Blunting the Great Society

...Unfortunately the sums involved are derisory of the program's purposes...

...Vietnam is not yet Korea, much less World War II, in size or in effect...

...But while things could be worse, they are not very good...

...No union leader can be pleased with a definitional change which has the net effect of substituting 3.2 per cent for the 3.6 per cent which the older formula would have produced...

...Hence there is little doubt that the President has taken the politically expedient course, at least in the short run...

...While President Johnson shares these insights, so far the general public has been almost coaxed into the belief that fiscal policy is simply a matter of successive tax cuts...

...But the boom in consumer spending, led by autos and color television, shows no sign of abating...

...Winthe-War...

...But in the longer run, he may have incurred a risk as unacceptable to him as the loss of his consensus: The prospect that the Great Society programs will remain in their present state-tentative, cautious, initial probings into the social pathology of decaying regions, urban slums, unlivable cities, and environments hostile to civilized life...

...As is usually the case in periods of tight labor markets, the gain in per capita productivity will be less spectacular than at the beginning of economic expansion...

...Its limited scope has allowed the President to construct a very tempting prospectus for 1966: Military service for the sons of the poor, employment for some of their fathers, rising wages, higher profits, and no consequential tax increases...

...If the much milder reform impulse of the 1960s is blunted so soon, how long will it take for medicare to be extended into a genuine health service for all...

...If this is the path that Lyndon Johnson, however reluctantly, has taken, then the first real social reform impulse since the early New Deal days will be yet another casualty of a mistaken foreign policy and a disastrous war...

...Thirty years elapsed before the Social Security Act was expanded to include medical care for the elderly, yet in the 1930s Franklin Roosevelt seriously considered (and finally rejected) health care for all age groups...

...No doubt it is a mistake to underestimate Lyndon Johnson's ingenuity and ruthlessness in wielding the powers of his office...

...In fact, this year's message contains an interesting novelty, a demonstration program incorporating some of the concepts which housing reformers like Charles Abrams have been urging for years if not for decades...

...For once the aim is the planning of housing as a human, not an engineering problem...

...Nevertheless, it is exceedingly improbable that the guideposts will be much help in repressing the more or less natural consequences of tight labor markets, high demand, and limited capacity...

...Although Johnson had some recent success in holding down the prices of aluminum, copper and, more dubiously, steel, it is unlikely that he can do as well in 1966, partly because the pressures of demand upon capacity will be stronger and partly because even large industrialists will learn in time that there are ways of raising prices without incurring the public wrath of a masterful Chief Executive...

...Indeed, most of the scant additional...

...None of this is intended as criticism of this aspect of Johnson's plans for the economy...

...War on Poverty appropriations are raised only slightly and the program is in considerable administrative and political hot water...

...Economists know that fiscal policy is reversible...

...At last some effort is to be made to coordinate physical redevelopment with the creation of genuine communities and the rehousing of displaced families...

...Since 1953 we have traded off a good deal of possible additional employment for stable prices...

...Dare one hope that the President will halt short of complete tragedy in Vietnam because the price of further escalation is almost certain to be the ruin of every domestic aspiration that the President has cherished...

...Under the circumstances, it is to the President's credit that his January Budget Message contemplates still another deficit of $1.8 billion in the administrative accounts...

...On the vital housing front then, the Administration proposes to do little more than mark time-an inadequate response to an admitted urban crisis, and a contradiction of the Administration's own strategy for coping with it...

...In a famous press conference Franklin Roosevelt served notice on his countrymen that Dr...

...It is quite likely that in 1966 prices will rise somewhat more rapidly than they did in 1965, possibly 3 or 3.5 per cent instead of last year's 2 per cent...

...Is there any meaningful demonstration of the virtues of the new program which could be financed in either of these cities for as little as the whole of each year's $400 million...

...Steel companies can charge for "extras...

...3.1 billion allotted to Great Society Programs will flow to education-$905 million in school aid under the terms of last year's Elementary and Secondary Education Act, $1 billion in loans and grants to enlarge college academic and dormitory facilities, and lesser amounts to initiate a 3,700-member Teacher Corps and to enlarge college scholarships for needy students...

...The permanent alliance of commercial bankers always eager to raise interest rates (the price of the commodity they market) and fiscal reactionaries intent as ever on curtailing social welfare appropriations, this year must have sought from the President actual reductions in spending for medical aid, assistance to schools and colleges, economic opportunity programs, and the array of other measures old and new which comprise the agenda of the Great Society...

...If in 1966 we are reversing this policy by trading off price stability for employment gains, it is none too soon...

...If the President had sought an actual tax rise of say half the size of the reductions authorized since February 1964, instead of the temporizing package of reimposed excises and speeded-up payment of levies ultimately to be paid in any event, his constituents would have felt real pain and raised their voices to a volume audible in Washington...

