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The economy clearly presents Ford with a set of his most baffling and urgent problems. The new President is moving cautiously to confront them; Press Secretary J.F. terHorst vows that Ford will not be an economic "cowboy," firing impulsively right and left. Ford has withheld announcing a detailed economic program until after his widely advertised "economic summit" meeting Sept. 27 and 28, at which he will seek ideas from corporate chiefs, private economists, labor and farm leaders —"the total spectrum of American society," as he somewhat grandiosely put it. The big summit will be preceded by a series of minisummits at which Government officials will consult with leaders of specific groups. The first such meeting, with private economists, convenes in Washington this Thursday.
The outlines of Ford's program are clear enough. The goal of goals will be to reduce inflation; if that can be done, the President says, "most of our other domestic problems can be solved." The chief strategy will be to slash federal spending and let the Federal Reserve keep a relatively tight lid on money and credit growth, at the risk of turning the threat of recession into an actuality. But there will be special help to ease hardship, in the form of programs to aid housing, the cash-strapped utilities industry and, most important, the people thrown out of work. The programs have yet to be formulated; one idea is a Government subsidy to lenders to hold down mortgage interest rates.
This strategy reflects the thinking of Alan Greenspan, a persuasive free market conservative who will be sworn in as chairman of the Council of Economic Advisers this week.* Greenspan, chosen by Richard Nixon, has already impressed Ford. He and the President will be co-chairmen of the economists' minisummit.
Strong Prop. In Greenspan's view, there is only a small risk that budget cutting will bring on a deep recession, largely because business capital spending will keep a strong prop under the economy. Manufacturers expect to spend almost 20% more for new plant and equipment than last year. In fact, Greenspan thinks that a tight budget policy eventually could help to revive the economy. Business is being held down, he believes, partly by the effects of inflation fueled by the big budget deficits and easy-money policies of the past.
"Inflationary expectations are repressing effective demand," Greenspan told TIME Correspondent John Berry last week. "That is one of the characteristics of an inflationary environment: the uncertainty in the average household. What will be the cost of my food, my shelter? This uncertainty makes the consumer pull back and save more. If we are successful in bringing down the big thrust of federal spending, convincing people that it and inflation can be controlled, then home building can start to move, sales tied to home building can begin to move—and that includes cars." The ultimate result, Greenspan believes, will be less unemployment as well as slower price rises.