Reaction on the Hill

Crimson: How will the Reagan budget fare in the Congress and what primary alteration will you be looking to make?

Wright: No president expects his budget be approved in toto. In this instance more than in any other the old aphorism is true: the President proposes and the Congress disposes. I think we will probably add money to the budget for certain job creating, stimulative enterprises and offer a more active job training program and some initiative to revitalize and re-energize America's industrial base. I believe we will reduce the amount that Mr. Reagan asks for in military expenditures. I think we will either eliminate, reduce, or put a cap on third year tax cut. By doing those things I believe we will make more than enough room for the stimulating kinds of things we would like to do for the economy. In financial aid it has always been our object to support all the financial aid programs. The President's budget request of last year would have drastically reduced financial aid through Pell Grants. It would have done away with the work study program. It would have made graduate students ineligible for student loans. It would have made student loans harder to get and harder to repay. All in all if Congress had accepted that budget for the current fiscal year verbatim, it would have made it significantly harder for some two million young Americans to attend college. We did not accept it, we altered it, we changed it and added money into the supplemental appropriations bill to fill a gap for student assistance. The President vetoed that bill and we overrode the veto. I think we'll do that again.

Crimson: How large a threat is the current federal government deficit and how do you see it being reduced?

Wright: The most obvious thing would be to eliminate the third year of the President's proposed tax cut. I think that the tax cut is inequitable and economically ineffective. It has not stimulated buying power nor has it stimulated investment, therefore I think that is the first and most obvious way in which to reduce the deficit. A second reduction in the deficit could occur by curbing the rate of growth in military spending and holding it, let us say at an arbitrary five percent. If we are able to influence the Federal Reserve Board to bring the real rate of interest back where it belongs we could automatically reduce a substantial portion of the deficit by reducing the amount that we must pay annually on debt service. This year we are paying approximately just a little over $100 billion on debt service on interest to loans. That's $100 billion wasted so far as budget is concerned. It doesn't buy a single skill, it does not pave a single mile of road, it doesn't do anything. If we are able to get interest rates back to levels they were four years ago, it would save $30 billion of the cost of government. Those are three ways. The most obvious way is to get the economy working again. We will never bring the deficit under control until we can get people back to work and paying taxes.

Crimson: What is your outlook for an economic recovery over the next two years?

Wright: I don't believe that economic recovery is like the weather. I don't thing you can just predict from meterological data. I think you must influence them. The chances therefore depend upon the policies we follow. We cannot just sit back and wait for it to happen nor can we continue the policies that have given us the recession.

Crimson: What should America's number one economic priority be?

Wright: To get people off the unemployment roles into productive roles. There should be short range, intermediate range, and long range programs to bring this about. In the short range there should be a federal works jobs program to employ some of those long-term unemployed in useful public works construction. The intermediate and long-term programs should involve job-training and job retraining so as to make the transition possible into more highly technological skills. In addition to that, we need to direct capital investment into modernizing. America's aging industrial plants and machinery so that the American working place could be just as modern and just as efficient as those in Japan or West Germany. Whether it is to be done by tax credits, by government loan guarantees, or by renewed Reconstruction Finance Corporation type operation or some combination of the three remains to be seen.