In the first phase of his White House career, President Kennedy has thrilled his American audiences with the call to sacrifice and comforted them by not asking for any. Here is the voice of Kennedy as candidate:

I believe in an America that is on the march. . . . If we continue to stand still—if we continue to lie at anchor—if we continue to sit on dead center—if we content ourselves with the easy life and rosy assurances—then the gates will soon be open to a lean and hungry enemy. . . .

The President continues where the candidate left off. Ten days after taking office he looked again around the world and he was then

. . . staggered upon learning . . . the harsh enormity of the trials through which we must pass in the next four years. . . . Each day we draw nearer the hour of maximum danger . . . [because] the tide of events has been running out and time has not been our friend.

So beleaguered, the President raises the flag of National Unity. He seeks for accommodation and support on the right, while he endeavors to retain the allegiances of the traditional American minorities and of organized labor. He quiets the unreasoning fears of the business community—perhaps the greatest success of his first month in office. The stock market rose sharply from November through January. On February 19, a New York Times headline read, “Wall St. at Ease on New Frontier.” Why not? No significant American political force challenges the role of private business. Why should American businessmen go in fear because a Democrat sits in the White House?

In addressing the research organization of the National Association of Manufacturers, the President could say, in all sincerity, “I feel that I can claim kinship here. . . .” He pledged “. . . we will not discriminate for or against any segment of our society . . .” and that pledge was taken as meaningful. He promised he would initiate a move to reduce income taxes for corporations engaging in a high level of investment, and that promise was credited.

The Kennedy election campaign had won back to the Democratic party the support of many Catholics and had held the party’s position among Negroes and Jews. Kennedy had the endorsement of the leaders of organized labor and of the more vocal New England intellectuals. He won the Northeast and the Southeast. Yet he did not carry the farm areas, the Rocky Mountains, or the Pacific Coast. He ran painfully behind his party. He lost both Ohio and California, despite their past easy election of popular Democratic governors. The distinctively left-liberal elements in the Congress also lost some ground in the election, whereas the Republicans gained 22 seats.

Voting analysts agree that Kennedy probably would have been defeated by Eisenhower. Against Nixon, he conducted a cautious campaign, attempting to evoke an image of the fresh and alert, seeking for meaningful distinctions of nuance. He was a Democrat, and had not the Democratic party historically been the party more concerned for the welfare of all the American people? Would it not attend more compassionately to the education of the young and the needs of the aged? Would it not proudly hold up the head of America before the world and make the United States, in all matters of value, “first”? Kennedy did not really emphasize the existence of an economic recession. He avoided issues of social controversy. And he won the presidency by a bare plurality of a hundred thousand votes. His subsequent actions were shaped by that meager outcome—though not by it alone.

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Searching for a wide consensus among existing, effective political forces, the President-elect chose a Cabinet containing only two or three individuals whose outlook would have precluded their holding the same posts under Eisenhower. At the sub-Cabinet level, he chose considerable new talent and of an interesting pattern. These sub-Cabinet officers think of themselves as pragmatic, businesslike. One of them said recently, “This administration has no ideology, but it has style. It is athletic, spare, austere.” (Perhaps by their self-portraits shall ye know them!)

The same pattern was reflected in the President’s conduct of his relations with the Congress. On the Senatorial filibuster, he looked in the other direction while his official leadership voted with their avowed enemies—accepting what appears to have been a quite unnecessary defeat. Some thought this might prove to be the greatest political blunder of 1961. Wise or foolish, it was no chance occurrence, but part of the chosen style of play, an incident in the fundamental political strategy.

Those who prefer an intellectual expression of this style and strategy may find some of its roots exposed in a pre-election publication of one who is now a White House assistant. The passage appears in a chapter interestingly entitled “The Political Economy of a Continental Community in a Time of Protracted Crisis”:

The issue for the American agenda is, then, how to shift the focus of national politics from . . . problems of income distribution, security and power as among social classes . . . to the isues of communal survival and communal development which are, in fact, now and foreseeably central to the nation’s life and its welfare.¹

For “communal survival,” read Arms and Foreign Aid. For “communal development”—read Galbraith.

Mr. Arthur Goldberg, the new Secretary of Labor, expressed the same thought and strategy in a more homely fashion while visiting centers of unemployment. His tour among the unemployed was above politics “. . . because the problem is far too serious,” he explained. Avoidance of politics in dealing with domestic economic questions was just as necessary as a common stand in foreign affairs: “We ought to bury our politics.”

