Trying to Build Confidence

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Economic Policy Group, but its meetings were attended by as many as 30 second-level officials, who set up a babble of unfocused talk, while their bosses saved their serious proposals for private discussions with the President. Blumenthal organized a small "steering committee" that works out a consensus on policy over Thursday-morning breakfasts of sausages, eggs and Danish in Blumenthal's private Treasury dining room. Among those attending: Council of Economic Advisers Chairman Charles Schultze and Budget Boss James T. McIntyre Jr. Dissents are noted in reports to Carter, who of course reserves final decision for himself. But, says one breakfast clubber, "in the past three months Blumenthal has dominated that group and in effect had veto power over anything going to the President." The steering committee got its final recognition as a power center in November, when Vice President Walter Mondale began dropping in on its breakfasts—not for the food, but to find out what Carter was hearing about economics.

At just about that time, the Blumenthal group faced a deadline of sorts: In late January every President normally submits to Congress and the people his State of the Union message, an economic report and his budget. Blumenthal and his steering committee decided Carter should seize this opportunity to try hard to convince business and the nation that he does have a thought-out strategy by spelling out his economic plans in considerable detail.

Carter took the advice, and last week he delivered a barrage of pronouncements that did add up to a reasonably coherent program. It was unexciting, unsurprising, unadventurous, but it seemed designed to appeal to the nation for those very reasons. The aim, apparently, is to present Carter as a prudent manager, aware that the tangled complexities of guiding a growing but troubled economy prevent any President from doing everything at once, ready to put off those goals that are merely desirable in favor of those that are essential. The program's main elements:

> Tax cuts of $25 billion—$17 billion net for individual taxpayers through rate cuts, $6 billion net for business in the form of more generous investment tax credits and a drop in the tax rate on most corporate profits from the present 48% to 45% late this year, 44% in 1980. Another $2 billion would be provided by repeal of the federal tax on telephone calls and a cut in unemployment-insurance taxes levied on companies. The overall aim: to offset the bite of higher Social Security and energy taxes, which the President conceded would otherwise drag the economy down by the end of 1978, and give businessmen more cash to invest. If Congress agrees, the cuts will take effect Oct. 1.

> A tight budget, with spending for fiscal 1979, which starts Oct. 1, held to $500.2 billion, roughly 8% more than this fiscal year. (The President stressed heavily that, adjusted for inflation, the increase would be only 2%.) The deficit is expected to shrink slightly, from $61.8 billion in fiscal 1978 to $60.6 billion. Though many businessmen grumble that spending and the deficit should have been reduced by $20 billion or more, the President did resist pleas for still higher expenditures. and McIntyre turned out to be something of a tiger at slashing spending requests.

For example, Carter and McIntyre threw out the Department of Housing and