West Germany after World War II advocated enlarged public spending and deficit financing as means to achieve prosperity but that the German Government disregarded their advice. In a recent illuminating book, "Fiscal Policy for Growth Without Inflation: The German Experiment," Frederick G. Reuss demonstrated how the German Government's conservative budget policy was followed by spectacular economic growth.31 The proof is yet lacking whether a deficit policy improves a country's economy or whether it only helps temporarily to cover up an underlying imbalance or deficiency. Does public spending reduce unemployment? The example of public works It may well be said that such historical comparisons and analyses are interesting enough but cannot disprove an obvious fact: Government can, by spending substantial sums which were not collected by taxation but created through the central banking system, place large numbers of jobless workers on its payroll or have them employed by giving contracts to private industry. The most frequently cited example of putting idle men to work is public works expansion. An enlarged public works program was approved in 1962, and additional authorizations are now under consideration in the House Public Works Committee.

It has been estimated that $1 billion in new public funds could put 100,000 additional men to work on construction.32 Would this be a net addition to employment or could the award of $1 billion in Government contracts have an adverse effect on prices, private demand and other employment?

Construction prices have been rising much faster than other prices for as far as our statistics go back (to 1915). Taking 1915 as 100, prices and wages stood in mid-1963 as follows:

Building trade union hourly wages_---- 856 Source: Construction Review, September 1963 and Statistical Supplement.

stead of $15,000. Large numbers of lowincome earners have been driven out of the housing market and remain in substandard dwellings.

In other words, a large public works program, while directly employing additional workers, would tend to push prices up even faster and to eliminate more marginal wouldbe buyers from the housing market. It would depress private demand, and in the end, might lead to less aggregate employment in construction.

Do budgetary deficits lead to inflation? The widespread aversion to governmental deficit spending is related to one common fear: that it would lead to inflation. Few can forget that the dollar lost half its value between the mid-1930's and the early 1950's.

Opponents to spending restraint reply that prices have been rising very slowly over the past 10 years in spite of sizable deficits. Consumer prices increased an average of only 1.5 percent per annum and wholesale prices have remained stable for the past 5 years. This does not suggest an automatic or inevitable correlation between deficits and prices. Moreover, we are told, there is no likelihood of inflation as long as we have sizable unemployment and unused productive capacity.

But unemployment, though substantial, is not uniform across the board. It is concentrated at lower levels of skill. Added demand may not provide many new jobs for laborers or miners but would strengthen the bargaining power of employed workers and also lead to more overtime and more moonlighting.

The upward trend in wages continued through the period of heavy unemployment. Prices rose only moderately because companies managed to cut costs-i.e. did less hiring and narrowed profits, which in turn affected investment.

If deficit financing were an effective method to accelerate economic growth and reduce unemployment, few countries would have a serious problem. All their governments would need to do is to run the printing press and spend more than they take in. In fact, several dozens of countries in Asia, Europe, and Latin America, in various stages

Economic Indicators, October 1963. U.S. Bureau of the Census, "Historical Statistics of the United States, 1960."

Construction wages and prices continued to rise more rapidly than other wages and prices right through the period of heavy unemployment since 1957. The offering of huge Government construction awards would have an impact on wage negotiations, lead to steeper boosts in contract renewals and result in still higher construction prices.

A one-family house now costs 5.4 times as much as an equivalent house would have cost 50 years ago, while other prices, wholesale or retail, multiplied only 2.6 times or 3 times respectively. Obviously, many more houses could be sold if construction prices had risen only in proportion to other prices and if a modest residence would now cost $8,000 in

31 The Johns Hopkins Press. Reuss also showed what happened when the German Government abandoned the steeply progressive tax structure which the Allied Control Council had imposed in 1946, and sharply reduced progression in the income tax while increasingly relying on consumption taxes: The economy boomed and Government revenues increased.

32 This does not consider the so-called secondary (offsite) employment, nor the fact that much of the need would be for skilled workers and technicians rather than for semiskilled workers and laborers who constitute the bulk of the hard-core unemployment.

that time and again over the past 1,000 years-almost always with catastrophic re

sults.

Such comparisons, we are told, are irrelevant because we are not faced with runaway inflation. A moderate and gradual expansion of public demand is not likely to boost annual price rises by much more than the 1.5 percent per annum which we have experienced for the past 10 years. This is a small price to pay for accelerated growth.

But a continued upward trend in prices of 1.5 percent per annum is not quite as harmless as it may appear. It means an increase of 50 percent in 27 years. It may cause mortgage money to cost 6 percent per annum instead of 4.5 percent. So the interest cost of buying a home-a large share It keeps the interest cost of Federal, State, of the total cost will be one-third higher. local, and corporate bonds high because lenders will try to protect themselves against loss of principal value. It shrinks the purchasing power of millions of persons whose income does not rise with the Consumer Price Index or the next contract renewal.