The strong and coarse-grained threaten harshly to bury their enemies. Is it the weak, or the sensitive, or the disingenuous who here cry out instead, “Let us bury our politics”?

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For nearly a century, since the readjustment following the end of the Civil War, output in the American economy has risen, in the average year, about 3.3 per cent in total and 1.7 per cent per capita. The fifteen years 1946-60 do not depart significantly from this average. Only the myopic eye of partisanship divides these fifteen years into an active (Truman) period of satisfactory growth and an indolent (Eisenhower) period of stagnation. The difference is narrower, and quite specific. There was indeed a sharp rise in national production during the Truman administration. It occurred from 1949 to 1953, and was powered primarily by increasing military expenditure. Eisenhower did reverse this. His administration brought the share of national output devoted to defense down gradually from 13.5 per cent to 9 per cent. Apart from consequences attributable to the reversal in military spending, the growth of the American economy was broadly of one pattern during the whole fifteen-year period.

And throughout those years, the received publicists of American society did not tire of announcing that the United States had conquered unemployment. These announcements bear witness to the traumatic impact, on many minds, of the mass unemployment of the 1930’s. But, except for the 1930’s (and perhaps other less well-documented periods of exceptional distress), unemployment has not been notably less in the United States since World War II than in earlier periods. In the first thirty years of this century, American unemployment averaged about 4.5 per cent of the labor force. For the fifteen years beginning with 1946, unemployment has also averaged just above 4.5 per cent! There has been no measurable improvement.

With a labor force of 73 million persons, the United States in 1960 had a national income approaching $420 billion. Yet, in my judgment, this American society is not usefully called “affluent.” The greater number of its people have no sense of affluence, or security, or ease. The median family income is about $100 a week. One-quarter of the population has no liquid assets beyond the cash in its pockets; three-fifths of all families have liquid assets of less than $500. The majority have no reserve with which to meet a major illness and no margin to contribute significantly toward the cost of sending a son or daughter to college. America also has no respected tradition of what Thoreau called “voluntary poverty.” The publicists who launched the slogan of affluence would be horrified by the prospect of themselves having to live on the representative income of an American family. We may regard their conduct and give little weight to their slogan.

In our society, property remains a great source of power and perhaps the surest support of personal independence. The common phrase “independent means” is not without its truth. How often one finds that the Assistant Secretary or the General Counsel or the Congressman who displays more independence and personal dignity happens to be the one who inherited a million dollars or, second best, accumulated a private fortune before entering politics. Those without means may offset their lack. They may have talents or friends. They may have a derivative strength from institutions and organizations. They may even, by the grace of God, have character. But, in a society where all are declared equal, they are among the less equal. Many felt this poignantly in the election campaign of 1960, when $200,000,000 is estimated to have been spent. This is a trifling amount in relation to the interests at stake, but even his small share could not have seemed trifling to the impecunious candidate.

The American economy also houses large—though loosely demarcated—groups of Strangers to the City. About 3½ million families and 4 million unattached individuals have incomes under $40 a week. One-third of these families are farm operators; the rest are farm laborers, unskilled employees in the service trades, factory workers without seniority, and the traditional unfortunates—the aged, the ill, the crippled, the widow and orphan. (Many are twice Strangers—Negroes, Puerto Ricans, Mexicans.) Seniority is increasingly important in the economy. The depressed classes have accordingly, as a group, no prospect of approximating the present normal income of Americans except in a period of rapid economic growth, when the demand for labor is high. And now, with the coming of age of the war-born population, the company of Strangers is being enlarged by a new element. In the decade of the 1960’s, the American labor force will grow by about 1,400,000 persons a year. But only 700,000 civilian jobs were added in the average year of the past decade. Can it be that the young will increasingly become the new Strangers of the American economy?

