"A Tough Year"

More than any other state document, the annual budget forces a President to translate rhetoric into reality, to assign priorities and price tags to his visions. The budget's cold columns leave no room for fantasies--just stark, unyielding figures. In the budget for fiscal 1968 that Lyndon Johnson is sending to Congress this week, bound in a subdued, rust-colored cover, the priorities are baldly stated. The President calls for a sizable increase in defense spending to sustain the Viet Nam war, with a complementary slowdown--though not an actual decrease--in Great Society spending.

Despite the size of the budget--a record $135 billion--the President has relatively little room in which to maneuver. At least $100 billion can neither be cut nor shifted around. The rest will certainly come in for what House Appropriations Committee Chairman George Mahon calls a "skeptical evaluation" from the 90th Congress.

Steady Steps. One practically untouchable area will be defense. With overall federal spending expected to rise by $8.3 billion, fully $5 billion of the increase will be consumed by the Pentagon, whose $73 billion budget will be the third highest in U.S. history.* In planning last year's defense spending, the President had sought to keep the total down by operating on the shaky assumption that the Viet Nam war would be over by June 30, 1967, the end of the fiscal year. For that reason, he provided no money for weaponry requiring lengthy periods of research and development, like aircraft, and consequently will have to ask Congress for a supplementary appropriation of $9.6 billion in the next few weeks. In his new budget, the President prudently abandons that assumption.

Loath to lower the sights on his lofty domestic goals in the face of burgeoning military expenditures, the President said last week: "I don't think we can reduce the Teacher Corps. I don't think that we can postpone the Head Start projects. I don't think that we can postpone what we are doing in the cities." Nevertheless, non-defense programs are in for what an Administration aide calls a "tough year." Said he: "We will move ahead on the major social programs, but it will mean firm, steady steps ahead--no wild expansion." Health, education and welfare activities are ticketed for an additional $1 billion, including $135 million for extension of Head Start, another $135 million for additional manpower training programs, plus added funds for the just-launched Demonstration Cities program.

More Mileage. Even to make these modest increases possible, the President will have to prune heavily in other areas. As Budget Director Charles Schultze sees it, the most likely targets are the Federal Highway program, public-works projects by the Corps of Engineers, other construction spending that can be stretched out or deferred. In the U.S. space program, the effort to put a man on the moon will not be affected, but post-Apollo projects are likely to be slowed down. Few potential economies have been overlooked: the President expects to save $8,000,000 a year with a regulation that Government autos be driven for seven years, or 72,000 miles, instead of six years and 60,000.

What is more, Johnson has postponed final decisions on two programs that could prove astronomically expensive. He will not make up his mind on building an antiballistic missile (ABM) system for the U.S. until Washington's new ambassador to Moscow, Llewellyn Thompson, has had a chance to determine just how effective the new Soviet ABM network really is. Nor will he decide at this time whether to go ahead with a supersonic transport for the U.S., even though Boeing has already been selected as the designer; instead, funds for continued research will be supplied on a month-to-month basis.

Santa U.S. Despite his efforts to spread a fair amount of butter through the bullet-heavy budget, Johnson is certain to come under attack. Many of his fellow Democrats are angry at his emphasis on the military at the expense of welfare programs. The G.O.P., unhappy at the prospect of an $8.1 billion deficit on top of this year's projected $9.7 billion gap between intake and outgo, insists that more domestic programs must be cut.

Another prime target for economizers is likely to be foreign aid, for which the President will request between $3 billion and $3.5 billion, although Congress gave him only $2.94 billion last year. Some Democratic leaders, notably Senate Foreign Relations Committee Chairman J. William Fulbright, want to restructure the whole aid effort by ending bilateral arrangements and channeling funds into such agencies as the World Bank instead. Senate Minority Leader Everett Dirksen merely aims to cut the total. The U.S., Dirksen said during his portion of the G.O.P. address, must pay "more attention to the conservation of our own strength and resources and less to those nations of the world that regard us as an amiable, vulnerable, jolly Santa Claus who can be slurred at wi'l and cuffed with impunity."

Uncertain Surtax. Because many politicians are worried about the possibility of a recession, the President may also have trouble getting Congress to approve his proposal for a 6% surcharge on corporate and individual income taxes. Johnson argues that the added tax will not be recessionary because it will be counteracted by an increase in Social Security benefits--an average 20% if he has his way, 8% if the G.O.P. suggestion is adopted. The higher benefits, he said last week, will pump more than $4 billion into the economy, mostly through lower-income groups. Simultaneously, he added, the 6% tax will "take from those making above $10,000 a little over $4 billion. So it kind of bal ances off."

And that is more than can be said for Lyndon Johnson's 1968 budget.

* After an $81.3 billion outlay in 1945, and $76.8 billion in 1944.

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