THE ECONOMY: Getting Out of Controls

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Last week Herbert Stein, chief Presidential economic adviser, and Federal Reserve Board Chairman Arthur Burns told the subcommittee that they expect the impact of the coming slowdown to be spotty. "There will be some booming industries and some depressed industries," said Burns, "some places where skilled workers will be in short supply and others where unemployment is high." Accordingly, the Administration is not proposing a raft of broad new spending programs, an across-the-board tax cut or new efforts to pump up the money supply. Opening up the Fed's money spigot, said Burns, "would not cut unemployment but would add to inflation." Still, a cut last week in the prime rate from 91/2% to 91/4% by several major banks continued a recent decline in interest rates.

Instead, it will attempt the same kind of "fine tuning" that was practiced under the Kennedy and Johnson administrations but was earlier shunned by the Nixon economists as a device that smacked too strongly of socialist-style planning. The White House is contemplating some large, quick increases in limited categories of Government spending this spring; it is expected to ask Congress to expand unemployment benefits, for example, in those localities hit hardest by the energy crisis.

Administration economists are hoping that their one-two application of decontrol and fine tuning will make for a steady course between too much inflation and too much recession. Congressmen who have to run for re-election this 1 year are not so sanguine, but nobody is really sure of what should be done differently. This lack of consensus is indicated by the fact that in recent months nearly 100 new wage and price bills have been introduced on Capitol Hill. Many of them are designed to leave the Administration with stand-by authority to reimpose controls-just in case the economy once again spins out of control.