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Henry Ford II last week called the auto industry's slump a "depression" and warned that Washington had better take quick action to help the unemployed.
Federal Reserve Board Chairman Arthur Burns warned of a possible "permanent decline of our nation's economic and political power" unless the Administration takes more vigorous action to curb the flow of wealth into oil-country treasuries. House Speaker Carl Albert offered an unnerving defense of the costly program that his fellow Democrats are talking up to help out faltering corporations and unemployed workers: "Someone said this is digging up F.D.R.'s New Deal. What if it is? It [the New Deal] got us off the soup lines, didn't it?"
Sideways Waffling. Even Treasury Secretary William Simon, the Administration's chief economic spokesman, conceded that the recession "probably" (he could well have said certainly) will be the longest that the nation has suffered since World War II.
And President Ford scheduled a press conference early this week at which he is expected to admit that the slump has worsened more rapidly than he foresaw when he submitted his 31 -point economic-policy package to Congress in October. He is likely to express special concern about the plight of the auto industry and to announce that he has asked his economic advisers for new ideas on how to fight recession—without giving up the battle against inflation, which the President still views as "Public Enemy No. 1" and, indeed, as the primary cause of recession.
But the Administration is at least easing up a bit on its budget-cutting drive, the centerpiece of its anti-inflationary strategy. The President last week proposed reductions of $4.6 billion in planned federal spending, which would hold total expenditures this fiscal year to $302 billion, v. the $300 billion that he had earlier proclaimed as his goal. All but $1 billion of the cuts require legislative approval that a Democratic Congress is unlikely to give; they include such politically sensitive proposals as a reduction of $1.2 billion in federal grants to states for Medicaid and other welfare programs, cuts veterans' education benefits, and a $325 million rise in the cost of food stamps to families that qualify for them. Even if the White House gets everything that it is asking from Congress, the budget would still be $9 billion in deficit, but Administration officials are concerned that a tighter squeeze would damage an already weak economy. Says Roy Ash, director of the Office of Management and Budget: "The economy can change faster than the budget."
It certainly can—and has. Though the economy has been drifting down all year, the slide has been so gentle for so long that the Nixon and Ford Administrations felt it possible to deny that the nation was in a recession at all. As recently as October, Commerce Secretary Frederick Dent asserted that the economy was only going through a period of "sideways waffling." Now, though, the slide has suddenly become something more like a nosedive—by some measures, the worst since the 1930s.
Key economic indicators were already peaking out in November 1973, when the Arab oil embargo and energy crisis finished off the 1971-73 U.S. boom.