Carter's Economic Doodling

...Imagine U.S...

...He also was quoted as saying that "economic conditions have changed, and we have a very serious recession...

...The ERP is a four-part package...

...Amazingly, the recession was welcomed by Treasury Secretary G. William Miller during and subsequent to his Federal Reserve sojourn, way back in 1978...

...Such a provision also stacks the cards in favor of capital-using over labor-using methods, while offering merely a tenuous impact on productivity...

...I am convinced tip would be superior to controls...

...How sterile can the Carter people be...

...Unspoken is the fact that this translates to a 0.5 per cent drop in the unemployment rate...

...The document also projects "real economic growth of 4 to 5 per cent per year...

...Mentioned specifically were the steel and auto industries...

...In any event, the nonprecious ERP words are disturbing mainly for their reminder of the barren ideas of the document's framers...

...Given the Federal Reserve adamancy, this qualifies as grandiose yearning in the absence of a serious anti-inflation policy...

...This would overwhelm the ERP's $2 tax "saving...

...In a minor way this imitates the Chrysler bailout and tarnishes the charming enterprise parable of courageous firms investing, upgrading their facilities, and striving for restoration of profits...

...Every recital has been offered with solemnity, conviction and a warning that the fate of the nation hangs precariously on acceptance of the urgent message...

...The skeptics among us would like to be confounded by the ERP's implementation...

...As finally discerned by Eizenstat, preparations have been made to confront itfrom the rear?after the event...

...Distressingly, the President uttered nary a word on the price blitz, the Public Enemy Number One that he is eager to see get lost and go unnoticed by Governor Reagan...

...In addition, to sweeten the marriage vow the income tax obstruction to matrimony would at last be mitigated...

...Incredibly, however, Eizenstat declared that the latest program "is it for January," meaning that it comprises the post-election agenda...

...But the Administration handout did contain an intriguing line, tucked away in a succinct passage, on "future tax reductions-earned by continued control of spending-in ways that help moderate the rise in wages and prices...

...We never know which Carter we are assessing, the one who landed us in the recession ditch or the one promising an untidy salvage operation, ever complacent on inflation and Federal Reserve stiffness in enforcing double-digit interest rates to impede recovery...

...Since our constitutional system began, the incessant battle has centered around identifying the senior partner-and the silent partner-in the unremitting struggle for economic power and dominance...

...Included, of course, is an evangelical call for "creating a forward-looking partnership" between government, the private sector and the public...

...Because of its focus on the future and a vagueness in vital dimensions, it is easier to dismiss the present relevance than to assess the ultimate pertinence of Carter's Economic Revitalization Programor ERP, an acronym we had better get used to if Ronald Reagan persists in making Taiwan, the "noble" Vietnam venture and the story of creation the centerpieces of his election strategy...

...The tax code would be liberalized to enable firms to charge off new plant and equipment at a faster pace, and lighten their immediate tax liability...

...This is an undisguised pitch for tip, the policy pioneered by Henry Wallich and myself, that would use incomes policy to promote full employment without inflation...

...On a budget of over $600 billion this would amount to less than a 0.3 per cent addition, so the numbers are not very staggering either...

...But this is merely a number, subject to fast revision after the election...

...Lacking are the details, which make the difference...

...Stuart Eizenstat, the President's domestic advisor, has graciously remained inconspicuous during the interval of extraordinary bungling by the other Carter economic "indignitaries" who are nevertheless courted by the media...

...Fanfare about a commission to recommend a commission, and to study familiar topics that are constantly under study, may excite a public relations agent or pollster...

...One disposable partfrom the President who promised to reduce the number of government boardsconsists of the "President's Economic Revitaliza-tion Board" (perb, as in hyperbole...

...Fortunately, this is Sidney Weintraub, professor of economics at the University of Pennsylvania, is the author of Capitalism's Unemployment and Inflation Crisis and Keynes, Keynesians, and Monetarists...

...But the program betrays a narrow vision deferred to too late a date, and a misapprehension of our economic problems: It evades the inflation ordeal while ignoring the monetary measures that led us over the brink and now, with the economy showing signs of life, threaten to stifle recovery...

...While we may prefer the ERP to the usual budget pieties, any prognosis at this time is futile...

...Congressman John Anderson has already pledged unequivocal support for the idea...

...In short, more public works-hardly a brave new thought...

...This mild New Deal-Great Society orientation was aimed at wooing labor, cities, blacks, and the campaign support of Senator Edward M. Kennedy...

...unfortunately, misery and distress are compounded by an approach to inflation that uses a camouflage of words to conceal nearly four years of inertia...

...Consistent policy, whether we agree with a specific lurch or not, is a one-time thing in the Carter era...

...For one thing, assuming Carter is returned, the ERP will be maimed and mangled by a more conservative Congress that looms on the horizon, particularly since it is projected for a time beyond our current sinking spell...

...at best, this is a long way off, considering the legislative temper...

...At least it is worth a try...

...two, formally mated, would now be able to live as cheaply as when severed in income tax liability only...

...Indeed, this part must have been dredged up for media impact...

...Steel and GM coming hat in hand, appealing for a Friedman welfare "negative income tax...

...Enduring the dull dope sheet circulated at one of those bigwig receptions Carter is fond of holding to expose a stern Presidential visage, only Miss Lillian could conclude that he has come up with anything fresh, innovative or ingenious...

...Estimates are that with the revised attitude, and the recession assault on tax revenues, the new deficit will be about $35 billion...

