Drawing the Battle Lines

It was Gerald Ford's week, and he made the most of it. Projecting a fresh sense of confidence in himself, his policies and his political future, the President used the power of his office to take attention away from Ronald Reagan, his Republican rival, and from a crowded field of Democratic candidates. Ford used the State of the Union address and the budget message not only to lay out his programs but to launch in earnest his campaign for election in November.

Shaping the theme of his budget and his campaign, Ford relied on his instincts--and the findings of pollsters. Both told him the nation was fed up with what he called "bigger and bigger Government." Declared the President: "The American people know that promises that the Federal Government will do more for them every year have not been kept. I make no such promises. I offer no such illusion." Ford urged the nation to practice the "common sense" once preached by Tom Paine, and called for a return to the old-fashioned virtues of "restraint" and "self-reliance." The President said, "The time has now come for a fundamentally different approach [to Government], for a new realism that is true to the great principles upon which this nation was founded."

Popular Idea. In the abstract, the notion of restraining--or at least reshaping--the Government is a popular idea these days even with many liberal Democrats, who have scented the same political winds as Ford. What is more, the President's conservative budget will certainly help him against the conservative Reagan. But it is also certain to embroil him in sharp battles with Congress.

In terms of specific issues, Ford took the calculated gamble that while jobs are a burning concern, most Americans are even more worried about reducing the rate of inflation. But Ford had to do more than settle on a budget that was austere enough to fight inflation, which he predicted would drop from an average of 9.1% in 1975 to 6.3% in 1976. He had to make sure that it was not so restrictive that it aborted the economy's recovery. The President settled on a total of $394.2 billion for fiscal 1977, up only 5.5%, compared with the jump of 15% this year. Ford's budget would produce a deficit of $43 billion, compared with this year's figure of $76 billion.

Economists clashed over whether Ford's budget was too restrictive (see following story). Actually, the budget was up $21 billion from the current year's record total. Yet inflation and the natural momentum of existing programs would have sent it soaring by $50 billion if Ford had not proposed reducing the growth of a number of Government activities.

SOCIAL SERVICES. About $14 billion of the reductions would come out of social programs. For example, child-nutrition programs would be cut by $900 million. Eligibility requirements for food stamps would be made stricter, saving $1.2 billion. Viet Nam veterans and those now in the service would have their education benefits cut back. Ford would hold the growth of Medicare expenditures to $2.2 billion, half of the projected growth. Patients receiving regular Medicare services would have to pay somewhat higher fees. But to ease the burden of what he called "catastrophic" illnesses, Ford also proposed a plan to make beneficiaries pay no more than $250 in doctors' bills and $500 in hospital and nursing-home bills in one year.

Other major issues:

JOBS. Potentially the most controversial aspect of Ford's tight-fisted budget was the fact that it made no all-out effort to ease unemployment. The President asked for only $1.7 billion to continue a $2.5 billion public service program that had created 330,000 jobs, and he would allow even these to be phased out beginning next January. The Administration's economists figured that the average unemployment rate of 8.5% in 1975 would drop only to 7.7% in the election year of 1976, which would surely give the Democrats a strong issue.

DEFENSE. Ford suggested ways of saving about $4 billion in the military by various small economies. But he urged Congress to allow the military to spend $101.1 billion in fiscal 1977, an $8.3 billion jump over this year's anticipated figure. Ford said that the budget included all of the programs that former Defense Secretary James Schlesinger had recommended before he was fired last November in the Cabinet shakeup.

TAXES. In an election year, Ford recommended an additional $10 billion income tax cut--about $2.7 billion for business and the rest for individuals. One suggestion: raising the personal exemption from $750 to $1,000. But he also urged an increase in Social Security taxes that would boost the maximum payment by an individual from $895.05 this year to $1,014.75 in 1977. People earning $16,500 or more in 1977 would pay the maximum rate. The new Social Security tax would raise $3.3 billion in fiscal 1977. This and other tax increases would reduce the impact of Ford's proposed income tax cuts to $4.3 billion.

To reply to Ford's proposals, Senate Majority Leader Mike Mansfield picked Maine's Senator Edmund Muskie. He gave a low-keyed, cautiously middle-of-the-road critique of the President's budget, offering no specific new programs as alternatives. He told a national TV audience that Ford's plans for the economy were "pennywise and pound-foolish"--that much more should be done to raise production and create jobs. "The President says we cannot afford to help Americans find work," declared Muskie. "I say we cannot as taxpayers afford not to."

The avowed Democratic candidates were less restrained. Senator Henry Jackson called Ford's budget a promise of "guaranteed joblessness and continued high unemployment." Senator Birch Bayh of Indiana said it was "a cruel political hoax." Noting that Ford's cuts came in social programs while his increases were in defense, Arizona's Congressman Morris Udall snapped: "He's got his priorities mixed up!"

As the second session of the 94th Congress got down to serious business, the Democratic leadership in the House made plans to carry the fight directly to Ford on the issue of jobs. Within a fortnight, the Democrats hope to pass three bills that, they claim, would create work for 1.4 million people.

The Democratic Congress is not likely to cut social programs, at least not as deeply as Ford is urging. Nor is Congress expected to regroup these programs into big packages--known as "block grants"--and hand them over to the states to be administered as the Governors see fit. Neither is Congress likely to increase Social Security taxes by as much as Ford proposes, give the Pentagon all that Ford is asking, or raise fees for Medicare patients. The prospect is for a series of fights between Congress and the President, with election-year realities forcing Ford to back off a bit as the months go by. Indeed, some Democrats on the Hill estimate that the final budget might go as high as $420 billion, which is about where the liberal economists would like to see it.

But all that lies ahead, and last week Jerry Ford seemed to be confident that he could take on anyone and win. To show he was in command, Ford personally briefed the press on his budget--the first President to do so since Harry Truman (see story following page).

The latest Gallup poll shows Ford leading Reagan among Republican voters by 53% to 42%. In mid-December the two men were tied; in November, following Ford's abrupt shakeup of his Cabinet and Reagan's announcement of his candidacy, the former California Governor led, 40% to 32%, in a field of ten.

Ford's optimism was particularly evident during an interview with a delegation of seven editors and newsmen from New Hampshire, where he will be running head-to-head against Reagan in the nation's first primary, on Feb. 24. After repeated prodding, the President ticked off the names of eight men as being "fully qualified" to be his running mate in November: Commerce Secretary-designate Elliot Richardson; Senators Edward Brooke of Massachusetts, Charles Percy of Illinois, and Howard Baker and William Brock of Tennessee; and Governors Daniel Evans of Washington, Robert Ray of Iowa and Christopher Bond of Missouri.

But perhaps the surest measure of Ford's new confidence is that he is finally learning how to exploit the fact that he is, after all, an incumbent President. Except for occasional forays into the primary states, he intends to stay in Washington and make news there, setting himself apart from all the other candidates. "He's the only one making the hard decisions," says an aide. "Nobody else is closing military bases or calling for a rise in Social Security taxes."

Morale Rise. Ford fully intends to use the White House as a pulpit, speaking out on the issues, seeking to establish himself in the mind of the public as a competent and determined chief executive. There is a noticeable rise in morale around the White House these days, and it extends right into the Oval Office. Says one of Ford's top advisers: "He feels the momentum is with him."

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