The Economy: Effects of TheTax Hike

THE ECONOMY

The outlines of the deal had been clear for some weeks. In exchange for the tax increase that he believes essential to save the economy from inflationary chaos, Lyndon Johnson would submit to massive budget cuts, despite pressing domestic needs. Last week when the package finally came to a vote, the House passed it by a surprisingly comfortable margin of 268 to 150, and only 16½ hours later the Senate, by an even cushier 64-to-16 vote, rushed the measure to the White House, where it awaited certain approval.

What effect it will have on the economy is less sure. At best,...