NOYIClE: PHOYOCOPllElO CJlfJilnl,(tllli. CODE). o ADVANCE FOR RELEASE: SUNDAY AMs 3 APRIL 23, 1972 DNC-72-34 o ~ [. 3 o IINIXONOMICS -- A RECORD OF ECONOMIC POLICY "< MISJUDGMENT AND MI SMANAGEMENT II , DEMOCRATIC,POLICY GROUP CHARGES ::1 2- . 0:­ 'niCD II'., "; ~lH' :',ll:.t ',;; . WASHINGTON, April 22 -- In a report to the 1972 Democratic ' () o .11'j' '\ .1., .' " ::1 ti.,j,~': }l"t\ait~'orm 'committee, the Economic Affairs Committee of the Democratic co I CD I I " L • '" CD '"0" ] ': I '. '~l Policy Council held the Nixon Administration's mismanaged economic ::1 0..' 9.. c n ~ policies responsible for lIaccelerated inflation, rising unemployment, '"(I) '"(I) o n the first recession in a decade, a staggering loss of production, the :::r o ::1 0.. first international trade deficit in many decades, and a forced reducti n U'l c­o.. (i)" in the international value of the dollar.1I '" () (I) ::1 Prepared under the chairmanship of Gardner Ackley, and ~ () vice chairmanship of Walter W. Heller, both former CEA chairmen, o the report is the fifth in a series of issue papers to be released co::1 by Democratic National Chairman Lawrence F. O'Brien, under a new CD '" convention procedure recommended by the O'Hara Commission. 0''" ::1 9.. » In reviewing the deterioration of the economy under n :::r Mr. Nixon, the report charges: liThe disastrous outcome of Nixonomics ~' stems directly from the notorious 'game plan'. It was anchored in the ~ C stubbornly held belief that the only effective way to curb inflation ::1 <" :.:'1 ~~, to tighten the screws on the economy until rising unemployment (I) "j'I:W:bll limit wage advances and dwindling markets will hold down prices. II Cil I": ' ' ~ Ii:, , "lit:jt<,:": '.. I . 2... " .' " Wh~le agree~ng that the New Econom~c Pol~cy II ~s at least o1<'" I' a step in the right direction," the report notes that lithe delay was 0- :::r costly and we will pay the penalty for years to come. 1I The Democratic o 3 economists also question the traditional Republican IItrickle down" ,0 approach ot tax cuts for business, instead of raising consumer ~ o ::1 purchasing power, pointing out that the new policies cannot create ::1 the millions of new jobs needed to reduce the unemployment rate. !2. :c ,g, The report further notes that the Phase II mechansims are o not adequate to the job. The Price Commission's present resources '"o and policies cannot m~et the Administration goal of 2 1/2 percent 3 inflatio~ rate by year end. ,""""o 0- Democratic Program" oW C" " .The"reI?ort out~ines a Democ:atic program for "recovery and :;'~ co stab~l~zat~on, w~th part~cular emphas~s on attaining the 4 percent o unemployment goal as a minimum objective. Key components of this ::1 program are: o ~ z (more) o 3 o p o1<'" 0- :::r o 3 tH~. PEMOCRATIC POLICY COUNCIL of the Democratic National Committee o 2600 Virginia Avenue, N.W., Washington, D.C. 20037 I (202) 333-8750 • night: 333-0161 'I ~ .. gW or. w 'rom the Collection of l'lfP, HON. CARL ALBERT LEGISLATIVE Coliection __________~ ___ Series __________ Box IL\~ Folder--,3",,'~ ___ ;e NOTICIE: PHOiOCOPllED MAYIERIALS MAY BIE PROnCYIED laY COPYRIGHT LAW (ilYLlE 17, U.S. CODIE). -2 .... o Fiscal flexibility. (1) Tax flexibility through a "0 routine surcharge -- positive, negative or zero ~- to ensure quick f response to changes in the economy. (2) Expenditureflexibilitl 8 to better coordinate appropriations and total expenditures. - ~ (3) Automatic flexibilitl in-expenditures, such as unemployment insuran~, welfare programs, "cyclical" revenue sharing with states and ~ municipalities to cushion economic swingso g: :r CD -- Size of total budget. While urging further development a::: .!i" of budgetary evaluation to improve efficiency and eliminate waste, :T- CD the report emphasizes that substantial new expenditure programs to () solve urgent social problems will probably be necessary and must be §.. examined in the light of the nation's needs and priorities. ~ ~ j', ~- ~ () , , ' " ' -- Tax reform. If more revenues are needed, the first o ~'source 'should be tax reform. Reasoning that many present loopholes co" en 'are outmoded and inequitable, the report states that the individual '" '"o· and corporate taxes "are badly in need of reform. 1I The report notes Q.." that, failing reform or if large revenue increases are needed, an ;00 CD increase in the federal tax rate is IIpreferable to a natiorial sales '"CDo tax. II :rn o " -- waEe and Price Policy. The report recommends a ~ permanent, flexile and equitable system to IIcontrol creeping 'inflation[, at high employment. 