Last not least: the deficits we have experienced in recent years have not brought rapid economic growth or full employment. Has this caused the advocates of deficit spending to reexamine their premise?

Quite

the contrary: They now assert that deficits have not been big enough and ought to be enlarged. If larger deficits do not end high unemployment there will be clamor for still bigger ones.

Deficit financing is like taking narcotics, it is habit forming. To produce a pleasant

sensation, the doses must be steadily increased and the patient becomes wholly dependent on them. If a $5 billion deficit won't bring full employment and 5 percent annual growth in GNP, why not try $10 or $20 billion? The President has already indicated that if the present program-which would mean an initial deficit close to $10 billion-is not successful, other means would have to be found. Those other means, it is implied, are enlarged Federal expenditures. The growth rate of Federal spending-too rapid or too slow?

In view of the public's uneasiness over tax cuts at a time of big deficits, the President recently announced his intention to keep spending under control. In a letter to the chairman of the House Ways and Means Committee he declared that "our long-range goal remains a balanced budget in the balanced full employment economy" and that "tax reduction must also, therefore, be accompanied by the exercise of an even tighter rein on Government expenditures." 33 This was written in response to a request in the preamble of H.R. 8363 (sec. 1):

"Congress by this action, recognizes the importance of taking all reasonable means to restrain Government spending and urges the President to declare his accord with this objective."

We may ask: How serious are such general declarations to be taken? What recommendations have come forth to implement them? How do they harmonize with the administration's general policy?

The record provides the answer. At his news conference on April 3, 1963, the President declared that nondefense expenditures ought to rise faster, and added:

"I am concerned that we are not putting in enough, rather than too much, because the population of the country is growing 3 million people a year."

Over the past 10 years the country's population has grown 19 percent, while the Federal Government's non-war-connected expenditures jumped 245 percent.34 If an increase of that size within 10 years is held to be "not putting in enough," how much is enough?

gress over a hundred new or enlarged spendThe President has sent to the 88th Coning proposals which would add $3 billion in the fiscal year 1964 and more than $17 billion in a 5-year period. He demanded that the proposals be promptly enacted and did not indicate a willingness to withdraw or postpone any of them. In fact, the House was advised that the exercise of an even tighter rein on Government expenditures would not

affect any of the President's recommendations for new programs.35

We may ask: How are spending restraints to be implemented if they are not to affect programs which have not even been enacted yet? Would not a moratorium on new programs be easier to carry out than a cutback on established operations? If the administration intends to put the brakes on expenditures, why does it so strenuously object to formalizing restraints? Restraints of the type suggested in the House amendment to recommit H.R. 8363 could be speedily amended or repealed should circumstances arise which require and justify such action.

In his speech at Yale University on June 11, 1963, the President declared that for the last 15 years the Federal Government has grown less rapidly than the economy as a whole or any major section of our national life and very much less than the noise about big government.

The official record, however, reveals that between the fiscal years 1948 and 1963, GNP increased 129 percent, Federal spending 220 percent (table XI). War-connected outlays expanded 146 percent, while spending for domestic purposes jumped 525 percent, which is more than four times the growth rate of the GNP.

An analysis of expenditure trends, as summarized in table XI, suggests the possibility of a danger far worse than runaway expenditures of inflation: national security projects may be deferred or rejected in order to make resources available for welfare and other civilian purposes. That would not at all be a new experience. In a careful study of the postwar record of defense budgeting, Samuel P. Huntington of the Institute of War and Peace Studies at Columbia Univer

celed by the administration, suggests that the tendency described by Huntington appears to continue. Priority for Federal funds is accorded to numerous new or expanded welfare and other domestic programs which are advanced simultaneously with the cancellation of national security projects.37

Officials of the Department of Defense have recently indicated that defense spending will level off or even decline in the next few years. But the President stated in a speech delivered only last week that he desired his many new domestic spending proposals to be enacted by Congress.

The counter argument, favoring spending for domestic purposes, usually points at activities which are in the national interest and declared to be in need of Federal financial assistance. The question is whether many of those purposes could not be effectively promoted or aided by means other than Federal appropriations.

For example, education, which is the subject of more than two dozen programs submitted by the President to the 88th Congress could be more appropriately helped by tax concessions-for school taxes, for tuitions and other educational expenses, for gifts to educational institutions-than by the enactment of new expenditure programs. Many such proposals are pending.

Since revisions of the revenue laws are under the jurisdiction of your committee, and since several such amendments to H.R. 8363 have been introduced, with several more to follow, I am outlining in the fourth and last part of this statement, how higher education could be helped by tax credits. Summary

Source: "The Budget of the U.S. Government, 1962," p. 979; "The Budget of the U.S. Government, 1964," p. 430; "The Budget in Brief, 1964," p. 63.

