FOREIGN' RELATIONS, 1I50iYVOLUME I


of additional areas where policy recomendations may be required
will depend in considerable measure on the size of new programs
that are likely to cme underconsieration by the Comitte, but the
following tentative listing is suggested:
  a) Meaqures to increasecapacity instrategic areas of-the economy
These might involve tax measures, credit measures, price support
programs or market guarantees ,(as in the case of agriculture, etc.
In some cases, clear identification of neede goals andthe ,reasons for
them nmight be enough to liift voluntary effort to the required levels,
  b) Measures to promote an efficient and equitable allocation of re-
sources. Depending on the size of newpirograms, such measures might,
if needed, range from-voluntary allocation agreements in selected fields
to more general types of allocation policies,.
  c) Measures to promote a stable and equitable distribution of pur-
chasing power. Again depending on the size of new programs recom-
mended, such measures, if needed, might range from purely voluntary
programs in selected areas to more general typesof price-wage policies.
tax policies, etc.
  d) :Finally, to the extent which seems desirable in the light of a
balanced assessment of other program recommendations and of gen-
eral economic developments, .ageneral program designed to promote
the full utilization of the United States potential for economic growth.
NSC 68, in the Council's view rightly, stresses the serious risks to
the. achievement of our broad policy objectives which would arise from
economic instability, and the crucial importance to those objectives
of, a stable and expanding economy.
  ý,T he immmediately foregoing points make -clear the high relevance
to'
SC 68 of the: target studies for the general economy which the
coUncil of Economic Advisers has had continuously under way."These
studies need to be expedited, amplified, and more closely articulated
with the problems raised by NSC 68.
  It will have been observed that the above listing is framed morei
terms of policy aims than of specific fields of action,-and that it
embraces the two final points in the NSC: 6,8 listing, namely, "reduc-
tion of Federal expenditures for purposes other than'defense and!
foreign assistance", and "increased taxes". This approach
appears
desirable in order to avoid pre-judgment. A major programIto expand
our economic and military potential might well require some selective
increases in expenditures outside the areas Of direct defense and
foreign aid.. It might also be found that certain tax concessions, as
well as tax increases, might be an important element in such a general
program. It may also appear that if we take up the slack in total
output and employment which has developed since the end of 1948,
every expansion of defense will not require contraction elsewhere.


310.