The Atlantic Report on the World Today: Washington

ONLY thrice since 1900 has there been such a transition as that over which President Eisenhower will preside in Washington this month: in 1913, when the Democrats took over from William Howard Taft; in 1921, when Warren G. Harding was inaugurated; and in 1933, when Franklin D. Roosevelt assumed office. In 1933, Hoover and Roosevelt tried to work out a modus rivendi with particular reference to the banking crisis, but without success. Henry L. Stimson, the outgoing Secretary of State, conferred with his successordesignate, Cordell Hull, and with better results.

Never before has this problem been so pressing as it is in 1953. Now the difficulties are greater and the problems calling for collaboration are more numerous, more complex, and more immediate, than ever before.

The truce negotiations in Korea are at a standstill while the United Nations General Assembly is tapping its collective foot in New York, awaiting the participation of a United States delegation which speaks with authority. Our allies in the NATO organization are troubled as they wonder how far the budget-trimming commitments of the incoming administration will force revision of their own military and economic programs.

It would be calming indeed if there were some accepted and smooth-working means of transition from the old to the new administration. Unhappily there is none, and it is doubtful whether under our constitutional machinery there can be.

The Shadow of Truman’s budget

President Truman will cast a long shadow of influence over the first year of his successor’s administration. The heart of Federal policy-making — whether in the area of foreign affairs, national defense, inflation control, or social welfare — is the Federal budget. The most powerful single individual in the executive branch of the government, save only the President himself, is the Director of the Budget. The Budget Bureau, as the President’s personal, supradepartmental agency of administrative management, exercises a strong, continuing control not only over the finances of the national administration, but over its day-to-day housekeeping arrangements.

The President’s annual budget and its accompanying explanatory message to the Congress are the chief instruments of this control. This message and the budget itself are sent to Congress at the opening of the session this month, almost three weeks before the inauguration of President-elect Eisenhower. Budget-making is a year-round process; the new one is begun immediately after the submission of the preceding year’s budget. The new fiscal year does not commence until July 1, 1953, and runs until June 30, 1954. Thus, (he estimates and recommendations for 1953-54 have been in the works for many months, and are now virtually complete.

General Eisenhower may, of course, make new and different recommendations. He may seek to alter the Truman budget after its submission and before its enactment by the Congress. Afterward, he may sequester funds already appropriated, direct the departments not to spend as authorized, and turn unexpended balances back.

Such changes in the final months will almost of necessity be of a limited character. Even with facts brought to his attention by his financial adviser, Joseph M. Dodge, General Eisenhower simply will not have at his command the facilities for a detailed revision of his predecessor’s budget.

Elsenhower’s Objectives

This does not mean there will be no changes, however. General Eisenhower has set as his goal a reduction of Federal spending from its present level of about 80 billions per year to a level of not more than 60 billions. This reduction the General hopes to accomplish in about two years. It is anticipated that President Truman will submit a budget calling for appropriations of about 84 billions, about the same level as last year’s budget, which was cut almost 6 billions by a Democratic Congress. However, some of last year’s cuts were accomplished — in the field of military appropriations— by spreading out programs already in progress, so that it will be necessary this year either to increase appropriations or to spread the present defense effort still thinner.

It will require a daring President to slash Pentagon estimates. Yet the fact must be faced that if there are to be savings, they must come out of the defense funds. Programs now in operation will, according to present estimates, require military appropriations of about 55 billion dollars. In addition, the existing atomic energy projects will cost about 3 1/3 billions. Fixed charges — that is, interest on the national debt, veterans’ benefits, and other items which cannot be cut without repudiating government obligations— will require another 15 billions. This leaves about 7.5 billions for the operation of the civilian government and 2.6 billions for foreign aid.

Only a few of the so-called civil items are likely to be cut, and these cuts would not go far toward a drastic cut in budget levels. Subsidies to farmers for soil-conserving practices may be eliminated: this would save about 250 millions, and some major farm organizations have favored the elimination of these subsidies in past years. Appropriations for river and harbor development may be more drastically curtailed, though the efforts of Senator Paul Douglas to carve down this traditional “pork barrel” have not been conspicuously successful in the past.

NATO and the Pentagon

The reduction of foreign aid funds will undoubtedly be proposed, and will possess a considerable political appeal. Whether President Eisenhower will find this reduction compatible with the continued progress of NATO, so dear to his heart, is very questionable. Indeed, there are complaints from some of our most important allies that they cannot shoulder their present burdens much longer without increased American aid. France, for instance, says she cannot longer carry ihe load which is bleeding her in Indo-China and at the same time meet her NATO commitments without undermining the stability of her currency and her domestic economy.

General Eisenhower may look upon the Pentagon with a cold eye. Truman, for all his boldness with General MacArthur, has stood in considerable awe of the military men. Many observers, both in the Congress and in civil government, have fell that it is possible to effect, economies in defense appropriations without endangering national security — or, to put it bluntly, that the country could, with more prudent, civilian supervision, get the same amount of defense as now for fewer dollars. In this respect, President Eisenhower’s military background and tremendous prestige may embolden him to a courage beyond that which would be possible in another President.

Sound currency, high interest

Joseph M. Dodge, General Eisenhower’s financial adviser, is not a newcomer to government, having served in the occupation governments in Germany, Austria, and Japan. His reputation is that of an able administrator and of a stern deflationist. His insistence in each of the occupied countries was upon the maintenance of sound currencies at all hazards, including high taxes and the risk of unemployment.

