Report Outline
Options to Stabilize the Ecnomy
Operation of Federal Budget System
Future of Fiscal Reforms in Congress
Special Focus
Options to Stabilize the Ecnomy
Priority Choices in Ford's New Federal Budget
The most serious threat to the American and the world economy in a generation faces President Ford as he draws up the fiscal 1976 federal budget for presentation to the new 94th Congress. Federal budget making is often described as the process of setting national priorities. In its broadest interpretation, the budget represents the administration's view of what role the government should play in the nation's economic and social system and in world affairs. In a narrower sense, government fiscal policies represent a choice of strategies for achieving these objectives: should defense allocations go to nuclear or conventional forces? Should the poor be aided by food stamps, cash assistance or tax benefits?
These important questions are currently overshadowed by the problem of how to use fiscal policy to ease the nation's economic plight. While most prices rose less rapidly than in earlier months, a sign that inflation might be weakening, unemployment jumped from 6 per cent in October to 7.1 per cent in December, the highest rate in 13 years, representing 6.5 million unemployed Americans—the highest total since 1940. Many observers predicted a rise to 8 per cent in 1975, amounting to the most massive layoffs since the Depression Thirties.
As the job picture deteriorated, pressures increased on President Ford to switch from a tight fiscal policy aimed at controlling inflation to a stimulative one aimed at offsetting recession. Toward the year end, there were clear signs that the administration was changing its economic policy. Exactly what path should be taken and how far the government should go remained a subject of debate among politicians and economists. |
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