There seems to be less reluctance than in prior years to recommend a higher debt ceiling. But recent experience with the abandonment of weapons systems projects, such as Skybolt, B-70 (later RS-70), Rover, and lately the nuclear carrier, which were requested by the armed services and declared to be essential by military experts but can

35 CONGRESSIONAL RECORD, Sept. 24, 1963, p. 17907.

36 Samuel P. Huntington, "The Common Defense: Strategic Programs in National Politics," New York, Columbia University Press, 1961, p. 221. Further details in Warner R. Schilling, Paul Y. Hammond, Glenn H. Snyder, "Strategy, Politics and the Defense Budgets," New York, Columbia University Press, 1962.

The need to cut the exorbitant income tax But to cut taxes at a time of large budgetary deficits and rising public spending without tangible steps to apply expenditure restraints may prove self-defeating. It may produce an initial spurt in the economy and a slight reduction in unemployment. But a material and sustained rise in the rate of economic growth and in employment requires that the Government budget be balanced over the business cycle. Experience has shown that mere intent to control expenditures is not of itself strong enough to resist the ever-present pressures. It should be accompanied by tangible evidence and enforceable statutory restrictions.

IV. CAN TAX CREDITS HELP HIGHER EDUCATION MORE EFFECTIVELY THAN GRANTS AND LOANS?

The financial requirements of institutions of higher education (IHL) will sharply increase in the next few years as the wave of postwar babies starts to graduate from high schools in 1964 and enrolls in colleges and universities. Attendance at IHL is expected to increase 50 percent or more during the balance of the 1960's.

Educational needs and financial prospects The foremost need is for an enlarged faculty of high caliber. This calls for substantial salary increases in order to attract a sufficient number of qualified men and women and to motivate gifted young people to seek an academic career. It also requires a substantial expansion in the physical plant.

Some observers believe that the present sources of income for instructional purposes-mostly: State and local government appropriations; student tuitions and fees;

gifts and endowment earnings—will not pro

37 See: W. Glenn Campbell, "Assuring the Primacy of National Security," and Roger A. Freeman, "National Security and Competing Costs" in: "National Security: Political, Military, and Economic Strategies in the Decade Ahead," Center for Strategic Studies, Georgetown University, Hoover Institution Publications, New York, Frederick A. Praeger, 1963, pp. 803 ff., 963 ff.

vide sufficient support in the years ahead and that revenues ought to be supplemented by Federal funds. Certainly the number of those who so believe has sharply increased over the past decade. The issue is controversial but I shall not discuss it further in this statement.

The fact is that no President of the United States ever has recommended Federal grants for the general support of IHL, either for operations or for capital improvements. President Kennedy has proposed construction loans and a few small grants for specified purposes. But loans to build academic facilities offer little help to most institutions and to many no help at all.

State constitutional and statutory restrictions prohibit public IHL from incurring general obligation debt without the approval of the legislature or the voters. If such approval is given, States, cities, or institutions can usually sell securities at lower interest rates than the Federal Government because of the exemption feature. Private IHL have shied away from debt financing except for revenue-producing facilities such as student housing or dining halls. Bonds for academic construction would require principal and interest payments from general revenues and thus restrict funds available for salaries and operations in future years. No such bonds have been offered in the market for several years.

The loans available to private schools under title III of the National Defense Education Act have remained largely unused, and 90 percent of the authorization lapses each year for lack of applicants.

Both Houses amended the President's recconstruction grant programs. No agreement ommendations in 1962 by inserting small could be reached between the two Houses, and no bill was enacted.

In 1963 both Houses again passed small construction grant bills. Conflict over the

form of participation of private IHL divides

the Senate and the House versions. This could again end in a deadlock. But even if the differences were compromised, and subsequent litigation would not becloud the future of the program, the extent of aid would be small.

IHL expended in 1962 over $8 billion and will by 1970, according to some estimates, need almost twice as much or more. Construction grants of $180 million (Senate version) or $230 million (House version) would equal less than 2 percent of the total budget. Where will the other 98 percent come from if, as many believe, the existing sources prove inadequate? The difficulties which the approval of even the small construction grants have encountered, and the fact that final enactment of even that program is not yet assured, suggest that prospects for a substantial increase, let alone extension to the area which most urgently needs greater support; namely, salaries and operations, are dim indeed.

Tax relief to aid higher education It is for this among other reasons that numerous proposals have been introduced to achieve by indirect means what apparently cannot be accomplished directly. In each Congress, over the past 10 years a growing number of bills were introduced providing for tax relief to those who now support higher education. About 100 such bills were introduced in the 87th Congress, and more than 120 were pending in the 88th Congress as of Close

May 1, with many added since then.

to one-fourth of all Members of the Senate have sponsored educational tax relief bills.

