When President Carter unveiled his new budget-balancing plan on March 14, there was widespread skepticism about whether he ultimately would be able to get Congress to approve his proposed $13 billion to $14 billion in budget cuts.
Despite eight days of marathon talks with congressional leaders, there was still the reality that Congress had rejected most of the cuts before. And the negotiators couldn't bind other legislators to go along with their list.
Last week, the House Budget Committee handed the president a stunning first-round victory by approving a fiscal 1981 budget resolution that calls for $16.5 billion in cuts -- $2.5 billion more than the president had asked for.
What's more, while the president's new proposal undoubtedly face some tougher skirmishes ahead, the committee's budget-balancing majority easily steamrolled efforts by liberals who were trying to block the cuts.
Congressional momentum for sharp budget-paring is clearly well under way.
Nevertheless, despite last week's heavy White House victory on the congressional front, there were signs that the president still was facing difficulties in his new anti-inflation program:
Almost immediately after the Budget panel finished, the chairmen of the House and Senate tax-writing committees voiced serious qualms about the tax increase that Carter proposed -- raising the possibility of a sizable slide toward deficit.
Sen. Russell B. Long (D-La.), head of the Senate Finance Committee, was quoted in one report as preparing to challenge the $11 billion oil-import fee that the president has imposed.
And House Ways and Means Committee Chairman Al Ullman (D-Ore.) showed little enthusiasm for Carter's other big proposal: a plan to raise $3.3 billion by collecting withholding taxes on interest and dividends.
Rejection of these and a companion Budget Committee recommendation for $3.5 billion in additional revenue-raising measures by themselves would eliminate the $5.5 billion surplus achieved through spending cuts.
Only Carter's new oil-import fee -- which would provide an $11 billion "contingency fund" to offset any such slippage -- would save the budget from actual deficit.
The new credit controls Carter ordered the Fed to impose were proving more difficult to operate than the administration had expected.
As predicted by critics, the regulations threatened to squeeze some big retailers who were caught at a seasonal low point, brought on new inequities in utilities' billing and left 95 percent of consumer credit exempt.
There were howls virtually throughout the economy.
Moreover, the early flush of success didn't obscure some important realities about Carter's new policy reversal -- specifically why and how it came about and how the administration handled the whole affair.
The budget-cutting proposals were only one of several major elements in the package. Carter also imposed an oil-import fee that would raise gasoline prices, and he ordered the Federal Reserve Board to impose credit controls.
It was doubtless the most sweeping anti-inflation package the president had proposed since taking office. But like other major Carter inflation-fighting efforts, it came late -- and at a price.
There were these points:
For all the current attention to the breadth of the new measures Carter has announced, the policy turnabout raises serious questions in the minds of some analysts about the administration's judgment on economic issues.
On Jan. 28, the president announced a fiscal 1981 budget calling for a deficit of $15.8 billion. The White House pronounced it appropriate both for the economic situation and the nation's political mood.
Barely four weeks later, however, Carter and his advisers already were moving to tear up that January plan and draft new budget-cutting measures that would reserve their earlier policy.
With so short a time between the two, the question is inevitable: In drafting his first budget, did Carter badly misjudge the inflation threat, miscalculate the political climate in the country -- or both?
Treasure Secretary G. William Miller contends the administration was surprised by the virulence of the January inflation figures, which showed prices rising far more rapidly than some analysts predicted.
But Fed Chairman Paul A. Volcker asserted last weekend that the round of bad numbers was "foreseeable" in the wake of December's announcements of sharp increases in crude oil prices.
The exceses in consumers' use of credit cards were well known to economists as early as last summer. And the skittishness in the financial markets was evident long before the January budget was officially out.
When President Nixon imposed wage-price controls in 1971, the nation was so taken with the action's drama that it overlooked a major reality: The shift marked a stark admission that Nixon's previous policies hadn't worked.
To many analysts, the current turnabout is no exception.
As policymakers concede, the president proposed his new anti-inflation package not because he wanted to, but because he was forced into taking drastic action by panic in the bond market that was threatening the economy.
Indeed, critics contend with some accuracy that Carter has been dragged kicking and screaming into virtually every serious anti-inflation program he has proposed.
Carter backed away from several mild anti-inflation proposals in 1977 and early 1978, and finally was pushed -- again by turmoil in the financial markets -- into adopting his wage-price guidelines program in late 1978.
In the case of his 1978 dollar-rescue plan, the move was brought on by a crisis in the international currency markets. Again the administration had been reluctant to act until it was almost too late.
