TWO centuries ago, their mercantile genius and drive gave the American colonists the world's highest standard of living. The nation since then has grown complacently accustomed to being the richest on earth. Yet the U.S. has rarely been at ease with its wealth, and even now, on the brink of a trillion-dollar economy, it has not fully reconciled the desire for private affluence, the requirements of international responsibilities, and the tremendous need for social and environmental reforms.
Richard Nixon has spoken movingly of the grail of the 1970s: improving the quality of life for all Americans. But his first annual Economic Report and Budget Message are consumed by the immediate challenge of inflation. To achieve the budget surplus that he deems crucial to the fight against rising prices, Nixon has called for an austerity level of federal spending in the fiscal year that begins next July.
Parsimonious Beginning. He proposed a massive $5.7 billion cut in defense and space outlays, reductions or outright abolition for 57 "outmoded programs," and increased Social Security and transportation taxes and postal rates. For lack of money, the President suggested a parsimonious beginning on new activities that he endorses, such as those dealing with air and water pollution, welfare reform and federal revenue-sharing with states and cities. The result is a spending program of $200.8 billion, an increase of just $3 billion over projected expenditures for this year. Taking inflation into account, Nixon is really advocating a reduction in federal purchasing power. Even so, the budget projects a surplus of only $1.3 billion, a precariously fragile barrier against an inflationary deficit.
Neither an end to the Viet Nam War nor continued expansion of the economy, by Nixon's calculations, offers much prospect of yielding dividends to buttress the nation's attack on its problems. Said he: "Existing programs of government and probable demands of the private sector could use up all the output we can produce for several years to come. If we decide to do something new or something more in one direction, we will have to give up something elsewhere." As he has before, Nixon blamed "the errors of the past" for much of the present and prospective difficulty. On top of previous deficits, last year's cut in the income tax surcharge —now due to expire altogether on June 30—curtailed revenues available to the Government. The slowdown in the economy, plus falling corporate profits, will curb the normal growth of tax receipts.