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In election year 1970, it seems dubious whether a Republican President will be able to persuade a disputatious Democratic Congress to adopt his finely tuned fiscal package. Much of the surplus, for instance, is predicated on deferring a cost-of-living pay raise now scheduled for federal employees. Though economic conservatives will cheer what Nixon calls "prudent policy," critics can be expected to fault his attack on social and environmental problems as timid. Nixon cites "economic credibility" as a goal of his Administration, but the tiny size of his estimated budget surplus is likely to raise skeptical eyebrows both in and out of Congress. Some economists contend that the U.S. needs a budget surplus four times that large in order to check inflation and simultaneously provide enough monetary relaxation to revive the stricken housing industry.
The Administration's rationale is that a midget surplus gives congressional spenders less room to operate. Had the Administration clung to its original aim of a $3 billion surplus for fiscal 1971, explains a top Budget Bureau official, the effect would have been to encourage Congress to raise its spending sights. More important, Nixon's successful veto of the Labor-HEW bill last week (see following story) and his threat to impound other funds that he considers excess will probably inhibit congressional spenders.
As it went to Congress, Nixon's budget already reflected one remarkable shift in the pattern of Government spending. For the first time in 20 years, national defense will account for a smaller proportion of total federal outlays (37%) than will such civilian programs as education, health, manpower training and social benefits (41%). On that score, Nixon's hold-the-line budget does indeed mirror the mood of a nation outraged at inflation, taxes and high interest rates, and weary of overseas burdens.