Nation: OF WAR AND INFLATION

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As a result, housing, which has only recovered from the 1966 squeeze, seems certain to suffer again (see BUSINESS). Car sales may also slow down. But no one seems very alarmed. "I don't see any drastic reaction," says Economist Beryl Sprinkel of Chicago's Harris Trust & Savings Bank. "It just seems to confirm the view that this time the policymakers really mean business."

Nixon does, certainly. When he took office, he inherited a $195 billion budget with a projected surplus of $3.4 billion. But in a matter of weeks, he realized that "uncontrollable" increases in debt interest and other costs would inflate the budget to $197 billion and trim the surplus to a bare $1.7 billion. Nor did Nixon's own department heads prove very sharp with their pencils. Their recommendations totaled $1 billion more than the original Johnson budget.

Very Disappointing. In a sharply worded memo, Nixon termed the economizing effort "very disappointing" and ordered another try. A prime target, of course, is the Defense Department. Nixon wants Defense Secretary Melvin Laird to sweat $2 billion out of the $80 billion budget. In his first attempt, Laird managed to cut only $550 million. Nixon told him to try again, and this time Laird brought the reductions up to $1.1 billion, chiefly in "ground munitions," including the anti-ballistic missile (ABM) system, which will take a $34 million cut.

Most startling, Laird proposed saving $185 million a year by curtailing one of the more effective weapons that the U.S. has in Viet Nam: B-52 raids. Despite what he called a "strong recommendation" from General Creighton Abrams, the U.S. commander in Viet Nam, Laird suggested reducing B-52 sorties by more than 10%, from 1,800 to 1,600 per month. The savings would come chiefly in the planes' 30-ton bomb loads, which cost $42,000. There would be little tactical impact; probably the same number of B-52 missions will be flown as before, but they may involve five planes rather than the standard six.

Both the White House and the Pentagon publicly insisted that the B-52 move was "strictly budgetary." But there was considerable speculation that the cutback, coming at a time when the Communists are pressing an offensive, was intended primarily as a political signal to Hanoi, indicating Washington's eagerness to end the war. Fueling such speculation was Laird's admission that "private"—i.e., secret—talks aimed at a settlement are under way in Paris. In addition, New York Times Columnist James Reston claimed that Nixon may go further, by withdrawing as many as 100,000 troops this year.

No Action. The Administration's emphasis on economy fairly guarantees that there will be no "Nixon domestic program" worthy of the name for the foreseeable future. Head Start, about which Nixon is enthusiastic, appears safe. The Job Corps is in disfavor, but will be retained, on a somewhat reduced scale until an alternative is worked out. Programs to subsidize hiring of hardcore unemployed will be expanded.