Certain sociologists have advanced a caricature of American society at the beginning of the 1960’s. It shows, at the base, a mass of isolated, frightened, and security-seeking individuals. Immediately above are three linked bureaucracies—of business, civil government, and military affairs. At the top, a three-branched Power Elite governs all. This caricature is not, however, an aid to understanding. In the actual American society of the 1960’s, power is partly aggregated, partly atomized, partly non-existent. Not everyone is under the daily orders of one of the great bureaucracies; there are 4¾ million non-farm businesses, 4½ million farms, and perhaps a million persons self-employed in the liberal professions. The American economy is surely the greatest achievement of American man. (It would have filled Marx with wonder and admiration.) But its distinctive strength does not lie in general policies, whether supposedly formulated by government or by business. The economy is not guided generally by the federal government, or by the 200 largest corporations, or by arrangements among these. Government authorities strike a grave pose when they are doing nothing, which deceives. Policies exist, but rarely one effective policy. Impersonal market forces play a great role alongside a congeries of public and private administrations.

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When President Kennedy was inaugurated, there were more people unemployed in the United States than at any time since Pearl Harbor. There was also more idle plant capacity. Full employment would have increased annual national output by perhaps $75 billion and tax revenue by about $25 billion. The Kennedy call for sacrifice—if it is for the sacrifice imposed by scarcity—is misunderstanding or masochism or histrionics.

Unemployment has risen with each United States business cycle since the early 1950’s. In the 1951-53 expansion, unemployment stabilized below 2 million, touching a low point of 2.6 per cent of the labor force. In the 1955-57 upswing, unemployment stabilized below 3 million, and in the 1959-60 recovery below 4 million. The unemployed now number about 5¾ million. Disregarding the usual winter increase, the unemployed are now about 7 per cent of the national labor force. In a dozen states, they are over 10 per cent. Part time, short time, and slack work now also account for about as much production loss as complete unemployment.

The words “full employment,” like “recession” or “depression,” are inherently imprecise. In comparison with England or France, the more sharply dispersed seasons which characterize the vast area of the United States add substantially to unavoidable unemployment. The easier dismissal practices of American business also swell the minimum. Taking account of these factors, I would say that employment is approaching the “full” in the United States when unemployment is recorded around 2.5 per cent (seasonally adjusted). In wartime, unemployment stayed below 2 per cent for three years.

In 1958, when unemployment was at its highest since 1941, the American system for compensating the unemployed paid benefits to only three out of every five unemployed persons. An average of 4,681,000 people were recorded officially as unemployed, but in the representative week only 2,766,000 were receiving unemployment compensation. Today the position is worse. In 1960 only half of the unemployed received compensation. American complacency at having achieved the Welfare State is premature.

Also in 1958, the total paid out in unemployment compensation was $3,892,000,000—about $16 per week when averaged over all the unemployed. This overall average is, of course, so low because many received nothing. The unemployed may perhaps be pardoned for thinking that they should have received at least twice as much as they did. As it is, unemployment insurance fails to meet its stated twin objectives: compensation to all those on whom our society imposes unemployment and a contribution to stabilizing consumer demand when the normal flow of earned income diminishes. An average payment to all unemployed of $33 per week would have meant a total 1958 expenditure of $8 billion. The year 1961 may easily make an equal claim.

The number of unemployed who received compensation was enlarged in 1958 by special temporary legislation. In this, Kennedy has followed Eisenhower. The bill passed by Congress in March extends the period of compensation to the unemployed by a maximum of 13 weeks. No other benefits are provided—neither broader coverage of occupations, nor the inclusion of the employees of smaller firms, nor a higher scale of payments. Thus, so far as compensation to the unemployed is concerned, the New Frontier in its first phase follows on the heels of the old frontier.

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In counter-recessionary tax policy also, Kennedy has followed closely the path marked out by Eisenhower. The second Eisenhower recession began in the third quarter of 1957. Less than a year later the President announced triumphantly that recovery had begun—without a federal tax adjustment. Kennedy has claimed a similar boon. The present recession began in the second quarter of 1960. And Kennedy has announced he will wait until April 1961 before considering any counter-recessionary tax move. His reaction time will then be as fast as Eisenhower’s. Will the fates grant him a triumphant announcement?

Unfortunately in taxation the United States has a problem of long-run fit as well as of specific recessions. The fluctuations of American economic activity in the past fifteen years suggest that the present tax system (federal, state, and local) would allow for demand adequate to create full employment if public expenditures for goods and services were somewhere near $20 billion higher annually than they now are.² In an alternative system, a much lower schedule of tax rates would also be compatible with full employment; such an alternative would yield a much higher level of private spending with public expenditure remaining at the present level. Now the federal tax system yields a revenue surplus at a national income level corresponding to 85 or 90 per cent of capacity. The revenue surplus brakes expansion to a stop far before full employment is reached.

