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Summit Agenda. Ford echoed some of this viewpoint at his press conference. Budget cutting, he said, will help both symbolically and "substantively." It will reduce Government borrowing and make more loan money available to home buyers and utilities, a point also made by Greenspan. Federal spending for fiscal 1975 is officially projected at $305 billion, but Ford pledged publicly to hold it below $300 billion, and Treasury Secretary William Simon has mentioned a goal of $298 billion. That would reduce the deficit from $11 billion to $4 billion. Ford is likely to accept a cut of about $2 billion in this year's defense spending now being shaped by Congress and to pare some civilian programs more deeply. He already has got Congress to whack almost $10 billion out of projected federal aid to mass transportation over the next six years, reducing the spending figure to $11 billion.
This is by no means an uncontroversial strategy. To many economists, the view that budget cutting is the most important way to attack all the troubles of the economy seems vastly oversimplified or even misguided. Trying to control the economy by holding down federal spending, says Robert Nathan, a member of TIME's Board of Economists, "will not work for Ford any more than it did for Herbert Hoover."
Such criticism is being muted for the moment, but it is sure to burst into the open at the economic summit. The Administration has laid out a five-point agenda for the summit conference:
1) To clarify the nation's present economic condition.
2) To identify the causes of inflation.
3) To develop a consensus on basic policies to deal with inflation.
4) To consider new and realistic approaches to the inflation problem.
5) To define hardship areas requiring immediate action.
On at least three of these points, Ford will hear opinions sharply at variance with those that he gets from Greenspan and his other advisers.
On the condition of the economy, there is little disagreement and even less cheer. The prospect is for continued rapid inflation, production stagnation and rising unemployment, not only for the rest of 1974 but through most of next year as well. Private economists forecast that retail prices will continue to leap at about today's double-digit rates through year's end, then subside only to between a 7% and 9% pace in 1975. Real output of goods and services may drop a bit more next quarter, then rise only 1% or so in 1975. Otto Eckstein predicts that industrial production will not regain its end-of-1973 peak until late next year, making 1974 and 1975 by far the longest period of no growth in the economy's postwar history.
The outlook has darkened considerably in the past few weeks. Though economists long ago lost all illusion that inflation could be conquered swiftly, they had thought that declining food and fuel prices late this year would help offset fast rises in the price of everything else. Those hopes have now been dashed by two factors—"the weather and the Arabs," as one disgruntled investor puts it.