In its fourth consecutive unanimous report, the Joint Economic Committee told Congress yesterday that the government's standard antirecession moves are "palliatives" that only make conditions worse.
The committee's midyear report said it "is convinced that government responses too often have been too late and too ineffective to influence recessions." Congress should reject a quick fix in this recession, the seventh since World War II, and concentrate on "programs that enhance the quality of recovery," the report said.
The committee's prescription for the economy's current ills is to slash "the burden of taxation weighing on the private sector resulting from both inflation-induced taxes and from legislated tax increases."
Under the guidance of its chairman, Sen. Lloyd Bentsen (D-Tex.), and the ranking minority member, Rep. Clarence J. Brown (R-Ohio), the committee stressed "supply-side " initiatives to stimulate economic growth. "Supply-side" strategy has come to mean tax cuts focused on generating business investment, rather than personal consumption.
The Joint Economic Committee report had no specific recommendations for a productivity-stimulating tax cut. But Bentson's own program for accelerated depreciation was incorporated in a $39 million tax-reduction measure voted unanimously by the Senate Finance Committee at the end of last week.
Privately, key Democratic senators had urged President Carter to abandon his opposition to immediate taxcut legislation, and to "claim victory" for the Senate Financial Committee's tax-reduction proposal, which is more modest than Republican candidate Ronald Reagan's
But while Carter took that suggestion under advisement, Reagan quickly endorsed the Senate bill, in principle, even though it falls short of more generous Republican proposals for cutting both business and personal taxes.
Democratic tax-cutting forces under Sen. Russell B. Long (D-La.) are pushing to pass the Finance Committee bill before the election. But Senate Majority Leader Robert C. Byrd (D-W.Va) said Saturday that he believes the bill will not pass before Nov. 4, and the House will hold off action until after the election.
For obvious political reasons, a realistic budget resolution reflecting a fiscal 1981 budget deficit of more than $50 billion, including a tax cut, would also be postponed until after the election.
The joint Economic Committee's conclusion that standard antirecession strategy doesn't work well was based on a study of the six recessions in the period 1945-79. These occurred in 1948-49, 1953-54, 1957-58, 1960-61, 1969-70 and 1973-75.
In all cases, the committee said, the beginning of a recession was not accurately anticipated. For example, the brief 1969-70 recession ended before most understood it had taken place. Once a recession was underway, forecasters had difficulty in predicting how long or how deep it might be. The result was that stimulative actions come to late to help. The time lag is especially long the report said, in getting one of the politicians' favorities -- public works programs -- under way.