Does It Matter Who Wins the Election?

In State of the Union, the 1945-46 Pulitzer prizewinning play by Russel Grouse and Howard Lindsay, a woman newspaper publisher asks an old Republican political boss: "Is there any real difference between the Democratic Party and the Republican Party?" Cracks the pol: "All the difference in the world. They're in--and we're out!"

In economic policy, the differences can be much more pronounced than that. This year they loom particularly large because after the election, many crucial decisions will have to be made on tax reform, the fate of wage and price controls, the trade-off between inflation and unemployment. How will the outcome of the election influence these decisions? That question was examined by three members of TIME'S Board of Economists: Walter Heller, who was chairman of the Council of Economic Advisers under Presidents Kennedy and Johnson; Beryl Sprinkel, a Republican and senior vice president of Chicago's Harris Trust & Savings Bank; and Harvard's Otto Eckstein, a CEA member in the Johnson Administration. Their appraisals:

WALTER HELLER. The economy will be expanding nicely into 1973 no matter who is elected. But I do not mean that there isn't some philosophical difference between Democrats and Republicans on economic issues. There are five areas of disagreement.

No. 1 is the division between the private and public sector. The Democrats would support public programs--welfare, education, poverty--more generously than the Republicans.

No. 2 is willingness to intervene in private economic processes. There is no question that there will be a greater likelihood of wage-price intervention by Democrats than by Republicans.

No. 3 involves unemployment and inflation. The trade-off between more jobs and higher prices would differ with the two parties. If President Nixon is reelected, he would accept a higher level of unemployment--as a trade-off for a lower rate of inflation--than a Democratic President would.

No. 4 relates to the regulatory environment. The willingness to regulate more aggressively would be greater with a Democratic Administration.

No. 5 is income distribution. A Republican Administration would be much less likely than a Democratic one to mount a vigorous program to close tax loopholes.

BERYL SPRINKEL. There would be more inflation under a Democratic Administration and, in the very short run, an average level of unemployment a little higher under a Republican Administration. Over the longer pull, I would argue that unemployment would be lower with the Republicans. They are likely to avoid a stop-go policy of stimulus and restraint--that is, they would tinker less with the economy.

Another very important issue is the size of Government. We hear a lot of discussion about unfair distribution of income. This is really a debate about how much of our total resources we want to allocate to Government. It seems to me that the American public is opting for less of their resources being allocated to Government, and this is the direction in which the Republican Party is moving.

In terms of Government intervention in the economy, there would be less desire to misallocate resources through controls under a Republican Administration than under a Democratic one. I would apply this point not only to the wage-price controls, but also to the international scene. If our balance of payments continues to improve, as I believe it will, a Republican Administration will get rid of the controls on loans and investments to foreign countries that got started under President Kennedy.

OTTO ECKSTEIN. What we are seeing now is really the New Politics versus the Old Politics, and the rise of a new generation to political power. If McGovern becomes President, he will do so because he has the support of a different group of people from those who would back a traditional, "old" political candidate who would be, after all, financed heavily and supported by the old political machines. The change would manifest itself in at least two ways. The first is the general area of business-Government relations--for example, the ITT case. It would not be possible under McGovern--and perhaps not even under Nixon in the future--for a corporation to work out its problems with the Government behind the scenes. From here on, business actions will be much more in the open, especially with a McGovern presidency.

The other area in which McGovern differs from the Old Politics is tax reform. The interesting part of McGovern's tax-reform agenda is the part that deals with wealth--that is, his plan to tax gifts and inheritances much more heavily. McGovern people perceive that the real disparity of economic status in the U.S. is not based on current income but on accumulated and inherited wealth. Where this approach will lead intellectually remains to be seen, but the attack on wealth is a relatively new issue and an issue that has a future. It just won't go away.

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