Evening star., 1947-11-03
Economic Report Seen
Fasoring Truman, But
Is Termed Sound
Mention Of Steel Shortoee
Held Notably TO Exclude
Reference to Strikes

> Held Notobly 70 Exclude
Reference to Strikes
BY Dauid Laurence
Anyone who takes the time to
read carefully the entire 25,OO0-
word report made by the Council
Of Economic Advisers to the Presi-
dent must derive therefrom at
least the impression that America
can render reasonable amounts of
aid to Europe and still maintain
a high-level domestic economy.
There is lot OF logic and COM
mon sense in the new report
though, as with all previous reports
by this particular agency of the
Government, conscious effort
seems to be made to support Tru-
man policies and to avoid reference
TO anything which might possibly
give critics of the Administration
any support.
Thus the new document says
there is little prospect that the
supply OF steel can be increased In
the amounts needed for both
foreign and domestic purposes and
then adds:
up to the present time, Sthe
steel industry has followed a con-
servattve program OF expansion.
Eyen II the industry were now to
make it's plans upon the sssump-
ton of sn economy continuing to
operate at maximum general levels
Of employment and production. ad-
ditionsl programs for enlargement
in capacity and supply would be too
late to affect the situation this
year or in 1913, and the use Of
steel for that purpose would &C.
centuate the shortage. Further
more, production is cramped by
shortages OF coke, scrap. pig iron
and transportation facilities. With
respect to scrap, the shortage is so
serious that sending scrap abroad
as requested by the Paris confer
ence is illogical"
Strikes Are Not Mentioned.
This is an intelligent appraisal Of
the situation. but it fails to mention
the demands from the socialistic
school Of thought In our midst for
10000, 900 tons as the needed extra
capacity and how readily these de-
mands might have been met and the
whole domestic and foreign situation
helped II work stoppages in America
since vi Day had not lost us 49,
100000 tons Of possible steel produc-
ton. IT IL q strange thing that the
Presidents economic advisers would
overlook and fail to make mention
of such q significant piece OF eco
nonic information.
The main thesis of the new report
Is that foreign demand has not in
creased food or industrial prices In
the United States. The argument Is
that the foreign demand has been q
factor but that the domestic demand
has been q larger one. The enlarged
domestic demand for food. 1t is
pointed out In the report, arises out
OF the higher incomes of workers and
the fact that the Nation now is eat
ing far more than 1t did In previous
years.
The report comedies that domestic
prices Of grain have been raised by
internation factors such as bad
weather and lack Of farming equip
ment abroad But at the same time
attention is drawn to the fact that
meats and dairy products, which are
not exported in large amounts, have
risen considerably in price due to
domestic demand. .....
Small Demand Raises Prices.
What the Presidents economists
gloss over is the fact that it does not
take much extra demand to send a
world price soaring. Hence it is un-
persuasive to assume that because
numerically the domestic market
absorbed more food products than
usual, the domestic demand was
the principal factor in raising
prices One solitary thing, OF course
is that the Presidents advisers did
not lay the blame on the removal OF
price controls, as 1s SO regularly
charged by Democratic stump
speakers who do not seem ever to
take into account the tremendous
excess of demand over supply.
Another significant omission from
the report Is the impact of lower tax
rates or Federal revenues through
Increased business activity. Emphssis
s1sid on the need for q continuance
OF high taxes instead, though 1t Is
conceded there will be q surplus even
with the passage of the Marshall
plan
But the Presidents economists
mindful Of his political policy insist
IN referring to surplrlS for debt re.
demption" whereas impartial econo.
n1ists would have said either ia,
reduction or debt redemption sine.
It. is not the province OF these Gov
ernment economists to Use their re.
port for political propaganda pur.
poses. One grudging concession
hewever on taxes is made in tn.
report. 1t says:
Nor does the need to maintain
taxes at a high level exclude i'm
provements that do not impair tn
aati-infiati tionary effect OF high taxes
nor the early consideration of ta,
reduction to strengthen consume
purchasing power and business in
centives to become effective whel
the infiationary danger has passed
This is hint that the sdministra
tion will not oppose revision of tn,
administrative provisions of exist
ing tax laws. Once President Tru
man feels politically secure, he will
ceH,e forth with a program of ta,
reduction too.
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