Download (Pdf)
Total Page:16
File Type:pdf, Size:1020Kb
Union Calendar 91st Congress, 1st Session - - - - House Report No. 91-142 1969 JOINT ECONOMIC REPORT R EPORT OF THE JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES ON THE JANUARY 1969 ECONOMIC REPORT OF THE PRESIDENT TOGETHER WITH MINORITY, SUPPLEMENTARY, AND DISSENTING VIEWS APRIL 1, 1969 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE WASHINGTON: 1969 For sale by the Superintendent of Documents, U.S. Government Printing Office Washington, D.C. 20402 - Price 65 cents 27-462 0 ) JOINT ECONOMIC COMMITTEE [Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.] WRIGHT PATMAN, Texas, Chairman WILLIAM PROXMIRE, Wisconsin, Vice Chairman HOUSE OF REPRESENTATIVES SENATE RICHARD BOLLING, Missouri JOHN SPARKMAN, Alabama HALE BOGGS, Louisiana J. W. FULBRIGHT, Arkansas HENRY S. REUSS, Wisconsin HERMAN E. TALMADGE, Georgia MARTHA W. GRIFFITHS, Michigan STUART SYMINGTON, Missouri WILLIAM S. MOORHEAD, Pennsylvania ABRAHAM RIBICOFF, Connecticut WILLIAM B. WIDNALL, New Jersey JACOB K. JAVITS, New York DONALD RUMSFELD, Illinois JACK MILLER, Iowa W. E. BROCK III, Tennessee LEN B. JORDAN, Idaho BARBER B. CONABLE, Ja., New York CHARLES H. PERCY, Illinois JOHN R. STARK, Executive Director JAMES W. KNOwLES, Direcdor of Research ECONOMISTS RICHARD F. KAUFMAN ROBERT H. HAVEMAN JOHN R. KARLIK FRAZIER KELLOGG DOUOLAS C. FEECHTLINO (Minority) (HI) 1969 JOINT ECONOMIC COMMITTEE REPORT CONTENTS Page I. INTRODUCTION------------------------------------------------ 3 II. ECONOMIC PROSPECTS IN 1969 The Economic Situation and Outlook- 9 Objectives for Economic Performance -12 III. TOWARD FULL EMPLOYMENT AND STABLE PRICES Fiscal Policy -17 Monetary Policy - 22 Structural Barriers to Full Employment and Stable Prices -25 IV. NATIONAL PRIORITIES AND EFFECTIVE PUBLIC POLICY National Goals and Priorities -33 The Economic Appraisal of Public Programs -35 Vietnam Costs and the Defense Budget - 38 V. TOWARD A PRODUCTIVE AND EQUITABLE SOCIETY Manpower Training and Development -43 Income Maintenance-- . 45 Urban and Rural Reconstruction -46 VI. INTERNATIONAL TRADE AND ECONOMIC ISSUES Foreign Trade Policy ---- 51 Domestic Adjustment Assistance -55 U.S. Balance-of-Payments Policies -57 Economic Development Assistance -62 International Monetary Reform -63 VII. IMPROVED STATISTICS FOR ECONOMIC GROWTH -69 Supplementary views of Representative Patman -71 Supplementary views of Representative Bolling -_ 78 Dissenting views of Senator Talmadge -80 Supplementary views of Senator Symington -82 Supplementary views of Representative Moorhead - 84 Minority views - 89 Committee and subcommittee activities in the past year- _151 Joint Economic Committee program for 1968- 1-63 (Inu) Union Calendar No. 39 91ST CONGRESS 1 HOUSE OF REPRESENTATIVES REPORT 1st Session f No. 91-142 REPORT ON THE JANUARY 1969 ECONOMIC REPORT OF THE PRESIDENT APRIL 1, 1969.-Committed to the Committee of the Whole House on the State of the Union and ordered to be printed Mr. PATMAN, from the Joint Economic Committee, submitted the following REPORT together with MINORITY, SUPPLEMENTARY, AND DISSENTING VIEWS [Pursuant to sec. 5(a) of Public Law 304 (79th Cong.)] (VI I. Introduction REPORT OF THE JOINT ECONOMIC COMMITTEE ON THE JANUARY 1969 ECONOMIC REPORT OF THE PRESIDENT I. INTRODUCTION This report is submitted in accordance with the requirement in the Employment Act of 1946 that the Joint Economic Committee file a report each year with the Senate and the House of Representatives containing its findings and recommendations with respect to each of the main recommendations made bv the President in the Economic Report. The report is to serve as a guide to the several committees of the Congress dealing with legislation relating to economic issues. The Employment Act requires that the President's Economic Report contain (1) the levels of employment, production, and purchasing power obtaining in the United States and the levels necessary to carry out the policy declared in section 2 of the act; (2) current and fore- seeable trends in the levels of employment, production, and purchasing power; (3) a review of the economic program of the Federal Govern- ment and a review of economic conditions affecting employment in the United States or any considerable portion thereof during the pre- ceding year and of their effect upon employment, production, and pur- chasing power; and (4) a program for carrying out the policy declared in section 2, together with such recommendations for legislation as he may deem necessary or desirable. This year, for the third time-in its 23-year history, the committee is confronted by a problem arising from a change of administration. The act's requirement for a timely report to the Congress by the committee has not permitted