Washington

on the World Today

SOME criticisms now being made of the Administration’s antipoverty program are unquestionably valid. There are administrative deficiencies; the program was put together much too fast; it barely scratches the surface in some respects; it is spotty in the quality of assistance being rendered. Vet the program is at the same time inspiring. This can be appreciated best by a visit to the Job Corps camps, where thousands of school dropouts are being given the first real encouragement in their lives.

Many of the Job Corpsmen have such povertystricken backgrounds that it is doubtful they can ever be trained as skilled laborers, they can be taught simple tasks, be given a chance to master the basic tools of learning, and get sorely needed medical care. For example, the first need of the majority who enroll in the Job Corps is dental care; few of them have ever been to a dentist. Any effort to rehabilitate these youths, to get them off the streets, to give some direction to their lives, is worth the cost.

Many will grow into useful citizens, for the spirit among them and among their teachers is high. Some have demonstrated a good basic intelligence, but they are untrained and undirected. It will be interesting to see how they fit into community life after die Job Corps training; the new hope it gives them should alone be worth a good part of the investment. At least they are being reached in time to give some meaning to their lives. It must be remembered that a crash program is required because of the growth of teen-age unemployment. Although the overall unemployment rate has been reduced in recent months, it is still extremely high among teen-agers. Youngsters without skills have no claim on a job today; yet the shortage of skilled labor is a growing problem in many industries.

As Secretary of Labor W. Willard Wirtz has often pointed out, the number of teen-agers in the labor force has risen from about 6 percent in 1948 to about 7.5 percent today; it probably will rise to 8.5 percent in 1970. At the same time, the unemployment rate among teen-agers is almost three times that of the total unemployment rate. In 1950 it was only twice as high, but in the last fifteen years the demand for unskilled, untrained labor has increased. Here is a table Wirtz frequently uses to show the seriousness of the school dropout problem:

Year Total Unemployment Rate Teen-age Unemployment Rate
1950 5.3 11.3
1952 3.1 8.0
1954 5.6 11.4
1956 4.2 10.4
1958 6.8 14.4
1960 5.6 13.6
1962 5.6 13.3
1963 5.7 15.6
1964 5.2 14.7

The society that has built rockets to take man to the moon has not yet found a way to prevent the incredible waste caused by inadequate care of its youth. The Job Corps, even if given larger appropriations and better administration, may do no more than contain the problem. But it is a significant salvage operation.

New man at Budget

Next to the President, no one in Washington has a clearer picture of the overall operation of the government and the problems of administration than the Director of the Budget. For this reason, and because he is the President’s agent, the Budget Director exercises a unique influence. When he is an exceptionally able man, like Kermit Gordon, who resigned in April, or Charles L. Sehultze, who was named as Gordon’s successor, he can be a powerful force. Yet to the public the Budget Director is almost unknown.

In January, when Schultze resigned as Assistant Director to return to his teaching post at the University of Maryland, his colleagues gave him a farewell luncheon, not knowing that he would soon be back. In a speech, one of Schultze’s colleagues reported that Washington was falling apart at the news of his departure, although most of Washington had never heard of him. Such is the power and anonymity of the Budget Bureau.

Earlier this year, when President Johnson was looking for a new Secretary of the Treasury, he remarked to an aide that he could think of no better man for the Cabinet post than Gordon, a former Williams College economics professor, who was even then trying to resign.

“Gordon would be as good as McNamara in the Cabinet,” Johnson remarked. Yet in the end he accepted Gordon’s advice not to name him. The major factor was political. A Treasury Secretary must be a man who has the confidence of the business and banking community, especially at this time, when business support is necessary to the success of the Administration’s attempt to overcome the balance-of-payments deficit.

Technically, Gordon would have been an excellent Cabinet officer. He has the confidence of top Administration officials as well as leading members of Congress. But Henry H. Fowler, the highly competent corporation lawyer and former Undersecretary of the Treasury, is in a better position to carry the Administration’s message to Wall Street. Although Gordon was denied a Cabinet post, he can claim a major part of the credit for the enormously successful fiscal policies of the last four years. As a member of the Council of Economic Advisers and as Budget Director, he helped write the new chapter in American economic policy.

Crossing the street

Schultze. who is only forty years old, married, and the father of six children, is the youngest Budget Director ever. Like Gordon, he played a significant role in forging the critical economic decisions of the last four years. His scholarly attitudes are enhanced by gregariousness and wit. In 1958, as a staff member of the Council of Economic Advisers, he produced a study on inflation that economists regard as a classic. In 1961 he did original work on the effect of the budget on the national economy that profoundly affected fiscal policy in the Kennedy-Johnson years and led to the big tax cut of 1964.

