Evening star., 1963-05-10
Chief Economist Optimistic
HeIIerD Doubts
Rise Can End
Lag in Jobs


HOT SPRINGS, Va. (AP).-
President Kennedy's chief
economist warned industry
leaders today that the spring
business upswing, although sur
prisingly strong, is insufficient
to make a real dent in unem-
ployment.
Walter w. Heller brought to
the Business Council, holding
Its spring meeting here, an ap-
peal for active industry support
Of a substantial tax cut this
year.
Without the kind Of stimulus
that a tax cut could bring, Mr..
Heller estimated, 1t would take
nearly 10 years Of uninterrupt-
ed business growth at the pres
ent gradual rate Of expansion
to restore full employment. And
the stimulus of tax reduction.
he argued. would have its
greatest impact If injected into
an economy that already was
in the recovery phase.
Tax Cut Supported
Mr.. Heller apparently did not
need to make a hard sales
pitch. At least a score of the
councils 165 members, includ-
ing some of the biggest names
in industry and finance. have
Joined Henry Ford II, board
chairman Of the Ford Motor
Co., In a movement to mobilize
Nationwide business support
for an early tax cut Of some
$40 billion.
These include the councils
chairman. Frederick M. Kappel,
board chairman Of American
Telephone g. Telegraph Co., and
its immediate past chairman,
Roger M. Blough, board chair
man Of United States Steel
Corp.
More were expected to Join
and make contributions this
week end to the new Business
Committee on Tax Reduction
in 1883" Two other council
members are the co-chairmen
Of the tax group, Mr.. Ford and
Stuart T. Saunders, president
Of the Norfolk g. Western Rail-
road.
Mr.. Ford and Mr.. Saunders
called a meeting Of their Exec
utive Committee here tomor-
row, sandwiched in between
council sessions.
Mr.. Heller, chairman of the
Presidents Council of Econom-
ic Advisers, was on the coun-
ellis program at a closed ses-
sion this morning, but asso-
ciates disclosed to reporters the
gist of his talk.
He emphasized that the pick
up in business activity since
January should not deter ac-
ton to cut taxes, since the pro-
gram was based from the start
on the assumption Of economic
expansion through 1868.
The $8.5 billion rise in the
annual rate of national output
in the first quarter was consid-
erably better than the Presi-
dents Council anticipated in
January. he acknowledged.
But it would take production
gains almost twice as great, or
about SIS billion a quarter, to
achieve a full employment
economy in one year, accord
ing to Mr.. Heller.
The Presidents interim goal
for full" employment means
that all but 4 per cent of the
labor force would have jobs.
Unemployment has averaged
above SIS per cent for more
than two years and now stands
at 81 per cent.
Move Stimulus Needed
To put the idle manpower
and plant capacity to work, Mr..
Heller continued, will require
the massive and continuing
stimulus to consumer demand
and industry investment which
a tax cut could provide.
Mr.. Heller was not expected
to make specific business FORE
casts here, but 1t was learned
that he and other Government
economists now expect nation
al output to reach a record to-
tai of $3.50 billion this year.
Such an output. IS billion
above the administrations
forecast in January. was the
basis for last weeks prediction
by Treasury Secretary Dillon
that rising tax revenues appar-
emily will reduce the anticipat-
ed Federal deficit in fiscal 1854
BY about 81 billion-from S1l.9