The Democrats' Conservatism:

...Nevertheless, the appealing personal style and intelligence of the President and the toll of difficulty which he faces in the real political world ought not to blind us to the possibility that even the highest quality of conservatism is inadequate to the needs of the economy...

...It has been said that President Kennedy is impatient with ideological labels and certainly his proposals thus far are innocent of the characteristic fixations of either the Utopian left or the radical right...

...Narrowly elected, indebted to Northern liberals and Southern segregationists and faced by a Congress accustomed to eight years of inaction, Kennedy as a realist has ample warrant for tempering aspiration with caution...

...The first is a decadelong tendency to run annual deficits of about $1 billion...

...Where executive authority does not reach, the President has not thus far asked a great deal of Congress...

...He has not closed his eyes to the realities of unemployment, lagging growth rates and gold outflows...

...About this Kennedy posture a great deal good deserves to be said...

...Of these there is a long list...

...Yet, among economists a tax cut during a recession does not rank as an extreme step and discretion over its timing and extent would surely add to the flexibility of executive action...

...Inheriting several major economic problems from the previous Administration, President Kennedy has gone quickly to work to offer his correctives in two important messages to Congress...

...They have been equally innocent of dogmatism either of prediction or prescription...

...the current exclusion of this category tempts solicitous fathers to aid their children by appearing to desert them...

...Whether the neat trick of raising one set of rates while lowering another can be managed will depend in large part on the willingness of the Federal Reserve System to cooperate with other executive agencies...

...Nevertheless, the tendency for recent recessions to be succeeded by incomplete recoveries and for average rates of unemployment in consequence to inch upward implies that the expansive forces in our economy are proving insufficient to absorb farmers displaced by technology, assembly line workers superseded by the control devices of automation, and school and college graduates who have been adding themselves to the labor force in ever-expanding numbers...

...Presumably the measure would stem the flight of foreign funds to countries where interest rates are higher than in the United States...

...Tax cuts and new public works projects are not part of the agenda...

...These measures are not only humane, they are also inexpensive or self-financing...

...All the recommendations continue the trend toward greater coverage and higher benefit levels which has characterized the history of minimum wage, unemployment compensation and Social Security legislation in Republican as well as Democratic Administrations of the last generation...

...What are the characteristics of the policies proposed in the first two major messages...

...The old prewar group of economists who argued that our economy faced the danger of more or less permanent underemployment of men and resources retreated out of sight in the face of certain overpowering facts, among them the population surge of the last 20 years and the happy failure of postwar depressions to materialize...

...They will extend the protection of present programs of aid to dependent children to the offspring of the unemployed...

...Widows are promised 85 per cent of their husbands' benefits instead of 75 per cent...

...We have much to be grateful for...

...He observed in answer that tax cuts were expensive, other programs were more pressing, discretionary power for the President was a far-reaching step and, finally, that he had voted first against and then for such a proposal during the 1958 recession...

...The realism which works within the limits of political feasibility militates aganst another of the President's declared objectives-the larger goal of altering the limits themselves, of transforming the mood both of Congress and the country so that more imaginative programs become politically practical and the inevitable compromises between President and Congress modify larger proposals and leave in their wake more substantial legislative achievements...

...The changes which the President urges will lengthen from 26 to 39 weeks the period of unemployment compensation coverage...

...His proposals have gone no further than strictly current need...

...In content his program is a mixture of the New Deal with a number of interesting technical innovations...

...More generous unemployment compensation will be paid for by taxing annual incomes up to $4,800 instead of $3,000 as at present...

...In fact, a more rapid rate of innovation in our industries over the last decade might well have raised wages and lowered labor costs per unit of product...

...Much that Congress was asked to do in February it was also asked to do last August...

...At the least our present economic situation suggests the possibility that we have not thoroughly exorcised the ghost of secular stagnation...

...Their new running mates are not exciting: Tourist dutyfree allowances will drop from $500 to $100 per person, and investment will be stimulated by accelerated depreciation allowances on new investment...

...President's new economic proposals 'have gone no further than strictly current need' The Democrats' Conservatism By Robert Lekachman Although President Kennedy has been in office now just a month, he has already offered Congress and the nation a long message on the state of the economy, a shorter one on the specific problems of our dollar and gold outflow, and the promise of later communications on housing, unemployment compensation and farm incomes...

...Of course there is little novelty in any of these clauses...

...The problems have stimulated him to intelligent action, invariably within the bounds of practicality...

...The President has instructed Government agencies to accelerate their procurement and concentrate their buying where possible on areas most afflicted by economic adversity...

...Its analysis is clear: The United States has been sufferingtwo kinds of deficits in its international payments...

...If eight years of inert Government had not diminished all our expectations, we should recognize our new President on his record to this moment as an intelligent conservative...

...One is the proposal (which requires Congressional authorization) to pay higher interest rates on foreign than on American short-term balances...

...Here Robert Lekachman, Associate Professor of Economics at Barnard College and author of A History of Economic Ideas, analyzes these proposals and suggests they reflect the views of an "intelligent conservative...

...Federal Housing Administration lending rates have been reduced from 5% per cent to 5% per cent and a speed-up is promised in urban renewal and college housing projects for which funds under existing programs are available...

...There is a final comment to be made about the Kennedy version of responsible economic statesmanship...

