FREE ENTERPRISE - SUPERSONIC STYLE

...The Symington deletion failed in a tie vote in the Senate...

...In each of these cases, the announced justification for a Federal subsidy was a strengthening of the defense effort or the furthering of the public welfare...

...On mass ground transportation, we are operating on a two-bit basis, in terms of Federal participation there...

...its plants stretch from Long Island in the East to California in the West...

...And this all assumes a successful program...

...The government is pursuing this course, as Mr...

...To the American aviation industry, the implications of that re-examination were frightening...

...But it is not the free enterprise about which school children learn, the free enterprise of investors risking their capital in the hope of reaping profits...

...One of these is the aircraft industry...

...The National Defense Education Act was passed after—and because of—the Soviets' Sputnik...

...Every indication since Boyd spoke a year ago leads to the conclusion that the SST will be a more expensive machine to build and operate than originally contemplated...

...Americans concerned with aviation had long been watching the progress of a supersonic transport, the Concorde, being developed jointly by the British and French governments...

...The report stated: "We feel that an American SST is in our national interest and that help directly from the government . . . should not be viewed as a subsidy but as a necessary element in our overall national economic panorama...

...The FAA has scheduled a month for evaluating the proposals, and the winning companies may be announced soon...

...Nor has the availability of Federal funds for the commercial SST prompted Congress to provide anything like adequate aid for urban transit—a public need that grows more desperate each year...

...If there are supersonics flying and they are attracting business, we are going to have to subsidize our carriers unless they have them...

...Free Enterprise -Supersonic Style by LEONARD BAKER A year and a half ago the late Pres-ident Kennedy, the bright spring sun warming his shoulders, stood before the graduating class at the Air Force Academy in Colorado Springs and announced: "The United States will commit itself to an important new program in civilian aviation...

...Does this have higher or lower priority...

...If England pulls out of the Concorde, the French will be unable to carry on alone...

...Prestige, the balance of payments, the need for jobs, and a fourth reason pushed the United States into the program...

...This disparity between the willingness to subsidize a favored private industry and the reluctance to assist the public sector was pointed up during the Senate hearings on the SST a year ago by Senator Philip A. Hart, Michigan Democrat...

...Spurred by competition from across the Atlantic and by the productivity of our companies," said Mr...

...The stated purpose of the billion dollar annual subsidy to the maritime industry is to provide a viable merchant marine fleet in case of war...

...The farm surplus problem—the root of subsidies to private agricultural enterprises—had its origins as far back as World War I when the national defense program encouraged the production of all the food that farmers could wring from the soil...

...Since then, there has been no effort to stop the SST...

...Part of the Federal Aviation Agency's proposal for the SST calls for a return of the Federal government's investment by collecting a royalty on each plane sold to the airlines by the manufacturer...

...The Boeing official, John O. Yeast-ing, vice president of the company's airplane division, added, "Risk is not a stranger to the Boeing Company nor to the aerospace industry...

...He then closed his talk by saying he had been trying to identify "some important fundamentals" because "an understanding and appreciation of these factors is important to our industry and to the free enterprise system...

...Last summer, in a little and late effort at both saving the cities from automobile strangulation and helping the commuter get to his job, Congress approved a program of financial aid to mass transit systems...

...Is this airplane of higher or lower priority than —you name it—schools and so on...

...The Pentagon, on many occasions, has insisted it does not need the SST...

...In his soft, Southern voice, Fulbright said, "I fail to see how a government subsidy of three-quarters of a billion dollars to the airplane builders is going to represent a triumphant vindication of free enterprise...

...Just a few days after the Labor Government began its re-examination of the Concorde, the FAA announced that the American SST was coming along on schedule, that proposals had been received from the competing companies—Boeing and Lockheed Aircraft for the airframe, and General Electric and Pratt & Whitney for the engine...

...There are four arguments that have contributed to adoption of the SST program...

...Kennedy's statement a year and a half ago, formally launching the United States in the SST race, Senator J. William Fulbright, Arkansas Democrat, rose to discuss the project...

...There was little doubt the Pan Am announcement had been the factor catapulting the American SST from a study to an action program...

...Many American industries are in trouble as the markets for their products dwindle...

...But in the past, one of two ends had to be served for the government to involve itself in private enterprise: the public welfare or national defense...

...The only serious debate occurred in 1961 when Senator Stuart Symington, Missouri Democrat, proposed to strip $12 million from the Federal Aviation Agency's budget that was earmarked for various early studies of the SST...

...This is a powerful argument with members of Congress concerned about an unfavorable balance of payments...

...Under this new "free enterprise," the Federal government takes the risks...

...What is there, then, about this sleek, bullet-shaped airplane that enables it to maneuver through the executive and Congressional branches of government with ease and emerge barely scratched while other programs are shot down by such charges as "subsidy" and "socialism...

