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Politically, it was a particularly satisfying coup for the Republicans, as the President's measures were in several cases neatly lifted from the proposals of his Democratic critics. Not only did he take the Democrats' advice, but he also used as his authority for a key order legislation that the Dem ocrats had forced upon him (see box, page 8). And the stakes were high. His trip to China is almost certain to bring him political rewards, but come Elec tion Day 1972, mending the nation's pocketbook could pay off at the polls as Peking never would.
The President's Package for a key order legislation that the Democrats had forced upon him (see box, page 8). And the stakes were high. His trip to China is almost certain to bring him political rewards, but come Election Day 1972, mending the nation's pocketbook could pay off at the polls as Peking never would.
The President's Package
The program the President has ordered, or asked Congress for, separates into eight parts:
> The U.S. will no longer convert foreign-held dollars into gold; temporarily, at least, the dollar will no longer be the foundation of international monetary dealings, as it has been since 1944.
>With minor exceptions, all prices, wages, rents and dividends are frozen at present levels for 90 days.
> A Cabinet-level Cost of Living Council, headed by Treasury Secretary John Connally, will preside over the freeze.
> Government spending will be reduced by $4.7 billion. Federal payrolls will be cut 5% ; foreign aid will be pared by 10%; and the effective dates of Nixon Administration programs for revenue sharing and welfare reform will be pushed back.
> The 7% excise tax on automobiles will be repealed retroactive to Aug. 15; that means an average saving of $200 per car, which should be passed along to the buyer.
> Industry will get a 10% tax credit on new investment for one year; the credit will thereafter become 5%.
> A $50 increase in the federal personal income tax exemption will take effect at the beginning of 1972 instead of a year later; this should release an extra $2 billion to consumers next year.
> Most imports will be subjected to a 10% surcharge, which in most cases will make U.S. goods more competitive in the domestic market with those from overseas.
Nixon's proposals were designed 1) to stimulate the domestic economy by encouraging industrial investment and consumer spending and making imported goods more expensive, and 2) to blunt the mounting attack on the wavering dollar. Said the President: "Every action I have taken tonight is designed to nurture and stimulate [the] competitive spirit, to help us snap out of the self-doubt, the self-disparagement that saps our energy and erodes our confidence in ourselves." Once more, Nixon was handling a crisis, and he seemed to be enjoying it all hugely. Observes TIME Washington Bureau Chief Hugh Sidey: "Nixon clings to what is familiar until the last moment. Then, when the evidence overwhelms him or something happens in his gut, he decides to act, and nothing stands very long in his way. He abandons his philosophy, his promises, his speeches, his friends, his counselors. He marches out of one life into a new world without any apologies or glancing back."
Basic Ingredients