THE BUDGET: A Tug of Political War

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In the election year game of tug of war shaping up between Richard Nixon and the Democratic-controlled Congress, both sides last week exerted an important political yank. The President, as expected, formally warned legislators that federal spending in fiscal 1973 must be kept to a maximum of $250 billion, and he threatened to veto bills "calling for excessive spending, which threatens the federal budget." Nixon was clearly worried by the nation's ballooning deficit, which is expected to reach $35 billion in the current fiscal year.

The Democrats challenged Nixon's hold-that-line dictum on two counts. First, they warned, any such ceiling must allow for different spending priorities from those proposed by the Administration, including a reduction in military spending. Even then, said some Democratic economists, still more federal spending may be needed to maintain the recovery in the nation's expanding, but below-potential economy.

At a hearing of the Congressional Joint Economic Committee, Walter Heller, who was chairman of the Council of Economic Advisers under J.F.K., declared that a "rigid $250 billion budget ceiling is not high enough to allow us the stimulus we need." Without more spending than $250 billion, he said, there is little likelihood that unemployment, now at an unhealthy 5.5%, will significantly decline in the next two years. On the other hand, said Economist John Kenneth Galbraith, the recovery will continue if the U.S. holds to policies of "easy money and exceptionally daring deficit financing."

Nobel Laureate Paul Samuelson argued that the budget deficit, whatever its level, should reflect new national goals.

He said that intensive bombing in Viet Nam could increase the Administration's defense budget by $5 billion beyond expectations. Asked Samuelson: "Does this mean that somebody in the inner city is going to starve because of the ceiling [on other spending]?" His point: If defense spending can rise, why should social spending be limited? Samuelson also called the big deficits of the past few years "responsible," moving the New York Daily News, which takes a Middle-American view of economics, to nominate him for "this year's Dumbbell Award."

In sum, the Democrats are interested in spending more for social problems and creating jobs, while the Republicans are concerned about holding down the budget to fight the inflation that has so badly damaged the nation, beginning in the Johnson Administration. That is yet another reason why President Nixon believes that the voters in November will have "the clearest choice in this century."