One aspect of the new economic program of Nixon and John Connally should not have been unexpected: its benefits for the rich and disdain for the poor. Connally, in particular, has brought to the Administration a blunt favoritism for big business that calls to mind the way things are done in Houston. He has belittled the target of 4 percent unemployment and deplored the “unacceptable” level of corporate profits: both, he thinks, are far too low. He has announced to the world America’s resumed willingness to throw her weight around, as if there had recently been a moratorium. Like Lenin’s, the Nixon-Connally Administration’s New Economic Policy is an essay in realeconomik.
The domestic program pretends to evenhanded severity—a call for homefront sacrifices in the “war against inflation.” In fact, inflation may well have been receding when Nixon made his speech (the 0.2 percent price increase in July was one of the smallest in years), while the situation of the jobless was getting steadily worse (the rate of unemployment during the last twelve months has been the highest since 1961). The Administration’s new program does include a plan for increasing employment, but a predictably selective one. Taxes are to be cut for corporations and the affluent—an increase in the personal exemption, as liberals seem to forget or misunderstand, confers greater benefits on higher bracket taxpayers. Budgets will be cut for cities and the poor. Welfare reform is shelved while investment credits (a form of subsidy for business) are resurrected.
The only remarkable aspect of the program was its initial success in gagging the Democrats. Most of the Presidential candidates, stunned by Nixon’s trumpets, kept quiet about the direction of the march. It took an explosion from George Meany to remind the Democrats whose party they were supposed to be.
For some time now the opposition to Nixon has been counting on “the economic issue” as its meal ticket for 1972. But it has no specific program beyond “doing something” about prices and jobs. Now that Nixon has done something, the Democrats are left waiting around for things to get worse again.
Events may well oblige. When the ninety days are over, the Administration will have three basic choices: to abandon controls altogether, to maintain them on the entire economy, or to regulate merely the price and wage decisions of large corporations and unions. Statements by Connally and Commerce Secretary Stans have already indicated the Administration’s preference for the third approach, on the theory that a completely free economy would soon revert to its inflationary ways, while a thoroughly controlled price and wage structure would require the World War II-style bureaucracy that the President clearly wants to avoid.
But selective controls have their problems, too. The first dilemma facing the new wage price board will be catch-up demands from firms and unions whose scheduled increases were postponed by the freeze. It would be politically impossible to deny all increases to the groups covered …