...Federal Aviation Agency officials quickly offered assurances that there was nothing to worry about...

...An alternative is to preserve the old industries with Federal subsidies...

...Even the first part of Halaby's answer—that the United States is competing with the English-French Concorde —may turn out to be untrue...

...Where can we get a blueprint...

...If Europe is not in the running, why should the United States get out of breath...

...The eventual price tag may be $2 billion, with taxpayers contributing at least three-fourths of it...

...Symington is a former Secretary of the Air Force...

...The nose on the Lockheed plane would move downward fifteen degrees to give the pilot greater visibility in both landings and takeoffs...

...This last contention is that private industry cannot pay the cost itself...

...Promoters of the project, in and out of government, press ahead with the SST, although some airlines are beginning to fear that if it becomes reality it will compete too soon against the subsonic jets that are just beginning to yield profits...

...Shortly after Mr...

...Kennedy's speech at the Air Force Academy revealing the Federal government's decision to go ahead with the American SST came the next day...

...Building an American SST, he stressed, "will maintain the historic United States' leadership in aircraft development...

...The report continued, "While we are inherently adverse to government's financial entry into the private sector of the economy, we feel that the case for doing so here is incontrovertible...

...Kennedy's assertion that building the SST would show what "can be achieved under a democratic, free enterprise system...

...In the name of national defense, the Federal government finances—and subsidizes— many private companies...

...present jets cruise at about 600 miles an hour...

...Alan S. Boyd, chairman of the Civil Aeronautics Board, has raised the possibility that operating the plane may be so costly to the airlines that the United States, instead of collecting a royalty to compensate for its investment, will have to dig deeper to help pay for airline operations...

...The Agency offered to pay $750 million if industry would pay the other $250 million...

...Shortly after Harold Wilson's Labor Party came to power, England began an "urgent review" of its commitment to help build a European SST...

...Black's words have a familiar ring...

...In the spring of 1963, the United States did have a study program for an American SST, but there was no call to action, no development program...

...As this figure grows, of course, the division of costs between Uncle Sam and the aircraft industry will be more hotly disputed...

...In the name of public welfare, the government wages a war on poverty, subsidizes low-cost housing, trains the unemployed, provides hot lunches for school children, and engages in scores of other programs...

...Even so, the authorization that Congress voted for the mass transit bill is $375 million, exactly half of what the government has agreed to spend—as a minimum— on the SST...

...Then on June 4, Pan American World Airways, a U.S...

...The Federal funds will go toward the development of a commercial product to be built, sold, and operated by commercial companies to earn a profit—for the private stockholders, not the taxpayers...

...Whichever nation or combination of nations builds the SST that captures the world market can expect rich returns, it is claimed...

...The Federal government has placed public funds in the private sector of the economy before...

...Everyone who comes to Washington seeking Federal support opens his presentation by saying he is "inherently adverse" to government subsidies, but that help for his project really is not a subsidy because the proposed venture is "a necessary element" in the nation's economy...

...The plane would carry between 170 and 250 persons, depending on the length of the fuselage finally selected...

...Kennedy explained it, "to demonstrate the technological accomplishments which can be achieved LEONARD BAKER is a Washington correspondent for Newsday...

...An official of the Boeing Company, one of the finalists in the SST competition, said last spring, "I doubt if many people appreciate the fact that if a company such as Boeing were to undertake a supersonic production program it would be necessary to commit one-fourth of our facilities and one-fourth of our manpower for at least a decade before one dollar of profit would be earned, and igain this does not take into consideration interest on the investment which could easily aggregate several hundreds of millions of dollars...

...Tongue in cheek, he told the Senate about the prospect of this country battling it out with England and France...

...The Boeing version calls for the SST to use variable sweep wings which can be extended outward and pulled back to the plane's body during flight to give the plane greater efficiency in both supersonic and subsonic flight...

...They revolve around our balance of payments, jobs, and the resources of industry...

...Never was the justification that of helping a single industry earn profits...

...Work on these present designs began last May when President Johnson told the four companies to go ahead: "I am confident that this country will produce a supersonic transport that will continue to maintain American world leadership in the air...

...Are we to subsidize American champagne bottlers and scotch distillers so that they can save our national honor by challenging their European rivals...

...The interstate highway system is labeled a civil and national defense effort...

...The Lockheed proposed airframe does not envision movable wings, but it does have a movable nose...

...I would like Mr...

...The result is that many members of Congress, not just those from one region, are concerned by the bleak future the aviation industry faces and the prospect of constituents—who vote—losing their jobs...

...I think," Boyd told Congress, "the supersonic transport may very well generate a requirement for subsidy...

...But nothing stops the SST backers, even the expected departure of Halaby from the FAA, as they continue to claim the project represents free enterprise at work, rather than the novel form of government subsidized profit plan that it really is...

