The Atlantic Report on the World Today: Washington
THE economy this spring is, by every known measuring stick, far more fundamentally sound than it was in the years of the Great Depression. Congress acted quickly to pump cash into the economic bloodstream, as it had in the first months after FDR came to power, but there were differences of great importance.
For one thing, the legislative branch was moving faster than the executive branch, and moving in a coordinated direction. The two top congressional Democrats, Senate Leader Johnson and House Speaker Rayburn, had agreed on a program and had advanced it in the name of “nonpartisanship,” although this did not eliminate highly partisan references to the “Eisenhower recession” or prevent the Democratic National Committee from attributing an “erroneous economic policy” to “the Eisenhower-Nixon Administration.” The more liberal Republicans, tired, as one of them put it, of “being clobbered,” struggled to come out on top by demanding even faster action than the Johnson-Rayburn timetable called for on emergency housing legislation and on bills to extend unemployment insurance for the workers whose benefits had been exhausted.
This latter proposal, an Administration proposal pushed by Labor Secretary Mitchell, Vice President Nixon, and other colleagues of similar liberal persuasion, represents a landmark in both American and Republican history. In many ways it epitomizes the beginning of a new era.
Back in 1935 the Social Security Act was bitterly attacked by almost all Republicans, even to the extent of charges during the 1936 presidential campaign that FDR wanted to put a social security dog tag around every American’s neck. The act set up the outlines of unemployment insurance; and during succeeding years the system was worked out which prevails today: a tax on employers alone of a basic 2.7 per cent of their payrolls to feed a federal Unemployment Trust Fund. The percentages vary, depending on an employer’s unemployment record, but in all states except Alabama and New Jersey the money is paid wholly by the employer, unlike taxes for retirement benefits, which are paid by both employer and employee.
In the last full fiscal year, ending last June 30, there were some $8.5 billion in the Unemployment Trust Fund, invested in government bonds and therefore available to finance other government expenditures. In fiscal 1957, payments into the fund were some $40 million more than the $1.5 billion paid out.
The insured now include about 43 million of the nation’s 65 million civilian workers, though the weeks of unemployment compensation and the dollar amount vary, depending on state laws. By early February, benefits were exhausted for a million and a half, and the number continued to increase into the spring.
It was in this context, then, that the Administration reached the decision that the federal government should extend unemployment benefits by at least thirteen weeks. The Democrats wanted a longer period, and Republican Senator Case of New Jersey offered a bill for such payments to run through the balance of the calendar year 1958.
The vital aspect of the Administration plan was that it put the federal Treasury in the unemployment compensation business. The money will come solely from the Treasury and, of course, will add to what clearly will be a huge deficit in the budget by the time this fiscal year ends on June 30 — the biggest deficit by far of the Eisenhower Administration, and following two years ending in the black, of which the GOP had been boasting.
The Administration shifts gears
More important, of course, than the budget or even the nature of the unemployment compensation measure is the philosophy that the measure bespeaks. In the 1952 campaign the Democrats tried once more to “run against Hoover”; that is, against Republican economic policies linked in the voters’ minds, rightly or wrongly, with the Republican Administration during the Great Depression. Eisenhower said from the start that his Administration would never permit another depression. After the 1953-1954 recession, the Administration was able to claim that it had brought an upswing by monetary measures without deficit financing. And for many months in the 1957-1958 recession the Administration hoped to do the same.
But as the trough deepened, and as a result of Democratic pressures in Congress and the fact that Senate Republican Leader Knowland is a candidate for governor of California and is therefore especially vulnerable this year, the Administration began to give ground. The President first backed down on his post-Sputnik call to Congress to sacrifice less essential domestic programs in order to increase defense spending within a balanced budget. Then he began to release impounded funds, already voted by Congress but held up by the Budget Bureau, for all sorts of projects. Next, he asked new funds for rivers and harbors and flood control (which he formerly resisted, justifiably, as “pork barrel” projects) and for Health, Education, and Welfare Department programs. The President did not push for a return to plans for federal aid for school construction, which he had urged in previous years but abandoned last fall.
All of these actions fell within the Eisenhower thesis, as he described it to newsmen, that the government must be “watchful of the economy” and “must keep it prosperous” and “keep our prosperity widely shared.” It was not, however, until the President agreed to the unemployment dole directly from the federal Treasury that he broke completely with the Republican past. And yet he could claim that he was acting within the generalization which he so often attributes to Lincoln, the first Republican President, that the federal government should perform an essential task only when it cannot otherwise be adequately performed by the citizenry.
This new Republican policy with all its ramifications — and it is being stamped as party policy by the votes of election-fearful members of both House and Senate, despite the personal misgivings of many of the older, more conservative members — is an event of historic importance.
Every foreigner who comes to the Capital during these recession months comes with the memory of the Great Depression, a memory not only from the history books but one sharpened by the constant crowing from the Kremlin of the superiority of the Communist economic system, with its alleged abolition of unemployment. It was not by accident that Nikita Khrushchev recently declared that “the Russian people are not happy that so many American people are suffering. The older people in the Soviet Union still remember pre-revolutionary hard times. Now, however, the people see that the future belongs to the Socialist world, which does away with all hardship.”
