President Johnson's economic policy has come a long way from the State of the Union message, which proclaimed that this country could do everything at once, to the budget message, which regretted that it could not. But there is still doubt that the budget takes adequate precautions against inflation. And there are also grounds for questioning the President's priorities.

In spite of Johnson's assurance that Great Society and War on Poverty programs would not be sacrificed, that is exactly what has happened. The War on Poverty was originally intended to increase from $1.4 billion last year to $3 billion this year. Instead, the President is asking for only $1.75 billion. In many areas, this will mean cuts in existing programs, to say nothing of new plans that will have to be junked. The same has been true of other Great Society programs, such as those relating to the problems of cities.

The President has apparently decided that holding down taxes should take precedence over financing the Great Society and the War on Poverty. The philosophy behind having Great Society and Poverty programs at all, as well as the urgency which President Johnson himself has attributed to them, contradicts this concept of priorities. The choice, often pictured as one between guns and butter, is as Walter Lippmann has said, "between raising taxes and neglecting the future." But even if one ignores the question of priorities, the budget still appears unrealistic. According to Administration plans, tax revenues should increase by about $6 billion. If the GNP for 1966 is above the estimate of $722 billion by the same percentage as it was for 1964-65, GNP could be as high as $730 billion. This would represent an increase of $54 billion, and could put the annual rate of GNP in the last quarter of 1966 at $745 billion or more.

In that event, a revenue increase of $6 billion would be a meager defense against inflation. And if the budget's implicit assumption that the Vietnam war can be kept in hand is not borne out, the $6 billion increase in revenues will be no defense at all.

Johnson has promised that he will not hesitate to ask for tax increases if he finds them necessary. Indeed, he has already asked for reinstatement of some excise taxes repealed last year. This reinstatement, however, is poor policy. If there was a reason for eliminating the excises, then there is a reason for leaving them that way. Repeal or enactment of excise taxes is a decision about tax structure that should not be changed according to the year-by-year exigencies of fiscal policy.

Theoretically, the President could ask for increases in personal and corporate income taxes later on. But to an election-year Congress, a proposal to raise taxes will be far less attractive in June than it would have been in January. There is a good case for granting at least standby authority now, even if actual increases are not put into effect until later in the year.

With unemployment expected to drop below four per cent, and industry operating at close to capacity, the danger of inflation is greater than it has been in a long time.

The President's budget obviously recognizes this. But he has chosen to meet the situation by cramping public expenditures while, as nearly as possible, leaving the way clear for private ones. The result has been a budget which seriously shortchanges necessary public programs, yet fails to provide adequate insurance against overheating in the economy.

The hearings before the Joint Economic Committee of Congress have revealed a growing feeling that the budget does not provide adequate safeguards on inflation. Hopefully, future hearings before other committees will point out the budget's failure to meet the objectives of the Great Society that the President himself proclaimed in the State of the Union message.