary to Ihe advice of one very capital." Another areat Idea that was put in a highly digestible (arm. nallng about the Martrn double·cross Congress feared a recesslon,lt wasn't towering economist from Harvard. we redlacover periodically? Q. Back to Presidents. You said And to my great embarrassment. - you know. stabbed him rn the back cnacted unlll 1968. By then, Ihe infla· A. Well, I had been working with the that Kennedy was a qulJohn Kenneth Galbraith? National Education Association. It memos at a Cabinet meeting one quandary. Now. how a m I gOing to get Among the many tragedies o( Viet· was a new concept to them, they just A. Well, Johnson was also extraor· lime, and he said, ' Herc's one of Wal · across the Idea thai the reason Mar· nam. one of them was that It Simply ,... Good old Ken Galbraith, whom loved it - the Idea WI one could dlnary. I think he had a areat I.Q., but ter Heller's memos. See how It 's set lin IS dorng thiS IS that alU!regate de· negated the great KeyneSian expert· I'm very fond of - we're good friends think of education II an Investment. he didn't want to go into things in the up? That's the way I want you all 10 mand Is beginning to mount. and that ment In economics. - but he Is fundamentally patronlz· But the Investment In human capital same depth that Kcnnedy did. Bill wrtte your memos.' God. How to lose hiS only mistake was not first comrng Ing In his way, and he came over and lOa. something Kennedy endorsed Moyers once said to me. 'One thrng friends and alienate people - I could to the PreSident and say 109, . Look , Q, Has Keyneslanlsm survived he said, 'Now Walter, I know the Ken· and understood. It 1081 extraordi· you ought to know IS that you don't have sunk through the floor. unless you put a tax mcrease into the war, the 70'. and Rea ..nom · nedys very well and I want to share your budgct program for 1966, I'll I<.? Is there any chance the ell, some thoughts with you, and one Is By this time, you were be.et Q, have 10 mc rease the discount rate and periment will be resumed? that I don't thlnlt economlsLS should with that gath~ring Vietnam War ti ghten money.' A. There's no question that it has advance on the President en masse.' Innatlon. How were you dealing In the middle of a ll IhlS, I was survived, despite the claims o( the He urged me to keep that authority In Who Was Who, Circa 1962 with It? I suppose that. for politi· trying to sell him a tax Increase, a monetarists and in spite of the chal· my own hands, and so forth. I did just cal ..alOft&, Prealdent Johnson very modest 5 percent surtax on the lenge (rom the super supply siders - the opposite. Kenneth AIrfIw Professor tlon; economist. C.E.A. 1954-56; Jllat didn't want to hear about Individual Income tax. What gave me punk supply siders, as Herbert Stein J. tackllna Inflatlon? Q, You said In a 1N1 article of economics at Stanford; won the consultant to the C.E.A., 1961~9; some help was that we sat down after so aptly calls them. that you were pushing for a IU 1972 Nobel Memorial Prtze In leading analyst of the tax system. A. That's true. He asked me to stay dinner and here was a wonderful What we have today is a kind of Economic Science; economist. until after tile election, which I did (or cable saying that a Commerce De­ modified Keyneslanlsm that could be · revision wt wouid close the Robert M. Sotow Professor maraJnal rates from a range 01 Council 01 Economic Advlaers, a year. But even after I went back to partment survey showed a 16 percent called the mainstream In policy 01 economics at the Massachu· Minnesota, he would have me come jump in real terms In plant and equi~ thinking these days. I call myself a 10 to .1 pen:eot down to 14 to II 1962 ; prealdent, American Ec:o­ setts Institute of Technology; nomlcl AsIocladon, la13. down to the ranch or the White House ment spending was coming up in 1966. chastened Keynesian, after the beat· percent, and eliminate virtually staff economist, C.E.A., 1961~2; · all1oop11olet and preferences. for a couple 01 days, so that I contln· I said, 'You know, Mr. PreSident, this Ing we took In the 1970's, with slmul· Kennft Gordon Member o( president of the A.E.A-, 1979. ued to work with him. spells trouble, because we're very taneous high unemployment and high A. Where does that come from? C.EA, I96HI1; directed the Bu· We wanted to apply Keynesian eco­ close to full employment, and we inflation, the stagnation bugaboo. Professor of reau of tile Budlet. 1962-65 ; presl· ...... Tal*! nomics In reverse - that Is to cool off need' - we got interrupted - 'a tax We 've built In Milton Friedman's Q. It wu a COYer story in Time economics at Yale University; dent 01 tile Brooklnp fn.liNdon, an overheated economy with a tax In· increase' - and we got mterrupted natural rate of unemployment. We've magazine. "Heller advocates a won the 1981 Nobel Memorial radical prosram 01 IU reform, 1967·78; died In 1978. crease rather than stimulate an again. The subject didn't come up tried to deal with stickiness in wages Prize In Economic Science; memo underutlllzed economy with a tax cut. and prices. This modified Keynesian­ but COftMrvatlves eouId weU su~ again until the next mornmg while Joeeph A. PKtln.. SenIor ber of C.E.A., 1961~2 ; president of We couldn't sell him. He cailed me · port it unleu. .." we're deer hunting In a white Conti· Ism still provides the most satlsfac· fellow of the BrookJn&s Instltu- the A.EA, 1971. down to the ranch in December 1965 nental convertible. tory guidance for policy, and the moat A. Isn't that interesting? f'd forgot· - the occasion was that he was sore And here's the President driving. satisfactory explanation of the re­ ten thaL Well, go ahead, read IL as a boll .t the Fed chairman, WII· We're on the ~ack 2,000, which I. sponses to policy. • MINNESOTA HISTORICAL SOCIETY

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