Coming down from the heady abstractions of the summit, President Ford last week rolled up his sleeves to confront the gritty economic and political realities of devastating inflation, lengthening recession and a looming international crisis over oil prices. With congressional elections less than a month away and pressure building for action, the Administration has been working feverishly to meet its self-imposed deadline to produce an effective and politically acceptable program by this week. The President planned to address Congress on nationwide television on Tuesday afternoon to announce his program and appeal for bipartisan support.
Though he and his advisers were tinkering with the package right up to the last minute, these were among the key proposals that the President was thought ready to make:
> A 5% income tax surcharge on individuals with higher earnings and on corporations.
> Bigger investment tax credits for business to encourage production.
> Tax relief for the nation's low-income families.
> An expanded public-service employment program.
> Federal financial aid for the mortgage market.
> A voluntary fuel conservation program.
> A proposal to cut the budget by about $5 billion.
In preparing that blueprint, all week long the White House's economic team, headed by Treasury Secretary William Simon and Presidential Adviser L. William Seidman, sifted piles of option papers streaming in from a dozen departments and agencies. They also studied loose-leaf notebooks fat with suggestions that came out of the recent round of minisummits. All the way through, the President himself was deeply involved.
The often frenetic process revealed some open disagreements between the President's political and economic advisers. Most notably, a number of economic aides sensibly favored an additional tax of 100 to 300 on each gallon of gasoline on the grounds that it would not only offset revenue losses caused by granting some tax relief to the poor, but above all, would also depress demand and lessen the nation's dependence upon overpriced, inflation-fueling foreign oil. But in the end, the President was swayed by the arguments of his political advisers. They warned that such a proposal would be poison at the ballot box and have practically no chance of being enacted by the Democratic Congress.
The overriding mood of the White House was one of urgency—with good reason. So far, the Administration has relied heavily on the tight-fisted money policy of the Federal Reserve Board to temper prices. That policy has lifted interest rates to towering levels and thus attracted massive amounts of money out of the mortgage market, put an enormous strain on banks and credit, and generally slowed production—without even denting inflation. Growing doubt among investors about the Administration's ability to control the economy has sent the stock market into a frightening slump. The Dow Jones industrial average has plunged almost 200 points in the eight weeks since Ford took office, closing last week at a twelve-year low of 585. The Labor Department announced that the unemployment rate for September jumped from 5.4% to 5.8%.
More than 5 million Americans are out of work, and that is certain to set off alarms in Congress.