Nixon's 1970 Worries: Economy and Environment

THOUGH he managed to escape from Washington to the Southern California sun, last week was a chilly, somber time for President Richard Nixon. While the war in Viet Nam goes grimly on, it is no longer his chief preoccupation; the polls show and his Democratic opposition concedes that Vietnamization and U.S. troop withdrawals have relieved, at least for now, the political pressures of the war on the President. Instead, Nixon has turned his attention to the two questions that have cast their shadows over the politics of 1970: inflation and the quality of the American environment.

Before he left the capital, the President made a show of reluctance as he signed a sweeping income tax revision bill that also includes a 15% increase in Social Security benefits (TIME, Dec. 26). The Treasury estimates that the new legislation will increase federal revenues by $3.7 billion in the first half of 1970 and by $2.7 billion in the fiscal year that begins July 1. But Nixon fears that the additional revenues will be eaten away by overly generous congressional appropriations, by the Social Security hike and by a continued rise in the Government's fixed costs. He warned that an inflationary deficit in the federal budget now "would be irresponsible and intolerable." For the coming fiscal year beginning July 1, Nixon added, "I shall take the action I consider necessary to present a balanced budget."

$200 Billion Neighborhood. To spur him on, there is the lesson of what is happening in the current fiscal year, when federal spending may well work out to total more than Nixon's hoped-for ceiling of $192.9 billion. The fat $5.8 billion surplus that the Administration once so cheerily anticipated will probably get much skinnier as the economy slows down and tax collections shrink with it. Nixon damned the Democratic-controlled Congress for putting his surplus in peril. "In the very session when the Congress reduced revenues by $3 billion, it increased spending by $3 billion more than I recommended," he said.

The Administration's planning for the next fiscal year is clouded by varying guesses about how serious the 1970 business slowdown may become. Presidential Assistant John Ehrlichman and Budget Director Robert Mayo were working with Nixon in California to put the final touches on the new budget. Part of their difficulty is with what Washington budget watchers call "the un-controllables": unavoidable automatic rises in payments for Medicare, Social Security and farm support. Another factor is the price of funding the national debt, a cost that has been driven up by the high interest rates of the Government's own anti-inflationary tight-money policies. Educated estimators put the size of the upcoming budget for fiscal 1971 at between $198 billion and $202 billion.

Since Nixon has ruled out a budget deficit, there are only two things that he can do to produce a balanced budget in the neighborhood of $200 billion. He must find new taxes to add to federal revenues, and he must hack away with determination at the spending requests that his department heads have put before him. He can hardly ask for a surtax extension beyond June 30, since he himself campaigned to end it; even if he changed his mind, moreover, Congress would hardly vote it in an election year. Nixon is intrigued by the idea of a value added tax, which is in effect a national sales tax of the kind becoming standard in the Common Market countries, but he has rejected it for now. Instead, he will try a bits-and-pieces approach. White House aides believe that he will renew his request for $600 million in postal-rate increases, ask for new excise taxes on such services as airline travel, and speed up collection of gift and inheritance taxes.

Blood and Buddha. On the budget-cutting side, Government agencies are being squeezed hard. Some have come to Nixon and Mayo asking for more money and have left with less than they had got the year before.

Defense Secretary Melvin Laird cut back $4 billion in the current fiscal year and stands to lose another $3 billion to $4 billion beginning July 1, leaving the Pentagon with about $73 billion to spend in fiscal 1971. Agriculture and the space program will also suffer a nasty pinch; only the Justice Department is likely to come out unscarred for the second year running. Says one Administration adviser: "There's only one Cabinet member who's sitting back smiling like Buddha, and that's John Mitchell. He got what he wanted, and he's about the only one who did."

Aside from the politics of budget making, does it matter if there is a surplus? Some think not. Says Herbert Stein, a member of the Council of Economic Advisers: "Many people now see a magical significance in a shift of a few billion dollars in the budget position, especially if the shift crosses the line between surplus and deficit. In a trillion-dollar economy, this is hard to understand." Still, it is what the President wants and has promised.

In spite of the brutal butchery that he is imposing in other areas of federal spending, Nixon is working to find room for one important new program that will cost nearly $2 billion in its first year alone: a campaign to improve the natural environment of America, centered at the start on combating water pollution. Last week the President signed a bill to create a three-member Council of Environmental Advisers, and he made a point of inviting reporters to the Western White House in order to explain his feelings.

Unfit for Living. "It is literally now or never," Nixon said. "A major goal for the next ten years for this country must be to restore the cleanliness of the air, the water, the broader problem of population congestion, transport and the like." Perhaps Nixon's own rediscovery of his transformed native Southern California helped convert him to the cause. He had toured the environs of San Clemente only the day before, and his comments reflected what he had seen. "If you look ahead ten years," he said, "you project population growth, car growth, and that means of course smog growth, water pollution and the rest--an area like this will be unfit for living. New York will be, and Philadelphia. Of course, 75% of the people will be living in areas like this."

In his State of the Union message later this month, the President will emphasize this aspect of the quality of American life. To that, unlike his budget, he should find little resistance on Capitol Hill. Prominent Senate Democrats like Edmund Muskie of Maine and Henry Jackson of Washington have urged more sweeping measures than the bill Nixon signed last week. In 1969, when the Administration asked a $214 million ceiling on new funds for municipal sewage-treatment plants that would reduce water pollution, Congress went ahead and appropriated $800 million instead.

This file is automatically generated by a robot program, so reader's discretion is required.