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"The Federal Government must stop spending money we do not have and borrowing to make up the difference."
Only four hours later, Carter returned to the theme at a press conference in the East Room. "The Federal Government simply must accept discipline on itself as an example for others to follow," he said.
He acknowledged that his program would be "difficult politically" and, by implication, "onerous and burdensome" to some needy people, though less so than continued inflation would be. He warned that price increases would remain "very high" for several more months before his policies took effect. But his new plan would succeed, though three previous ones failed, he asserted, because "the nation is aroused now as it has never been before, at least in my lifetime, about the horrors of existing inflation and the threat of future inflation."
In follow-up press conferences Saturday morning, Federal Reserve Board Chairman Paul Volcker proclaimed that "the greatest risk beyond doubt" facing the economy is accelerating inflation. Not only do rapid price rises bring "direct pain and distortions," he said, they also prepare the way for a serious recession. Said he: "There is no way we can deal with the problems ... other than by placing restraint on people who individually would like more credit." Treasury Secretary G. William Miller similarly asserted that the Administration's first priority "is to demonstrate the political will to bring our budget under control, demonstrate to the American people and the world that we can do this."
As this barrage of resolute rhetoric might indicate, inflation is not only a frightening economic problem but is rapidly becoming Carter's most dangerous political liability as well. Campaign audiences for the President's numerous rivals are showing at least as much interest in the economy lately as in Iran or Afghanistan. In Carter's own party, Ted Kennedy has made a demand for wage and price controls his major issue, and is apt to answer any question on any other subject with an attack on inflation. On the Republican side, Front Runner Ronald Reagan has been hammering increasingly harder on economic issues. Said he, campaigning in Illinois Friday night: "It's Government that causes inflation, and Government can make it go away by cutting out deficits and stopping the printing of money." George Bush assails "Jimmy Carter's raging inflation" during almost every appearance.
For all the urgency of the issue and the careful orchestration of the Administration's response, Carter's actual program followed an all too familiar pattern of hesitant and belated steps toward a worthy goal. And a great deal of it had been too extensively leaked in advance to have much psychological effect. Its main elements:
¶ "Discipline by reductions in the Federal Government"; spending will be reduced slightly.
¶ "Discipline by greater conservation of energy"; a new gasoline tax will be levied.
¶ "Discipline by restraints on credit"; consumer borrowing will be curbed.
Government spending. In fiscal 1981 it will be sliced, Congress willing, by $13 billion* below the amounts planned in January—though