Thus the American economic recession bears directly on the EastWest competition, the so-called peaceful coexistence. For that reason, what the Eisenhower Administration has been doing this spring, despite its reluctance or misgivings, has great importance abroad as well as at home. No American government, regardless of party, can ever again consider allowing a major recession to run its course; it is bound by precedent, which the voters will not permit it to ignore, to act aggressively to turn the economic curve upward. Only when the current recession has ended and can be fully analyzed will we know the importance of the steps taken, including the federal unemployment compensation move. But already it is apparent here that this recession has earned a place in the American history books for reasons beyond mere economics.
More talk
By spring the East-West dialogue, most of which was carried on in public, reached an impasse on the mechanics of arranging a Summit meeting, on who should attend, and on the vital question of what was to be discussed by the heads of government. As it became clear that the Kremlin was in no mood to negotiate German reunification or even to permit discussion of what Dulles terms “the East European satellite question,” the core of the problem is the arms race and how to slow it down.
Discussion of disengagement in Central Europe, either through the Soviet-backed Polish plan for an atom-free zone or through Kennan’s idea of a militarily neutral area, became a side issue. So did the argument in Washington on whether or not the West should agree to a suspension of nuclear testing.
The central issue, it has now turned out, is over the control of what the United States terms “outer space” and which, for some reason, the Russians translate from their language into English as “cosmic space.” It is the coming of the Russian intercontinental ballistic missile which has raised this issue — and the fact that the Soviets have the I CBM while, according to Atomic Energy Commissioner Willard F. Libby, the United States has yet to test its ICBM nuclear warhead.
The balance of terror
It is always a gamble to speculate on Soviet motivation. But Washington observers agree that the Kremlin had begun to worry lest the President’s reiteration of the need to control outer space would touch an even more receptive chord around the world than the old Soviet cry of “ban the bomb.” After all, how can one oppose the idea of making sure that outer space is used only for peaceful purposes?
The initial Soviet response to Eisenhower’s proposal was limited agreement. Slowly this response has been spelled out. Khrushchev wrote the New Statesman in London that the ICBM gave Russia the means to strike back if the Americans attacked. He claimed that the real reason the United States wants to control outer space is to deprive the Soviets of this power of self-defense while leaving the Americans the ability to strike Russia from overseas bases, either by planes or shortrange missiles. To prevent America from achieving “a more advantageous position,” argued Khrushchev, control of our outer space must be linked to liquidation of those bases.
This argument is attractive in purely military terms, though both sides have omitted, thus far, what will soon be a complicating factor: the nuclear submarines with at least 1500-mile long-range missiles. Many Washington observers believe, in fact, that only when such rival fleets arc in being, in large numbers, will the balance of terror be established firmly enough as to deny each side the possibility of annihilating with a single blow the other’s power to strike a deadly counterblow.
Dulles has, more and more, concentrated his thinking on the outer space issue. When he was in Manila at the SEATO conference, he said that the United States might agree to a Summit meeting on the single issue of outer space, provided it was well prepared — that is, provided there was reason to believe that the Soviet Union might come to terms. But the Russians responded with a four-point proposal for a United Nations organization to ban military use of space, to liquidate American bases, to set up international controls, and to provide for international cooperation in outer space research, along with talk of joint projects to control the weather, make the deserts bloom, and fight disease.
This was a clever turn of the card, and it was quickly recognized as such in Washington. There is a wide desire among scientists in the United States for such cooperation with the Russians, military projects aside. The burden now has been put on the President and Dulles to argue that the Russians must give up the ICBMs while the Americans continue to use a ring of bases which come close to surrounding the Communist Eurasian land mass. This, indeed, will be difficult to do. Dulles had reached the conclusion, before the formal Soviet proposal, that the Soviet would reject control of outer space on American terms. But now once again the burden of saying no has been put on the United States.
The impasse seems inescapable, despite all the continuing talk of a Summit conference this summer. If a conference does occur, it will be the result of some new factor. Here the Soviets are counting on allied pressures on Washington to force Eisenhower to the meeting on essentially Russian terms, not to mention on a basis of equal representation for the two sides among the others present. Whether this will occur may depend on issues which alarmed Washington this spring, especially the decay in France and the emergence of new power for Nasser in the Middle East resulting from his open row with King Saud, and the transfer of power to the King’s brother.
Whether or not a Summit meeting is held, there can be no major arms limitation agreement (and Dulles will fight any minor agreement on the grounds that it would only lull the free world) until there is a worldrecognized parity in the realm of intercontinental missiles.
Mood of the Capital
The hopeless deadlock over the presidential disability issue is attributable in large measure to fears by Democratic House Speaker Sam Rayburn, with an assist from former President Truman, that the Republican politicians may talk Eisenhower into making Nixon “acting President” long enough to build him up for 1960, however groundless most observers feel such reasoning is.
The President’s agreement with Nixon on the issue has added to that fear and increased Rayburn’s opposition to any legislative solution which does not give Congress a say in the matter, something the Ad, ministration will not accept.