Ford Broadcasts, 1965-1966: 12237637

Read from the scan by GLM-OCR; expect the odd misread word.

MR. KIPLINGER: If that is the case, then doesn't this almost automatically suggest that the price rise will be greater than the previous indication and that it might be in the neighborhood of three or three and a half percent for the year?

MR. ACKLEY: I am not prepared at this time to make an estimate of what the price increase might be this year. As I indicated earlier, I think there are some factors working on our side from here on out.

MR. KIPLINGER: I might follow with just this one question: You have had a lot of practical experience as a price controller in OPA days, during World War II, and OPS, during the Korean War. If the price level were to rise as much as 3.5 or 4 percent this year at the consumer level, would this in your view suggest that we ought to have some rigid form of price controls comparable to those we have had in previous war-time periods?

MR. ACKLEY: On the contrary. It seems to me that it would be quite unnecessary, inappropriate, under the kind of circumstances that we foresee today, to be thinking or talking of any kind of legislative, statutory, wage and price controls.

I think it would be a matter of pretty poor management if under the kind of economic situation we face we stumbled into that.

MR. SPIVAK: May I ask you a question, Mr. Ackley?

In January of this year you estimated that the Gross National Product for 1966 would be about $722 billion. On March 23, Arthur Ross, Labor Statistic Commissioner, estimated that the government economists now expect the Gross National Product will total $735 billion. Do you agree with the $735 billion figure, or do you think that is too high?

MR. ACKLEY: That was Mr. Ross' own figure. It was not a figure of government economists, at least in the sense that the Council of Economic Advisors was involved.

I think 735 is too high. Our forecast, of course, was $722 billion plus or minus five, so I suppose we would be within our forecast if we came up with 727. Whether we need to widen the range on the high side is something we are still considering.

Mr. SPIVAK: Do you think it is more likely to be 727 than 735?

MR. ACKLEY: I wouldn't want to comment on that.

MR. VANOCUR: Mr. Ackley, we seem to have come to this in this half hour, that you say that the Administration does not yet think anyone can say with finality that a tax increase is needed. Yet liberal economists and many conservative economists and bankers say that there is the need for a tax increase now.

Since capital investment is a great factor in the kind of overheating of an economy that people are worried about, why couldn't the Administration repeal temporarily the 7 per cent investment tax credit, to be put back at such time as it is needed? This wouldn't take Congress very long. Why not err on the safe side in a matter like this?

MR. ACKLEY: I think a case can be made that the investment tax credit is not serving a useful function at this time. It is true that the heaviest economic pressure right now is in the area of capital goods, and the severest pressure on labor markets is in those parts of the country where capital goods are manufactured, durable goods, generally. On the other hand, I think there are a lot of difficulties with turning that particular weapon on and off. Businessmen have been counting on it They have felt it was an appropriate structural reform of our tax system.

There are, as I say, administrative difficulties of turning it on and off, and I think we are not ready to reach a judgment that that is an appropriate tool.

MR. DALE: Mr. Ackley, the White House said that it prefers—the Administration prefers—to work quietly in private in trying to get business to comply with the price guideposts, in holding down prices. Can you give us an indication of how many contacts with business there are? How many a week for example?

MR. ACKLEY: I don't think I could make an estimate of that. We are constantly in touch with businessmen, the people in the Department of Commerce are. The President sees many businessmen. We talk about various things, including prices, price problems, price prospects. Where there does seem to be a prospect, possibility of price increases in the future, we try to talk about the nature of the problem and persuade the people involved to consider the national interest in price stability.

MR. DALE: Can you give us an idea of the results of these conversations? Prices do seem to be going up after all. How many times has the [administration] succeeded in, shall we say, heading off a price increase through this process of friendly conversation and persuasion? Not an absolute number, but can you give us some sense of it?

MR. ACKLEY: I think it is very difficult to quantify that. We hope that a lot of our persuasion is effective—and I think it is. Even where prices are increased, it may very well be that because we have discussed the problem increases are smaller or less inclusive or accompanied by price reductions. I think it is not possible to-

MR. FERTIG: Mr. Ackley, Mr. Dale has referred to friendly