Closing the Confidence Gap

John Kennedy chose a tough audience for his first presidential policy speech to a private group: the blue-chip businessmen of the National Industrial Conference Board. Right off, he disarmed the skeptics with charm and wit. "It would be premature to seek your support in the next and inaccurate to express thanks having had it in the last one." Then he poked fun at the missile gap flap within his own team by referring to "what Democrats in this Administration used to call Missile Gap.' "

As laughter subsided. Democrat Kennedy moved to close the confidence gap that separates him from the predominantly business community. "The complaint has often been made in business circles that the Federal Government is a silent partner in every corporation --roughly half of all net earnings," he. "But it should be also realized this makes business a not always silent partner of the Federal Government-- that our revenues are dependent upon your profit and your success--and that, far from being natural enemies, Government and business are necessary allies." For example, last year's profit drop of $6 to $7 billion will cut federal tax receipts by $3 billion--"enough to pay the federal share of all our antirecession health and education proposals." Said the President: "Your success and ours are intertwined. Whatever past differences may have existed, we seek more than an attitude of truce, more than a treaty--we seek the spirit of a full-fledged alliance."

Holding Down Prices. That alliance, he believed, should strive for three goals: economic growth, plant modernization, price stability. Kennedy was worried that growth and productivity were being retarded by the nation's antiquated tax-depreciation schedule, which leads prudent businessmen to keep some machinery running until it is woefully obsolescent. "Within the next few weeks," he promised, he would send to Congress "a new tax incentive for businesses to expand their normal investment in plant and equipment.''

Kennedy sought also to soothe the businessman's twin fears that his Administration would return to inflationary policies or Government price controls. "A free government in a free society has only a limited influence over prices and wages freely set and bargained for by free individuals and free enterprises. And this is as it should be," he said. Nevertheless, the Government should seek to keep wages and prices steady "in a free and orderly manner."

While Kennedy's call for tax help and his defense of the profit system generally pleased businessmen, The Wall Street Journal commented: "This sounds less like a desire that people at work should be prosperous for their own sake than that they should be more prosperous just so Government can get more from them to spend for its own purposes . . . This is bound to leave just a twinge of suspicion that the new 'full-fledged alliance' may be a guise for more Government intervention in the economy."

Speeding Up Buying. Later in the week, the President named a 21-man Advisory Committee on Labor-Management Policy, including Secretary of Labor Goldberg. Secretary of Commerce Hodges and equal representation from management, labor and the public.* -- His general plan is to use all the persuasion and pressure at his command to moderate big labor's wage demands and big business' price rises. At the same time, the Administration will try to increase the incomes of low-pay and largely nonunionized groups by such means as boosting the minimum wage for the unskilled and service workers and by propping farmers' prices.* In his first farm bill, last week, Kennedy urged higher price supports for grain farmers who agree to reduce plantings.

The President is obviously seeking broad public support to speed his antirecession measures through a slow-moving Congress. His major legislative proposals --with the exception of the minimum wage increase--do not rile most Republicans. Neither do the executive actions that he announced during the week: his Administration will accelerate defense procurement, federal highway and post office construction, the payment of income tax refunds and the award of Government contracts to small business in depressed areas. All those devices, tried and proved by the Republican Administration in the recessions of 1954 or 1958, would channel more spending money into the consumer economy and put men back to work.

* Among the members: Union Presidents George Meany (A.F.L.-C.I.O.), Walter Reuther (Auto Workers), David McDonald (Steel workers), David Dubinsky (Ladies' Garment Workers); Company Chief Executives Thomas Watson Jr. (IBM), Henry Ford II (Ford Motor), J. Spencer Love (Burlington Industries), Joseph Block (Inland Steel); President Clark Kerr of the University of California.

* With no Government prompting, leaders of 18 A.F.L.-C.I.O. building-trades unions and 28 contracting firms last week set up machinery to prevent strikes in the nation's $55 billion-per-year construction industry. Terms: labor and management will meet before the beginning of every major construction job, seek to find and settle potential grievances before they arise, move into arbitration if necessary. Hoped-for result: fewer stoppages in the construction of such major projects as oil refineries and steel mills, faster economic growth, more construction jobs.

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