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lnitial Reaction to Nixon's
Economic Plan
P
RESIDENT NIXON'S August 15th
announcement included what may
have been the most dramatic
economic package since Franklin Delano
Roosevelt's New DeaJ in 1933. In the
general order of importance, the
President:
- Cut the dollar loose from gold,
inviting foreign banks, governmeots,
and prívate rnarkets to "fioat" the dol–
lar's value.
- Imposed an imrnediate 90-day
freeze on al! wages, prices, and rents.
- Imposed a 10% surcharge on all
imports.
- Cut almost $5 billion in Federal
spending for Fiscal 1972, including 1)
postponing revenue sharing to cities for
three montbs, 2) postponing welfare re–
form for another year, 3) reducing Fed–
eral jobs by 130,000 (rnainly through
attrition) and postponing governrnental
pay raises 6 rnonths.
These proclamations took immediate
effect. It is the prerogative of the Chief
Executive to institute such measures
under "emergency" situations. In addi–
tion, the President asked Congress for
swift action on the following measures:
- Increasing investment tax credit
from 7% to 10%.
- Repealing the 7% excise tax
(about $200 per car) on autos.
- Advancing income tax benefits
to begin January 1, 1972, instead of
1973.
Within
days,
foreign and dornestic
officials responded; the public was
polled; businesses changed their future
plans; officials hurriedly rnet io Europe
and Japan. The unemployed saw hope
for jobs; businessmen saw investment
opportunities open up; investors saw a
bonanza in the stock exchange; union
leaders
vehernently denounced the plan
as favoring business, while a Jarge per-
centage of wage earners voiced approval
of the plan.
Mixed Domestic Reaction
•
The Pubiic.
A poli of 220 house–
holds by Albert E. Sindlinger
&
Co. on
Monday revealed 75% of Americans
favored the Presidcnt's proposals, while
"most of those who dissented did so on
the ground that Mr. Nixon's actions
should have come sooner." Mr. Sind–
linger's amazed reaction was, "In all the
Wide
World Phofo
years l've been doing this business -
more than 15 - l've never seen any–
thing thls unanimous, unless rnaybe it
was Pearl Harbor."
A Gallup Poll released Thursday eve–
ning after the announcement also re–
vealed 75% in favor of the proposals. A
telephone sampling taken by
The
PLAIN
TRUTH staff also revealed a
75%
favor–
able mark.
The Gallup Poli revealed that only
15% felt they would be hurt by any of
the President's actions, 42% felt they
would be helped, while a whopping
43% said the actions would have no
effect on them (
!)
or had no opinion.
Overall, a new respect for the Presi–
dent and new hope for the economy
quickly emerged.
•
The investor.
The stock market
leaped a record 33 points on a record
volume of 32 million shares, but suf–
fered declines after the first two days of
euphoria, mainly due to the increasing
dissent of the organized labor sector.
•
The labor tmi01u.
Although most
workers supported the President's plan,
their leaders were not as happy - espe–
cially when a "stcike ban" was
annouoced the following day. The
AFL-CIO executive council said, "We
Ratly
reject the Administration con–
tention that it has any such power in
peacetime. This is an assertion of dicta–
torial powers completely foreign to the
American concept of freedom."
After such statements, the Adminis–
tration backed clown partially on their
strike ban, but labor remained ve–
hemently against the President's origi–
nal economic plan as "lavish handouts
to the rich," "totalitarian," "favoring
business over labor" and as we go to
press, it is not clear whether the defiant
stand by labor unions will affect the
workiogman's attitude, or the success of
the Presídent's overall goal of a business
boom.
•
Economists.
The concensus of most
econornists (although that profession
rarely agrees on anything) was in favor
of the wage-price freeze, against the
protectionist 10% surcharge, and
for
the
depreciation of the dollar in foreign
markets. The measures to help business
investments were praised, but the cuts
in
welfare reforrn and revenue sharing
were criticized by social econornists. Vir–
tually all economists stressed the short–
term nature of the Presideat's changes,
and the corresponding need for a
per–
manent
plan for the dollar, price and