While Gordon was Budget Director, Schultze was number three man, in charge of fiscal policy. He worked closely with the Council of Economic Advisers and the Treasury Department to make certain that the government, whose $100 billion to spend makes it the biggest business of all, was a positive influence rather than a depressant on the economy. The President, who was impressed by his ability in the number three post, thought first of Schultze for the $30,000 a year directorship.

The Budget Director sees the President more often than most Cabinet officers do. On some days he may walk across the street from his office in the Executive Office Building to the President’s several times. All year long the Budget Bureau is engaged in the budget-making process. Officials from every agency must appear before it to justify their requests for funds, for new legislative proposals, for reorganizations they may wish to make. Though it employs only 478 persons, including secretaries and messengers, the Budget Bureau pulls close rein on the federal establishment. It is a pity that the Director’s assignment is so grueling that a man like Gordon finds he cannot stay indefinitely in government service.

Some observers think that after McNamara, Gordon is the man Johnson has leaned on most heavily. Once when he was Vice President, Johnson’s well-known temper flared during a meeting with these two men. After the meeting, Gordon remarked that if Johnson ever became President, they would be out in ten minutes. “Five,” McNamara replied. But it did not take the new President long to appreciate their strength. Gordon made his first deep impression on the President with a brief and explicit memorandum outlining the decisions the President had to make immediately regarding the budget.

The Budget Director is the only member of the President’s staff with a professional organization capable of executing the President’s wishes and knowledgeable about all aspects of government policy. It is often remarked that the moment a man is named to the Cabinet his loyalty shifts from the President to his department’s constituency and to Congress, which he depends upon for funds. But the Budget Director’s first loyalty is always to the President. Perhaps as an anonymous agent, neither elected by the people nor confirmed by the Senate, he exercises too much power, as some critics maintain: but he is, in fact, the President’s right hand.

France versus progress

For more than four years the United States has enjoyed a record of economic growth without parallel in our peacetime history. In his annual economic report to Congress President Johnson was able to predict a gross national product for this year of S660 billion, compared with S584 billion for 1963 and $622 billion for 1964. Now even that estimate appears to be conservative. Yet there is a major danger - and a significant opportunity that Americans in their busy preoccupation with their own affairs tend to overlook. Unless the archaic limitations of the international monetary system are broken, the entire Atlantic community and all those who depend upon it face serious economic difficulties.

In his final statement as Secretary of the Treasury, C. Douglas Dillon correctly said that “the greatest financial challenge is to work out changes in the international monetary system.” And Fowler, in his first statement as Secretary, called the problem the major one facing him. He promised to approach it with an open mind and with a determination to prevent it from pulling down the columns that have sustained the Atlantic community in its great post-war development.

As in so many other Atlantic undertakings‚ France is the chief stumbling block to progress. Yet we are approaching a situation in which the pressures on France to work in a more cooperative spirit are gaining momentum. The efforts of the United States to overcome its balance-of-payments deficit are producing surprisingly rapid progress. This means that the dollar balances of other countries, including that of France, must necessarily worsen, as our gain is their loss. In addition to the American effort, the latest British budget is regarded in Washington as a decisive step forward. Its belt-tightening tugs are exactly what is needed to strengthen the pound sterling. Taken together, the British and American moves are the necessary first steps toward a genuine attack on the international payments problem.

In the United States, leading economists and bankers have been studying the problem under the general direction of Frederick Deming, Undersecretary of the Treasury for Monetary Affairs. The so-called Group of Ten, representing financial advisers of ten leading industrial countries, have been attempting to agree on recommendations for a less cumbersome international payments system. It will take the most skillful presentation and negotiation to achieve progress in this complex held, as essential as is progress in political and military cooperation.

Fortunately, there is a full awareness of the urgency of the task in the highest Washington offices. The While House, with its hypersensitive political ear, recognizes that domestic prosperity cannot be sustained indefinitely without a vigorous international trade and payments system. The program to reduce the gold and dollar drain is an essential step toward the larger goal.

Mood of the Capital

How long will LBJ’s magic wand work on Capitol Hill? The President’s skill as a legislative leader, his astuteness as a compromiser, his tempestuous, insatiable appetite for accomplishment have paid high dividends. He begs, pleads, charms, terrorizes, demands, out-thinks, outplans, and out-promises to get his way. Since there is a pent-up demand for many of the long-debated programs he has proposed, he has been riding with the tide.

Lyndon Johnson has achieved a degree of cooperation no other recent President has approached. His own political skill is one reason for his success. Another is the Republican Party deterioration that followed the Goldwater nomination. Another is the fact that many of the bills being passed this year have been debated for years, even decades, and a consensus has at last been reached. Finally, the Democratic majorities are so large that even an inept Democratic President, which Johnson definitely is not‚ would have made a record this year.