THE ADMINISTRATION'S anti-inflation program is working--although not as the administration had planned and hoped. It had intended to create many new incentives throughout the economy. The autumn's surge of industrial layoffs has certainly created, for several million Americans, the most urgent kind of incentive to tighten belts, cut spending, work for lower wages, and engage generally in non-inflationary behavior. The unemployment rate in December, the government now reports, was 8.9 percent. As a strategy to stabilize prices, this one is costly, cruel and slow. It is a reproach not merely to this administration but to the country as a whole that it has been unable to agree on anything better.
Recessions, from time to time, may well be inevitable. But unemployment on the present scale is not. It is the result of the failure of Americans-- business people, working people and the politicians who represent them--to come together on any policy except the simple and brutal one of the monetary wringer enforced by high interest rates. And it's futile to blame the Federal Reserve. With budget deficits rising, it has very little control over interest.
Unemployment is very likely to continue rising in the course of the winter. And it's not solely a cyclical downturn that will automatically reverse itself later in the year. Beneath the cycle there seems to be a slow, continuing weakening in heavy industry, with little prospect of returning even to last summer's numbers of jobs. You probably noticed the unemployment rates of 15 percent in Michigan, 12.5 percent in Ohio and 9.8 percent in Pennsylvania-- the steel and automobile states.
Economic growth in this country all but stopped about three years ago. Since then, unemployment has moved only one way. The present deterioration is best viewed as the second phase of the W-shaped recession that began in January 1980 under the previous administration. Unemployment was then just over 6 percent. The first phase of the recession was sharp but brief. When it ended, in the summer of 1980, the rate was up to 7.6 percent. It declined only slightly over the following year until last July, when the second half of the recession began.
The administration intends to grit its teeth for the next few months and assure its uneasy allies in Congress that a recovery will get started next summer before the election campaigns get under way. Maybe so--and then again, maybe not. Mr. Reagan inherited an economy that was trapped by high interest rates; a year later it is still trapped by high interest rates. Whatever happens next summer, it will begin with unemployment stuck on a plateau by far the highest since World War II.