Sharp eyes may have been required to detect the misfitting of the revenue system in 1954-57. Paced by the 8-million-auto-mobile-year 1955, there occurred an unusual bulge in consumers’ demand for durable goods. Business management pre-built facilities for several years ahead rather than forgo the special tax reductions designed to assist the Korean remobilization. Nevertheless, owing principally to the decline in federal expenditures, even at the 1957 cyclical peak there was 50 per cent more unemployment than in early 1953. In 1956 and 1957, a federal budgetary surplus emerged with the economy operating substantially below full employment. The danger signal should have been apparent to an alert eye.

But it took no sharp vision to see the perverse action of federal tax revenues in 1959-60. Consumers’ expenditures on durable goods did not bulge. Business investment remained sluggish because there was still a long way to go to achieve full utilization of existing capacity. Federal government expenditures would have had to be about $30 billion higher in 1959-60 than they actually were to make the same percentage demand on the national output as they did in 1953. A budget surplus emerged in the fiscal year 1960, when output was perhaps $50 billion below a full employment level. Clearly, with this level of public expenditure, this intensity of business drive to invest, and this pattern of consumers’ demand, our revenue system acts to brake the expansion in economic activity to a stop long before we reach full employment. The capacity of the economy has grown since 1953 far more rapidly than the demands on that capacity. The tax brake is too tight.

Apart from general re-sizing of the revenue system, the United States needs—more urgently—a specific business cycle tax adjustment. For this, the federal individual income tax is the appropriate base. At full employment it would yield well over $50 billion. But the federal income tax will never perform as a stabilizer unless it is redesigned to embody principles broadly similar to the following:

1. The present individual income tax schedule of liabilities should be designated, by statute, as constituting the Normal and related to Normal unemployment.
2. When, for any consecutive three months, unemployment shall have been officially reported as greater than 5 per cent (seasonally adjusted), for the next three months the lawful tax liability (both in withholding and final computation) shall first be computed as Normal and then reduced by 25 per cent.
3. Tax liabilities shall revert to the Normal when, for three consecutive months, unemployment will have been not more than 5 per cent.

The impact of such a system would be, both by anticipation and demand stimulation, to diminish the volume of unemployment and shorten the periods in which other than Normal tax levels operated.

Temporary tax reductions, though widely recognized to be desirable during recent recessions, were delayed or avoided (except in 1954 when the change was not temporary) because of the anticipated difficulty of securing new legislation to again increase taxes when the recession had passed. The automatic feature of the above redesign removes this difficulty. It deliberately avoids the granting of any discretionary power to the President. Such discretion is unnecessary and undesirable. The United States needs tax institutions that function properly without reliance on the initiative of a great Leader.

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We shall again understand Kennedy better if we look first at Eisenhower. Several academic economists have reported Eisenhower a convert to Keynesian economics. They find proof of this conversion in his having allowed federal spending to rise in the 1957-58 recession without moving for an increase in taxes. The report of Eisenhower’s conversion surely reflects the hunger for consensus that affects our academies. But does it testify responsibly to anything else?

Let us measure from the peak of the cycle 1954-57, the first half of 1957. After that, federal spending for goods and services (in constant prices) did not rise for the three quarters in which business was contracting. Then Eisenhower announced that the recession had turned into recovery. Subsequently there were small increases in federal spending for goods and services—smaller than the increase since 1957 in population! On the other hand, there was a distinguishable rise during the 1957-58 recession in federal grants and transfer payments. But, in these also, the higher levels of federal spending were reached only late in 1958 and in 1959—after the recession had been officially called off. In the fiscal year of acknowledged contraction (ending June 30, 1958), the federal cash deficit was in the trifling amount of one and one-half billion dollars. It was in the fiscal year following the heralded recovery that the cash deficit reached $13.1 billion!

In this perverse timing of expanded federal spending, the Kennedy administration is apparently resigned to imitating Eisenhower. Such resignation was already a puzzling aspect of the Samuelson Report, published in January of this year. While it refers vaguely to accelerating everything, the report calls for an expansion of federal spending “. . . of $3 billion to $5 billion above already planned [Eisenhower] programs in fiscal 1962.” The amount of $3-$5 billion is trifling, unless it goes with greatly expanded unemployment compensation and a tax reduction of at least $10 billion. But even this modest program was suggested only for the fiscal year beginning July 1, 1961. What then was to be done in the five months to the end of June? Almost nothing.