Mr. Dodge opposes the policy of cheap money and low interest rates which has been followed for the past twenty years, and his views more nearly accord with those of Marriner S. Eccles, whom President Truman deposed as Chairman of the Federal Reserve Board because of disagreement with the monetary views of Secretary of the Treasury John Snyder. Mr. Dodge would also be unlikely to view with favor any “quickie” tax reductions such as those already advocated by Speakerdesignate Joseph Martin, whose watchword was “Cut taxes first and then balance the budget.”

As the President-elect’s first choice for financial observation and counsel, Mr. Dodge became overnight a figure of national importance and a symbol of the lines along which General Eisenhower’s mind was running.

The new cabinet

The Eisenhower cabinet, virtually complete before the General’s departure for Korea, had some surprises. For the Treasury, the President-elect chose George M. Humphrey of Cleveland, Ohio, a lawyer turned industrialist.

As head of the Hanna Iron and Steel interests, Mr. Humphrey’sreputation for imagination, energy, and fact-facing realism was high. Though on friendly terms with Senator Taft, Mr. Humphrey was not a “Taft man” in the conventional sense. Rather, the impetus for his selection came from Paul Hoffman, who firmly declined all proffers of official position, and from General Lucius Clay. Humphrey had done a report for ECA on the dismantling of German industry, and his work had earned the admiration of both Hoffman and Clay.

Governor Dewey, like Hoffman, decided not to enter the Eisenhower cabinet, but the designation of John Foster Dulles as Secretary of State was chalked up to Dewey’s credit.

Even more important, Herbert Brownell, Mr. Dewey’s long-time collaborator and intimate friend, was the new Attorney General. This would indicate a powerful Dewey influence not only on policy decision but on matters of patronage and political organization, since the largest hunk of patronage plums is now under the Attorney General’s dispensation.

Mr. Brownell is far more than an experienced and adroit political manager; he is a lawyer of real distinction. In the Justice Department he will, in all probability, insist, on high-class judicial appointments, strict enforcement of the criminal laws, and abstention from smelly deals. McCarthyism will find no warm welcome from Brownell.

Perhaps most significant of all was Eisenhower’s choice of Charles E. Wilson of General Motors as Secretary of Defense. Wilson, a quietspoken administrator of great talent, is highly respected as an industrial manager — not least by his longtime antagonist and friend, Walter Reuther. Wilson’s selection seemed to relegate the Defense post to a department of production and supply — the subordination of political to industrial function.

How big a broom?

How big a broom will the new administration sweep with in matters of personnel? Demand for Federal patronage is less pressing than in the depression days of 1933. In many of the government agencies, qualified men have been hard to find for the past several years. Again, the great majority of appointive posts are protected by the civil service laws; for the occupants of these posts, speeds removal without cause will be impossible. Of the 2.6 million government employees, probably not more than 12,000 at the most will be subject to arbitrary removal and political replacement, and even among these are many nonpolitical career men who will doubtless remain at their posts. This does not mean that things will remain the same. Among the places open are those for the key policymaking officials in all the Federal departments and agencies.

The so-called independent agencies— the Securities and Exchange Commission, the National Labor Relations Board, the Civil Aeronautics Board, the Federal Communications Commission, and their sisters — have suffered a steady ebb of vitality and effectiveness. The causes of this decline are not easy to assess. There is a seeming tendency of regulatory agencies, after a period of crusading youth, to adopt an altitude ever more protective and paternal toward the regulated interest.

The Power Commission has twice changed its mind as to Federal power over the natural gas industry, owing largely to the refusal of the Senate to confirm one of Mr. Truman’s appointees. When the Federal Communications Commission determined television policies, it was sometimes hard to know just who was in charge of the operation.

There is a widespread agreement, that the structure and operation of these semiautonomous bodies call for a long look and strong medicine. In 1937, President Roosevelt’s Committee on Administrative Management recommended a substantial strengthening of Presidential control. Its recommendations went unheeded. Today, many who were skeptical then have been converted.

Some would go so far as to urge almost complete integration of the independent agencies into the regular executive departments — or at least the substitution of single-headed for multi-headed agencies. Such extreme surgery would meet with stubborn Congressional resistance. But President Eisenhower’s great popularity might, in his honeymoon period, overcome this opposition.

President Eisenhower must also consider the need to improve relationships between the White House and the Congress. F.D.R., Throughout his administration, suffered increasing difficulty with Congressional relationships, and in the Truman administration there has been almost a total breakdown.

Those who sponsored the Legislative Reorganization Act pinned their hopes on certain mechanical devices — Congressional policy committees and the Kefauver proposal for virtual nonvoting membership in the Congress by cabinet members. Inevitably, however, such devices move in the direction of a semiparliamentary government, which, however attractive to academic students of American government, has never caught the popular fancy or appealed strongly to practical politicians.

Perhaps the techniques of coöperation cannot be enshrined in legislative formularies but must be hammered out in the day-to-day processes of politieal give-and-take.

Mood of the Capital

Signs of diminishing pressure on the inflation front were abundant. The cost of living, while high as a cat’s back, had fallen a bit for two successive months. New productive capacity, in steel, in aluminum, and in other areas of the economy, was beginning to make itself felt. There was little talk of shortages. World commodity prices were softening and had been doing so for months.

Farm prices had perceptibly declined. Huge grain crops had poured into cribs and bins; once more a bounteous harvest had proved the best of all weapons against inflation. Meat, always a sensitive sector on the cost-of-living battle line, was down in price and up in quantity. OPS had decontrolled more than half the items in the market place, and many others were selling below ceiling prices.

In a few localities, especially New England, there was unemployment and economic forecasters talked of a recession in 1954, or even late in 1953. But while the prospects for holding the line against inflation were good, it was hard to foresee a recession so long as government spending continued at a high rate.