In the Grass

Virtually every leading economist--along with the business and banking communities and Government fiscal experts--believes that a general tax rise is mandatory if the U.S. is to escape what might be a runaway boom (see BUSINESS). The gross national product grew at a frenetic $20 billion pace during the first quarter, while consumer prices soared at the rate of at least 4% a year--faster than at any other period since the Korean War year of 1951.

With the experts and the figures so unequivocally in agreement, why is it that neither Congress nor the Administration can harmonize? "It's like a bunch of people walking around in high elephant grass," says one Treasury official. They were in brief sight of one another last month at the height of the gold crisis. Sobered by the threat to the dollar, Congress seemed to be less hostile to the notion of raising taxes in an election year; the Senate went so far as to attach a 10% income-tax surcharge to another revenue measure--together with a stiff $6 billion cut in the federal budget.

The elephant grass was thicker than anyone had imagined. After this month's riots, Johnson felt that urban and poverty programs would have to be expanded rather than cut. Though he also vetoed any major troop increase for Viet Nam, he did approve increments that would push war spending up by at least $2.5 billion.

Many Congressmen concluded that the President had simply welshed on his promise to let Congress do the chopping. Johnson aides countered that L.B.J. had never said he would let Congress cut anywhere it wanted. Neither side seems likely to give in any time soon. Some key figures in the dispute think that the whole matter will be left up to a new Congress and a new President. Meanwhile, the economy spurts ahead, with no slowdown in sight.

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