The Atlantic Report on the World Today: Washington

THIS is the year of the great economic boom. Unless the signs fail, the newspapers and news magazines will be bursting with all sorts of records for the American economy. Once the steel strike was definitely settled, the Administration led the pack in proclaiming the advent of what the President forecast as “the most prosperous year in our history.” Treasury Secretary Robert Anderson, with more restraint than most, prophesied that we are entering “one of the most prosperous and fruitful” decades in history. Anderson offered one caveat, however — “in the absence of any major change in the international outlook" — not exactly a minor consideration.

The great majority in the Capital think that Nikita Khrushchev’s course, as now so firmly set, has as a fundamental the avoidance of war with the United States. This does not exclude use of the many types of Communist pressures around the globe nor nuclear blackmail. His speech to the Supreme Soviet announcing a cut of 1.2 million men in the armed forces was well sprinkled with evidence of such pressures to come, most likely over Berlin.

Despite a lot of election-year cries from the Democratic Congress, the President once again may have his way on his defense and space budget. He anticipated some of the outcry by boosting both missile production and the space effort, though not to a level considered satisfactory by many of his best-informed critics. Given the President’s undoubted popularity and the acceptance of his dictum on national defense (“I know more about it than almost anybody ... in this country because I have given my life to it”), the opposition is not going to get very far.

Prudent management of public affairs, sound money, and fiscal responsibility are Anderson and the President’s key phrases this year. They will ring often in the ears of frustrated Democrats on Capitol Hill. Democratic presidential hopefuls are likely to tiptoe around them in attacking the Administration, including Vice President Nixon, for what Senator Kennedy already has called the approach of “a bookkeeper who feels that his work is done when the numbers on the balance sheet come out even.”

In this connection, the following quotation is worth recalling: “The question of a country’s defenses cannot be measured by the concern for cost nor by any economic concern.” It was said not by a Democratic candidate for the presidency but by Khrushchev. And he sounded even more like the Democrats when he added, “We shall not chase the ruble when the lives of our people, the existence of our country, may be subject to risks.”

The 1960 budget

The skies over Washington seemed magically clear to the Administration, and especially so to Nixon, with the settlement of the steel dispute. The only possible clouds were the Democratic hints of an election deal between Nixon and the steel companies and the considerable alarms that the settlement was inflationary. A concerted campaign by the President, Nixon, Labor Secretary Mitchell, and the whole Administration machine worked hard to destroy these fears. And if there is no price rise before election day, as may very well turn out to be the fact, given the indications of full-capacity orders for the mills, the alarms are likely to be forgotten. The continuing low farm prices promise to match the creeping rises in other components of the consumer price index, which reflects the housewife’s budget problem.

The President’s budget surprise was his forecast of a S4.2 billion surplus for the fiscal year beginning July 1, 1960. While he said in his State of the Union message that this should be used to pay off a bit of the national debt, in his budget message he suggested that perhaps in the following fiscal year — the first one fully under control of the next Administration — it might be possible both to reduce the debt and to cut taxes.

This is the opening for the Nixon campaign theme; the fiscal policies of the Eisenhower Administration, on whose record the vice president must run this fall, have brought record prosperity and the possibility of a tax cut once Nixon is in the White House. In the heat of the campaign, it may be difficult to stick to only the possibility of a tax cut. Aside from campaign pressures, Nixon well knows that Anderson’s predictions for fiscal 1961 are conservative on the revenue side. They are based on a gross national product for the calendar year 1960 of $510 billion, a figure a good many economists in and out of the Administration think will be surpassed, and on a corporate profit estimate which may turn out to be even more conservative as far as the resultant inflow of the Treasury is concerned.

The thesis of the President, Anderson, and Budget Director Maurice Stans is that the federal budget should move up somewhat as population grows but that it should not rise in any mathematical relationship. The problems of our cities and their sprawling suburbs, under this thesis, can be met only by the states and the cities themselves. And here the record amply demonstrates that they cannot thus be met, in part because of the overrepresentation of the contracting rural areas in most of the state legislatures.

The Democratic attack will be against this restrictive philosophy in domestic issues, as well as against the limitations of the missile and space programs. But, unhappily for the Democrats, the economic prospects as conservatively forecast by the Administration should allow Nixon considerable room for campaign promises of increased spending by the federal Treasury.

The missile gap

One thing on which there is agreement among the Democratic contenders is that the four years of the next Administration will present the United States with its most dangerous period of military inferiority vis-à-vis the Soviet Union in the critical field of nuclear-tipped intercontinental missiles. The Eisenhower Administration has acknowledged the missile gap, and the experts are in general agreement that the period of the greatest lag will begin about the time the next President is being inaugurated.

Furthermore, all the major proposals to bridge the gap are based on the same assumption: that the United States could not possibly close the gap in less than three to four, or perhaps five, years, the time difference largely depending on estimates of further Soviet advances. The temporary remedies are generally the same as those the Administration is now undertaking, or for which at least the first preparations are being made: hardening of bases for stepped-up missile production and dispersal of Strategic Air Command planes equipped with standoff missiles, plus putting a number of SAC planes on a round-the-clock air-alert status.

