Carter team now sees 'full-fledged recession'
Washington — Old-time observers here are saying they never can remember a time when a President has walked so calmly -- almost expectantly -- into a recession, particularly one that might cost him re-election.
Yet, once again a top presidential economic adviser -- this time Secretary of the Treasury G. William Miller -- has, in the most detached manner, forecast a full-fledged recession for this fall.
Mr. Miller and, a few days before him, Secretary of Labor Ray Marshall, were telling reporters in a very businesslike way over breakfast that the President would be running this fall with both recession and inflation on his back -- although both foresaw a lessening in the pace of inflation by that time.
Six months ago, Mr. Miller told this group, "We are halfway through the recession." Now he said he was "wrong" about that forecast.
He said, however, that all indications now point to a recession that will be going strong as the November election approaches. And he added that the President was fully aware of this.
The political implications of an administration heading of a recession -- one it would have preferred to have weathered by this time -- are:
* The increased joblessness will certainly cut into the support from blue-collar workers and from blacks which has traditionally gone to a Democratic presidential candidate since the days of Franklin d. Roosevelt. A falloff of support from other, poorer ethnic groups, including Hispanics, could also be expected.
* Since the Presidential is using the old-time conservative approach to try to cope with inflation -- cutdowns in spending, an effort to balance the budget, and with no promise of a tax cut -- he also goes into the election with the prospect of losing widespread support from the liberal community that traditionally backs a Democrat.
* Already Mr. Carter's Democratic opponent, Sen. Edward M. Kennedy, is profiting from the President's present and projected economic woes.
Should Senator Kennedy gain new momentum in the Pennsylvania primary April 22 , it will be because the Democratic voters there are protesting the Carter approach to dealing with inflation as well as his inability to free the hostages in Iran.
In fact, the Carter "collapse" that Kennedy backers are hoping will come about, thus rescuing the senator's candidacy, is based largely on this assumption: that Democrats across the nation will soon rise up and vote against a President who seems to be almost welcoming a recession which, with joblessness and sky-high interest rates, will make life miserable for the millions of less-advantaged Americans who usually vote Democratic.
One presidential adviser, who asked for anonymity in exchange for his views, said: "It will be very difficult" for Mr. Carter to win in November if the US is in the midst of a recession. "But there was no other acceptable choice. There was no way to slow down the inflation without having this recession effect.
"If we didn't go this route, we'd be talking about 30 percent interest soon. A recession is better than having that."