Business: Steady as She Goes

• Share

For a long period in his first Administration, President Nixon's economic policies were summed up in a phrase popularized by Treasury Secretary George Shultz: "Steady as she goes." The words implied a commitment to going along with old policies and resisting sharp or contentious change. There are no better words than those to describe the fiscal 1975 budget that Nixon sent to Congress this week.

Unlike the budget that he submitted a year ago, which set out to eliminate large chunks of Lyndon Johnson's Great Society programs, the new budget has no controversial decisions to kill or slash popular programs. Neither does it have any major initiatives for new programs, though spending will rise by nearly $30 billion, to a record $304.5 billion. With his power on Capitol Hill diminished by Watergate and with Congress on the verge of considering whether to impeach him, Nixon may well have decided that big initiatives would not get off the ground.

Despite the current economic slowdown, Nixon is offering what he calls "a budget which will continue a posture of modest restraint." The slowdown is cutting into personal incomes and profits and thus into the tax take. Revenues will be lower than if the economy were closer to full employment, and the budget is dropping deeper into the red. The deficit is expected to swell from $4.7 billion this fiscal year to $9.4 billion next year. Many economists outside the Government predict larger deficits, as high as $20 billion. For all of Richard Nixon's conservative fiscal views, his budgets have never ended in surplus.

The Administration may deliberately deepen the deficit if the economy seems headed into a recession—though there is great debate between the White House and its critics over just what constitutes a recession. Nixon and Roy Ash, chief of the Office of Management and Budget, have said that the Administration is preparing a package of as yet unspecified "contingency spending plans" that would be used if the slump became long or deep. Meanwhile, Ash and other officials have been carefully leaking budget figures in advance to prepare the public and remove the sting of the first U.S. budget ever to exceed the $300 billion mark.

Energy Lift. Most of the spending increases are the result of either inflation or program expansions that were ordered in earlier years. One exception: in the budget, spending on energy research and development would rise by $650 million, to a total of $1.6 billion. Most of the added money would be used to develop nuclear-power projects and coal technology. Another exception: the Administration would nearly double spending on mass transit, from $488 million to $900 million, and federal subsidies would finally be available to help reduce the operating deficits of local transit systems.