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'Dollar Could Drag Us Down'

April 03, 1985

In her article (Editorial Pages, March 21), "The Dollar Could Drag Us All Down," University of Maryland economics professor Barbara R. Bergmann tells us: (1) the fall of the U.S. dollar "could take us back to the worst days of the last recession"; (2) "only Fed Chairman Paul Volcker stands between us and severe recession"; (3) the U.S. deficit "came from the huge tax cut that Reagan gifted us" coupled with "the huge defense buildup he sold us." Gadzooks, shades of her socialist partner-in-absurdities, John K. Galbraith.

First of all, the unusually high value of the dollar in recent years is one of the principal causes of the recent recession. Our reduced ability to compete with cheaper foreign products, coupled with foreigners' reduced ability to buy our costly goods, has not only caused us to become a "net debtor" nation, but has also curtailed American production and employment.

Yes, Volcker and the Federal Reserve Board's intercession might postpone (but never eliminate) a recession, but Bergmann conveniently forgets that his highhanded and single-handed past meddling is the primary cause of every problem he eventually takes credit for magically correcting.

Finally, President Reagan's tax cut stimulated the economy when it needed it; and you just can't get more taxes without generating more income first. The defense budget has not increased nearly as much as the increases a foolish Congress foisted upon the President and that were totally beyond his control. Of course Reagan's spending reduction promises were broken--but not by him.


Beverly Hills

Bergmann's article gives a distorted picture of who is responsible for the rise in the demand for the U.S. dollar.

She would have us believe that our budget deficit was caused solely by "the huge tax cut that Reagan gifted us with during his first term, and the huge defense buildup that he sold us." Her conclusion is that "foreigners . . . in effect, have been paying for all that defense hardware."

The real problem is the national debt, which is now pushing toward the $2 trillion mark, is the result of spiraling U.S. budget deficits over the last 10 years.

Just as in a single family household that has overspent its means, the U.S. government has spent money it doesn't have. It is now the time to pay the piper.



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