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David Stockman Is Really Blaming Americans

May 11, 1986|Annelise Anderson | Annelise Anderson , associate director of economics and government, Office of Management and Budget, during the first two years of the Reagan presidency , is a senior research fellow at the Hoover Institution, Stanford University.

STANFORD — David Stockman, in his best-selling memoirs about his tenure as federal budget director, would have us believe that Ronald Reagan is a god that failed.

He faults the President and his advisers for not fighting hard enough to control federal spending--and for not giving in soon enough and calling for a tax increase. He would have us believe they did not really understand the choices they were making, that the plan was "fatally flawed." His book, "The Triumph of Politics," is a plea for a tax increase--and an acceptance of his own disillusionment, the conclusion that the choice has been made--by the voters--between "capitalist prosperity and social security."

In other words, his disillusionment is not really with Ronald Reagan, but with us. He sees Congress' refusal to accept the entirety of the President's budget proposals as the revealed preference of the electorate to keep in place the current network of subsidies, transfer payments, pork-barreling and other welfare-state spending and to find the tax revenues to fund it. He claims his experience in the Reagan Administration "proved that the American electorate wants a moderate social democracy to shield it from capitalism's rougher edges."

This "moderate social democracy" Stockman says we have chosen is not cheap. The tax increase he is talking about is no minor matter. Federal spending is running at 24% of the gross national product; taxes are running at 19%.

Balancing the budget with a tax increase would require additional revenues equivalent to a surcharge on all individual and corporate income tax payments of almost 40%--a lot to pay for smoothing out the rougher edges.

But the voters have not chosen this tax increase. They did not choose it when they elected Ronald Reagan, and they do not choose it in polls. They might be willing to pay a little more--but not much.

Stockman has not, then, provided any answers, but he has laid out the fundamental problem in federal budgeting: The conflict between spending for myriad programs that benefit recipients--special interests, particular regions of the country, particular industries, defense contractors, providers of health care, the poor, the aged, the retired and so on--and controlling spending to make possible the overall, primary economic objective of a strong and vital economy. Such an economy is essential to the economic growth that makes the future brighter for ourselves and our children, expanding opportunities for all; reduces unemployment; ensures rapid recovery from recessions and adjustment to change; preserves the value of savings over time, and permits tax levels that are not too burdensome--an economic future we can look forward to with confidence.

But Congress cannot vote directly for economic health and strength--for low unemployment, low inflation, more business investment, low interest rates. To vote "for" economic growth and vitality, Congress must vote against excessive spending, subsidies and protectionism.

The conflict exists not only in the mind of every one of our elected representatives but in the structure of the Congress. The problem is to find a way to put more emphasis on the overall spending and taxing totals and thereby control the spending passions of the committees and subcommittees interested in this program or that. The problem also exists within the executive branch, in conflicts between the Cabinet members who are trying to keep their constituents happy and the Office of Management and Budget, which is more concerned with the consequences of the total budget.

And the problem exists within each of us, as we support the overall objective of controlled federal spending (and the lower tax levels that go with it) while writing our representatives to make sure they preserve that special federal program that puts money in our own pockets.

This conflict between spending and restraint cannot be settled once and for all. The gap between what Congress would like to spend and what the voters are willing to pay in taxes will open and reopen. The pressures to spend are especially great in election years. The current Congress cannot even find ways to reduce the 1987 deficit from $182 billion to $144 billion, as required under the Gramm-Rudman legislation, without raising taxes. Congress is currently supporting a $13-billion tax increase for 1987 alone. It will encounter the same problem in 1988 and in every year thereafter.

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