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Some of Washington's most powerful lobbies—representing farm groups, truckers, oil companies, automakers and auto dealers—strongly opposed a gasoline tax. So did such Democratic Senators as Washington's Henry Jackson, Maine's Edmund Muskie and Minnesota's Walter Mondale. They insisted that with rebates it would take a long time to get the money back to the poor, who in the meantime would be the chief victims of a gas tax boost. Also, they noted that a higher levy on gasoline would immediately add to the consumer price index, though in the long run the increase in Government revenues would serve to dampen inflation.
Prospects for Passage. Congress's reaction to the total Administration package remains uncertain. Tax relief for the poor and an expanded public-jobs program may well zip through both Houses, but it is unlikely that the lawmakers will take up the distasteful business of a tax surcharge until next year. Critics in and out of Congress will continue to push for some kind of Government intervention to hold down wages and prices and for an expansion of the money supply beyond the 5% to 6% annual rate now targeted by the Federal Reserve.
Some businessmen, economists and politicians worry that unless the Administration moves more swiftly and forcefully, the economy will slip into a deep recession. Economist Walter Heller, CEA chairman under President Kennedy, asserts that if the present tight-money policy is continued, the jobless rate will scoot up toward 7% by mid-1975. Says Heller: "Never in the five previous postwar recessions have we waited so long to stimulate the economy. The slump is already in the cards, and what is needed now is action so that it doesn't feed on itself."
The success or failure of the program will hinge largely on how effectively and harmoniously it is administered by Ford's new 13-man Economic Policy Board. The half-dozen key members are all self-professed economic conservatives, who strongly favor balanced budgets and distrust Government intervention or controls. Problems may lie ahead because several of the members have had little experience in public life or with broad, complex economic theory.
Simon, for example, is a former Wall Street bond trader and a tireless, tough administrator, but he is neither a politician nor an economist. Alan Greenspan, chairman of the Council of Economic Advisers, is a superb economic technician, but has had no deep experience in public life, and his bluntly stated conservative views have made him a favorite target of liberals. Budget Director Roy Ash, who left his job as president of Litton Industries to join the Nixon Administration, is expected to return to private life in a few months. Arthur Burns, chairman of the independent Federal Reserve, is wise in the ways of Washington and will of course have an important say in policy.