Throughout this first phase, President Kennedy has kept up a great flow of special messages and televised press conferences. These have contributed much to the public impression of alertness and responsible action. But they have added almost nothing to immediate federal spending. On February 9 the Secretary of the Treasury explained that all the Kennedy administration measures—administrative and legislative—would add two or three hundred million dollars to federal spending in the fiscal year ending June 30, 1961. This amount is a flyspeck on the Eisenhower budget of $78,945,000,000. A few days later, in addressing a national conference of manufacturers, President Kennedy took care to play down also the magnitude of his remoter spending plans. The amount of $3 billion, Kennedy said, would be “. . . enough to pay the federal share of all our anti-recession, health, and education proposals for the next fiscal year and still have enough left over to start closing . . . the missile gap.” Eisenhower had increased federal cash payments to the public by $11.4 billion in the fiscal year 1959, the second fiscal year of his recession. Here was Kennedy suggesting that, for him, something like $3 billion would do well enough in the fiscal year 1962, the second year of his recession. “I shall increase federal spending far less,” the President was saying to the assembled manufacturers, “in my recession than Ike did in his.”

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In monetary policy, the declared objectives of the Kennedy administration are two and, in appearance, simple. The first objective is to raise short-term interest rates. Thereby it is hoped to hold in the United States money that might otherwise move abroad and so deplete United States gold holdings. The second objective is to lower long-term interest rates. Thereby it is hoped to decrease the cost of mortgages on new housing and also the cost of loans floated by utilities, industry, and public authorities.

The first objective is easy to achieve and of limited—even questionable—value. The Treasury can pay more on short-term issues; the Federal Reserve will help it to pay more; no lender will object to receiving more. But the positive achievement from all this increasing of interest charges will be very limited. Higher short-term interest rates will keep in the United States some money that would otherwise move abroad. So long as the money consists only of monetary reserves (principally of foreign banks and treasuries), it performs no function particularly useful to the United States economy even when it is here. But the holding of this money in the United States does keep under American title some gold that would otherwise pass to foreign title. And the preservation of this American title quiets the fears of a public whom its supposed betters have taught to be frightened by gold outflows resulting from mere international transfers of money.

The second objective is quite another matter. Powerful lenders have to be induced to take less interest. That would demand a rare combination of monetary expertise and political toughness. The Kennedy administration would have to fight hard battles against many whom it wishes to induce to be its friends. The government of the United States would have to become a more active lender of last resort—and at sharply lower rates than now prevail. The lower rates required are not in the dimension of the publicized presidential reduction of ¼ per cent in Federal Housing Administration loan rates.³ In this case, the Samuelson Report was realistic. It recommended a 4½ per cent mortgage rate. That is a full 1¼ per cent below the present (inclusive of the ¼ per cent insurance charge).

Much of the immediate advantage of reducing long-term interest rates is lost when reductions are made inch by inch. Any prospective builder who can delay is inhibited from borrowing by high interest rates that are slowly tilting downwards, as in recent months. Will he not get better terms if he waits a few months longer? If reduction is to be of counter-recessionary value, long-term interest rates need to be brought down sharply and swiftly, to the point where prospective borrowers see that the next significant movement can only be upward. Then alone have the monetary conditions been created for a spurt in the construction of houses and of other long-lived facilities, where cost is substantially influenced by changes in long-term interest rates. This is definitely a tiger who is not wisely killed inch by inch.

Forces of the first magnitude are arrayed in combat over any reduction in interest rates. In the past fifteen years, there has been a great strengthening of the interest-receiving, rentier element in the American economy. From 1946 through 1960 the dollar amount of the national income increased by 125 per cent, and total debt increased about 122 per cent. But the interest income of individuals plus the net interest received by businesses, taken together, increased by 325 per cent. Interest is therefore greatly more important now, as a source of income, than it was fifteen years ago. The interest item in the national income for 1960 was $46 billion. It is the power behind this $46 billion that the Kennedy administration is challenging when it moves to lower interest charges.

