Evening star., 1957-12-24

trend"
Adjustments are necessary,
he added. but I'VE are laying
the foundations for another
economic expansion starting
In 1883"
While agreeing that condi-
tons viii improve late next
year. Senator Kefauver. Demo-
crat Of Tennessee. insisted re-
cession will have q substantial
effect on the 1858 election. The
country lacks confidence In our
economic leadership
He urged immediate Federal
action to loosen credit. liberal
ize loans to small businesses,
boost farm income. aid de-
pressed areas. encourage con-
struction and expand public
works.
Questions Of Timing
But q high administration
ofiicial contended. mo special
action by the Executive Branch
Is called for" He asserted the
Federal Reserve Board can
handle the mild economic dip
by adjusting its monetary
policies.
II conditions deteriorate. this
spokesman said. the admins
tration will promptly put ii
anti-despression plans into op-
Grafton. Action probably would
start with heavy Federal spend
ing. probably unbalancing the
budget. and continue with rec
concentrations for tax cuts and
freer lending policies. "As Q
last resort" he continued. I'VE
would launch a big program Of
public works"
/ Thus, the 1858 economic de-
bate shapes up as q clash ovei
timing. Administration critic:
viii demand urgent action u
revive the boom. Unless the
economy says much lower thar
most analysts expect. President
Eisenhower's relaxed attitude
probably win prevail.
The Government will combat
the slump indirectly. through
the defense program. Chair.
man Mills. Democrat Of Ar.
kansas, Of the House Ways anc
Means Committee. doubts Con.
gress will enact any specifi,
antidepression laws. Military
spending may actually be thu
stimulus Congress develops"
/ Russia's gains in the weap-
ons race undoubtedly will boosi
United States expenditures fol
military and scientific projects
BY pumping this extra money
into the economy. the Govern
ment will Offset some declines
| in other sectors.
AFL-CIO Aide Optomistie
Stanley H. Ruttenberg. ALL
CIO research director. called
the Federal budget "the big
factor" that will determine
when the economy perks up
He looked for some revival ir
the third or fourth quarter oi
1858.
Even II military spending
fails to have enough impact
Congress will find something
to help US pretty fast" ht
predicted. There are too many
smart politicians to permit .
serious depression"
But Mr.. Ruttenberg called
the slump bad enough righi
now to warrant immediate &C.
ton. He said the Nation Is tr
Ia decline worse than the reces.
sions Of l949 and 1854.
While President Eisenhower
hopes to compensate for much
of the rise in defense spending
by cutting civilian programs
his foes warn such reduction.
would retard economic re.
covery. They propose increase.
in spending - not retrench.
mentS. -5- &
The President q dam an tly
iopposes tax cuts in this periot
of heavy spending, and HI
probably will win his way. But
few observers doubt the govern
ment would cut taxes promptly
to swell consumer income II
deep recession should start.
Spiraling Arms Costs Seen
Mr.. Mills warned against
hasty tax reductions because
military spending viii rise ever
faster during the next several
years. Before long. he pre-.
dicted. defense programs viii
take up the slack in the econ.
omy and imitation again viii
threaten.
But Mr.. Mills will hold hear.
ings next year on revision o.
the tax structure in a manner
designed TO encourage eco
nomic growth.
The Federal Reserve System
last month took the Govern
ment's FIRST important step :,
combat the slump. looseninI
credit by lowering the interes
rate 1t charges on loans h
member banks. This actor