...We shall take special care to see that urban communities of all sizes are included...

...Moreover, "for each such community, the impact of the program will be significant, involving as much as 15 to 20 per cent of the existing substandard structures.' "All sizes' must include New York and Chicago...

...Nor is there even a paucity of new ideas...

...Worse still, programs whose initial impulses wither are in danger of capture by those adroit enough to exploit them for private purposes-as FHA and urban renewal were diverted to the advantage of builders and real estate developers, and as the regulatory agencies were converted into advocates of precisely the same interests they were originally created to curb...

...This is the apparent condition of today's disarmament agency...

...Johnson, by temperament an expansionist, has recognized the economy's need for modest additional fiscal stimulation...

...By mid-year unemployment may at last fall below 4 per cent, so long the interim target of national policy...

...A sixth year of economic expansion is one of the safest forecasts of modern history...

...Up to now the Johnsonian consensus on economic policy has depended upon an almost unprecedented economic expansion fueled by large business investment, rising military expenditures, a protracted boom in automobiles, and-tax reductions distributed widely enough throughout the economy to win the President support from practically everybody...

...A major disappointment is the meagerness of the President's plans for housing and urban improvement...

...Nor are demonstration grants an adequate substitute for the real thing...

...Johnson might have yielded to the conservatives inside and outside his official family who for five years have been warning of price inflation and a balance of payments disaster...

...by year's end the unemployment rate may actually touch the 3 per cent mark, taken by many students of labor markets as the practicable minimum in a comparatively uncontrolled economy...

...Place this level of financing next to these Presidential words: "There are few cities or towns which could not participate in the Demonstration Cities Program...

...New Deal had been superseded for the duration by Dr...

...Such improvements will require communities to coordinate their own social and engineering agencies and then work out suitable relations with the Federal officials appointed to supervise the demonstration projects...

...And if, in practice, the grants are distributed to smaller cities and towns, what will their successful or unsuccessful use prove about the best way of civilizing the major American metropolises...

...In 1966 their apprehensions seem plausible...

...They know that it can be consciously used for social purposes as well as for economic expansion...

...The Administration's principal defense against unacceptable wage and price increases has been the Presidential application of the wageprice guideposts...

...To this inevitable question there is an obvious answer: He could and should have asked for much larger Great Society appropriations, and for the increases in personal and corporate income taxes required to finance them...

...The price of this policy would have been a political ruckus...

...If the Budget does not quite bring the march to the Great Society to a halt, it comes perilously close...

...Tokenism is as unpromising in social welfare as it is in racial integration...

...Aside from de-escalating the Vietnam war, what else could the President have done...

...Even as an attempt to induce exemplary performance on housing in a few small cities, the sums proposed are so tiny as to promise nothing at all...

...In many skilled categories labor is scarce and hoarding of personnel by employers has begun...

...There is no lack of stirring rhetoric: Once more Johnson's special housing message eloquently and urgently describes the magnitude and intractability of the cities' problems...

...Not surprisingly, AFL-CIO President George Meany has reacted sharply to the Council of Economic Advisers' shift in the mode of computing the economy's productivity gains from a five-year moving average based on recent experience to a longer-term measure...

...Such programs do not automatically become large...

...He appears to realize that a prompt change in national policy to tight money and budget surpluses would amount to snatching from the long-term unemployed their best hope for jobs...

...The automobile manufacturers can raise prices by including once-optional equipment as standard or by compensating for "higher" quality...

...For Johnson to have deferred to these men and offered a balanced budget without substantial tax increases would have implied acceptance of the conservative judgment on his proudest innovations...

...One should be explicit on the consequences of the President's policy...

...The President contemplates spending $2-$3 billion over a six-year period-possibly $400 million each year...

...It is all too probable that Vietnam military demands will put pressure upon the economy...

...Here again, the omens are unfavorable...

...As the President envisages them, the demonstration grants will be conditioned on a community's willingness and capacity to effect change "in the total environment of the area affected," by providing "schools, parks, playgrounds, community centers and access to all necessary facilities...

...The much heralded Medicare, due to commence in July, will of course be financed out of rises in highly regressive payroll taxes...

...Our reward has been prices more nearly steady than those of any of our major trading partners, and our penalty has been the highest unemployment rate in the Western world...

...It was for a long time the fate of the Justice Department's anti-trust division...

...All the President risks is the possibility that some, if not all, of the programs upon which he has placed his stamp will be lost...

...Even the attainment of this figure will depend upon the Administration's success in reducing agricultural subsidies and in holding down outlays for Vietnam...

...There will be trouble from labor as well...

...Potentially, therefore, the demonstration program is a highly creative device...

...Recent history is full of examples of agencies maintained in a condition of half-life...