However, none of those proposals has ever been advanced or come close to enactment. Upon analysis of the various proposals it seems to me that there is a good and valid reason why no further action was taken on those bills. They would not have achieved what they were expected to do and would

The purpose of indirect aid to higher education is (1) to augment the financial resources of institutions; (2) to aid talented young persons with aspirations for higher education means.

from families with limited

Most of the pending bills meet neither of these objectives. They either permit the deduction from adjusted gross income of tuitions and fees (and possibly also some other college expenses) or grant an increase in the number or amount of personal deductions.

Students and families in low-income brackets would recover 20 percent (or under the provisions of H.R. 8363, 14 to 17 percent) of their expenses and still have to bear 80 percent of the cost. Families in high-income brackets would be reimbursed for up to 91 percent (under H.R. 8363 schedules, up to 70 percent) of their outlays.

Boards of trustees of IHL would be reluctant to boost tuitions substantially if students from low-income families would have to bear 80 percent or more of the increase. Those plans would therefore not add substantially to the financial resources of IHL nor help students from mediumand low-income families sufficiently.

Educational tax relief plans which permit deduction of college expenses or additional exemptions would channel most of the benefits to high-income families, because of the graduated structure of the personal income tax. Most criticism of educational tax relief has been directed at this feature and Treasury Secretary Dillon again emphasized it at the hearings of your committee on October 16. This concentration at the top is probably responsible for the lack of action on most of these proposals. Restrictions have been suggested such as an upper income limit for eligibility at about $20,000 in S. 2270 by Senator GOLDWATER, and deduction from expenses of 5 percent of adjusted gross income, in an amendment to H.R. 6143 introduced on October 21, by Senator KEATING. Such provisions would prevent large benefits from going to families which do not need them but they would not increase aid to low-income students or help the institutions.

This shortcoming would be slightly, but not very materially, remedied by the use of a tax credit of 30 percent of college expenses, as was proposed by the American Council on Education and several other organizations in the years 1954 through 1959, and as incorporated in S. 800 by Senator McCARTHY.

A 100-percent credit-that is, a full offset of tuitions against tax liability-would be effective in aiding students from low-income families and would encourage institutions to raise fees because it could be done without adding to the burden on the students.

Objections have been raised to this proposal because it would involve a heavy revenue loss if the maximum dollar ceiling were set high, and would not be of sufficient help if it were set low, e.g. $100, because of the wide range in the size of tuitions among institutions. Equity between private and public IHL, between institutions with low and with high tuitions, also poses a difficult problem.

A sliding tax credit schedule When I was asked by the Senate Committee on Labor and Public Welfare last spring to testify on pending aid to education legislation, I studied this problem and drafted a sliding tax credit schedule which would permit a 100-percent tax offset for the first $100 in tuitions and fees, a 30-percent credit for the next $400 (between $100 and $500), and a 20-percent credit for the next $1,000 (between $500 and $1,500).

My proposal appears in the hearings of the Committee on Labor and Public Welfare (pp.

SIONAL RECORD on May 27, 1963. It is incorporated in S. 2269 by Senator GOLDWATER and in its companion bill H.R. 8981 by Representative THOMAS B. CURTIS of Missouri.

For reasons of space I shall not repeat here all the details of the plan which I submitted to the other committee.

The concept of a sliding tax credit schedule for higher educational expenses was taken up in the Senate on June 6, 1963, by Senator HUMPHREY (CONGRESSIONAL RECORD, p. 10253):

"It is essential that an across-the-board tax credit program be initiated to assist every person currently facing the considerable expenses associated with higher education. * #

*

"I have sponsored similar tax credit legislation for many years. However, the bill I introduce today is, in my opinion, a significantly improved measure over all earlier versions.

"Tax deductible, additional exemption and tax credit bills share a common purpose: First, to assist persons financing a college education and, second, to provide indirect assistance to the institutions of higher education."

Senator HUMPHREY then cited from my testimony of May 27th and continued:

"The sliding tax credit schedule provides a sensible and workable system of Federal assistance that helps every student, indirectly helps both public and private institutions, and does so in a manner that in no way interferes with individual or institutional freedom or policies. This bill, providing for a declining tax credit for expenditures on tuition, fees, books, and supplies, mitigates the distortion found in the large majority of bills that rely on tax deductions, additional exemptions, or nonvariable tax credit.

"While this tax credit proposal would not solve all the financial problems related to higher education, it would represent a significant contribution well within our national means. It would provide this assistance in a manner that avoids any argument about Federal control of education and also the nagging question of church-state relations. Moreover, it would provide this aid without having to expand the Federal bureaucracy to administer the program.

"Support in the Congress has been growing for this general approach to the problem of Federal aid to higher education. I know the appropriate committees in both Houses are giving these proposals careful scrutiny and consideration. I hope that the administration will consider seriously requesting such legislation from the Congress."