...Conversely, if American airlines go abroad to buy an SST, that much money would leave this country...

...It is well known," he said, "that the French produce better champagne than we do here in America, and that the British brew a fine scotch whiskey...

...In contrast to its strong support of the theory that the Federal government should aid the airplane manufacturers —and those wealthy enough to fly between New York and London at supersonic speeds—Congress accepted the idea that Washington should help the millions in the cities and suburbs to get to their jobs at reasonable cost, only after a bitter legislative struggle lasting several years...

...Another justification is the politically attractive prospect of providing new jobs for constituents...

...Congress does not appear especially concerned about the subsidy issue...

...A special report on the SST, submitted to the White House last December by Eugene R. Black, former head of the World Bank, supports industry's request for ninety per cent Federal financing...

...It would seat between 200 and 250 persons...

...To this plane, known as the SST, for Supersonic Transport, the Federal government already has committed }90 million, and has promised to commit $750 million, at least, in this decade...

...One by one, the manufacturers have come before Congressional committees to back up Halaby's statement...

...One solution is to seek new industries...

...And if the supersonic is not an economical machine, we subsidize [the airlines] for operating them...

...Industry, however, feels that too much is being asked of it and wants the government to assume an even larger share...

...company, announced plans to buy six of the European supersonic transports when they come off the production lines late in this decade...

...With that, the United States placed itself in the business of building a commercial airliner—a supersonic plane capable of racing the sun around the earth at speeds of 2,000 miles an hour...

...Ironically, a program as big as the SST creates its own momentum, which may keep the project going even though the original impetus has dissipated...

...Whether this proposal will ever become a reality is doubtful...

...In the more than a year since the point was raised, no one has tried to answer it...

...Although the original estimate of $1 billion to develop an SST is still the figure officials adhere to in their public statements, a more realistic current estimate is $1.5 billion, and this could eventually grow to $2 billion...

...But Senator Fulbright's most telling line was his reaction to Mr...

...Unlike most other troubled enterprises, however, aviation is a national industry...

...This is what bothers me, and I am sure everybody...

...Does our national prestige suffer as a result...

...private industry takes the profits...

...The answer can be found in the other three justifications pushed for the SST...

...The Federal Aviation Agency originally estimated the cost of developing an SST at $1 billion...

...Industry is not alone in pleading that the government pick up a greater share of the cost...

...under a democratic, free enterprise system...

...In the past, aircraft manufacturers relied on the Pentagon for new orders...

...Both the Boeing and Lockheed airframes would cruise at approximately 2,000 miles an hour...

...However, except for the TFX fighter-bomber to be used by both the Air Force and Navy, there is no new airplane in the Pentagon's plans slated for large-scale production...

...The only justification for government support of the development program," said Halaby, "is that the risks and costs associated with it are beyond the financial capability of manufacturers...

...Either plane could use the General Electric or the Pratt 8c Whitney engine...

...Kennedy, "the Federal government must pledge funds to supplement the risk capital to be contributed by private companies...

...In each, there is one theme: help for the individual who cannot help himself...

...First, there is the nation's prestige, underscored by the timing of President Kennedy's announcement...

...Najeeb E. Halaby, the administrator of the Federal Aviation Agency and probably the supersonic transport's most zealous advocate in Washington, argues that sales abroad of an American SST could bring $2 billion into this country during the 1970s...

...The SST program would create 40,000 jobs in the aviation industry during the 1970s, a point the airplane's supporters carefully mention in their discussions with Congressmen...

...Tin's new government goal, however, is precisely the justification for the SST...

...But the need to preserve the nation's prestige has been invoked by the White House on behalf of many of its proposals...

...He was sure that when his audience—the Aero Club of Washington—understood all the facts, it would recognize "the industry is simply endeavoring to exercise prudent judgment" by seeking Federal financial support...

...that part of the SST program has ample precedent...

...This would demolish the argument that an American SST was needed to bolster this nation's "prestige" and protect its balance of payments...

...His chief argument was not against the SST as such, but against "subsidizing a commercial airliner" while the government was refusing to speed development of a supersonic military plane, the B-70...

...Halaby," Hart stated, "to suggest how a set of priorities should be established in the Federal government...

...And no one suggests the SST is necessary to feed the hungry, house the homeless, or train the unemployed...

...And that is the banner under which the SST is Hying—the banner of "free enterprise...

...Jerome B. Wiesner, the former White House science adviser who had much to do with developing the economics of the SST program, told Congress: "It is a new experience for the Federal government...

...Today's fleet of commercial jet airplanes is the byproduct of the government's investment in fighters and bombers...

...Why does Congress go along with the SST and reject others...

...This is what should bother us . . ." Halaby's answer was summed up in his last sentence: "A, we are in competition with foreign nations, and B, we are proposing that the Federal investment be returned in financial terms...