The Recession

President Eisenhower's endearing attachment to the notion that there should be a Hoover in every White House explains much of the virginal optimism and defunct conservatism emanating from Washington. A recession, however is not a Phoenix generating its own resurrection, and wishful thinking is often an admission that the wells of wisdom have been filled with poverty-stricken nostalgia.

In vetoing the rivers and harbors and flood control bill, for example, Eisenhower announced that he believed "a sound national policy requires that a comparable measure of responsibility for projects where there are identifiable beneficiaries must remain at the state and local level."

It was with great reluctance then that the President approved a $1.8 billion increase in federal spending for highway construction, and he showed similar hesitation when he signed a $1.8 billion housing bill. Eisenhower's equating "sound national policy" with maintaining rigid federal-state relationships is, however, ironic and dangerous, especially at a time when sound national policy requires initiative on the part of the government. The assumption that states are currently capable of sharing equally with the government in any works program is also untenable, since most states are unable to finance their own anti-recession programs.

Many public works program, as Eisenhower has pointed out, are a waste of public funds--but this does not necessarily imply that they are therefore undesirable. Admittedly, expenditure programs have a long-run rather than immediate impact on the economy; still, their value, socially and economically, is certain. A recession is not the time for the government to economize, and fear of deficit financing often implies fear of positive action.

Tax cuts have been opposed by the Administration, which nourishes a fear that the government will be unable to meet deficits if revenues are reduced. The value of a tax cut is questionable, but not for the reasons Eisenhower proposes.

A tax cut, to be effective, should increase the spendable income of those groups with a high propensity to consume. Generally this means low income groups, which for the most part are now unemployed. Even supposing that a cut did release a greater proportion of current income for consumption purposes, it is doubtful that this money would in fact be spent. Most likely it would be used to meet outstanding credit obligations assumed during the past boom, or possibly it would be saved in fear of continued economic uncertainty.

Income taxes, moreover, are generally collected as with-holding taxes, and reductions would be spread over many payroll periods, destroying any immediate effectiveness.

Unemployment compensation, which has the merit of placing money where it is needed, has, perhaps, been paid too much homage by economists and politicians. But the advantage of sustaining consumer purchasing power during long stretches of unemployment is obvious.

The revamped unemployment compensation bill passed last week by the House, while inadequate, is still a step forward. Senate Democrats fortunately plan to broaden the House measure, increasing the level of payments and extending compensation periods.

Reorganization of certain market structures, particularly in highly concentrated, oligopolistic sectors, also has great merit as an effective economic control--although the Administration has shown little imagination in this area.

Price stickiness, excessive and compulsive advertising, administered prices, and other undesireable consequences of oligopoly are problems which certainly should be considered in formulating anti-recession policy. Techniques for combatting economic ills are, of course, imperfect, and there exists no single effective anti-recession weapon. Any sophisticated discussion of economic policy must recognize the need for a variety of approaches, applied with varying degrees of emphasis throughout the spectrum of the economy.

But the Administration has become entangled by its own double-talk and mouthwash slogans. "Peace, Progress, and Prosperity" expressed a hopeful note which somewhere turned sour. A successful military man should know that last war's weapons fast become obsolete, yet defunct ideas and empty symbols still dominate the President's approach to recession recovery. The White House, for example, was exceedingly cruel when it suggested recently that the unemployed were being uncooperative by their failure to buy more goods. Luxury items, to be sure, are selling close to pre-recession levels, but the rich are patriotic and will always pull hard on their oar and do their share.

Eisenhower's concern with balanced budgets, states rights, moderation, and sound business procedure, does not make his economic policy much more attractive or effective. While poverty may not be just around the corner, neither is immediate prosperity. And the tedious trip to recovery is made more unbearable by an Administration which seems to be particularly insensitive to the condition of the unemployed.