Senator HUMPHREY slightly modified the tentative schedule which I had drafted. Educational tax credit schedules FREEMAN

Up to $100-
$100 to $500---
$500 to $1,500‒‒‒‒‒
Maximum credit, $420.
SENATOR HUMPHREY

Up to $100‒‒‒‒
$200 to $500__.
$500 to $1,000.
$1,000 to $1,500----

Maximum credit, $485.

Percent

100 30 20

75

40

30

20

The tax saving, or revenue loss, under my schedule may be estimated at $700 million per annum or more. Institutions may be expected to recoup as much as three-fourths of that amount through increased tuitions. They could apply the added funds to salaries or earmark part for the service of bonds issued to finance the construction of academic facilities.

Congress could determine by how much it desires to aid IHL and revise the credit schedule accordingly as time goes on.

The point has been made that tax credits would be of no help to students from families With such low income that they pay no income tax. That point has little validity, if any. While no statistics are presently available on the number or percentage of families of college students which pay no Federal income taxes, it may be estimated that it is quite low and certainly not higher than 10 percent of all students. Most of those students are now recipients of scholarships and thus pay no tuition, nor would they have to pay the increased tuitions that would follow the enactment of such a plan.

It is also possible to make these tax credits unconditional. In that case, the students or their parents would compute their income tax, apply the credit, and be entitled to receive a credit balance in cash.

Tax credits for donations to education The. National Government could also materially aid IHL by permitting tax creditsrather than mere deductibility from the tax base of private donations, as the American Association for the Advancement of Science proposed some years ago. The present high marginal rates make such donations inexpensive to wealthy individuals, while persons in low-income brackets must bear 80 percent (under H.R. 8363, 83 to 86 percent) of the cost of their gift. As a result, large numbers of alumni with modest incomes do not contribute. By permitting tax credits, at 100 percent with a specified dollar maximum or according to a graduated schedule such as I suggested for tuitions and fees, persons in low- and medium-income brackets could be encouraged to donate more liberally to higher education and hundreds of thousands of additional donors could be found.

Gifts to higher education amounted to more than $1 billion in 1961, according to the Council for Financial Aid to Higher Education. By materially widening the range of potential contributors, the granting of tax credits could very substantially augment this important source of support for IHL. The same principle could also be applied to elementary and secondary schools and tax credits permitted for local school taxes-as proposed in S. 2270-and for tuition payments and gifts.

Summary

The legislative history of proposals for Federal aid to higher education suggests that a program of grants-in-aid of substantial size for the general support of colleges and universities, whether for operations or construction, is not likely to be adopted. A small construction program such as is now pending in conference between the two Houses, even if enacted, would be of relatively little help compared with the huge amounts which the institutions will need in the years ahead.

Higher education could be effectively aided by the Federal Government through the granting of tax credits for educational expenses which would help institutions as well as students and their families. Such a plain avoids the bitter controversies over aid to church-connected schools and over Federal control of education. A sliding tax credit schedule would allocate aid where it is needed the most and could best meet the diversity in the size of tuitions and fees and between the requirements of public and private institutions.

Donations to higher education could be effectively encouraged and the range of donors expanded by the granting of tax credits.

Tax credits for local school taxes and school tuitions would be of material assistance to elementary and secondary public and private schools.

Graduated tax credits for tuitions and fees in higher education, such as I outlined, and tax credits for donations to higher education, are proposed in S. 2269 by Senator

GOLDWATER (and its companion bill, H.R. 8971, by Representative THOMAS B. CURTIS). I suggest that H.R. 8363 be amended to incorporate S. 2269.

WE FACE A NEW KIND OF WORLD Mr. HUMPHREY. Mr. President, Mr. William Attwood, our Ambassador for the past 2 years in Guinea, returned recently to the United States. A former foreign editor of Look, he has just written an incisive, provocative article taking a fresh view of our foreign policy from where we stand today.

He sums up his impressions of "how little people seem to realize how much the world has changed in the last few years, how much has been accomplished and, most important, what remains to be done if our children are to grow up safe and free in this revolutionary era."

He finds that we have made solid gains, or achieved hopeful improvements all over the world. Drawing a balance sheet of these against the difficulties and real problems, he finds the world view from Washington "considerably more hopeful" than it looked 3 years ago. tions that Communists score all the points in the cold war, that Asia and

He finds sheer "nonsense" in the no

Africa are lost, that the U.N. is a failure, or that Castro is a dangerous threat.

Professional anti-Communists who make a good living writing this, and melodramatic press coverage, are made responsible for this confusion.

Mr. Attwood reminds us that we are living in one of the most revolutionary periods of history; that there are world forces over which we do not have omnipotent control, "our policies can help guide the course of history, but they can't alter it or dam it up"; and finally that the cold-war slogans and attitudes we have lived with since 1946 are getting out of date.

