Over 30 years ago, I had the very good fortune to land in the highly politicized world of our nation’s capital at a time when a far wiser and more experienced economist, Bill Niskanen, was across the hall from me at President Ronald Reagan’s Council of Economic Advisers. Bill was the model of the consummate economist in the role of adviser to politicians.

To our lasting benefit, President Reagan told us clearly what he expected of us, guidance that I appreciated very much. But in Bill’s case that guidance was not necessary. The president wanted straight economics with no amateur political judgments tossed in. I could readily see how tempting it would be to bend to the political motivations of both insiders and outsiders as well as to offer one’s own naive political views. While I certainly needed to learn that lesson, Bill did not.

The economic argument | From the first issues that confronted us, Bill offered solid economic theory and empirical evidence, both when he supported and when he opposed the countless ideas that surfaced from somewhere in the bureaucracy. There was no coloring of his opinions to accommodate political objectives. While I shared with others the great desire to see the administration succeed, I soon learned from observing Bill—in CEA staff sessions, in working-group meetings, and in cabinet council meetings—that others listened only when they knew that what was being said came from economic analysis with no hidden agenda. In contrast, watching the reaction of listeners to other speakers who clearly mixed political judgments with economic advice made it easy to see why they were tuned out. Bill never was.

The perils of giving voice to good economics are many. One well-known incident early in the new administration illustrates how easy it is to catch political flak even while speaking simple economic truth. The macro agenda of the new administration included an objective of reducing government spending as a share of the economy. The tactic pursued was to “starve the beast,” which was attributed to Milton Friedman’s idea that “the best way to get Congress to cut spending is to take away the revenue.” Professor Friedman, as Bill’s one-time teacher and mentor, had taught that “the true burden of taxation is whatever government spends.” No one doubted that the administration’s objective was to employ “fear of deficits” to negotiate reduced spending. Bill found out that good economics and good politics sometimes don’t mix very well.

Specifically: In an off-hand way, not at all related to issues Bill was regularly involved in, he stated in the presence of journalists the simple economic proposition that “deficits don’t matter.” The outrage over this remark within the Republican side of Congress suggested that a major heresy had been uttered. Bill’s intent had been to dismiss declarations by the political opposition that we couldn’t “afford the tax cuts” because they were causing big deficits and therefore should be reversed. Had Bill phrased the thought, “It’s the spending, stupid,” the remark probably wouldn’t have been reported. The tax cuts were good economics and needed to be defended even if they did not create the political environment that yielded spending cuts. But the political opposition pounced on Bill’s simple statement as a reason for not coming to the table to negotiate spending reduction as part of a bargain to reduce the deficits.

Bill paid the political price of “apologizing” to Republican congressional leaders—for having said something that was true! The incident made me wary of saying anything at all in the presence of journalists, but Bill shrugged it off as the sort of thing one has to expect in the role of advising politicians.

Keep swinging | The irony (and surprise to me) was that the challenges to sound economics that were the most difficult to parry came from the president’s own party. Because of his greater experience in Washington, Bill knew that in every cabinet department there would surface claims of a “special situation” involving trade, agriculture, environment, energy, and all the rest. Our job, he counseled me and the staff, was to be present in every meeting of executive branch leaders, expect to hear mostly political arguments for some proposal, then make sure that the economic argument was at least presented.

In the midst of a severe recession in 1981–82, with a highly critical media, it was hard to stay focused on what we had come to Washington to do and what economic analysis suggested was best for the country. And it was sometimes very discouraging to be on the losing end of so many meetings on so many issues. But Bill was as strong as he was tall. More than once he would listen to my frustrations about the outcome of some decision, puff a bit on his pipe, then observe that in major league baseball the best hitters are happy to have a .300 season. That means that seven out of every 10 times that they walk to the plate, they walk back to the dugout without a hit. Then he would press that if we were successful in winning the argument on solid economic grounds only 30 percent of the time, it would be quite an achievement. So, like a major league player, I gradually learned to take my turn at bat with the knowledge that I would probably strike out, but it was better to have had a chance at bat than not to play at all.

Bill kept stepping up to bat for the four years of Reagan’s first term, always handling the outs with grace and moving on to the next issue. More than any other economist in the administration, Niskanen was the keeper of the “Holy Grail” of what was meant by Reaganomics.