sufficient time for the new administra- tion to prepare and file its own report. While we have an Economic Report from the previous administration, the committee was limited to hearing testimony of a general nature from the top economic policy representatives of the present administration. In the course of this year, we expect to hear again from the administration, and it is our hope that at that time they will submit specific program proposals. Mean- while, it seems clear that there is little difference of opinion between this committee and the present administration spokesmen on the present state of the economy. During 1968, gross national product grew at a rate of 9 percent; of this, 5 percent represented an increase in real output and 4 percent an increase in prices. The unemployment rate fell to 3.3 percent, the lowest level since 1953. In these respects, commendable progress toward the goals of the Employment Act was made. (3) 4 But serious problems remain. The 4-percent rate of inflation that prevailed in 1968 is the highest since 1951. Interest rates, at the highest level in our history, are producing distortions in the economy. A sizable proportion of Americans remain at an intolerably low level of living. High unemployment in ghetto areas is a serious factor in social unrest. Imbalances exist in the allocation of Federal Government re- sources, with the result that fundamental needs like education, urban transportation, and pollution control are not adequately met. Nor have we yet established adequate methods of assessing and asserting priorities for public expenditures and assuring an effi- cient and effective expenditure of the public dollar. The outlook for reduction of defense expenditures is clouded by the Vietnam war and proposals for more expensive missile defenses. The Nation continues to face stubborn international trade and balance-of-payments problems. Much progress has been made under the Employment Act in articu- lating public economic policy. Yet, there are important unmet needs in this process of establishing public economic policy. We are concerned by the rack of any comprehensive statement from the administration setting forth the long-range goals and requirements necessary to carry out the full objectives of the -act. We also believe that economic policymaking in a number of significant areas has been handicapped by absence of economic analysis in the economic reports and recommendations from the executive branch. We refer to issues such as urban deterioration, the defense budget, pollution control, and manpower policy, all of which are central to the objectives of the act. One evidence of this at the present time is the absence of any public policy directed toward substantially reducing unemployment, particu- larly in low income and urban ghetto areas. The seriousness of this problem was brought out in this committee's report of last summer on "Employment and Manpower Problems in the Cities." We are disturbed at the apparent tendency of the new administration to acquiesce in permitting unemployment to rise as a result of measures to reduce price increases, without adequate measures to offset increases in unemployment. Another example is the absence of any concrete analyses, plans, or proposals to bring interest rates down in the future. High interest rates are endangering the housing industry and frustrating construc- tion of vitally needed public facilities. We cannot afford complacency in this matter. Further, we have had little concrete analysis of the defense budget or guidance from the administration on the important question of the allocation of our resources between military and civilian programs. At the moment, there is uncertainty as to how much, if any, of the expenditure reduction that would derive from deescalation in Vietnam 5 would be available for social programs. This decision is fundamental to any program for allocating resources to high-priority national needs. Considering the importance of these many other serious national economic problems, this committee urges the administration to focus attention on assessment of our Nation's requirements and goals, the definition of long-range objectives of economic policy, and develop- ment of more realistic means of establishing priorities in public ex- penditure. We would expect that the Council of Economic Advisers and the Bureau of the Budget would play a key role in conducting this effort. The Council of Economic Advisers should undertake to enumerate the comprehensive long-range goals and requirements necessary to carry out fully the objectives of the Employment Act. The Bureau of the Budget in particular, can provide additional help to the Con- gress in advising us on the long-term commitments involved in pro- gram choices. It