WHERE THE CANDIDATES STAND ON THE U.S. ECONOMY

THROUGHOUT U.S. history, the national economy has been the permanent political issue. This year, partly because Americans feel relatively prosperous and partly because they are preoccupied by concern for law and order and the Viet Nam war, the economy has not become a major topic of campaign contention. Yet many--some would say most--of the problems that the new President will face are deeply entwined with economics. Without making big headlines, both Richard Nixon and Hubert Humphrey have placed themselves on record in considerable detail about the direction of the economy. Though both men are moderates in their attitudes toward business, their views diverge in many respects--and would lead to important differences in Washington's dealings with the business community.

Pocketbook Appeal. On the campaign trail, both candidates do their best to appeal to pocketbook interests. Humphrey, using a theme that has been generally successful for decades, maintains that U.S. citizens "have never had it so good." He always adds: "Don't let the Republicans take it away." To support his argument, Humphrey cites "91 months of sensational economic growth," a 4% yearly rise in take-home pay for a family of four, doubled business profits and the lowest unemployment in 15 years.

Nixon, on the other hand, contends that prosperity is not nearly what it seems--and that rising prices and taxes take away all of the wage gains. For months, he has been blaming the Johnson Administration for causing inflation by mismanaging the economy. "Why are prices rising faster than they have in a generation?" he asks. "Why is the American dollar viewed with greater suspicion in the central banks of Europe than it has been for a century? Why is the American taxpayer groaning under the heaviest tax burden in history? Because for five years the Administration has refused to keep federal spending within federal means."

Last week Nixon also aimed three specific appeals at the business community. He accused the Administration, which is investigating the conduct and cost of stock-market trading, of imposing "heavyhanded, bureaucratic regulatory schemes" on the securities industry, and indicated that, if elected, he would get rid of them. He promised to eliminate "self-defeating controls" over foreign investment by U.S. business. And he pledged "swift action" to end congestion in the nation's airways, which he blamed on "years of neglect at the highest levels of Government."

Welcome as such statements were, Wall Street showed much more excitement over what brokers were calling "the Nixon market." Reflecting belief that a Republican Administration would be good for corporate profits, stock prices rose last week to their highest level in two years amid heavy trading volume. Continuing a two-month rally, the Dow-Jones industrial average climbed to 952.95.

Elusive Goal. For the candidates and their teams of economic advisers, today's U.S. economy poses a complex challenge: how to combine prosperity with price stability. Many economists insist that an unwelcome degree of inflation is almost inevitable in times of minuscule unemployment. Humphrey says that he is "determined" to keep unemployment low and prices stable, partly through "timely fiscal action" and better labor productivity. Nixon also insists that the goal can be reached, but he places more reliance on getting there by shrinking the federal deficit.

Perhaps the most fundamental issue dividing Humphrey and Nixon is whether Washington should mastermind or merely encourage social reform. Humphrey is convinced that the government must spend vast amounts of money to better the lot of Negroes, clean up the slums, improve health, transportation and education. Last month he came out for a 50% increase in social security pensions over the next four years, a boost that would ultimately cost $12 billion a year. Since all that money must come from somewhere, Humphrey is considerably less emphatic than Nixon in asserting that this year's 10% income surtax should expire as soon as the Viet Nam war can be ended.

Nixon favors tax incentives to bestir private enterprise to build ghetto factories and housing, to train the hardcore unemployed, to promote "black capitalism" and to reduce air and water pollution. As possibilities for budget cuts or stretch-outs, he has cited public works, the supersonic transport, the post-Apollo space program and federal highway construction. With the war's end, part of the fiscal savings should be used to replace the draft with a volunteer, paid "professional" Army. On other issues, Nixon and Humphrey split somewhat less sharply, but keep the economic argument alive. Items:

sbTAX REFORM. Nixon pledges to keep the controversial 27 1/2% oil-depletion allowance, which Humphrey says should be reexamined. Humphrey favors closing loopholes in income, estate and gift taxes. He has urged a "minimum income tax" for the wealthy, no matter how many tax shelters they enjoy.

sbTRADE. Humphrey advocates reducing such nontariff barriers as quotas and import taxes, while protecting domestic industries against "unfair dumping" by foreign producers. Both men are fundamentally free traders, but Nixon goes along with "temporary" protection for such hard-pressed industries as steel and textile. He blames domestic inflation for the nation's shrinking trade surplus.

sbANTITRUST. Both men urge clearer Government guidelines to reduce uncertainty over what mergers may encounter federal opposition.

Eminent Advisers. In developing their policies, neither candidate lacks for eminent--and plentiful--economic counsel. Humphrey's top adviser is Walter W. Heller, 53, the University of Minnesota professor who was chairman of the President's Council of Economic Advisers under both Presidents Kennedy and Johnson. It was Heller, more than any other advocate, who sold the Keynesian "new economics" to Washington, and with it acceptance of federal deficits to generate economic growth. Other Humphrey advisers include former Budget Director Charles Schultze, 43, an indefatigable statistical analyst who helped formulate many of today's taxing and spending policies, and Harvard Professor Otto Eckstein, 41, a former member of the White House economic council who helped to shape the wage-price guideposts. Last but far from least is liberal Washington Economist Robert R. Nathan, 59, a onetime Roosevelt braintruster.

On Nixon's team, the No. 1 adviser is Economist Alan Greenspan, 42, president of the Manhattan consulting firm of Townsend-Green-span & Co. An expert on the federal budget, Greenspan has also worked on developing computer techniques for better economic forecasting. Predictably, Nixon also leans heavily on ex-Eisenhower aides. Arthur F. Burns, 64, who was chairman of Eisenhower's economic council from 1953 to 1956 and is now head of the National Bureau of Economic Research, advises Nixon as one of the nation's most knowledgeable men about business cycles. Professor Milton Friedman of the University of Chicago, an apostle of regulating the economy chiefly by expanding the money supply at a fixed rate, shares with Humphrey Aide Pechman an enthusiasm for the negative income tax--a minimum annual income even for the jobless. Nixon, however, rejects the idea; Humphrey is gingerly considering it.

Half an Insight. One reason that economic issues--apart from inflation--have drawn so little voter response is that both candidates have stuck to cliche-clouded generalities. Moreover, both tend to skip over obstacles that could well thwart their policies as President. Nixon might find the troubles of financially pressed cities beyond the reach of private enterprise. Humphrey's willingness to keep taxes high could easily run afoul of congressional economizers, as could his leaning toward costly new social programs. Such economic debate as the 1968 campaign has so far produced gives an inattentive public only half an insight. Whoever wins in November, the times seem likely to require harder choices than either candidate suggests.

This file is automatically generated by a robot program, so reader's discretion is required.