...What do these proposals, suggestions and intimations add up to...

...The modest program of the special session centered on distressed areas, aid to the unemployed and Social Security and they are here once more...

...The balance of payments message contains an interesting hint of a much more important technical innovation: the proposal of the distinguished Yale economist, Robert Triffin, that gold reserves be pooled under the auspices of the International Monetary Fund to create something on an international scale akin to the reserve operations and mutual protection of our own Federal Reserve System...

...If the President has his way, minimum wages will rise to $1.15 immediately and to $1.25 within two years, and coverage will be widened...

...Veterans Administration insurance dividends will reach policy-holders within 60 days instead of on policy anniversary dates scattered over 12 months...

...The proposal has the merits of economizing on the use of gold and protecting member nations against speculative forays which would attack the value of their currencies...

...In economic as in other affairs, this Administration is unusually competent, extraordinarily receptive to new ideas and extremely cautious in action...

...This cool calculator of political probabilities is unlikely to suffer the repeated Congressional rebuffs which Harry Truman encountered on domestic legislation and which even Franklin Roosevelt suffered during his second Administration...

...Insofar as the future resembles the past and the present, the promise of the Kennedy Administration seems to be the limited one of prudent governmental conduct, continuing extension of social gains, alert response to domestic recession and ingenious adjustment to international exigency...

...This judgment applies equally to the extension of food stamp distributions-another New Deal legacy-and the distressed areas legislation which has been a legislative bone of contention during several recent Congressional sessions...

...As the President noted, "The programs will not by themselves unbalance the budget which was earlier submitted, but are designed to fulfill our responsibility to alleviate distress and promote recovery...

...Higher Social Security taxes will finance increased benefits to the disabled, the widowed and those male workers who retire at age 62...

...Funds for highway construction-$724,000,000 -are to be released immediately instead of over the course of the year...

...In order to compete we must keep our costs low, but low costs need not imply low wages...

...But unless events drive him to more radical interventions into the American economy, we have little reason to expect of John Kennedy any major change in the nation's manner of conducting its economic affairs...

...As long as the President hesitates to contemplate this sacrifice, the amount that he can ask once the recession is over is severely limited...

...The President's recommendations are in the main ingenious technical adaptations...

...In peacetime the most substantial sacrifice most citizens are called upon to make is tax payment...

...The restrained temper of Kennedy's thought appeared in a clear light recently when a reporter asked his views on tax cuts...

...Indeed, the New York Times commented editorially on the general cautiousness of the minimum wage proposals and the specific failure to include employes of large farmers...

...These statements have refreshingly demonstrated the new prose style of this Administration-they have been crisp, workmanlike, vigorous and delightfully free of the cant which stultified even the soundest of the Eisenhower pronouncements...

...And it may not be possible for the President, if he remains within the budgetary limits he appears to have set for himself, to produce the aid for education, housing, depressed areas and agriculture which his task forces one after the other tell him are essential...

...Indeed he has displayed some of the most admirable traits of conservatism at its very best...

...Can the Kennedy palliatives remedy the lingering sluggishness of the last decade and the persistent misallocations of resources to which John Kenneth Galbraith and other social critics have repeatedly pointed...

...While the President is clearly betting that recovery will come fairly soon (at one point in his economic message he refers to the "period of slump" as "the next thirty to sixty days"), he promises to take another look at the state of the economy before 75 days have elapsed and make whatever new recommendations this evaluation suggests to him...

...Our ample surplus stocks will cover many times the amounts to be distributed under food stamp arrangements...

...While the rhetoric has promised more, the recommendations have kept in mind the desirability of balanced budgets, competitive costs and stable prices...

...The second and much larger deficit of the last three years is the result of large transfers of gold to foreign accounts and substantial shifts of short-term funds from American to foreign financial institutions...

...This expedient goes hand in hand with the Administration effort to lower the long-term interest rates as a stimulus to new investment...

...The message itself is admirable in a number of ways...

...In each of these realms, intelligent, able men are at work...

...In the first place, they breathe a humane concern for the plight of the casualties of our economic situation: the unemployed, the dependent children of the unemployed, recipients of Social Security and disabled workers...

...In style it is empirical...

...Disabled workers need no longer prove that their disability will lead to death or permanent incapacity in order to collect disability payments...

...The basic deficit is the consequence both of our extensive military and economic commitments to other nations and of the growing strength of the industrialized nations of Europe and Asia...

...In sober truth, if the budget which this Administration has inherited will be unbalanced it will be much more the effect of declines in tax receipts than of increases in expenditures...

...Nevertheless, there is also a touch of cautious experiment, especially in the balance of payments message...

...Although the President observed that "the Treasury and the Federal Reserve System already are working together to further the complementary effectiveness of debt management and monetary policy," the history of Federal Reserve and Treasury disagreement and the known conservatism of the present Chairman of the Federal Reserve Board, William McChesney Martin, inevitably evoke some reservations about the terms on which the cooperation is forthcoming...

...Its outlook includes no radical social or economic reconstruction, though much in the Kennedy rhetoric has seemed to suggest such an approach...

...Presidential order is sufficient to extend food stamp aid...

...Both of the President's messages are faithful to his instinct for political practicality, an instinct implicit in his emphasis upon the steps which can be taken under the President's authority alone...