Evening star., 1949-07-12
The Presidents Report

The Presidents "Midyear Economic Re-
port" to Congress is in part reassuring, in
part challenging, in part discouraging, and
In part an incitement to renewed contro-
versy over Federal fiscal policy and the
role it should play in relation to the ups
and downs of our historic system of free
enterprise.
Basing his views on the findings of his
Council of Economic Advisers, the Presi-
dent has been at pains to emphasize tnat
our current recession is fundamentally not
very serious Unemployment has risen to
around four million, and industrial produc-
ton, business investment and farm income
have all dropped rather markedly under
last years figures. In his opinion, however,
these and similar unfavorable factors are
offset by enough favorable ones to make 1t
inappropriate for the Government to
undertake emergency measures at this
time
Nevertheless according to the President,
1t would be dangerous to sit back COM
placently and let nature take its course.
To keep the recession from fattening into
a full-scale depression, business, labor,
agriculture and Government must work
earnestly together for full employment in
a steadily expanding economy which he
emissions as achieving an annual national
output we'll above 300 billion dollars in the
next few years. AS his Economic Council
has put it, "Our real need is for industrial
production not only to rebound to the
level of present consumption but also for
both production and consumption to con-
tinue to rise sufficiently to absorb labor
force which is both growing in size and
increasing in productivity per man.
Because evidence abounds that the stu
alton today is basically much sounder than
in 1929, there is good reason to believe that
the President and his Council are not
whistling in the dark when they say that
the immediate outlook is generally re-
assuring. There is good reason to believe,
too, that their call for an expanding
sary objective which private enterprise
must pursue for the long-term good OF
the Nation. Further, Mr.. Truman is ac-
ceding to political realities, with ample
support from his economic advisers, by
reversing himself and ruling out his jan
uary request for higher taxes Also,
whether Congress goes along with him
or not, large body of opinion will
welcome his recommendations for i'm
mediate legislative action on such matters
as restoration of the Reciprocal Trade
Agreements Act and extension of the
maturity time limit on the RIGS business
loans.
With that said, however, it must be
added that other, more controversial
aspects of the Presidents report will create
encouragement in many quarters, lnclud-
ing not least of all the very business COM
munity which the report seeks to reaSSure.
Thus, for example, coming at this partlc-
ular moment, his proposals for higher
minimum wage, for lower consumer prices,
for increased farmprice supports, and for
more generous unemployment and social
security payments will seem to good
number of Americans to be both ill-timed
and ill-advised. But above everything else
his declaration that it would be economic
folly" to make any cuts in essential
national programs" and his implied pre-
diction of a series of Federal deficits
ahead, will come as dismal and disturbing
news to lot of people besides Senate Byrd
1t is true enough, of course, that the
President says he will try to balance the
budget and reduce the national debt at
"the earliest feasible time" But he sug-
gests that that time may be long way
off, and he makes clear that meanwhile
there will have to be deficit financing
because economies right now would, in his
Judgment, serve only to deepen the recess
IN ho1f
it, Perhaps he is right. But still, even
though slashes in foreign aid could have
very serious political and economic conse-
ouences, it is difficult to agree with him
when he holds that no Government pro-
grams of any kind should be cut. What
he is espousing, in effect, is pump-priming
of a sort that has always been open to the
gravest question.
Certainly, considering the fact that that
kind of fiscal policy failed to solve the
une- oloyment problem in the 1930s, its
resi- alton at this juncture, after all the
prewar and wartime deficits, does not
inspire confidence. On the contrary, with
the national debt already totaling a
quarter of a trillion dollars, it tends to
stimulate nervous speculation about how
much longer the Government can operate
in the red, as a welfare state, without
shattering public faith in Federal securi-
ties and undermining the credit Of the
country in way that could be catastrophe
for our ree-enterprise system. Clearly, If
pump -priming continues to feed that fear
the outlook for private investment in an
expanding economy will be quite dim.
Yet, in fairness to the President, it must
be said that he is right in declaring that
our friends abroad are anxiously watching
our recession, that the Kremlin is hoping
it will develop into crash proving the
Marxist prophecy of capitalism's doom, and
that the whole free world will suffer griev.