ABSTRACT
The President’s Economic Report and the CEA’s Report in early 1968 had both been rather pessimistic about what would happen to the economy if Congress continued to delay action on the August 1967 proposal. The administration’s fiscal policy appeared to have little effect on the economy. The tax hike had come too late and was too small to reverse the economic pressures that had been building since 1965. In the last Economic Report of the Kennedy-Johnson years in January 1969, the Council noted the unprecedented economic growth that the nation had undergone since 1961. The CEA and most of the administration’s other economists had approved of a more accommodative monetary policy because of their reading of construction industry trends and their fears of excessive fiscal restraint. Arthur Okun had never claimed that the surcharge would end the nation’s economic problems, but he had hoped that the government’s fiscal restraint would set a good example for business and labor.