...These would in fact be corporate subsidies, with government promising to abate losses...

...The Army Corps of Engineers, incidentally, would "expedite" not the "current port dredging proposals," but their review...

...Subduing the price orgy, and thereby impelling the Fed to slash interest rates, could add 1 million housing units annually in a rebuilding of America...

...If in name, hoopla and some content the ERP is a very modest New Deal, no one will ever confuse Carter with FDR...

...Another unstartling ERP plank would extend unemployment compensation from 26 to 39 weeks-a good robust number divisible by 13...

...it barely transcends Reagan's views on evolution...

...Rather than the "millions and millions of jobs" that an exuberant President held out to the Urban League a month ago, the ERP envisions half a million by the end of 1981...

...not the case...

...In other words, for a worker earning $ 15,000 the Social Security bite would go up $78, and the tax cut would come to $80, yielding a net break of $2...

...On taxes, the handout lists an income tax credit of 8 per cent of Social Security levies to offset the higher rates slated to begin next year...

...The provision is overdue, considering the state of the economy...

...What new disasters can Carter be planning...

...The ancients often spoke of time belonging to God...

...There must be a better way-for example, simply cut the eleemosynary Social Security obligation and have the government funnel general tax revenues to the system for this limited sum...

...More controversial is a cash refund to firms that sustain losses or report inadequate profits to cover investment credit write-offs, normally deducted against taxes...

...Aid in the form of loan guarantees, and interest rate subsidies, to firms locating in depressed areas (a proposal already before Congress), and an extra 10 per cent investment tax credit are on the ERP docket as well...

...The ERP would have firms earn a tax credit to neutralize their higher Social Security costs, too: What government taketh with the right hand it re-turneth with the left...

...By stopping inflation we could provide far better than 500,000 jobs-a figure of 3-4 million would be within reach...

...Further, it is the third economic policy the President has pronounced this year, with each unrelated to the other, so we can assume that all is subject to quick change should he stay in the White House...

...The economic ramifications here are underwhelming...

...Under the ERP provision, the gov-vernment would grant refunds as easily as an A for effort...

...Leaving aside the fact that moods and conditions have changed, sections of the ERP are what can always be taken from the shelf and dusted off by almost either party looking for something new in the very old when a "small think" posture is deemed propitious...

...How comforting that the news has penetrated the Oval Office...

...In both political parties, and in virtually all quarters, this is a noncontentious provision which should-if ever interest rates come down-encourage investment and, over time, revive capital formation, jobs and productivity...

...Remarkably, for a President who professed "fiscal responsibility" and a balanced budget in his previous solemn pledge last March 14 to save our economic soul, that aspect is buried in the ERP unspectacular...

...This is truly a magnificent "small think" clause in a purported major "revitaliza-tion" measure...

...We have nothing to lose but a bungled economy...

...Unfortunately, there will be truth in the conservative scorn...

...What has been dreamed up, without candid admission, is a backdoor revision of the Social Security financing concept, collecting more revenue under its guise and relinquishing almost identical IRS sums...

...A LITTLE NEW DEAL Carter's Economic Doodling BY SIDNEY WEINTRAUB After dumping our country's economic cart deep into the recession ditch, President Carter late last month unveiled a plan to "create almost half a million jobs by the end of 1981...

...Adam Smith, to those unfamiliar with the sentiments of the canny Scot, would elevate the consumer to the top spot...

...And administering it is likely to be formidable, for every business will surely want to share in the bounty...

...At about $30,000 the net tax increase would come to roughly $230...

...Stopping inflation remains the key to recovery and economic progress...

...Until we discard the fiction that moneys extracted from the same individual in different packets are unrelated, such proposals must be regarded as nonrevolutionary stopgaps...

...For very low earnings outside the income tax net that are subject to Social Security imposts, the credit would go from 10 to 12 per cent, to overcome the rising rates by a refund...

...Its function is to advise on establishing an industrial development authority, on how industrial dislocation affects workers, communities and productivity, and on health and safety regulations...

...Finally, more "countercyclical" grants to communities-which too often become procy-clical in local government hands?ceta funding, and a bill to train 450,000 young people complete the humdrum little New Deal...

...Think of the fresh conservative gibe at this: "Send your money to Washington and the bureaucrats will refund it, after taking their cut...

...Given our notorious management and stockholder conflicts, the policy could generate queer instances of management commitments to unwarranted investments and taking liberties with stockholder funds...

...Scientific research, highways, railroads, ports, mass transit, and "wea-therization" of public buildings are allotted about $2.4 billion more in 1981 by the ERP than previously budgeted...

...The President should elaborate his sparse words, to enable judgment on whether they signify little or augur very much...

...Margaret Thatcher, the corporate Fascist state of the 1930s, and for 200 years, well-meaning democrats have used literally the same phrase, zillions of times...

...With mortgage rates in the 9 rather than the 15 per cent range, buyers assuming a $40,000 mortgage could save upwards of $2,000 in the first year...

...To magnify the national happiness, cities and nonprofit organizations that pay Social Security but are exempt from income tax would be mailed refunds...

...Senator Kennedy, badly advised, caved in on the wrong principle when he opted for the piddling Carter job concession rather than insisting on his wage and price controls plank...

...Revised industrial depreciation aspects of the ERP are more far-reaching...

...Can the economy wait so long...

...I would have liked to see this spelled out candidly, as the heart of the ERP, and not inserted as an afterthought...