Between the Graphs

The real news of the President's Eco nomic Report to Congress last week is not prosperity-for, by now, the whole world knows that the U.S. is fabulously prosperous, and expecting to be more so. The real news is that after three years in office the Eisenhower Administration has discovered for Government a new economic role that is as fundamentally different from the New Deal as Franklin Roosevelt was from Herbert Hoover.

Depression-born, the New Deal, haunted by overproduction and "reckless" past expansion, could hardly be expected to put much stress on speeding up the growth of the economy as a whole. The New Deal, operating on the assumption that the economy was maturing, stressed the struggle between classes for a bigger piece of a limited pie. It took up the cudgels for the "have-nots," believing that an ever-larger Government was needed to overpower what Harry Truman loved to call "the special interests." Eisenhower's 1956 Economic Report assumes an ever-expanding pie. From that assumption it derives a new meaning of Government's role in the 20th century breakthrough of U.S. capitalism. With no breast-beating the Economic Report accepts Government responsibility for correcting unemployment, raising farm prices, reducing regional "pockets of poverty" and expanding social security. It promises to curb "monopolistic tendencies," and even undertakes to prevent future depressions.

It does all this not in hostility to business but on the theory that an orderly, well-clothed, well-housed, well-fed society is just the starting point for an expanding economy that will demand the best from all the people in order to give the best to all the people. The Federal Government, reflecting the growing mood of most Americans, has at last stopped thinking in terms of boom and bust, and is thinking in terms of graph lines going upward, with prices staying steady.

Steady Climb. In detailing where the U.S. now stands, the President noted that "we have reached the threshold of a $400 billion economy." The rise of the Gross National Product goes like this:

Consumers have more money to spend than at any time in the world's history, mainly because weekly earnings have climbed like this:

And pay increases are now directly reflected in real wages because the Administration has been able to keep the consumer price index (base: 1947-49) looking like this:

Ike acknowledged trouble spots. He asked Congress to join him in a study of the growing problem of installment credit (up 25% in 1955). But he was far more concerned, obviously, with an index of farm prices (base: 1910-14) that goes like this:

Alluding to his recent plea to Congress for a nine-point agriculture relief program (TIME, Jan. 23), the President wrote: "The Government can do a great deal to help people who have been left behind in the onrush of progress by undertaking special programs for raising their productivity . . . We must find ways and means of extending prosperity to the less flourishing sectors of our economy."

Help for Stragglers. The whole idea of "extending prosperity" to the farm, i.e., taking quick, corrective action to get all the good graph lines rising together-epitomizes Government's new role in the expanding economy. Harry Truman's Agriculture Department rushed to defend the farmer, was willing to commit him to eternal Government control in protecting farm income. Eisenhower, as the report shows it, sees the farmer as a blameless straggler in the general march to prosperity. Ike wants to get him back in line as soon as possible so that the farmer can march up the graph lines with everybody else&-and, more important, because the general economy cannot march upward for long without the farmer.

When a government tells this or that group that it is being shortchanged, then government can never give up its defense of those groups without seeming to betray them. This inevitably leads to an ever-increasing expansion of government powers. But if a government recognizes that the economy can and will provide prosperity for all, then it sees its economic function as one of repair and encouragement; it has no vested interest in getting bigger to fight for a cause. A two-way traffic in federal power develops. Government can give up functions, not merely take on new ones. A few days after the Economic Report came the recommendation of the McKinney committee that the Federal Government begin to divest itself of the emergency monopoly of atomic energy (see BUSINESS) and encourage private enterprise to enter that great field of future expansion.

Help for Enterprise. Such an approach does not guarantee smaller government. As the economy expands, the emergencies, and the problems of regulation and housekeeping, become more complicated (and the 1957 budget shows that the Federal Government is growing, much to the surprise of the original rock-ribbed Eisenhower budget-cutters). But the Eisenhower approach does guarantee that big government will not become an end in itself--its main concern with the economy is seen as encouraging an atmosphere of individual independence and enterprise in the growing economy around it.

Such are the implications of the story between the lines of the Economic Report -- as exciting a story as modern man has ever read of the vast changes in his own time.

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