The unfinished task

By

SOMEDAY Ronald Reagan will probably look back with one big regret. He will regret that he allowed Congress to go home in August 1985 with the budget unbalanced by his own refusal to do the two things that would have moved it toward a new balance. He refused to allow the Congress to reduce the social security drain on the economy by a one-year moratorium on cost-of-living increases. And he refused to allow the Congress to pass a new tax on oil imports.

Had he given way on these two points to his own Republican leadership in the Congress, the federal budget and the national economy would have been on a clear road toward balance. The dollar would also have been on the road toward balance. The dollar would also have been on the road toward a new stability at a lower exchange rate, which, in turn, would have stimulated exports, checked imports, and helped to reverse today's unfavorable United States trade balance.

In many respects, Mr. Reagan has been a pragmatic rather than ideological President. He has tempered his own preelection ideology on Taiwan vs. mainland China, on policy toward the Soviet Union (he is headed toward a summit with the Soviets), on defense (he accepted a cut in the defense budget), and on the environment (he fired James Watt and put an environmental conservationist in his place).

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He was, indeed, being pragmatic rather than ideological in his refusal to defer social security cost-of-living adjustments. His 1980 election year stance called for cutting back on all forms of welfare. Social security is the most expensive form of welfare.

But in the 1984 election campaign he gave a promise that he would not cut back on social security. Last week he was honoring a campaign pledge. It was political pragmatism (at the expense of his own ideology) when he dug in his heels and refused to allow Congress to defer social security adjustments during the next fiscal year.

Why was he unwilling to countenance a tax on imported oil?

Partly that was also honoring a campaign promise that he would never raise taxes. He has in fact departed from that promise. My own federal tax bill has gone up, because he now taxes half of my social security payments. These were not previously taxed.

A tax on imported oil at a time prices are dropping would have hurt no one. It would not have raised the price of oil products on the US market or reduced the volume of imports significantly. It would have raised revenue and helped toward balancing the budget.

But he promised repeatedly that he would not raise taxes. That is part of his own ideology, although it also has an undertone of political expediency in it. The line between political expediency and pragmatism is often obscure.

Mr. Reagan's actions in refusing those two available means toward a budget balance raise a disturbing question. Is Mr. Reagan as well tuned now to the needs of the country as he was when he was first running for the presidency in 1980?

In 1980, Mr. Reagan correctly sensed that rising welfare payments and rising taxes were smothering the American economy. What had once been a good thing had become a liability. When the economy was suffering from a shortage of consuming power, welfare was a blessing. But that time had passed.

By 1980, the economic problem had been reversed. The high taxes were starving the economy of investment capital needed to bring productivity into balance with consuming power.

One of the problems in politics is to know when yesterday's remedy becomes today's burden, and vice versa. Taxes are not good or bad in themselves, but only as they serve the needs of the day. The same goes for welfare. Welfare payments can be necessary to restore lagging consuming power. But carried too far, they can stifle productivity and cause inflation.

The present state of the US economy is impressive evidence that Mr. Reagan was on the right track in 1980. But the signs of prospective trouble in the economy raise a doubt whether he understands the basic change which calls for new and different remedies.

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