Steady as She Goes

For a long period in his first Administration, President Nixon's economic policies were summed up in a phrase popularized by Treasury Secretary George Shultz: "Steady as she goes." The words implied a commitment to going along with old policies and resisting sharp or contentious change. There are no better words than those to describe the fiscal 1975 budget that Nixon sent to Congress this week.

Unlike the budget that he submitted a year ago, which set out to eliminate large chunks of Lyndon Johnson's Great Society programs, the new budget has no controversial decisions to kill or slash popular programs. Neither does it have any major initiatives for new programs, though spending will rise by nearly $30 billion, to a record $304.5 billion. With his power on Capitol Hill diminished by Watergate and with Congress on the verge of considering whether to impeach him, Nixon may well have decided that big initiatives would not get off the ground.

Despite the current economic slowdown, Nixon is offering what he calls "a budget which will continue a posture of modest restraint." The slowdown is cutting into personal incomes and profits and thus into the tax take. Revenues will be lower than if the economy were closer to full employment, and the budget is dropping deeper into the red. The deficit is expected to swell from $4.7 billion this fiscal year to $9.4 billion next year. Many economists outside the Government predict larger deficits, as high as $20 billion. For all of Richard Nixon's conservative fiscal views, his budgets have never ended in surplus.

The Administration may deliberately deepen the deficit if the economy seems headed into a recession--though there is great debate between the White House and its critics over just what constitutes a recession. Nixon and Roy Ash, chief of the Office of Management and Budget, have said that the Administration is preparing a package of as yet unspecified "contingency spending plans" that would be used if the slump became long or deep. Meanwhile, Ash and other officials have been carefully leaking budget figures in advance to prepare the public and remove the sting of the first U.S. budget ever to exceed the $300 billion mark.

Energy Lift. Most of the spending increases are the result of either inflation or program expansions that were ordered in earlier years. One exception: in the budget, spending on energy research and development would rise by $650 million, to a total of $1.6 billion. Most of the added money would be used to develop nuclear-power projects and coal technology. Another exception: the Administration would nearly double spending on mass transit, from $488 million to $900 million, and federal subsidies would finally be available to help reduce the operating deficits of local transit systems.

Half of the next year's total spending increase would be for "income security" programs, and most of those raises were ordered by Congress, sometimes over the Administration's objections. Social Security benefits are scheduled to rise by $9 billion, or 11%. Spending on benefits for the aged, the blind and disabled, for food stamps and for federal-employee pensions would climb another $5 billion, to a total $15.9 billion. Health expenditures would rise by $3 billion, to $26.3 billion in all. About $2 billion of the increase would go for Medicare as more people become eligible and medical costs inflate. Out of a total $2.2 billion for medical research, the Administration would spend $559 million seeking a cure for cancer. On the other hand, arguing that the nation now "has an aggregate oversupply of hospital beds," the Administration aims to try again to persuade Congress to kill the Hill-Burton hospital-construction program.

Student Loans. Education spending would amount to $7.6 billion, up by $800 million. The primary increase would be for loans and other aid to needy college students, budgeted to jump about $400 million, to $1.7 billion. For the past two years the Administration has sought authority to reorganize its aid-to-education programs by replacing grants for narrowly specified purposes with lump-sum grants giving state and local officials more flexibility in spending the money, but Congress has resisted, and will do so again.

Outlays for housing and urban development are budgeted to increase only $200 million, to $5.7 billion. The model-cities program is being phased out, with spending down to $220 million from nearly $600 million this year. New urban renewal programs are not being approved. In space, an era will end next year, as the final $6 million is spent on the Apollo lunar program, which has cost more than $25 billion so far. The overall space budget is to rise about $100 million, to $3 billion, roughly half of it for the earth orbital program. On the farms, the Administration plans to spend about $932 million in price supports for a few crops, including rice and peanuts, though farm prices have risen 100% in the past six years and are at all-time highs. The spending for price supports would be just about the same as this year but would be down sharply from $3.6 billion the previous year.

With all its relatively modest ups and downs, the 1975 budget is a bit like an old friend who does things differently on occasion but is never really surprising. Most of the proposals for change have been made before and will not provoke hard new confrontations. But perhaps that is the proper sort of budget for an embattled President to offer at a time of political trauma and economic uneasiness.

This file is automatically generated by a robot program, so viewer discretion is required.