REGAN, REAGAN, AND REALITY If you think the stargazing was weird, read how the Administration conjured up economic policy.

(FORTUNE Magazine) – So you've absorbed all there is to know about astrological influences on the Reagan White House. Can you learn anything else from Donald Regan's deadpan but deadly memoir, For the Record: From Wall Street to Washington (Harcourt Brace Jovanovich, $21.95)? Indeed you can. But be warned -- you might find Regan's revelations about economic policymaking under Reagan even more unsettling than the spectacle of a President whose comings and goings are dictated by the San Francisco seer. Regan served as Treasury Secretary throughout the first Reagan term before switching jobs with James Baker III, then White House chief of staff. Regan was not only a witness to economic policymaking, but also a top player -- actually the top player, of course, since ''by temperament it would have been impossible for me to accept a lesser role.'' The former head of Merrill Lynch decided early that his job at Treasury was ''to identify ((the President's)) promises and do my best to translate them into policies and programs.'' There were just a couple of problems with that plan. One was that he couldn't figure out what the President wanted. That was partly because, he says, the President wouldn't tell him. ''From first day to last at Treasury,'' Regan writes, ''I was flying by the seat of my pants. The President never told me what he . . . wanted to accomplish in economics.'' In the face of this yawning void (''no rules . . . no missions''), management by mind reading became the order of the day. Example: ''Did the President want to reform the tax system or not? I had the impression, based on his body language rather than any words he had spoken . . . that he wanted to hold the line against new taxes . . .'' The neophyte Secretary eventually resorted to reading newspaper articles and presidential speeches to divine what the Chief wanted. But you have to wonder who was doing the clipping. At the outset of the first term, Regan interpreted Reagan as an advocate of strict monetarism, supply-side tax cuts for individuals, and old-style tax incentives for business investment. Conspicuously missing from Regan's account of Reagan's goals: balancing the budget and wringing out inflation. Yet in his run for the presidency, Reagan must have called for these a thousand times. Regan defends his limited interpretation by arguing that deficits don't matter much in the short run if ''the economy generates sufficient revenues'' and ''government spending is controlled.'' But oddly for the nation's chief financial officer, he dismisses the Administration's ability to control federal spending. In allocating credit and blame, Regan is content to fault the Democratic Congress for the tide of red ink that engulfed the Administration after 1981. ''The budget is not controlled by the executive branch but by Congress,'' he lectures, conveniently omitting that the President's own budget requests would have led, without congressional add-ons, to huge and growing deficits. The other problem with Regan's job strategy was that after he read the President's campaign promises, he did not come to grips with the fact that they were contradictory. A big military buildup and a 25% tax cut and low inflation and a balanced budget -- no way. After 1981 the role of ''Deficits Don't Matter'' Regan was to urge the President to resist the advice of Baker, David Stockman, and Martin Feldstein, chairman of the Council of Economic Advisers, to raise taxes. ''I kept advising him 'to stick to your guns, Mr. President, and everything will come out well in the end.' '' REGAN'S ACCOUNT shows a curious indifference to the traditional role of the Treasury Secretary. He is silent on the matter of Third World debt, and he omits any mention of the dollar's flight into the stratosphere. If he makes a strong case that his boss was not overly concerned with economic realities, Regan by his own account was concerned only selectively. The former Treasury Secretary does deserve credit -- though not quite as much as he claims -- for keeping the ball rolling on tax reform. The idea, launched by Democrats Bill Bradley and Richard Gephardt, was moribund when he took the cause to the President in late 1983. ''I asked him a question about his old employer, the General Electric Co.,'' he writes. '' 'What does General Electric have in common with Boeing, General Dynamics, and 57 other big corporations?' '' Reagan, remembering fondly his days as good-will ambassador for GE, leaned forward for the punch line, only to hear that '' 'not one of them pays a penny in taxes to the United States government . . . Your secretary paid more in federal taxes last year than all of those giant companies put together.' '' After hearing Regan's argument for getting rid of loopholes so the majority could pay lower taxes, the President, Regan relates, said, ''I agree, Don. I didn't realize things had gotten that far out of line.'' Though Baker shepherded the legislation through Congress, Regan's so-called Treasury I proposal set the direction. Flushed with victory, Regan ultimately overreached himself. ''The Treasury plan for tax reform was proof that management by objective was an attainable goal in government,'' he reasons. That conviction led Regan to propose switching jobs with Baker. As he thought at the time, ''Willy-nilly, Ronald Reagan had achieved great things in four years. What might he do if his office were better organized and his ideas were more systematically transformed into policy?'' We were not to find out.