Ike and the Economic Outlook

March 19, 1956

It is still too early to say precisely what effect the willingness of Mr. Eisenhower to run for a second term will have on the future of business.

We cannot judge too much from recent mercurial reactions of the stock market. At the moment the most probable outlook is for a race between Mr. Eisenhower and Stevenson. But it is far from certain that the outcome will be the same as four years ago. Mr. Eisenhower’s personality and policies are better known to the voters now than they were then. The impression left by his personal earnestness, candor, dignity, sense of duty, and absence of malice is perhaps even more favorable now than in 1952. But his reputation as an efficient administrator, or as a statesman with a firm grasp of political and economic principles, has considerably diminished. And any turn for the worse before November in either the domestic or the foreign situation will hurt his chances.

He started off well. He promised a drastic reduction of governmental expenditures, and a balanced budget. He ended a stalemated war in Korea. He removed price controls. But in the last year—and especially since his heart attack—his program has turned more and more into a mere extension of the political and economic policies of the New Deal. Details of the drift toward “ever-expanding Federal power and paternalism” were summarized in this column of Aug. 22 last. Recent developments have emphasized present New Deal tendencies in foreign aid, farm aid, housing aid, loose fiscal policy, big spending, and money and credit expansion to sustain an inflationary boom.

The net result of these recent policies and tendencies has been to alienate the conservative Republican vote, which constituted a large and perhaps determining factor in the election of 1952. In recent months, moreover, Mr. Eisenhower and his aides have made several grave political blunders. The two most important were Secretary Dulles’s inept “brink of war” interview, and Mr. Eisenhower’s illogical veto of the natural-gas bill in a message which cast doubt upon the integrity of the votes of the very senators who thought they were supporting him.

As a result of all this, it is extremely doubtful that the Republicans can win a majority in the forthcoming Congress. It is even far from certain that Mr. Eisenhower can win the election against Adlai Stevenson. For even if neither side were to say another word about it, Mr. Eisenhower’s heart attack is bound to be an important issue in the campaign. The voters are certain to weigh much more heavily than they usually do the possibility that the Vice Presidential candidate may become the President. Stevenson, on his side, is a very articulate, astute, and ruthless campaigner, adroit in making mountains even out of molehills. It would be the height of folly for the Republicans to ignore Senator Knowland’s warning that in the forthcoming election “not a thing can be taken for granted.”

Mr. Eisenhower, again, is repeating and magnifying the very blunder that defeated Governor Dewey in 1948. This is the blunder of presenting to the electorate a halfhearted copy of the New Deal, on the theory that this will capture the “middle of the road” voters, and that the regular orthodox Republicans have “no place else to go.” These voters, however, did and do have one place not to go—and that is to the polls. They refrained from doing so in the millions in 1948. That is what defeated Dewey.

In sum, in a race today between Eisenhower and Stevenson, the voters would be presented, so far as policy is concerned, only with a choice between the original New Dealer and their Johnny-come-lately imitators. Those voters who look with concern upon the steady growth of centralized government, of paternalism, of big spending, of subsidies for every pressure group, of continued inflation, and the steady erosion of states’ rights, will have no candidate who reflects their views—except in the improbable event of the formation of a third party of conservatives drawn from both the Republican and Democratic ranks.