The revolutions in the world are political, economic, biological, and scientific. Together they have made a different world:

Its battles can no longer be fought with bombs, but with modern factories and technical aid, with medicines and teachers, with rice and respect.

We cannot remake the world in our image and should not try. Let us be satisfied to make it safe for diversity. This is the aim of our foreign policy. It is catching on. We are no longer distrusted, as the Russians are beginning to be, in many corners of the world.

In the new phase of the cold war, "the big unfinished job is keeping the poor countries in the world from getting poorer while the rich get richer. The alternative is the kind of chaos and violence that the Chinese Communists will certainly exploit wherever the Russians do not."

If this job is unfinished, it is because it is hardly begun. Our foreign aid programs have held the line but the U.S. Government cannot do the job alone. Other countries, international agencies, private industry, and capital have an important and necessary role to play. This does not mean drastically cutting our foreign aid in the foreseeable future. We have an important role to play out

side the scope of private investment: in education and vocational training, in surplus food for hungry people, in launching selected agricultural and industrial projects, in providing technicians like Peace Corps volunteers, in coordinating development programs, and in discovering and encouraging opportuni

ties for investors.

Our foreign aid is accomplishing much. It is not a giveaway. It costs less than 1 percent of the gross national product, and less than 10 percent of what we spend for military purposes:

What a soundly conceived foreign-aid program does is to enable America to take part in the worldwide war against poverty. And influence on the course of history. For in taking part is the only way we can exert the world community, we Americans are by far the richest family in town, and if we turn our backs on our neighbors, we can forget about being community leaders.

Yes, we have come a long way and done pretty well since January 1961. It is important to keep the momentum and help it gather strength. Mr. Attwood's article makes a cogent, realistic case for our foreign policy and for the fact that we should have more confidence and less

anxiety.

I heartily recommend it to my colleagues and ask unanimous consent that it be printed in the RECORD.

There being no objection, the article was ordered to be printed in the RECORD, as follows:

WE FACE A NEW KIND OF WORLD—OUR POLICIES CAN HELP GUIDE THE COURSE OF HISTORY BUT THEY CAN'T ALTER IT OR DAM IT UP

(By William Attwood) (NOTE.-The Russians have given up the idea of risking war by trying to bluff us out of Berlin. The once-monolithic Communist movement is cracked wide open, as the feud between Red China and the Soviet Union gets hotter. Thirty-two independent African nations now outnumber the Western allies in the U.N.)

Nearly 3 years ago, when I was foreign editor of Look, I wrote a piece called A Preview of Kennedy's Foreign Policy. In it, I said the people of America would have to get used to a President who believes in action, and I quoted Kennedy as saying he sought the job "because I want to get things done."

For most of the years since I wrote that article, I have been involved in a small way in helping this administration get some things done in Africa and elsewhere. Now, home again for a while, I've been asked by Look's editors to take a second look at Kennedy's foreign policy in the light of where we stand today.

The best way to start is to say that I've been struck, since I got home, by how little people seem to realize how much the world has changed in the last few years, how much has been accomplished and, most important, what remains to be done if our children are to grow up safe and free in this revolutionary

era.

This is disturbing, if only because a democracy like ours can't act fast or update its policies without the support of public opinion. And people will support what needs to be done only if they can visualize the opportunties as well as the risks, and see some signs of progress.

Yet it appears that doubt, anxiety, cynicism, and indifference still permeate much of our thinking about foreign affairs. This is hard to explain. Since 1960, things have not always worked out the way the President hoped-no one, for example, forgets the Bay

of Pigs but enough has happened to justify a good deal more optimism than you can find among your friends and neighbors.

So let's begin by taking a look at some of the more hopeful developments of the past 3 years:

In the Congo, thanks to our decisive sup

port of the United Nations, order is replacing chaos, and Soviet ambitions have been

frustrated. Elsewhere in black Africa, na

tion after nation has achieved independence with less bloodshed than takes place anhas helped their leaders, as in Guinea, resist

nually on U.S. highways. And American aid

Communist subversion and preserve their independence.

Laos, which was all but lost despite our costly commitment in men and money, has been neutralized. The outlook is better than it was during the 1960 fighting, and now the neutralist Prime Minister and his troops are actively resisting sporadic Communist attacks. The wall is

still up, but, more than ever since the Cuban

The big squeeze is off Berlin.

crisis, the Russians know better than to risk war by trying to bluff or bluster us out of the city.

In Algeria, who would have thought that a

Socialist but nonalined government would called a "dirty war"? Timely U.S. aid soon after independence helped make friends where we might have expected enemies.

have emerged from what even the French

In the Middle East, the Communists have suffered serious reverses in the last year, particularly in Iraq. And the multimillion

dollar Soviet aid program in Egypt has failed to pay off in political influence.

been better. India remains nonalined, but Red China's aggression has shown the world's second most populous country where the danger lies.

