The congressional Joint Economic Committee, in a dramatic turnabout from its traditional liberal Democratic stance, yesterday recommended a set of moderately conservative economic policies giving top priority to fighting inflation and spurring productivity and business investment.
The 251-page document, replete with cautious analysis and proposals for promoting prosperity by bolstering the private sector rather than the government, represented a major departure from the post-New Deal philosophy the panel's Democrats have espoused in previous reports.
For the first time in 20 years, all members of the committee -- Republicans as well as Democrats -- endorsed the recommendations without major dissents or exceptions. Until this year, Republicans consistently filed a separate report that differed sharply with the majority's prescriptions.
The development reflects both the changed mood of Congress on economic issues and the ascendancy of conservative Sen. Lloyd M. Bentsen (D-Tex.) to the chair of the formerly liberal-dominated panel.
Bentsen and Rep. Clarence J. Brown (R-Ohio), ranking minority member, issued companion statements hailing the new "consensus" as a significant achievement. In previous years, the panel had been so divided that its recommendations have had little impact.
The carefully worded report essentially endorses the government's present anti-inflation measures, from President Carter's new budget-cutting proposals to the Federal Reserve Board's effort to keep money tight and hold interest rates high.
It also reluctantly goes along with Carter's wage-price guidelines program, while inveighing against mandatory controls which the panel's Democrats have endorsed in the past. And it cautiously acknowledges the need for gradual decontrol of domestic oil prices.
All but unheard of in earlier reports are the panel's recommendations for spurring business investment and heightening productivity, from tax incentives to changes in accounting rules. It urged setting a goal of boosting investment to 12 percent of the gross national product.
The report did not deal specifically with the two big economic problems now facing the administration -- acute overheating in the industrial sector and a worrisome round of new price increases that threatens to burst the wage-price guidelines.
Carter has called his energy and economic advisers to Camp David today to discuss these and other issues. White House aides say the sessions are not expected to lead to firm decisions, but policymakers are slated to discuss a wide range of options.
The JEC report accepted as "not... unreasonable" the administration's January forecast that the economy will slow gradually this year without falling into a recession -- despite predictions to the contrary by some private economists. However, it warned that the possibility of a slump "cannot be ruled out."
Nevertheless, the document still set inflation-reduction as the nation's "top priority" for 1979 and 1980. In contrast to previous reports, it did not argue for further government stimulus to push the overall unemployment rate below its current 5.7 percent level.
And, in a break with the committee's earlier stance, the report included only scant reference to the 1978 Humphrey-Hawkins "full employment" act, which the panel previously championed as a major goal of a former chairman, the late senator Hubert H. Humphrey (D-Minn.).
Committee members chided the White House and the Federal Reserve Board for not adequately fulfilling the new law's requirements to spell out suggestions for requirements to spell out suggestions for reducing joblessness to 4 percent by 1983. But they did not criticize current policies for failing to get there.
Despite its conservative bent, the report admonished against using budget-cutting and tight-money policies to wring inflation out of the economy by creating a recession. That would "barely put a dent in the inflation rate" and would not be worth the rise in unemployment, it said.
Instead, the report recommended trying to improve what Bentsen called "the supply side of the economy" by enacting incentives for increased savings, new investment and more research and development, in hopes that these would lead to more job creation in the private sector.
The 20-member panel warned that the nation's economic problems cannot be cured overnight. "The key is moderation, a policy of gradualism," it said. The document contained 42 specific recommendations on a wide range of economic and energy issues.
The consensus was hailed by Brown as "evidence of the fact that the country's extreme economic problems are producing a convergence, rather than a divergence, of economic thought." He called this "important because it gives the country an economic common ground" for tackling its problems.
The only hint of dissent came from Rep. Parren J. Mitchell (D-Md.), a liberal and the only black on the panel, who endorsed the report "with reticence" because of reservations about its emphasis on fighting inflation and budget cuts. Nevertheless, Mitchell signed the document.
While endorsing the Fed's tightmoney policies, the committee warned that the central bank had gone too far recently in cutting the growth of the nation's money supply, and urged some easing up to bring policy into line with targets the Fed set earlier.
If further restraint is needed to combat inflation, it should come from cutting spending, not from tightening money.
If the economy falls into a recession, policymakers should cut taxes rather than ease money and credit to prevent a further slide.
The government should expand manpower training for the disadvantaged and "structurally" unemployed, both through existing programs and new private-sector initiatives proposed by the administration.
The panel also endorsed a controversial proposal by Bentsen to cut back or eliminate the portion of the current $6 billion general revenuesharing program that goes to the states. The committee would continue only those grants going to cities and counties.
The recommendations on energy and business investment included a series of tax breaks and rule changes designed to stimulate oil and gas exploration and production and to boost spending on new plants and equipment. The panel did not deal at length with price decontrol.