The business community and its war cry - confidence first - command high ground as the President and his men get ready to present their economic policy for the coming year. Even so, the administration shows signs of incipient irritation with the corporate world.
In a sense business is now on trial. Unless it can generate economic growth soon, Carter is apt to turn to his more liberal supporters among the unions, the minorities and the professional economists.
Tension between business and the liberals constitutes a regular feature of Democratic administrations. One unmistakable tie binds Democratic Presidents with the unions, the minority groups and the professors. They all emphasize the primacy of jobs, and they show little reluctance to use the tools of government to expand the economy in the interest of diminishing unemployment.
Corporate executives, in contrast, believe that jobs are created by the investments of private industry. They see up close the restrictive, regulatory side of government, but only dimly its role in expanding economic opportunity. They argue that economic growth depends on a climate of confidence, which in return requires that government keep hands off.
President Carter is plainly tilting toward the business point of view now. He has named a businessman, G. William Miller, to replace Arthur Burns at the top of the Federal Reserve System. A tax cut full of advantages to business is the centerpiece of the economic strategy the President will set forward in the State of the Union message on Jan 19. The budget due to follow in the next few days will restrict government programs dear to liberals.
Health insurance is off for several years. So is tax reform, closing loopholes available chiefly to the wealthy. Similarly with a major program for urban revival. It is typical of the times that the chief effort in th jobs field will provide federal subsidies for business for on-the-job training of unemployed black youths in the center cities.
Solid reasons exist for the pro-business stace. Public opinion, still dominated by the Great Society backlash, has low confidence in government, and particularly government spending, as solvers of social and economic problems.
Numerous signs, however, announce that there has been a fall-off in business confidence. Investment in plant and equipment, due to rise by 5 per cent next year according to the latest survey, has been the weak spot in recovery from the recession of 1974-75. The stock market was down in 1977 (only the third time since World War II that it dropped in a nonrecession year).
So there is political and economic mileage in catering now to business and its arguments. There is room for improvement in confidence, and if confidence does pick up, there is ample scope for a rise in business investment that would make the recovery truly take off.
But the administration's patience with business has distinct lines. The President has aired visceral doubts about business in his continued insistence on ending the "three-martini lunch." He replaced Burns as chairman of the Federal Reserve in large part because of irritation with his general statements about confidence in the economy. Shots taken at the oil and gas lobby reflect a widespread feeling that industry is responsible for the administration's troubles with the energy bill.
Labor, the minorities and not a few economists, furthermore, point to the rigid oppositon of business to the abortive $50 rebate plan proposed to stimulate the economy last year with the enthusiastic cheers for the tax cut this year. One year hightly placed administration official said to me: "Business isn't really against government handouts. They just want the goodies all to themselves."
Comments like that should be handwriting on th wall for intelligent businessmen. Confidence cannot be used merely as a buzz word to make goverment pay tribute. While business confidence is a good thing in itself, it is not a substitute for economic policy.
Unless the business community begins to make good its implicit promises, unless business investment picks up with a consequent rise in economic growth and job openings, the tide will turn. If the recorvery does not take off this year, President Carter will be obliged, as President Kennedy was before him, to move from vainly trying to curry business favor, to the strong policy measures that eventually - despite the grunts and groans of business - yielde the prosperity of the 1960s.