United States-Indian relations have never

Fidel Castro still runs Cuba, but it's costing his Soviet backers a million dollars a day to keep him afloat, and he's no longer the hero he used to be in Latin America. We may not like him ranting on our doorstep, but he's likely to become more of a problem to the Russians than he is to us.

A test ban treaty with the Russians has been signed. The long, grim deadlock is broken, and the first tentative step away from nuclear war has been taken. It may be, as the President said, only the first step in a thousand-mile journey on the road to peace; but every sane man can rejoice that we have made a start.

Communist

And the once-monolithic movement has cracked wide open. We may have our family quarrels in the West, but what is going on between Russia and Red China is no mere quarrel; it's a feud of such proportions that the cold war, as we have known it, will never be the same again. Whatever challenges lie ahead, they probably won't include coping with an aggressive, single-minded, billion-strong Communist empire stretching from the Iron Curtain to the Yellow Sea.

None of this is to say that all's well with the world. The Alliance for Progress is still more a blueprint than a reality. Our grand design for European unity has blurred. In Vietnam, the war drags on, and the end is not in sight. And for most of mankind, poverty is still the rule, and freedom only a dream.

But on balance, the state of the world, as seen from Washington, looks considerably more hopeful than it did 3 years ago. This you would never suspect from listening to many of your fellow citizens. What you hear, all too often, is that the Communists are scoring all the points in the cold war, that Africa and Asia are as good as down the drain, that the U.N. is a failure, that foreign aid is wasted since nobody likes us anyway, and that Castro, shaking his fist on a Havana balcony, is just about the greatest

threat our country has faced since Pearl Harbor.

A lot of this nonsense gets disseminated by the professional, self-styled anti-Communists who make a comfortable living scaring people all over the country, and who have a financial stake in making the Communists look stronger than we. Some of it also comes from the press, where bad news always rates the biggest headlines and good news is usually no news. But I suspect that the main reason for all the confusion about foreign affairs is that history is moving too fast these days for the average man to keep it in proper focus.

To understand what's happening in the world today, and to avoid getting confused or discouraged, we Americans in particular need to keep three things in mind:

The first is that we are living in one of the most revolutionary periods in human history. The old colonial order and with it, the supremacy of the world's white, Christian minority-is vanishing. New nationsand new imperialisms-are rushing into the vacuum. This is the political revolution.

All of these new nations want to break through the sound barrier of modernization in a few years. I've just come back from one of them. Billions of people are hungry for the things we take for granted. This is the economic revolution.

But they are trying to do this in the midst of a population explosion that will double the number of people in the poor countries during the next generation. This is the biological revolution.

Meanwhile, supersonic flight, atomic energy, and the intercontinental ballistic missile have made the world much smaller and much more dangerous. No place on earth is very far away, and no one is safe. Never in history have so many people been at the mercy of so few. This is the scientific revolution.

Together, these revolutions have already made the world a far different place from what it was as recently as World War II. And we have to realize that its battles can no longer be fought with bombs, but with modern factories and technical aid, with medicines and teachers, with rice and respect.

The second thing we have to understand is that a lot has happened, is happening and will happen in the world, regardless of what the United States does or doesn't do. Too many people still believe that when things don't go our way, somebody in Washington must be at fault. But the fact is that while our policies can help guide the course of history, they can't alter it or dam it up. Castro and Mao Tse-tung came to power because their countries were ripe for revolution. Eastern Europe is behind the Iron Curtain because the Red army moved in during World War II. Charles de Gaulle may be a hard man to deal with, but there he is. In Africa, the tide toward independence can no more be reversed than the tide toward full equality in the United States. Those who think so, whether they are Portuguese colonialists or Southern segregationists, are living in a dream world. The choice today is either to curse the tide or to see to it that what is bound to happen, happens with a minimum of harm.

In short, being the strongest power on earth doesn't mean that we can impose our will, our system or our way of life on other countries. That's what the Russians try to do, and that's why they have made so little headway among the newly independent nations.

Fortunately, our aim-and our strengthis that we stand for free choice and not coercion. So long as a nation values its independence and does not threaten the freedom of others, we don't try to tell it how to manage its own affairs. This approach, this support for diversity instead of conformity, is the main reason why we are no longer

distrusted-as the Russians are-in so many corners of the world. People in the underdeveloped countries are beginning to realize that what we want for them is what they want for themselves-national independence, political stability and economic progress in freedom.

So when things don't seem to be going our way, all the way, let's not wring our hands or look for scapegoats. We're not going to remake the world in our image, and we shouldn't try. Let's be satisfied to make the world safe for diversity. That's already a lot.

The third thing to remember is that the cold-war slogans and attitudes that we've lived with ever since 1946 are getting obsolete.

