New Tactics at Half Time

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The policy changes accompanying this shift in rhetoric, however, are in some cases minor. Job programs are an example. Reagan is likely to suggest little more than a revival of his "enterprise zone" plan to give businesses tax breaks if they set up shop in city slums; a tiny increase of perhaps $300 million in job-training funds; and permission for employers to pay subminimum wages to teenagers hired for summer jobs.

In other cases, however, the President is about to propose some far more important steps that he long resisted, notably a hold-down in military spending and some kind of stand-by plan to raise taxes if necessary to shrink gargantuan deficits. Nonetheless, these measures amount to much less than a wholesale retreat from Reaganomics. The President, indeed, sees himself quite accurately as making the minimal concessions necessary to keep a rebellious Congress from attacking the core of his program, chiefly the income tax cuts, the social spending rollback and the big military buildup. For that matter, the change in tone is also less than total. Echoes of the chipper, partisan Reagan of yore rang through the President's remarks last week, and doubtless will resound in the State of the Union speech as well. At his news briefing, Reagan once more pinned blame for the recession on "the overtaxing, overspending, over-regulating binge of the '60s and '70s . . . that we've finally started to correct." He added: "Nearly every economic indicator shows us heading into recovery. The same economists who were arguing a few months ago about how much worse the economy would get are now arguing how strong the recovery is going to be."

That was an overstatement. There was only one unqualifiedly good piece of economic news last week—though, to be sure, it was all important. The Consumer Price Index actually went down in December by .3%, only its second monthly decline in more than 17 years (the other also occurred under Reagan, last March). For all of 1982, prices rose a mere 3.9%, the smallest increase since 1972, when wage and price controls were in effect. Since Reagan took office the rate of inflation has been reduced by more than two-thirds, an achievement the President will crow about, with justification, in the State of the Union speech.

But other statistics made clear the high cost the nation has incurred to tame inflation. Total national production of goods and services, adjusted for inflation, dropped an unexpectedly sharp 2.5% in last year's final quarter. For all of 1982, real G.N.P. fell 1.8%, its worst tumble since 1946. U.S. mines and factories in December ran at only 67.3% of capacity, the lowest figure on record since these statistics were first compiled in 1948.