May 19, 1975
Page 14937
FORTUNE MAGAZINE PRAISES BUDGET REFORM
Mr. MUSKIE. Mr. President, in an editorial in its current issue, Fortune magazine praised Congress for a new prudence in fiscal matters as a result of the new budget reform process.
Fortune also commented:
While showing their unexpected concern about overall deficits, Congressmen have also been making a commendable distinction between spending measures with short life spans to counter recession and programs that will get embedded in the budget and become more costly as the years go on.
To share Fortune's comments with my colleagues, I ask unanimous consent that the editorial be printed in the RECORD.
There being no objection, the editorial was ordered to be printed n the RECORD, as follows:
COOLING THE FISCAL FEVER
Spring has brought a renewal of confidence in the economy, which, in Walter Heller's striking simile, has begun to look like a falling airplane that is finally pointed upward – even though it is still losing altitude. And with the fresh confidence has come a welcome bonus: a discernible improvement in the quality of discourse about the economy.
As recovery becomes a clearer prospect, there is a lot less of the clamor we were hearing a couple of months ago for colossal doses of stimulus to turn the economy around and get the unemployment rate down in a hurry. What's helping to mute the clamor is a spreading realization that imprudent anti-recession measures could bring back double-digit inflation and abort the recovery.
The new prudence has been most noticeable in Congress, of all places, where it has been underscored by the promising debut of the Senate and House budget committees. Created last year to give Congress a budget-making mechanism that would replace the old helter-skelter way of dealing with appropriations, the two committees got down to work speedily, and in some innovative ways. In the Senate public hearings have been conducted like seminars, with Senators and witnesses – among them Leonard Woodcock, Alan Greenspan, and Arthur Burns – sitting with senior staff members around a table, firing questions and comments back and forth.
ADDING UP THE AGGREGATES
This year the budget committees set out only to recommend aggregate income, spending, and deficit figures as targets for Congress to aim at (starting next year they'll also establish priorities in sixteen specific spending areas, such as Defense and Agriculture). The spending limits they recommended this first time out were far below the aggregate totals for proposals already in the congressional hopper. The Senate committee came up with a budget target that would produce a deficit of $69.5 billion in fiscal 1976. On the House aide the recommended target was a bit higher and would put the deficit at $73.2 billion.
By no standards of the past can these targets be described as frugal (nor, for that matter, can the $60-billion deficit which the Ford Administration is now aiming for). But they are a lot better than the $100-billion deficit some leading economists were advocating not too long ago. In fact, the Senate committee urged rejection of bills costing $54-billion; the deficit could exceed $120 billion if Congress passed all the spending proposals now before it.
While showing their unexpected concern about overall deficits, Congressmen have also been making a commendable distinction between spending measures with short life spans to counter recession and programs that will get embedded in the budget and become more costly as the years go on. Even the tax bill reflects a preference for "in-and-out" stimulus; its $23 billion in tax cuts might have been distributed far more wisely, but as President Ford said when he signed it: "Most of the drawbacks are enacted for only one year."
A POWERFUL DETERRENT
The President himself can claim some credit for cooling the fiscal fever on Capitol Hill. For many weeks, his seemed a lonely voice crying out in speeches, press conferences, and interviews against budget recklessness. In fact, he was a bit of a bore about it. But his message appears to have been heard – and is now being played back to all those Democratic Congressmen by their constituents.
It seems that the trauma of recession has not, after all, wiped away fears of – and indignation about – inflation, and impatience for recovery doesn't mean willingness to pay for recovery with a renewed inflationary surge. A recent Gallup poll found that 60 percent of Americans perceive inflation as the nation's biggest problem, while only 20 percent cited unemployment. Sentiment that strong could become a powerful political deterrent.
But the effort to assure a sensible, sustainable recovery depends on continuing the battle against unwise spending – and the outcome remains uncertain. After all, a $69-billion deficit may be tolerated this coming fiscal year, but another one that size the following year would be sure to reignite the inflationary flames.