1I Based on the consent and participation of those ~ whose wages and prices are controlled, such a system must have specifi~ legislative authority. ~ () o In releasing the report, O'Brien emphasized that the views ~" and recommendations contained in the economic report are those of ~. the members of the Committee on Economic Affairs. Q.. » :rn "We do not presume to speak for anyone in the Democratic ~. Party other than those who directly had a role in the preparation of ,'" these reports. However, we are confident that these views will be ~fforded the most serious consideration by the Platform Committee membe,rs in writing the 1972 Democratic Platform,1I O'Brien said. Other reports to be released iriclude education, freedom of information, farm' income,', women's political power, housing, national regional development policy, the urban crisis, intelligence and security, the environment, consumers, and international.affairs., The full text of the report of the committee on economic affairs follows: o o< z o 3 o ," o -'0" - :r""" o 3 o 'J w a af- w 1From ili© CoHt;Gtic:.'1l o~ _ 1fiH[E HON. CCA~'L AWEJl(f - lEGISLATIVE Colledion ______________ Series __________ Box \4~ F0 Id er ___~ _ NOTICE: PHOTOCOPIED MATIERIAILS MAV BIEPROTlECYIED ISV COPYRIGHT LAW (TITLE 17, U.S. CODE). ISSUES AND ALTERNATIVES IN ECONOMIC POLICY Gardner"Ackiey, Chairman WcHterW .~':Heller,ViceChairman NIXONOMICS The Economic Record of the Nixon Administration , Judged by any objective standard, the economic policies of the . present administration have beeila dismal failure , as even Mr. Nixon () o was forced to admit in his abrupt turnabout last August 15. co:::> CD '" 1;-'" The administration came into office with bright promises of assuring :::> o prosperity, halting inflation, and strengthening the international position CD'" '"CD of the dollar. Instead, it achieved a·ccelerating inflation, rising unemploy­ o n ment, the first recession in a decade, a staggering loss of production, the :r o :::> first international trade deficit in many decades, and a forced reduction in 0.. (f) the international value of the doUar. c­ o.. (ii' '" Let's look at the sorry record ·of Nixonomigs-- a record of economic ~. policy misjudgment and mismanagement so bad it must be seen to be believed: ~ () o co:::> • lobs . From the preceding eight Republican years, the Kennedy CD '" Administration inherited a legacy of 5 million workers I or 7 per cent of our 0''" :::> labor force, unable to find jobs. Eight Democratic years succeeded in o reducing unemployment to 3.3 per cent -- the lowest level since the Korean War. Three Nixon years scuttled this achievement; all during 1971, five C million or more were again jobless, and the unemployment rate had zoomed :::> CD<' '. to 6 per cent. Unemployment exceeded lOper, cent among non-whites, and ;;; 17 per cent amonQ teen-agers. .. ~' Q... o..... • Inflation. This increase in joblessness was the deliberate and 0' o:r purposeful Nixon prescription: for curbing inflation. But inflation, far from 3 being restrained, accelerated. Consumer prices had risen 4.2 per cent in ,0 ~ o :::> 1968, not a good record. Yet, a s unemployment rose, so did the rate of :::> ~ inflation. Prices increased 5.4 per cent in 1969, 5.9 per cent in 1970 and, :]:. despite the'~freeze" in August, 4.3 perCe1)t in 1971. ~ o '"o • Production. As Nixonomics took hold, our economy turned slack 3 and sluggish. Between 1969 and 1971, total U. S.output (Gross National ,'"'"o 0- Product in constant prices) increased only 2 per cent.· Total industrial w o output in 1971 was actually 3.8 per cent lower than in 1969 .. In contrast, . between 1961 and 1968'total output had'increased atan average rate of 5.1 :;'~ co 0' per cent a year, and industrial production at an average of 6.7 per cent per :::> year. o o< z o 3 o -" .....o 0' :r o 3 o 'J w o o.'f. w NOTICIE: PHOTOCOPIIED MAYISetlALS MAY IaIE PROYISCYIED laY COPYRIGHT LAW (TIYLE17, u.s. CODE). 2. ;, . • In the last quarter of 1968, 87.2 per cent ofour industrial capacity was being utilized. In the last quarter of 1971 use of capaci~y had ·plp.m.metegto 74. o per cent,alow unequalled . since the· Republican reces~ion in 195B~ • Operating the economy below full employment during 1970 and 1971 has already cost: us $128 billion loss of potential output. By election day, the loss will have reached $175 billion. During 1973, itwil,l reach alld surpass $1,000 per capita. l () o ~ • Profits. Business' profits, declined sharply throughout the Nixon ;Administration. As a percentage return on stockholders'equity, corporate () o profits in 1970 were lower than in any year since the recession year 1961. :::I co CD (il And 1971 showed .only a modest recovery. II' II' "1J 0: aa.. :::I c o /"l • Take Home Pay. For those at work, even the sharp wage increases ~ t1) t1) a.. II' t1) 5' of recent years have barely kept up with rising prices , while lagging produc­ o o (; :::I tion has cut the average working week and held down workers' incomes.