These issues will be argued out during this session of Congress, and there probably will be some alterations in current plans but no major changes. The Administration’s gamble is based on a political as well as a military reading of the Communist bloc. This reading of a Soviet intention to avoid nuclear war is, however, nothing about which to be complacent, considering the unresolved issues to be argued at the May summit conference in Paris.

If the Senate and House missile and space inquiries this year are to have any real effect on American policy, either in this or the next Administration, they will have to come to grips with the lack of coordination between the civilian and military components of the space program. All the evidence shows that one of the keys to the Soviet space successes has been the integration of military and civilian scientific efforts under a single head. President Eisenhower has publicly disapproved this method of operation.

Spies in the sky?

The problem involved cannot be neatly compartmentalized, as the issue of the reconnaissance satellites known as Midas and Samos demonstrates. Midas is an early-warning vehicle which will be able, its backers say, to pick up by infrared techniques a Soviet missile as it ascends relatively slowly through the atmosphere, and to flash back a warning of attack. As Samos hurtles around the globe it will be able to scan the Soviet Union and send back detailed information of Russian missile bases and other intelligence now lacking in the West.

There already have been hints from Moscow of an effort to brand such space vehicles as spies and to rule them out of the skies in the same way that the Kremlin forced an end to nuclear testing by using the fear of radioactive fall-out. Because of an apparent lack of coordination in Washington of military and politicalpsychological problems, there has been talk of shooting down such a Soviet satellite if the Russians launch one first. Chairman Overton Brooks of the House Space Committee has publicly called launching of such a Soviet satellite a hostile act.

To treat it as such could very well mean depriving the United States of its own chance to gain something like parity with the Soviets in intelligence. Those in Washington who are alarmed at this trend hope to counter it by getting into the skies as quickly as possible a number of weather and communications satellites, vehicles which would have major world-wide utility of a clearly peaceful nature. Their launching and acceptance, it is argued, could thereby counter and blunt any Soviet attempt to bar reconnaissance vehicles. But this has not yet become accepted Administration policy.

Shelving the supersonic bomber

Another related problem is best demonstrated in the controversy over the President’s elimination of the B-70, a long-range supersonic bomber. There is merit in the Eisenhower belief that, by the time it would be ready, about 1965, the United States will have bridged the missile gap, at least to the point where such a plane would not be the necessity it is today. But some observers make this point: while the United States is shelving the B-70 (two prototypes only will be continued), the Soviet Union is not shelving its counterpart aircraft, despite Khrushchev’s public statements about ending bomber production in favor of missiles.

Even if one takes Khrushchev’s statement at face value, it is said in Washington, the Russians have so geared their state-owned civil airline, Aeroflot, to military necessities that all the airliners are basically military vehicles available for quick conversion, just as was the case with Hitler’s pre-war Lufthansa planes. And the Soviets already have said that they are working on a supersonic civil airliner.

The United States needs to bring together more closely its civil and military aircraft programs. Those alarmed over the B-70 issue contend that the reason there is not now a comparable civilian liner under way is that the Air Force insists that such a supersonic plane must be under its command if it is to be built at all.

The railroad mess

The big labor issue, which will reach crisis proportions by next summer, will involve the railroads. This is the one labor dispute which could spoil the otherwise happy economic predictions.

In the nineteenth-century days of the robber barons, the railroads ran roughshod over the public interest, buying up members of Congress and state legislators in brazen and now well-documented fashion. Part of the current unpopularity of the railroads springs from that historic background; part springs from the cycle of declining revenue, declining service, rising rates, and so on; part springs from the rise of the new transportation titans, the truckers and the airlines with their powerful Washington lobbies, aided by the automobile lobbies.

The net result is that the railroads today are the sickest of all the major industrial segments of the American economy. A few mergers have helped. State and local subsidies of tax reductions have been initiated to keep commuter trains running, but even this has failed in some localities. And, as the railroads say rather plaintively, they are subject to restrictive regulations and manifold taxation which put them at an everincreasing disadvantage with other forms of transportation.

It was in this context that last year the railroads decided to make an all-out attack on union featherbedding — work rules which they state, with much truth, inhibit their effective operation and prevent full benefits from technological improve - ments.

Railroad management’s contention is that featherbedding costs some $500 million a year in useless expenditures. The unions disagree, but privately it is conceded that a good many practices are out of date and ought to be revamped. Practices which management is attacking include a fixed-mileage pay system (based on steam locomotion and now irrelevant), artificial crew change requirements (seven stops for crew changes on a New York to Chicago passenger run), and use of personnel not needed on new diesel equipment.

The trouble, from the unions’ standpoint, is that since 1950 railroad employment has dropped from 1,200,000 to under 850,000, in part due to automation practices and in part to the shift of business to competing trucks, buses, airlines, and private automobiles. The unions are fighting to hold jobs, an approach opposite to that which John L. Lewis took in the equally declining coal industry.

The featherbedding row is a far more serious business in the hard-hit railroad industry than was the workrule issue in the steel dispute. Steel is prosperous, and the steel industry failed to make a case. In steel, however, the end result was a nonbinding agreement that both sides would consider the problem in a less heated atmosphere. So far, in the railroad impasse, there is no agreement. And unhappily, as in steel, there has been no move by the Eisenhower Administration to anticipate the trouble by getting some fact-finding under way. The result has been only rival and confusing advertisements and statements by both sides.