THE RECESSION: Ford's Risky Plan Against Slumpflation

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voiced worry about the ensuing bulge in the budget deficits. At one meeting, Simon remarked: "If I were a money manager, I'd be scared as hell." Ford asked: "Are you recommending against a tax cut?" Simon paused, then reluctantly said: "Mr. President, given the state of the economy, I guess we need a tax cut." (Late last week, while echoing support for the Ford program, Simon said that the prospective deficits for the next two years "horrify me.")

At one point, some advisers argued that the rebates should be made on payments of taxes for 1975, not 1974. But Ford turned them down. "Just a minute," he said. "The people who need it [the rebate] the most are unemployed in 1975, and they wouldn't get anything." He insisted that the tax refunds be made by check, not credits on new taxes. Said Ford: "If you don't send a man a check—money that he can see and hold in his hand—you are going to lose some of the impact."

Ash and Greenspan stressed the need to hold down Government spending and persuaded Ford to oppose any new spending programs for one year. Indeed, Ash wrote the State of the Union passage in which Ford said: "If we do not act to slow down the rate of increase in federal spending, the United States Treasury will be legally obligated to spend more than $360 billion in fiscal year 1976—even if no new programs are enacted."*

Floor Fight. Similarly, the energy proposals grew into a consensus among a different group of advisers. Secretary of State Henry Kissinger early convinced Ford of the necessity of a tough conservation program. That was urgently needed, he argued, to stop the hemorrhage of dollars to oil-exporting countries and demonstrate to the other oil-importing countries, which the U.S. is trying to weld into a coordinated bloc for bargaining with the OPEC cartel, that the U.S. really means to reduce imports. But Kissinger played little part in putting together the details of the proposals. That was done by a group headed by Frank Zarb, chief of the Federal Energy Administration.

Ford gave his advisers some clear directions — and limits. A proposal to put the main tax and price burden on gasoline, rather than oil prices generally, never was seriously discussed because the President had repeatedly ruled it out. Said one Republican leader: "His whole ethos is bound up in the motorcar syndrome of the state of Michigan." Still, there were some hot debates. To induce energy companies to develop more domestic oil and alternative sources of energy, Assistant Secretary of State Thomas Enders argued strongly that the Government should fix a "floor" below which prices of oil could not drop; Simon protested vehemently that price guarantees violate free, market principles. The matter I went to Ford three times for a decision before he compromised by asking Congress for authority to set a price floor but not committing himself to do so or specifying a figure.

When the time came to present his proposals, Ford took the unusual step of renting a mobile TV unit and rehearsing his fireside chat at least three times, reading updated versions to try out his delivery of revised wordings. For the first time in his career he read the final speech off a TelePrompTer (one that Walter Cronkite had used previously).

The final