(10 of 10)
If steel's deal turns out to be excessive, the Government will tighten up on spending, forgo more tax-cutting. But if the steel settlement turns out to be reasonable, the Government will be able to pump billions into the pocketbooks of U.S. consumers—probably by further tax cuts—without risking inflation. The Administration has a new flexibility in economic planning because the success of the '64 tax cut in spurring the economy without inflation has taken much of the burden off federal spending and monetary policy as the two main weapons the President must rely upon in coping with the business cycle. Says Donald Cook, President of American Electric Power and a close friend of Johnson's: "After the tax bill, there came a new economic thinking in the affairs of Government. This philosophy represents the best hope for continued good business in 1965 and 1966."
Emergency Power. The planners know that when all is said and done, the ultimate decisions about the future of the economy will be made by the U.S. consumer. And the men who know best what the consumer is likely to do are Jack Straus and the nation's other merchants. They generally forecast that an average U.S. family of four, which spent an average $8,320 last year, will spend about $8,650 this year. The brisk increase in consumer demand should go far toward bringing about what Washington foresees as a 6% gain in both corporate profits and the gross national product, to some $63.5 billion and $658 billion respectively.
Considering the emerging power of the consumer, even the short-term pessimists are long-term optimists. Chicago Economist Langum, for example, says that the '65 troubles he envisions will simply be a prelude to "a really terrific era" that the U.S. can expect later in the 1960s. Jack Straus knows the reason well: "Our economy keeps growing because our ability to consume is endless. The consumer goes on spending regardless of how many possessions he has. The luxuries of today are the necessities of tomorrow."
It is the promise of that tomorrow that has aroused envy and fascination around the world. Now the pull of the American system is attracting even the Communist world, which in 1964 moved with considerable candor to adopt many of the aspects of U.S. consumer capitalism. Nobody expects the success of this economic order to work worldwide wonders overnight. But in 1965 a considerable number of people will be watching the average U.S. consumer—the Macy's customer—for clues that will not only reveal the future course of the U.S. economy but may also have significance for the course of world politics.