Into Combat

Perhaps the basic political fact about recessions in the U.S. today is that the Federal Government is committed by law, custom, popular demand and political necessity to combatting them. Last week, confronted by a spate of plunging graphs and slipping statistics, both the White House and Capitol Hill were talking plenty of combatting. Items:

Public Works. The President asked Congress for an extra $257 million for reclamation, flood control, hospital construction and other public works. With both parties agreed on speeding up the federal-state highway program, the Administration sent to Capitol Hill a proposal to put an additional $2.2 billion in federal money into the program over the next few years. The Senate Public Works Committee voted an even more souped-up highway bill. The House passed a hog-fat rivers and harbors (pork-barrel) bill.

Housing. With nary a nay, the Senate okayed a pump-priming Democratic bill authorizing an additional $1.8 billion in federal housing loans, as reports showed private housing starts had fallen from 64,200 in January to 60,000 in February.

Defense Spending. The White House announced that procurement orders would be placed at an average rate of $2.3 billion a month in 1958's first half, nearly double the pace of 1957's last half.

Unemployment Insurance. TheAdministration shaped up a plan to extend benefits for 13 weeks beyond present limits--26 weeks in most states--and House Democrats hoppered a bill to continue payments for an extra 16 weeks.

Both the Administration and responsible leaders on Capitol Hill curbed the temptation to plunge into tax cuts. The Senate even voted down, 71 to 14, a premature tax-cut measure urged by Illinois Democrat Paul Douglas (see Democrats). But Democratic chiefs in both Houses and Administration voices made it clear that tax cuts lay ahead unless March statistics showed unemployment shrinkage.

Whether the Democratic Congress goes for tax cuts or public works or, as is most likely, a generous combination of both, the price will be a huge budget deficit. With the recession pushing federal spending up and revenue estimates down, a fiscal 1959 deficit of $5 billion or more already looms. Tax cuts or massive new spending could easily mean a red-ink splash of more than $10 billion, biggest since 1946.

This fact was very much in the President's mind as he fended off demands for reckless action to halt the downturn by any means, at any cost. Labor, business, state and local governments, all were calling for action from Washington, and doing very little on their own to help fight the recession. Symbolizing the panic pressures, A.F.L.-C.I.O. President George Meany, United Auto Workers President Walter Reuther and other top labor leaders handed the President a damn-the-deficits plan that included just about everything except an offer to join with management in a hold-down on wages and prices. The U.S., it seemed, had grown overly accustomed to letting Uncle Sam do it.

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