October 16, 1974

Nibbling The Bullet Not Enough

There was a lot of brave talk in recent weeks about facing up to hard economic decisions and "biting the bullet," but when the moment of truth arrived we all took a nibble and spit it out.

President Gerald Ford labored mightily and brought forth a mouse which he assured us was a war to Whip Inflation Now (WIN).

The voters heard "five percent surtax" and fell over in a dead faint.

Congress roared with indignation over the possibility of having to do something decisive during an election campaign.

In the ensuing hullabaloo, every special interest in the nation rushed into print to prove that those portions of Ford's program pinching them was a disaster approaching 10 on the Richter scale.

The intensity of criticism of the President's timid proposals indicates that little will come of them.

It is painfully evident, now, that inflation-recession has not yet hurt us badly enough to convince us we have to make sacrifices.

The real fight against our economic problems is yet to be joined.

Despite the prophets of gloom and doom, Americans are not convinced we are in a desperate situation requiring desperate measures.

Perhaps, in the collective wisdom of society, this unspoken conclusion is more valid than the learned gobbledygook of the hundreds of so-called economists who can't agree on what year this is.

Ford's grand plan is hardly more than the type of tinkering that has characterized U.S. economic policy for at least 20 years.

I'm not so sure anything more is needed, but the president led us to expect a divine message carved into granite by lighting bolts.  A whole series of economic "summits" created an atmosphere of crisis.

Then we were asked to applaud the courage of the President putting us to the "the acid test" and proposing things "politically unpopular."  Damn the torpedoes!

If the program can be faulted - aside from its theatrics - it would have to be on the basis it is too little.

Overall, Ford's seven-point program of "grow more and use less" is a mixture of inflationary and anti-inflationary proposals.

The program to extend unemployment insurance benefits by 13 weeks and create additional public service jobs is clearly inflationary even though compassionate.

The tax surcharge for one year on corporate taxes and on a portion of taxes paid by "middle" and upper income individuals is certainly anti-inflationary.

The increase in the investment tax credit for business from 7 percent to 10 percent is inflationary in that it cuts down on the amount of taxes going to government, but is anti-recession in that it encourages industry to expand and provide more jobs.

There is a little piece of candy and a little piece of pepper for everyone.  What fun it will be to try and snatch the goody and leave the sting for some other sucker.

Though Ford's plan is less than exciting, it is something.  Better to light one small candle than curse the darkness!

It has the merit of being coordinated - balancing spending with saving.  If Congress starts to cut it to pieces - as it has already vowed - the result will be a mish-mash that will intensify our economic problems rather than ease them.

The surtax is such a convenient straw man to knock down during a free-swinging election one wonders why Ford would propose it at this time.

The poor working-stiff allegedly is to be ground down once more while the fat cats are to be given another lucrative loop hole through which to draw some more profit.

This is pure demagoguery - by the politicians, and the press, and the unions who all know better.

Ford asked for a five percent surcharge on "adjusted gross income" - a piece of IRS terminology that is confusing to the average voter under the best of conditions.  The politicians and the press deliberately allowed this to be interpreted as "total income."  The technically correct term is rather piddling.  The latter, erroneous term is a sock in the nose justifying a great rush to protect the "peepul."

In reality, the surcharge is applied to income AFTER deductions.  A family of four making $15,000 a year would pay nothing more than the usual income tax.  At $16,000 a year, that family would pay an additional $3.  A family of four with $20,000 total income would pay only $42.

Back during the Vietnam war, Congress gave President Lyndon Johnson a 10 percent surcharge.  But, of course, that was a majority congress accommodating a President of its own party.

Now the matter is partisan game.  The soothing words that induced Americans to quietly accept twice as large a surcharge then are missing now.

Today the profligate spending of 40 years is shrilly charged to a minority president.  The mildest efforts to deal with the problem are shouted down as reckless.

It is the same kind of irresponsibility that thwarted President Herbert Hoover's proposals to deal with a world wide depression.  He was propagandized into a monster until defeated by an opposite party Congress which then gave Franklin D.  Roosevelt much of what Hoover had proposed.

The same partisan rip-off is underway again today.

No matter how many rich bogey men the demagogues can conjure up, the reality of economic life is that three quarters of all taxes are paid by the middle-class workers earning between $15,000 and $25,000 a year.

Whether we like it or not, the middle class helped vote in the spenders and only the middle class can buy our way out of the mess we're in.

Nibbling the bullet is not enough.

Author: Lindsey Williams