Higher interest rates account for the strengthening of the rentier element in the American economy—higher rates and not the popularly lamented increase in the principal amount of debt. The rise in rates has been spectacular. In January 1960 long-term interest rates were about twice as high as in 1946, and short-term rates approximately three times as high.

The new, higher level of interest charges has gradually been built into the social structure of American income and employment. Those banks which can legally do so, now, pay their depositors higher interest. The depositors consist of that more weighty two-fifths of the population which owns more than $500 worth of financial assets per family. In addition, banks and insurance companies and other financial intermediaries have proliferated employees and offices. They added 75 per cent to their personnel from 1946 to 1959, when total United States employment increased only 16 per cent. The vested interest in high rates of interest is of many kinds!

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The Kennedy administration has already proposed more enlargement of federal welfare programs than Eisenhower did in eight years. Some enlargements will be warmly contested. Yet they involve only slight changes in the face of the American economy. New federal expenditures would be less than $3 billion annually—perhaps a half per cent of gross national product capacity in 1962.

The measure longest under consideration involves no federal spending. It would raise the minimum wage, in occupations which are covered, to $1.25 per hour. The present version of this measure (H.R. 3935) provides for reaching $1.25 in 1963 and adding coverage for large enterprises in retail trade and services. As always, the increased minimum wage will make some subnormal workers totally unemployable. But it is a helpful crutch for the valuable worker who is unorganized, weak, and exploited.

Almost as old is the proposed “distressed areas” legislation. Its significance is more political than economic. No important money is involved. Some $400 million would be provided permanently, for three revolving loan funds, a grant fund, and other things. The mechanism (H.R. 2510, especially Sec. 7) makes it unlikely that $100 million can be spent in the first year.

Of far greater and speedier consequence is the proposed liberalization of social security retirement benefits. A widow would be allowed 85 per cent of her husband’s benefit. The minimum for a retired worker would be raised to $43 a month. The modesty of these benefits caused the President to exclaim, “We wish it could be raised higher. . . .”

More subject to controversy were the President’s two larger proposals, in the matters of health and education. The American people now spend about $25 billion annually for each. The President’s proposals might add 4 per cent to that figure. Most of the increase in health services would go for medical payments for those over sixty-five. These are indeed sadly needed. And there would also be some new money for medical research, education, and care. Elementary and secondary education would be assisted by three-quarters of a billion dollars annually—all in grants to the states for public schools. The private and parochial schools were deliberately left out—one answer to the religious issue. College education would be assisted by grants of about $115 million annually for scholarships and also by a $50 million per year enlargement in loans for college construction. The grants for scholarships, which leave the scholar his own choice of college, are a particularly happy step. All this is proposed—none of it yet done, but it is a safe forecast that a large part will be enacted. Speaker Sam Rayburn does not find the health proposals radical, and he is a valuable weathervane.

Characteristically, the tax associated with these welfare proposals is a payroll tax. The cumulative effect of the President’s recommendations would be to increase the tax eventually to 10 per cent, paid half by the employer and half by the employee. This 10 per cent would apply on the first $5,000 of wages and salaries, on no higher segment of any wage or salary, and on no other form of income. This is, I believe, in full accord with the fiscal gospel according to Galbraith. He has written, “In the affluent society no useful distinction can be made between luxuries and necessities.” Galbraith was there specifically endorsing the sales tax, and he was rejecting the idea that a general sales tax might, at least, usefully exempt food and clothing. Has regressive taxation ever been defended by a more plausible professor?

President Kennedy has even, in connection with his welfare programs, specifically echoed the authoritarian thinking which is so consistent a feature of The Affluent Society.⁴ When questioned regarding tax reduction, Mr. Kennedy replied, in substance, “To what purpose? If people have another $3 billion, they will spend it, and the country will have nothing to show for it. The government can keep the money and spend it for health and education. Then the country will be further ahead.” Mr. Kennedy’s clock kept poor time. When he spoke there was so much slack in the economy that it was possible to increase both public and private spending substantially by tens of billions. But the indifferent economics was less disturbing than the authoritarian tone. “Individuals spend money on mere frippery and trumpery. Government makes the good choices. Big Brother knows best.”

