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The program "was very positive and broad," said C. Edward Acker, chairman of Air Florida, a small airline. "I wasn't expecting so much." Otto Eckstein, a member of TIME'S Board of Economists, declared: "I think the President has made a complete reversal of his economic policy, for the better. He has gone from three years of greatly excessive budget deficits and excessive money supply expansion to a conservative regime of budget balancing and limited credit growth." Republican Senator Bob Packwood of Oregon commented with ironic approval: "It seems that the President has learned more about inflation in the last ten days than he had in his first three years in office."
But many businessmen complained about the lack of specifics about how much Carter proposes to cut from which federal programs.
They were not alone: a spokesman for the Government's own Department of Health and Human Services (the old Department of Health, Education and Welfare, minus Education, which is now a separate department) griped that his only information was a fact sheet, handed out by the President's aides, which referred vaguely to reductions in programs to combat mental illness and alcoholism and unspecified other problems. Said the spokesman: "We are not sure what that all means. We are not sure how much these programs will be cut or which health-service programs will get the ax."
Many executives also felt that the spending reductions, which amount to only 2% of the budget, were still insufficient. "While it sounds significant, it isn't," said William Agee, chairman of Bendix Corp. "God, when the country is in almost as bad shape as it would be in time of war, it's no time for a guy to go around building a consensus."
The program is in fact open to serious objections on several counts. Balancing the budget, a move important in itself, has also become the quintessential symbol of Government resolve to fight inflation. As Carter noted, "Nothing will work until the Federal Government has demonstrated that it can discipline its own spending and its own borrowing." But a one-shot, one-year surplus would barely begin to undo the damage wreaked by years of deficits: $160 billion since 1977 By some estimates, a balanced budget in fiscal 1981 would, by itself, reduce the inflation rate only by two-tenths of 1%.
What is needed is a long-range plan to bring the growth of federal spending under control. That can hardly be done without some trimming of the entitlement programs, which not only swallow 77% of the whole budget but are inexorably rising. That is because most of them are tied to the consumer price index. Social Security benefits, for example, will rise 13% this year because the CPI rose 13% in 1979. That creates a vicious circle: inflation increases federal spending, which increases deficits, which increases inflation. Several experts have proposed limiting the tie between prices and benefits to 85% of any rise in the CPI, but Carter apparently will not ask even for token cuts in the entitlement programs.
If Carter is cautious in an election year, so is Congress. Indeed, there is good reason to wonder whether the legislators who have the final say on most of Carter's plans can muster the