The Economy: Growing Pressure

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More than that of most nations, the history of the U.S. is studded with controversies over taxation, from the Boston Tea Party of 1773 to the rocky advent of the graduated income tax in 1913. Last week taxes were once more a large and bristly national issue—but the controversy this time was only among those who wanted the same thing in differing ways. Across the U.S., pressure and sentiment were growing on every front for a tax cut to spur the sluggish U.S. economy.

The U.S. Chamber of Commerce and left-leaning Americans for Democratic Action seldom agree on anything—but they were together for a tax cut. On Capitol Hill, Minnesota's Democratic Senator Hubert H. Humphrey, fighting for an immediate slash, was joined by two Republican colleagues, Kentucky's John Sherman Cooper and New Jersey's Clifford Case. At the conference of state Governors in Hershey, Pa., New York's Nelson Rockefeller, California's Pat Brown and Ohio's Michael Di Salle—all running for re-election this fall—added their voices to the chorus. Within the Administration itself, the President's own Council of Economic Advisers kept pressing for immediate and substantial reductions. The fever spread to the press, inspiring countless editorials and cartoons. The New York Mirror topped a cut-taxes edi torial with the headline: NOW, NOW, NOW!

The Big Question. The proponents of quick tax cuts to get the economy moving were powerfully backed up by expert eco nomic opinion. Fortnight ago, three dozen highly regarded economists from outside Government assembled in Washington to discuss tax reductions with Treasury Secretary Douglas Dillon and his top officials. The economists agreed to a man that the state of the economy demanded them —not next year, but as soon as possible. Says University of California Economist Neil H. Jacoby: "There is general agreement among economists that federal tax rates must come down. The big question is whether there will ever be a better time to do it than now. I hope President Kennedy acts soon."

For Kennedy, the key word seemed to be "if" — he has repeatedly said that he would cut taxes if he thought that the economy really needed such action. Last week at his press conference, he repeated that the Administration was planning "a tax cut and tax reform next year and we, of course, would prefer to maintain that schedule." But he promised again to keep a close watch on "the basic indicators of the economy," and sounded what seemed to many to be a hint of the future by stressing that demands for a tax cut from both business and labor "should be very seriously considered."

Vague Ideal. Behind Kennedy's reluctance to cut taxes this year stand the urgings of Treasury Secretary Dillon, the only Republican in the Cabinet. Dillon feels that a quick cut this year would wreck the Administration's plans for broad reform next year. Treasury experts have been working on the outlines of a reform bill for more than a year. Under present plans, cuts in rates under the reform bill would be steep enough so that the measure would bring overall tax reductions—but some taxpayers now benefiting heavily from special provisions might find themselves owing more income tax rather than less as a result of the bill's loophole-closing provisions.