White House, Congress trade shots over '83 budget
The locomotive of the US economy is fired up and waiting to steam away toward growth and prosperity, says the Reagan administration's just-released economic report.
But the American public must be convinced to climb aboard. And they won't get on, says the report, if they think the train's schedule is going to be changed.
The President's annual Economic Report to Congress, produced by the Council of Economic Advisers (CEA), makes liberal use of the words ''constant,'' ''continuing,'' ''stable,'' and ''long term.'' Those who would change the President's economic policies are cast in the role of doubters who favor a return to the ''stop-and-go policies of the past.''
Inflation is pictured as the prime roadblock to economic growth.
The success of the administration's policy ''will depend on the degree to which it is credible in the eyes of the public,'' says the report. It ''is a problem of convincing the public that the federal government will be steadfast in maintaining its new economic course.''
The more cooperation between the administration, Congress, and the Federal Reserve Board, the faster the recovery, says the report. Considering that Congress did not exactly give the Reagan budget a standing ovation, such cooperation may be difficult.
Following a time-honored tradition, the report heaped blame for the recession on previous administrations and their decade of ''inflationary economic policies.''
''We didn't do terribly badly for a novice administration,'' claimed CEA chairman Murray Weidenbaum in briefing reporters.
The report makes these predictions:
* The recession will end by the second quarter of 1982. When the economy starts up, it will steam ahead briskly with a 5 percent annualized growth rate for the second half of the year. Real GNP growth is predicted at 3 percent for the year as a whole.
* Inflation will continue to decline like a hot air balloon with a slow leak. For 1982 it should average 7 percent, says the report.
* Unemployment should reach ''the vicinity of 9 percent'' in the spring, declining 0.5 percent to 1 percent by the end of the year.
* Productivity is expected to grow only 0.6 percent in 1982, but by 1983 it is predicted to jump 2.3 percent.
* The bellwether housing industry should benefit from a ''rapid recovery,'' with annual housing starts increasing from the current 900,000 to between 1 and 1.5 million.
By 1984, says the CEA, real GNP should be booming along with 4.9 percent growth, and inflation should sputter down to 4.7 percent.
The 200-page report devotes considerable space to discussing the effects of a federal deficit. From an historical perspective, the administration's budget deficits are ''substantial,'' yet ''not unprecedented'' when measured as a share of the economy.
If properly financed by the government, deficits will be inflationary only ''to the extent workers and firms believe . . . they are inflationary,'' and demand higher wages and prices to keep pace.
The report also aims a quick slap at the gold standard. Reviewing the gold standard's past performance, the report concludes ''the evidence does not suggest that it achieved greater stability in price levels or growth.''