Word: pechman
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...needs to invest more of the national income. Its rate of investment, currently about 15% of gross national product, is one of the lowest in the industrialized world (TIME, July 28). But many liberals doubt that Simon's plan is the right way to go about it. Joseph Pechman, a member of TIME'S Board of Economists, says that the Treasury Secretary's proposal "by and of itself will have very little impact on total savings." Pechman contends that Simon's plan should be considered only as a part of a broader tax reform package...
...that builders still have a full year's supply of finished but unsold houses to dispose of. Automakers last week reported that sales during early May, normally a high point in the spring buying season, fell 21% below the already depressed levels of a year earlier. Thus Joseph Pechman and Nathan see very modest economic growth later this year and a moderate advance...
Liberal members of the board, such as Okun and Pechman, think that a faster upturn is possible, but it would require more Government stimulation of the economy. Most would wait until late this year or early next to see if big new tax cuts or spending programs are necessary, but they believe that some steps could be taken now. At minimum, they think the income tax cut should be extended through 1976 rather than being allowed to expire on Dec. 31, as it will under present law; Congress is almost certain to agree. Some members would also have the Federal...
...Pechman, Okun, Nathan and others retort that the economy is operating so far below its potential that for at least the next 18 months or so, a rekindling of inflation need not be feared. They are concerned about inflation from a different aspect: they believe that the savagery of the recession and the subsequent drop in demand should have forced a sharper slowdown in the rate of price increases than has, in fact, occurred. Businessmen, they suspect, are refusing to cut prices partly because they want to keep profit margins up, partly because they do not think that price cuts...
None of the Board members expect the Administration's grim scenario to be played out, however, because they are certain that Congress will appreciably expand the President's budget. Pechman, for one, believes the projected deficit for fiscal 1976 will have climbed by $13 billion or more when Congress is through with the budget. For example, Ford wants to reduce Government spending this year by $17 billion through, among other things, limiting the mandatory increases in federal pay and Social Security and boosting the price of food stamps for the poor. But the swift approval that the House...