The People's Business: Nixon v. Congress

Since Richard Nixon delivered his State of the Union messages last February and March, the state of the union has, to put it mildly, somewhat changed.

This week, therefore, the President is sending to the newly reconvened Congress a revised version of the charter for his second term. It is an effort to get away from Watergate and turn to what Nixon calls "the people's business," but it is also a recognition that the people's business has gone badly in recent months. Whatever their worry about Watergate, Americans are even more concerned about plagues that are closer to home: runaway inflation, food and power shortages and the general state of economic uncertainty.

Four Fronts. At a nationally televised news conference--his second in 14 days--the President tried to blame many of the nation's troubles on the 93rd Congress, whose performance so far he described as "very disappointing." He needs some congressional victories to salvage his power and reputation, and if he fails to achieve them, he clearly means to put the blame on the Democratic-controlled Congress.

Challenging the Congress to respond to his "bipartisan" initiatives, he drafted a new message demanding action on four "urgent" fronts: inflation, defense, the energy crisis and domestic-spending programs.

The news from the nation's marketplaces loudly confirmed the urgency of the economic problem. The Wholesale Price Index for August ballooned by 5.8%, the biggest monthly increase since 1946 and the third biggest since the Government started keeping such records in 1902. Nearly all of the increase was caused by runaway farm-level prices for food, which rose by an astronomical 23.1% in a month--a new record by far and an inflation rate usually associated with banana republics.

Moreover, the retail price of the nation's favorite main dish, beef, seemed headed for a new round of increases, at least for a while. The Cost of Living Council removed price ceilings on beef cuts at week's end and Council Director John T. Dunlop admitted that the result was likely to be a "bulge" in prices.

However, since feed-lot owners have been building up their herds in anticipation of the action, increased supplies may hold down some price increases.

In an attempt to prove that the summer's roaring inflation has not completely taken the spine out of the President's Phase IV, the Cost of Living Council began to reassert itself. It ordered the nation's major auto firms to cut back their proposed increases in 1974 models by 10% to 30%. The decision still allows the Big Four automakers to raise their prices by amounts ranging from $51 to $74 a car. In addition, the council ordered the big firms in the steel, tire, paper and detergent industries to postpone already-announced price increases until their executives can appear at hearings to justify them.

Nixon made it clear, both in his press conference and in his new mes sage, that Congress's primary responsibility in holding down inflation is to live within the budget. Said Nixon: "It is very disconcerting to note that al ready before the Congress are spending proposals which, if enacted, would bust the budget to the tune of at least $6 billion." Yet, in a quick turnabout, he ruled out any substantial saving from are duction in military spending.

Seven Steps. In his State of the Union II, Nixon also presented proposals to alleviate the energy crisis. He recommended seven steps, including construction of the Alaskan oil pipeline, deregulation of natural-gas prices at the wellhead -- a step that would surely force prices sharply upward -- and the funding of further research into coal gasification and other new energy sources. Finally, Nixon urged Congress to take action on a whole series of domes tic programs, including the better-schools bill and the better-communities bill, two revenue-sharing measures that would transfer from federal to local authorities much of the decision-making authority in federal school and community-development programs.

The President's burst of initiative resulted from his growing conviction that the best defense against Watergate is an offense against not only the nation's problems but the two bodies that have given him the most trouble: Congress and the press. When he went before newsmen last week, he was more confident and commanding than in any other recent appearance. He still grew noticeably tense and uncomfortable when asked questions about Watergate or his personal finances, but it was clear that he has correctly sized up the press-conference format as one in which he holds the advantage (see THE PRESS).

Among the highlights:

ON MINIMUM WAGES. Nixon announced that he would veto a bill passed by Congress setting the minimum wage at $2.20 an hour. That rate, an increase of 38% over the present $1.60 minimum, "would give an enormous boost to inflation" and might "deny employment opportunities to unskilled and younger workers" by requiring employers to pay more than their services are worth. Nixon said that he will ask Congress to write a new bill.

ON A TAX INCREASE. While he agreed that there should be changes in the tax laws, Nixon said, "there isn't a chance that a responsible tax bill would be passed by this Congress." That appeared to rule out any effort by the Administration to slow down inflation by raising either corporate or personal taxes, a course that many economists have urged.

ON VICE PRESIDENT AGNEW. The President declined to discuss Agnew's legal status but reiterated his carefully hedged support for Agnew "during the period that he has served as Vice President" --an endorsement that sounds more damning every time it is recited.

ON HIS SAN CLEMENTE TAX PAYMENTS. Nixon indicated that he had not paid a capital gains tax on the sale of four-fifths of his San Clemente property to Pals Bebe Rebozo and Robert Abplanalp in 1970, and that his decision not to do so was accepted by the Internal Revenue Service. If he did not pay a tax -- and did not, for complicated technical reasons, defer it -- the President must have claimed that he realized no profit on the transaction. Yet Nixon managed to keep his house and six acres of choice waterfront land while selling off 80% of his property for 83% of his purchase price. How such a deal could avoid a capital gains tax remained a mystery.

By implying that the nation must deal with Watergate and its other problems on an either-or basis, the President was oversimplifying the choice.

Neither will go away. As for the economy, Nixon noted: "It's very easy to turn the crank so tight that you have a hard landing" -- meaning that a wild, groping effort to stamp out inflation at any cost could easily trigger a recession.

With skillful management, especially in restoring credibility to the Phase IV guidelines, most economists believe that such a possibility can still be averted.

Despite his own recent hard landings, Nixon finally seems to realize that a renewed confidence in his own leadership is a vital part of the salvage effort.

This file is automatically generated by a robot program, so reader's discretion is required.