In a word, terrific! All kinds of promising avenues open with Jim Baker at Treasury and Don Regan in the West Wing. For one, almost certainly Baker will replace Beryl Sprinkel as Undersecretary of Monetary Affairs (there's been talk anyway that Sprinkel's leaving). Int'l monetary reform was impossible with Sprinkel in this key spot and his monetarist views shaped both Regan's and RR's views of Fed policy. Baker never bought Sprinkel and monetarism, always much better in reflecting supply-side concerns about deflation. He'll be much more aggressive in taking on the Fed; there's even a chance he'll bring Lewis Lehrman into the monetary slot. The move also increases the likelihood of flat-tax reform, one barrier to which had been the Regan-Baker rivalry. Baker now has a stake in seeing the tax-reform through to completion, masterminding the politics, and Regan in the White House guarantees maximum Presidential support for this effort. The legislative package has taken shape and will be ready to "anchor" the State of the Union address. Top rate of 30%, 40% exclusion on capital gains, liberalized depreciation, out with dividend deduction and indexing of interest payments. Not firm, but getting there. At the same time, Regan's surprise move to chief-of-staff will please conservatives, who see Regan as a "let-Reagan-be-Reagan" loyalist and will be thrilled to get Baker out of the White House. The other bonus: Regan has been Stockman's archrival for four years, and now Stockman has to report to Regan. Chances are greater than ever that the Boy Wonder will soon be gone, and good riddance. By all accounts Stockman has been getting worse and worse in his disingenuous pursuit of the austerity agenda. Stockman's departure would help solve the what-about-Darman problem, with Dick going to OMB. It doesn't make sense that Regan will want Darman as his deputy, with Darman's loyalties still strong to Baker. The OMB job would be perfect for Darman, who is not an austerian. Regan, who is not a wheeler-dealer, would tend to transform the second Reagan term along more open, communicative lines. We'll also see the whole debate over deficits and growth scenarios revived now that Regan is next door to the Oval. Office, with Regan much more important in bolstering the President's inclinations. This also shortcuts talk that a "George Bush" agenda would be pursued, RR lameducking as '88 approaches; Regan is viewed as a total Reagan loyalist with no thoughts of '88. Other personnel implications: Regan could bring Manley Johnson over from Treasury to chair the Council of Economic Advisors, which would be terrific too! Let's just hope that he doesn't have Sprinkel in mind.