Nation: Trying to Build Confidence

(4 of 10)
however, would save $320 on income taxes, pay $439 more to Social Security, and wind up forking over an extra $119 to the Government. Many economists are already speculating that still more income tax reductions will be needed to keep the economy expanding next year. The President in his economic message last week came close to conceding the point.

At minimum, however, Carter has sorted out his economic priorities. He badly confused businessmen early in his Administration by setting goals of reducing both the unemployment and inflation rates to 4.5% or less and balancing the budget besides—and doing all that by 1981. Executives and economists rightly protested that reaching paradise so soon would be flat-out impossible. They wondered how long it would take the President to realize that, and which aim he would concentrate on when he did.

The new program clearly gives first place to keeping production growing and unemployment coming down gradually. Though the President talks of reducing the inflation rate, some economists outside the Administration suspect that Carter has quietly reconciled himself to price increases averaging 6% or so for the next year; indeed, the Administration's private estimate for 1978 is 6.5%. And Carter last week conspicuously did not mention balancing the budget by 1981, even as a hope.

As Secretary of the Treasury, Mike Blumenthal will take on the job of selling this program to Congress and his fellow businessmen. He has already started, visiting New York two weeks ago to brief the influential Business Roundtable on the President's plans, taking to national TV over the past weekend to explain and justify the Administration's policies. The task is one to which he is less than ideally suited. His laconic, low-key manner does not make for stirring public addresses, and he comes across better chatting frankly with individuals and small groups. But his firm grasp of policy and its rationale is unmistakable.

Last week, in an interview with TIME Washington Economic Correspondent George Taber, Blumenthal candidly discussed the Administration's position. Draping his legs casually across a simulated colonial chair in his office and puffing on his cigar, he conceded: 'There has been much comment in the press about the lack of business confidence, and commentators have written about mutually inconsistent goals. I think there is some substance to this. [Last year] there was insufficient attention given to the relationship between various programs. It is also true that economic decision making in the early months was anything but smooth."

Now, asserts Blumenthal, the Administration has its goals in order: "People will still say they don't like the policy; that's unavoidable. But I am hopeful that most reasonable observers will say, 'At least we know where we stand.' The first priority is to get [Carter's] energy program passed, because it is the key to everything else. The second priority is to continue bringing down the level of unemployment gradually. Reducing the budget deficit is a high priority, but that can be achieved only as rapidly as the developing strengths of the economy allow."

An all-important aim is to convince businessmen that they can now invest with confidence since they know what the policy is, and that the Administration will help them