In Western Europe, the threat of Soviet armed aggression has been successfully countered by NATO, and people breathe more easily. In Eastern Europe, the brutal discipline of the Soviet empire is not what it used to be under Stalin, and life is more tolerable. The Iron Curtain is there, but not so tightly drawn.

The Atlantic Alliance is no longer the only cornerstone of free world strength, and influence. In the United Nations, the Western allies are outnumbered by 32 African countries alone, to say nothing of the Asians. Winning the support of these nations, even at the risk of annoying some former colonial powers, is vital to our long-range interests as well as those of the world organization.

And all around the globe, we are beginning to see that the big problems of the next generation may be, as Arnold Toynbee predicted, less East-West than North-South. After years of nuclear stalemate and a balance of terror, the Soviet leaders may realize that exporting communism by force is a futile exercise; already the younger generation of Russians is far more interested in buying cars and TV sets than communizing the world. But the problem of closing the gap in living standards between the rich industrialized countries, mostly in the north, and the poor underdeveloped countries, mostly in the south, is rapidly becoming the biggest challenge the world has ever faced. Thus, if we can keep in mind that the world is in revolution, that the United States is not omnipotent and that the nature of the cold war is changing, we Americans will be in a better position to know where we stand and what we have to do. We may also conclude that there is more reason for satisfaction than for despair. That is certainly the mood among people in government whose job is working on foreign policy on a day-to-day basis. Unhappily, the professional agitators and headline seekers are those whose voices are more often louder in the land.

To look ahead, the big unfinished job is keeping the poor countries in the world from getting poorer while the rich get richer. The alternative is the kind of chaos and violence that the Chinese Communists will certainly exploit wherever the Russians don't.

I said this job was unfinished; actually, it has hardly begun. Our foreign aid programs have held the line here and there, but the task of helping the new nations develop healthy economies is far too big for the U.S. Government to undertake alone or even in conjunction with its allies. The necessary capital must and should come from private sources and international agen

cies like the World Bank.

Working in partnership with local firms and governments in the developing countries, American industry can give these fledgling economies a bigger push in less time, and in the process build up good will for American methods and products. One reason countries like West Germany and Israel are extending easy credits to Africa is that they foresee the day when the new

nations will be potential customers, anxious to buy the goods they're now getting as free samples.

Nor should we underestimate the political impact of U.S. private investment. In Guinea, at a time when Soviet technicians were trying to reorganize the economy along Communist lines, the only really productive enterprise was-and is a privately owned alumina plant in which half the capital, or about $75 million, was American. Thanks to the foreign exchange earnings of this plant, the Guinean Government was able to retain a measure of economic independence from the Soviet bloc. Its successful operation has been an object lesson to Africans who were inclined to believe Communist propaganda about rapacious American capitalism.

The problem thus far has been the reluctance of U.S. investors to risk putting money into countries they regard as unstable. Yet the paradox is that it takes capital investment to guarantee real stability and progress. Therefore, until greater confidence is generated, the solution would seem to lie in an expanded investment-guarantee program by the U.S. Government that would protect private investors against political risks such as expropriation.

This doesn't mean our foreign aid appropriations should be cut in the foreseeable future. Government has an important role to play in areas outside the scope of private investment; for example, in education and vocational training where schools and teachers are lacking, in providing surplus food where people are hungry, in helping launch selected agricultural and light industrial projects, in giving advice where it is requested, in furnishing technicans such as Peace Corps volunteers, in coordinating development programs with other free countries and international agencies, and in discovering and encouraging opportunities for American investors.

Nor would the American people want to cut down on foreign aid if they were fully aware of what it is and what it's accomplishing. Today, too many people still think that it's a kind of giveaway program-although about 80 percent of it is spent on American products here in America; that it's costing us a lot of money-although it totals less than 1 percent of our gross national product and less than 10 percent of what we spend for military purposes; and that it's designed to buy or bribe allies-although we found out some time ago that leaders who can be bought aren't worth having on our side.

What a soundly conceived foreign aid program does do is to enable America to take part in the worldwide war against poverty. And taking part is the only way we can exert influence on the course of history. For in the world community, we Americans are by far the richest family in town, and if we turn our backs on our neighbors, we can forget about being community leaders.

So there is work to do for all of us-in business as well as in government-who like to take part in the history of our time, for the next few years are going to be decisive in shaping the kind of world our children will inherit. There will still be dangers. But at long last, those of us nearing middle age can begin to see beyond the tensions that have been the trademark of our generation to the opportunities and challenges that lie ahead. As a nation, we Americans have done pretty well since the President summoned us, in January 1961, "to bear the burden of a long twilight struggle, year in and year out, 'rejoicing in hope, patient in tribulation,' a struggle against the common enemies of man-tyranny, poverty, disease, and war itself." Whether we continue to do as well, year in and year out, will depend on our ability, as citizens of a powerful country, to see the world as it is and not as some of us would like it to be; to act with wisdom and compassion, and to be unafraid.