The Economy: Revolt on the Hill

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Telling the President. On the House floor, Bow introduced his proposal as an amendment to a routine financing resolution necessary to authorize normal spending by the majority of departments for which formal appropriations are still pending. House Speaker John McCormack quashed the amendment as irrelevant. The Republican riposte was to move that the financing resolution be sent back to committee. "We are going to tell the President," declared Minority Leader Gerald Ford, "to make reductions at the demand of Congress. This is what we should do as a legislative body." Majority Leader Carl Albert scurried about the floor trying to hold wavering Democrats in line. He spoke to some 30, but won over only three. In the end, the House voted 202 to 182 to recommit the resolution to committee. Thirty-four Democrats, including Mills, helped the Republicans trounce the Administration.

The threat to Government operations was largely illusory. A temporary compromise was in prospect for this week that would permit bills and payrolls to be met. The real significance of the vote was that it demonstrated the depth of anti-tax feeling in the House. Although Mills was silent, his message was all too loud: the President would have to unlimber his blue pencil.

One of Thousands. Where to cut? Most members of Congress oppose amputation of major programs. Instead, critics insist that the Administration can judiciously defer or slow down spending in nonessential areas and still save $5 billion or more. Most often mentioned are military construction in the U.S., the supersonic transport project, the space program, research and development in all fields (which now amounts to $17 billion), and such frills as highway beautification. Last week Wisconsin's John Byrnes, senior Republican on Ways and Means, got a call from the Interior Department informing him of a $2,000 grant for picnic facilities in his district. "That's only one of thousands," fumed Byrnes. "It's a nice thing, but it can be postponed."

What cannot be postponed indefinitely is a decision on the tax increase. Overwhelmingly, the economic indicators reflect strong and mounting inflationary pressures. Industrial production, housing starts, personal income and employment were all thrusting upwards in late summer, while inventories dwindled.

Last week the Bureau of Labor Statistics reported that consumer prices rose by 0.3% in August, reversing the normal trend for that month. Wholesale prices also rose by 0.3%. If Congress fails to pass a tax rise, the independent Federal Reserve Board may well restrict credit—as it did in similar circumstances last year—and perhaps make tight money an even bigger election-year issue than higher taxes. Fast-rising prices do not make for friendly voters either. As obnoxious as these alternatives may be in Washington, they have yet to exert any lubricating effect on the stalemate between Lyndon Johnson and the House of Representatives.