Ike’s Semi New Deal

February 15, 1954

When President Eisenhower at his press conference on Jan. 27 was invited to comment on statements by some observers that his program was an “extension of the New Deal,” he is said to have told the reporter “in a tone of steely indignation” to compare Mr. Truman’s budget with his own.

But such a comparison is not in itself convincing. It is true that Mr. Eisenhower’s proposed Federal expenditure for the fiscal year 1955 is $12.3 billions less than Mr. Truman recommended for this fiscal year; but it is not less than Mr. Truman actually spent in 1952, his last full fiscal year in office; and it is actually $21.6 billions higher than Mr. Truman spent in the fiscal year 1951. During both those fiscal years, incidentally, the Korean war was being fought.

Nor was Mr. Eisenhower’s second reply to the reporter’s question much more helpful. “When it comes down to dealing with the relationships between the human in this country and his government,” he said, “the people in this Administration believe in being what I think we would normally call liberal, and when we deal with the economic affairs of this country, we believe in being conservative.” I must confess that I do not know quite what this means, because I have always assumed that all economic affairs were human affairs, and that all economic welfare meant human welfare.

Yet Mr. Eisenhower could have convincingly drawn many sharp contrasts between his own policies and the policies of the New Deal. He removed the New Deal wage and price controls—an achievement of the first importance. In the early part of his Administration, he put at least a temporary halt to inflation. In the economic report that he transmitted to Congress on Jan. 28, he put a stress that the New Deal would never have done on fostering economic growth through economic freedom, in creating “an environment in which individual enterprise can work constructively to serve the ends of economic progress.”

If we wish another contrast, we can compare his statement: “It is well to recall the accumulated experience of generations which has taught us that no government can of itself create real and lasting prosperity,” with Mr. Truman’s first “basic economic principle,” announced in his own final economic report in January 1953, that: “Full employment must be a constant objective of policy.”

Some of us could wish, however, that these contrasts were more frequent and consistent. When it comes to concrete policies, the contrasts sometimes seem to be outnumbered by the similarities. We may point especially to the recommendations for additional spending for social security, housing, education, and health programs, as well as to the ambiguous attitude toward public spending. There is the constant intimation, throughout the economic report, that at the first real sign of a downturn the government would throw itself into pump-priming projects. Take this, for example: “The government will not hesitate to make greater use of monetary, debt management, and credit policy, including liberalized use of Federal insurance of private obligations, or to modify the tax structure, or to reduce taxes, or to expand on a large scale the construction of useful public works, or to take any other steps that may be necessary.” And at another point the President declares that his antirecession policies will not be allowed to “interfere any more than is necessary [my italics] with the fiscal objective of bringing down the scale of Federal expenditures, reducing taxes, and arriving at a budgetary balance.”

This seems to take over from the New and Fair Deals the essence of the Keynesian ideology—the belief in “compensatory spending,” the belief that any decline from a peak of inflationary prosperity can and should be offset and rectified by an increase in deficit spending—in brief, by further inflation. My belief is that this ideology is unsound and dangerous; but it is still not clear just to what extent Mr. Eisenhower holds it. As long as its ambiguities and vacillations continue, we will not be unjust in calling its present policies the Semi New Deal.