Nixon's Spending Plan for 1972

IT would, said President Nixon, provide "a new balance of responsibility and power in America." What is more, it would have an expansionary effect on the economy, turning unemployment around and helping to end the recession. With these audacious predictions, Nixon signed and sent to Congress the two green leather volumes that set forth his proposed budget for fiscal 1972, which begins July 1. Total proposed federal outlays: $229.2 billion, an increase of $16.4 billion over fiscal 1971. Prospective deficit: $11.6 billion, on top of an estimated shortfall of $18.6 billion for the current year.

In principle, the fine print of the budget supports the two large aims that Nixon set for it. A candid Keynesian approach--the planned deficit, unlike this year's unintended one--is there to stimulate the economy, presumably to a degree so judicious that further inflation would be controlled. A budget, however, is only a plan and a set of assumptions. Nixon, to his possible future regret, bases his projections on a steeper upturn in the economy than most independent experts predict (see BUSINESS).

As for the new balance between Washington and the rest of the country, local government would get more dollars and more freedom to spend them under revenue sharing. As Nixon put it, there would be a better allocation of "our national resources in accordance with individual and local needs." That, however, raises an old dilemma. Washington's programs often have disappointing results, partly because of the geographical and bureaucratic distance between conception and execution. State and local governments are closer to the people in many respects, but they are usually more susceptible than Washington to pressure from special interests. Local government has often meant government by the locally powerful and privileged. Ultimately, one of the major results of the President's budget and its centerpiece, the revenue-sharing plan, will be to focus attention on just how great a claim local government has on being reliable and truly representative of the people.

The plan to give local governments more spending power also calls for dismantling some Great Society programs that did specific things for specific people --paying for remedial-reading teachers for poor schoolchildren, for instance. Nixon means to pool many of those resources under a broader rubric, in this case, education. It would be up to the state or the city getting the federal money to spend as it chose, as long as the general purpose of education was advanced. No one, not even the experts at the Department of Health, Education and Welfare, can yet say for certain how such crucial details would work in practice. But there is already some speculation that revenue sharing could be come a device for directing funds away from the Democratic constituency of the urban disadvantaged.

Despite its departures, the budget contains no fundamental shift in priorities. The division between human resources --education, manpower training, health, social insurance, veterans' benefits--and defense would remain roughly the same as in the current fiscal year, though the rise in HEW's share is greater than the Pentagon's. Half of the growth in HEW's allocation comes from a 6% Social Security rise, which is to be paid for by higher payroll levies.

DEFENSE, cut back to $76.4 billion this year, would inch up to $77.5 billion for fiscal 1972. The new money would go mainly for pay increases designed to make military service more attractive, thus helping to end draft calls by mid-1973, and for moving ahead with hardware projects delayed by the high costs of Viet Nam. Among them: new ships and underwater missiles for the Navy and the Air Force's B-1 bomber.

SPACE would drop a bit, with a small decrease in NASA's outlays. The Apollo program would be cut from $1.2 billion to $843 million.

PEACE CORPS funds would slip from $87.9 million to $72.9 million.

ENVIRONMENT would get a boost by way of authorization for a threeyear, $6 billion program of aid to local governments for sewage-treatment plants.

THE SST has $281 million earmarked for outlays on further development, but there are already hints that the Administration will not press very hard for it.

SCIENTIFIC RESEARCH & DEVELOPMENT will get a big 7.6% increase, to $16.7 billion, including the $100 million for cancer research that Nixon proposed in his State of the Union message. Other new funds would go mainly for studies in health, pollution, energy resources, crime and transportation. The Administration has been criticized for cutting down on R & D funds.

MASS TRANSIT is supposed to benefit from a $10 billion, twelve-year program of expansion and improvement, not all of it yet written into law. If the funds are parceled out year by year in relatively small amounts, as they would be under revenue sharing, no city will be likely to get enough to do much good. Major new systems, like California's San Francisco Bay Area Rapid Transit network, require major financing commitments at the outset.

Nixon's 1972 budget calls for no new taxes, except for the Social Security increases. That does not mean, however, that the President has no long-term plans for tinkering with the federal tax structure. At a Senate hearing last week Nixon's Treasury Secretary-designate, John Connally, revealed that the President has charged him with a full-dress review of the whole revenue structure. One major focus of Connally's studies will be the value-added tax, a kind of national sales levy widely used in Western Europe. That, Connally said, might well replace some of the existing income sources.

Many of the increases in Nixon's 1972 budget, notably for social welfare, are what his budget men call "the un-controllables"--outlays determined by formulas fixed in law. These can be treacherous: federal unemployment funds were originally budgeted at $3.2 billion for the current fiscal year, but because of the lagging economy, the Office of Management and Budget expects the total will be $5.9 billion. In fact, Nixon's fiscal-1971 budget got altogether out of hand, mainly because the economy did not revive on schedule.

Possibly because he recognized that his 1971 plans were going awry, Nixon involved himself earlier and deeper in the planning for fiscal 1972. Where a year ago he put in only 40 or 50 hours on the budget, this time he immersed himself deeply. The tedious process of budget making has no special fascination for Nixon, but he believes that the budget is the die with which to make his presidential stamp on the U.S.

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