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There are, of course, soft spots—especially in the persistently high rate of unemployment, which has not been below 5% in five years. There were hopeful signs in March, when the rate dropped from February's 6.1% to 5.6%—but last month it began to climb again. Most economists would agree with the Administration that a tax cut might help. But there is great disagreement about the form the tax cut should take.
Chase Manhattan Bank Chairman George Champion, for example, claims that the Kennedy proposals "put too much emphasis on stimulating consumption," when, in fact, "consumers have increased their spending by no less than $70 billion in the past five years." Corporations need a bigger share of any tax cut, he contends, to spur investment. There is even more controversy over the Administration's proposals for continued high Government spending, which would bring a budget deficit of $10.9 billion.
All By Itself. The deliberate deficit represents a reversal in President Kennedy's thinking. During his first year in office, Kennedy was so convinced that the budget should be balanced that he proposed to raise taxes, if need be, to prevent a deficit. By mid-1962 he and his advisers had changed their minds, were advocating a "quickie" tax cut to pep up the economy; but even then Kennedy did not argue that a deficit in itself was a virtue.
Most of the Congress-passed economic actions taken so far by the Kennedy Administration have admittedly been of the stopgap variety—a higher minimum wage, aid to distressed areas, extension of unemployment benefits, expanded public works, etc. They probably have not hurt the basic economy, but neither have they helped it much. Yet since Kennedy would certainly be blamed for recession, he can just as certainly claim credit for resurgence. And the way the U.S. economy is doing all by itself may make John Kennedy look very good in 1964.