Pumps, Not Taxes

At his press conference last week, the President was cheerful and chipper. How did he feel about the economy? Bullish.

But somehow Harry Truman sounded a little like a man who was damned if he was going to come down with the flu, even though he already had the sniffles. This week, in the longer, drier sentences of his midyear economic report to Congress, the President frankly admitted that there were some reasons for feeling bearish.

There were soggy spots, he said, almost everywhere his economic advisers poked their fingers. Employment was still high (59.6 million), but unemployment was rising (to 3.8 million in June). Production was off 13% from last fall's peak. Wholesale prices had dropped 9% since last August; business profits were down 13%, and farm income was 8% under the first half of 1948.

One of the President's top economic advisers had a description of the country's present condition: "There are four stages of economic deterioration--concern, apprehension, jitters and panic. We're now somewhere in between the upper levels of concern and the lower levels of apprehension."

"The 1949 decline has been moderate," insisted Harry Truman. So far there had been no speculators' spree, no sudden upsurge of personal debt, none of the familiar warning signals of an economic smashup. But in this "transition period," he admitted, there was no longer any point to the whole kit & caboodle of anti-inflation controls which he had been demanding. Nor was there, he acknowledged, any longer a possibility of the $4 billion tax increase he had asked for last January.

What was needed now, the President said, was to pump new life into the sagging economy with a series of Fair Deal measures to increase minimum wages, broaden social security, raise farm price supports through the Brannan plan. In essence, his program was a moderate dose of the old New Deal mixture: deficit financing, some brave whistling, some Government pump-priming.

Presumably, too, the Administration was dead set against another round of wage increases (see BUSINESS), but it just couldn't bring itself to say so. In trying to write around this painful subject, the President's economic advisers composed some masterful doubletalk. Sample: At the present time both employers and workers should strive to work out adjustments which will help to stimulate activity, bearing in mind the need both for holding business costs down and for maintaining consumer purchasing power at high levels."

Whatever that meant, there was no mistaking Harry Truman's concern for the change in economic climate. The report made no mention of the economic storms building up in Europe, but Treasury Secretary John Snyder was already heavily engaged on the foreign front, trying to work out a way of saving Britain's dwindling dollar reserves (see INTERNATIONAL) . Back on Capitol Hill, Maryland's Millard Tydings let it be known last week that his Senate Armed Services Committee had presidential permission to whack almost a billion dollars out of the armed forces' budget.

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