Carter's Stand: Democratic Orthodoxy

In at least one all-important area, the accusation of fuzziness that has dogged Jimmy Carter throughout his 18-month campaign cannot fairly be sustained. In a stream of speeches, position papers and interviews, the Democratic front runner has expounded his ideas on all of the major, and some of the minor, questions of economic policy: jobs, prices, taxes, energy, even regulation of the trucking industry. No one who pays attention can miss his general drift: Carter is a mainstream Democrat, who offers primarily an updated version of the economic policies of the Kennedy and Johnson Administrations. His keynote: a major effort to reduce unemployment, principally by Government stimulation of the private economy.

Oddly, Carter's economic views have never received the attention they deserve -mostly, no doubt, because until very recently the campaign spotlight focused on delegate counts. Also, Carter has voiced his ideas in a characteristically bland tone: no purple rhetoric, no sweeping simplifications, no attempt to jam complex proposals into catchy headlines. That low-key approach so far has defused possible controversy even over some striking proposals. For example, Carter advocates taxing capital gains, such as profits on the sale of stock or real estate, as heavily as income from wages and salaries (capital gains now are usually taxed at half the ordinary-income rate). That idea created an uproar when George McGovern voiced it in 1972, but this time around, coming from Carter, it has gone almost unnoticed.

Now that he seemingly has the nomination locked up, Carter's economic program undoubtedly will come in for closer scrutiny, and he will be under pressure to amplify it. But there is little chance that the program will change substantially. With minor exceptions, Carter has been quite consistent in his economic pronouncements, and he pledges that as President he would follow steady, predictable policies, avoiding the sudden lurches -from a free market to wage-price controls and back again -of the Republican years. His major views:

JOBS. Carter's overriding objective is to cut the unemployment rate, now 7.3%, to 4.5% (3% for "adults") as rapidly as possible. To do so, he would rely principally on those most orthodox tools of Democratic policy: higher Government spending, temporarily larger budget deficits and an effort to persuade the Federal Reserve Board to increase the nation's money supply more rapidly. He also proposes a variety of Government inducements to private industry to step up hiring, including more money for on-the-job training programs and research assistance to develop promising technologies such as solar energy. Another Carter recommendation: an intriguing plan under which a company that would ordinarily lay off, say, 10% of its employees would instead keep all of them on the payroll for a shorter week -and the Government would share the extra cost.

Carter further would have the Government itself hire some people for public-service jobs -presumably meaning work in parks, drug-rehabilitation clinics and the like -and launch a program to create 800,000 summer jobs for youths. But he flatly opposes the idea that the Government should guarantee everyone a job through hiring for public-service employment. Though Carter has endorsed the Humphrey-Hawkins Bill. which calls for just such Government hiring, it is a ritualistic blessing only. Says his chief economic adviser, Lawrence R. Klein: "This bill could become an albatross. But no bill goes through Congress without amendments, and I can envision ten amendments that would make this a good bill."

PRICES. Carter believes that the inflation rate over the long run can be pushed down to about 3% a year, even as unemployment also declines. Pumping out more money to create jobs will not speed up inflation, he says, "because our economy is presently performing so far under capacity." The double-digit inflation of 1973-74, he says, was caused largely by a series of shocks that are not likely to be repeated: the quintupling of oil prices that followed the Arab embargo, frantic worldwide bidding for scarce commodities, two devaluations of the dollar.

Nonetheless, Carter's advisers do worry that inflation will speed up again as unemployment falls below 5%. To keep prices down, Carter advocates a hatful of standard Democratic remedies: some undefined programs to improve labor productivity and the abolition of Government regulatory restrictions that keep prices high, such as a present rule that forces many trucks to return from hauls empty. Finally, Carter says he will ask for standby authority to impose wage-price controls, but thinks he will "never" have to use it. Instead he proposes that the Government "effectively monitor excessive price and wage increases in specific sectors of the economy" -apparently implying a type of jawboning exhortation familiar from the Kennedy and Johnson years.

TAXES. In one of his few flights of angry rhetoric, Carter calls the present loophole-ridden federal tax code "a disgrace to the human race." He pledges to recommend a total overhaul, scrapping scores of deductions and exemptions in return for generally lower rates.

To work out the details of a tax overhaul, Carter says, will take a full year after he enters the White House. But he has given some startling glimpses of specifics. He once mentioned the deduction for interest on home mortgages as one that he might recommend dropping, though he lately has shied away from the subject. And he believes it is unfair to tax corporate profits and then tax the dividends paid out of those profits -so he would either knock out all taxes on dividend income or stop taxing the portion of corporate profits that is paid out in dividends to shareholders.

ENERGY. At this point, Carter has no comprehensive energy program, but offers a batch of specifics. If the Arab countries declare a new embargo, he says, he as President "would consider this an economic declaration of war and would respond quickly with a boycott against them" -presumably of food and industrial goods. Otherwise, he believes the U.S. should adopt strict conservation measures, including mandatory fuel-economy standards for cars and better insulation of homes, and shift as quickly as possible toward using more coal. Possibly, he thinks, the Government should offer some kind of inducement to industry to burn more of it.

On the hottest energy issue of the moment -the drive by many of his fellow Democrats to break up the big oil companies -Carter takes a cautious approach. He would "probably" split off gas-station chains, and possiby wholesale-distribution terminals as well, from the oil giants. He also is inclined to favor forcing oil companies to get out and stay out of other fuels, such as coal and uranium. But he would not divorce oil exploration, production, refining and transportation, as a bill now going to the Senate floor would do (see following story).

BUDGET. Despite his advocacy of higher spending at the outset of his presidency, Carter insists he could balance the budget by 1980. One reason is that tax collections would shoot up as the economy expanded. Also, Carter is counting on major cost savings from his much-touted plans to overhaul the federal bureaucracy. Long range, Carter's goal is to balance the budget "over the business cycle" -that is, produce surpluses in boom years large enough to offset the deficits incurred in years when the Government must pump out money to pep up the economy.

MONEY SUPPLY. Carter believes that the Federal Reserve has been too stingy in doling out money. To give himself and future Presidents more influence over the independent Fed, Carter proposes that each President be empowered to appoint a chairman who would serve a term that coincided with the President's own, Under present law, Fed chairmen are appointed for four years, but the term can overlap Administrations. The incumbent, Arthur Burns, was reappointed early in 1974 and would run the Fed through the first year of a Carter presidency.

MISCELLANEOUS. To get more housing built, Carter would have the Government subsidize mortgage interest rates lower than those now charged by private lenders. He would raise the wage base on which Social Security taxes are levied -they are now collected from the first $15,300 of a worker's income -but not the tax rate. Importantly, he opposes any loosening of antipollution laws, even to get more coal burned. In general, he sees no conflict between protecting the environment and promoting a rapid expansion of the economy -but if he did, he says, he would come down in favor of the environment every time.

These views are open to attack. Republicans are sure to charge that Carter gives too low a priority to holding down inflation -indeed, that his job program would set off price rises that his anti-inflation measures would be inadequate to contain. Pumping up Government spending immediately, and then swinging to a balanced budget by 1980, are two goals that, to put it mildly, will be exceedingly difficult to reconcile.

On the whole, though, Carter's economic policies are carefully thought out. He has been about as specific in explaining them as presidential candidates commonly get -and he has outlined a potential program that cannot possibly be confused with the ideas of President Ford or Ronald Reagan. On economics, at least, the choice in the fall should be quite clear.

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