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In this first phase of his White House career, President Kennedy has warmed hearts and lifted spirits. “A country,” said Mazzini, with more emotion than precision, “is a fellowship of free and equal men bound together in a brotherly concord of labor toward a single end. . . .” President Kennedy has, in these several weeks, given some a Mazzinian sense of country. Many reacted with religious awe to his inaugural address. Obviously, for them, he touched, if only with grazing fingers, the mystic chords of memory (invoked, by Lincoln, on just this occasion of a First Inaugural, a hundred years ago).

What he has constructed in these several weeks seems, however, a passive and fragile amity, not a working politics. The elders of the Democratic party accord Mr. Kennedy every public deference conventionally granted the President of the United States. But they do little on his account which they would not have done equally for Mr. Eisenhower. “Und der Koenig absolut, wenn er unseren Willen tut.” Mr. Kennedy is also not the favorite of the liberals in his own party. He has avoided identification with them, and they are cool toward him. Moreover, the President has made no move to construct a new kind of national and popular Democratic party, which might serve him as a personal base of political strength. On the contrary, he has conducted himself in a manner quite incompatible with any such radical innovation, which would challenge profoundly the sovereignties, in their several states, of the Senators and Congressmen of his own party.

Can it be that Mr. Kennedy has been making himself everybody’s popular President and failing to establish any distinctive bases of political strength? Time will answer. Today, however, it seems not unlikely that, in domestic political authority, Mr. Kennedy, during the next four years, will be more nearly in the position of Harry Truman than of Franklin Roosevelt. Mr. Kennedy does not emerge from the smashing victory of the election of 1932 or of 1936. And he will not, presumably, be a President of the United States in time of war.

The Eisenhower administration contributed to discrediting the political capacity of American business and its counselors (frequently lawyers). The Kennedy administration has now taken the first steps toward making a similar contribution to discrediting the American liberal intelligentsia (also with its lawyers). I cannot believe that either of these contributions is an unmixed blessing. Whom shall it profit if it is made clear that the Professor of Economics, in public office, is as superficial, timorous, and ineffective as was the Vice President in Charge of Sales? These are fears, not finalities. The Professor may still save his own soul—and do something worthwhile for his country. But the first signs are not good.

For economic recovery, President Kennedy has, in this first phase, projected little and accomplished almost nothing. His program for unemployment compensation is meager. He has no counter-recessionary tax policy He proposes only a trifling immediate expansion in federal spending. His monetary policy cannot be relied upon to make a large contribution to recovery. His welfare programs would provide small stimulus in an economy where the margin below full employment output is in the range of $75 billion annually. His proposed reduction of corporate income taxes, for firms with a high level of investment, is also of more political than economic importance under current circumstances.

It is always possible that the whole outlook will be quickly, and drastically, transformed by a major deterioration of the international position. Then 1961-63 may copy the rearmament simplicities of 1951-53. Or there may be far worse things. Barring such transformations, it cannot be very long before President Kennedy comes to see that his present economic program amounts to very little.

At that time, he will reach—if he has not reached already—the issue of purpose. What does he wish? If he desires merely to be President, he can have that with a relatively quiet life. Eisenhower did. Will Kennedy, at that point, allow himself, in his own mind, to recognize clearly the unserious and even trifling character of his present economic program? Or will he muddle his own thought, accept the tortured estimations of that majority of Organization Men with whom every President is surrounded, and obfuscate and temporize—beguiled and beguiling, deceiving himself and cajoling others? And if he does decide to attempt something more serious in economic policy, how will he then go about building the requisite political strength?

There is an easier alternative. That is to act like President Eisenhower—but more skillfully. Ignore unpleasant facts. Accept what the Democrats called “high level stagnation” when Eisenhower was in the White House. The same condition can be called affluence. And deft hands can garland it with the uncostly flowers of familiar welfare programs.

Which alternative will President Kennedy choose? Nothing in the experience of the First Phase gives us sufficient grounds for a confident answer.

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¹ W. W. Rostow, The United States in the World Arena (Harper, 1960, pages 524-525).

² This allows for the tax reductions of the Revenue Act of 1954, without which the need for public expenditure would be much greater.

³ Only nominally as much as ¼ per cent—because partly offset immediately through discounting mortgages $1.50 per $100 of face value.

⁴ In this I would warmly agree with most of what Mr. Ernest van den Haag has so well written in his article, “Affluence, Galbraith, the Democrats,” in the September 1960 issue of COMMENTARY.