Carter's Dog-Day Afternoons

As the President confronts some tough problems, criticism grows

It was the end of the season of beaches and barbecues, the doldrums for much of the nation--but not for Jimmy Carter's sloop of state. The Administration was being buffeted by crosscurrents of criticism on a variety of domestic and foreign issues. None of the President's problems--Bert Lance, the Panama Canal treaty, relations with China, the Middle East, the economy, the thorny question of racial quotas--are near the magnitude of a real crisis. But the problems are numerous enough to raise doubts about the Carter Administration's mastery of the issues that confront it. They have also created some confusion about just where Carter intends to strike the precarious balance between principle and pragmatism.

Last week many of these issues surfaced at Carter's press conference. Unusually grim and unsmiling through much of it, the President nevertheless mounted an impressive defense of his record. But he did little to quiet the criticism of some of his policies. Among Carter's chief problems:

The Lance Affair Carter's biggest immediate problem remained the continuing criticism of Budget Director Bert Lance in the wake of the mixed review that Lance received from U.S. Comptroller of the Currency John Heimann (TIME, Aug. 29). By his ringing endorsement of Lance ("Bert, I'm proud of you") Carter clearly opened himself to the charge that he was reneging on his pledge to avoid even the appearance of impropriety among his appointees. "There's no doubt that the President has used up some credit," said one White House staffer last week. "He told the people, 'You should trust Bert Lance,' and I think they'll listen to him--once. But the next time, it won't be so easy."

Some Administration aides insist that Lance's support in the business community remains strong. Yet the Wall Street Journal last week declared that Lance's effectiveness as budget director has probably been destroyed, and Business Week called for his resignation; so did the Los Angeles Times. White House Press Secretary Jody Powell worked overtime to blunt the criticism. He announced, for example, that Carter would pay $1,793.70 for five flights he took in 1975 and 1976 on a plane belonging to one of the banks that Lance formerly ran, the National Bank of Georgia.

Lance may survive the criticism--if there are no more bombshells. That could prove a big if. Some critics charge that his confirmation testimony before the Senate Governmental Affairs Committee may have been misleading; in addition, it was learned last week that Lance pledged the same stock as collateral for two different loans--a violation of his loan contracts. Investigations by three congressional committees are scheduled to begin next month. A probe by the Senate Banking, Housing and Urban Affairs Committee, headed by Senator William Proxmire (the only Senator to oppose Lance's confirmation last January), will use the Lance case as a wedge to look into loans to bank insiders, overdraft policies and general banking practices.

Controversy over the Canal When he took office, Carter hoped to establish an activist foreign policy, but now virtually all of his diplomatic initiatives are in trouble, either at home or abroad. The proposed Panama Canal treaty, the Administration's only major breakthrough with a foreign government to date, is running into so much difficulty that the Administration almost certainly will have to abandon all hope of winning Senate approval this year. In suburban Washington, domestic opponents of the treaty are preparing a massive mailing of 5 million anti-treaty broadsides. In New York, only hours after he was briefed on the treaty by U.S. Negotiators Ellsworth Bunker and Sol Linowitz, California Republican Ronald Reagan informed a convention of the Young Americans for Freedom: "I told the ambassadors not to get their hopes too high. I do not believe we should ratify this treaty." Also distressing was the decision of Senate Majority Leader Robert C. Byrd to delay his personal decision on the treaty until after Senate hearings. While having lunch with Carter at the White House, Byrd told the President that he had "an uphill road to travel for ratification." A foretaste of how emotional the debate may be was provided by retired Congressman Hamilton Fish Jr., 88, who charged that supporters of the new treaty want to "impeach the great Theodore Roosevelt in the grave by sticking a dagger in his back."

The China Tangle With conservatives leading the opposition to the Panama treaty as a "giveaway," the timing could not have been worse for discussion of another prickly issue: the U.S. defense treaty with Taiwan. Yet Secretary of State Cyrus Vance's visit to mainland China last week inevitably focused attention on Peking's insistence that the U.S. abrogate the treaty and thereby abandon another long-held position. To be sure, no one knew in May, when Vance's trip was scheduled, that it would coincide with the Panama debate; moreover, the Administration had been sharply criticized by Asian experts for ignoring China. Probably the impasse in U.S-Chinese relations will persist (see THE WORLD).

Middle East Muddle Carter's hopes that a Middle East peace conference would convene in Geneva this autumn, like his hopes for quick ratification of a Canal treaty, have gone aglimmering. For a time, the Administration thought the Palestine Liberation Organization was about to recognize Israel's right to exist. That notion was dashed last week at a meeting in Damascus of the P.L.O.'s 35-member central council, which castigated the U.S. for plotting with Israel rather than pressuring Jerusalem to support a Palestinian homeland. Repeated U.S. objections to Israeli settlements in the occupied territories have had no visible effect on Israeli

Premier Menachem Begin; he has already "legalized" three existing settlements and approved the creation of three new ones. Carter said at the press conference that he had received "private assurances" that Israel did not intend its settlements as a sign of permanent occupation. Even many of the Israeli politicians who oppose Begin, however, are taking a harder line. Said former Premier Golda Meir: "The boundaries of this country have always been drawn--not by declarations, talk, lofty speeches and rhetoric--but by people willing to settle the land and work."

Economic Warning Signs Adding to Carter's late-summer blahs is some uneasiness about the economy. The Dow Jones industrial stock average was at its lowest level in 20 months. Businessmen and investors were worried about possible new blows from Carter's tax-reform program, due to be unveiled next month; it may propose eliminating preferential tax treatment for capital gains. There was concern too that legislation requiring 9.5% of imported oil to be transported in U.S. flagships could prove highly inflationary; the General Accounting Office said the requirement would raise the nation's fuel bill by $240 million annually. Leading Republicans have called the proposal "a blatant political payoff to maritime unions.

Affirmative Action This fall the Supreme Court will tackle what could prove to be its most crucial race case since the 1954 Brown v. Board of Education decision. The case pits Allan Bakke against the University of California Medical School at Davis, which denied him admission but accepted 16 minority students with lower college grades. The Administration could have chosen to join either side of the case, or not to participate at all. But word got out last week that the Government would enter the case against Bakke and in support of limited programs of affirmative action. The Administration was bound to stir strong opposition no matter which choice it made, explained a Justice Department staffer. "So Carter and [Attorney General Griffin] Bell decided to uphold the position they both favor." That decision is sure to create a storm of controversy.

Plainly, after more than seven months in office, Carter's honeymoon is over--as indeed it should be. To his credit, he has moved boldly to solve problems that were not of his own making: achieving a Panama Canal breakthrough that eluded his three immediate predecessors, taking a crack at the thankless task of tax reform, staking out a strong position on affirmative action. Yet Carter's place in history will depend on how well he resolves such problems, inherited or not.

The criticisms reverberating in Washington have not yet seriously dented Carter's personal popularity. Curiously, polls continue to show that the President's overall performance is rated higher than the sum of its parts. In July 62% of those questioned in a Gallup poll said they liked the way Carter was handling his job--while 58% approved of his management of domestic problems and only 49% his conduct of foreign affairs. Critics figure that the polls show that the people may like Carter's style and good intentions, but they do not like a number of his policies. Now that he is facing the hard decisions, style and lofty aspirations will not be enough for an effective presidency.

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