What the new package says is that the administration no longer believes that its former policy of gradualism can be effective in dampening inflation, and is moving to bring on a recession as the only way to cool the price surge.
That's far different from what Carter sought to accomplish in his January proposals.
For all the fuss about Carter's budget-cutting proposals, the administration once again is relying mainly on the Fed -- and the new oil-import fee -- to bear the brunt of the anti-inflation burden, at least in the short run.
The administration's proposed budget-cutting package may be stiff in strict economic terms, but it isn't stark enough to have much shock value, and won't actually begin cutting to have much shock value, and won't actually begin cutting until October, when the new fiscal year begins.
Indeed, the bulk of the cuts that officials have discussed are short-term reductions or deferrals of new programs. Carter avoided tackling the longstanding entitlement programs that may regard as the root of the problem.
The touted $1 billion "cut" in anti-recesion aid to cities, for example, isn't really a cut, but a decision not to increase previous aid. with no deep recession in Carter's forecast, the money in theory wouldn't be spent anyway.
Moreover -- incredibly to many Budget Committee members who were in the front trenches -- Carter politicos already tried to weaken the package by seeking $700 million in new aid to cities to "mitigate" the impact of the cuts on cities.
Indeed, less than a week since Carter's new announcement, Budget panel members already are complaining they've been receiving conflicting signals from the White House on precisely what Carter wants cut or kept intact.
Besides the turnabout on cuts in aid to cities, White House operatives also were reported delaying a key decision on cutting highway funds that congressional figures say must be made soon or the money simply can't be cut.
Once again, the foot-dragging was linked to the New York primary.
Many analysts feel that Carter reduced much of the shock value that his new belt-tightening proposals might have had by prolonging the deliberating in order to try to build a concensus for the budget cuts in Congress.
Although White House officials proudly are dubbing the negotiations "the most remarkable example of consultations" in the history of the government, skeptics are doubtful the pact will last beyond the first few floor votes.
Indeed, the discussions dragged on so long that the White House had to fend off charges of indecisiveness. But for a hasty Friday announcement, there well might have been further turmoil in the markets.
Lawmakers involved in the talks also complained bitterly that the White House was not providing enough leadership in proposing what cuts they should consider. "They'd sit there and say, 'It's up to you'," one senator said.
The White House got itself embroiled in an unncessary political squabble by refusing to make public the specific spending cuts Carter is proposing until next week -- conspicuously after the New York primary.
Although the White House insisted the delay stemmed from technical difficulties, not from political considerations, many outsiders considered the explanation lame.
White House negotiatiors and congressional leaders had just spent eight days poring over specific spending-cut proposals, the bulk of them on a list compiled by the Office of Management and Budget.
As if that weren't enough, however, officials disclosed later that the president had proposed in his Friday announcement cutting between $13 billion and $14 billion in spending without formally signing off on any of the specifics.
According to insiders, Carter simply reviewed a list of $16 billion or so worth of possible cuts and accepted advisers' assurances that "we can get $13 billion out of it." Some of the proposals were still up in the air last week.
Ironically to some onlookers, the turnabout this past month brought Carter to an embarrassing position in his economic policies: endorsing the proposals of his Republican predecessor, former president Gerald R. Ford.
When Carter ran against Ford in 1976, he campaigned mainly on economic issues. Ford wanted to slash spending; Carter opposed it. Ford vetoed money bills; Carter was critical. Ford sought oil-price decontrol; Carter did not.
Now, four years later, Carter has come full circle and -- rightly or wrongly -- adopted these same policies. He also is proposing sharply higher defense spending.
What frightens some analysts is that Carter's new belt-tightening may bring on a steeper recession than the administration now intends -- and prompt the government into new stimulus that could derail the anti-inflation effort.
For all of Wall Street's complaining, the president's January budget already was restrictive by most economic measures. Housing already was in a slump from soaring interest rates. And Americans' tax burdens are rising.
What kept the economy from going into the long-predicted recession last year was mainly the activity brought on by consumers who were struggling to beat out inflation.
Convinced that inflation was here to stay, Americans went on a spending spree designed to buy now before prices went up further: They dipped sharply into savings, took second jobs, piled up debt and refinanced their homes.
There was precious little solid growth.
Moreover, economists say the jobless rate was held down artificially because lagging productivity spurred many employers to keep their payrolls bloated.
Although Carter's budget cuts may not seem Draconian, analysts say the combination of his proposals -- including the credit-tightening and oil-import fee -- may yet tip the economy into a full-fledged recession as deep as the one in 1974-75.
If that happens, the president may well be back with still another policy reversal next fall -- and may not be back after next January.