Now it's up to Congress
Fighting inflation is difficult not because the problem itself is insoluble. It is difficult because, while everyone gives lip service to wanting "tough" measures to combat it, no one wants to be hurt by having to sacrifice. In the wake of President Carter's announced anti-inflation program, the question is whether Congress will have the fortitude to resist the pressures of special interests and work together with single-mindedness to bring the new budget into balance. This will be extremely difficult in an election atmosphere. But the national interest demands it.
To be sure, Mr. Carter's program is not hailed by anyone as a panacea. Its impact on the inflationary spiral is expected to be slight, and only over a long period of time. The oil import fee in fact will immediately boost the inflation rate by half a percentage point or so. But the Carter measures are an important , if small, first step toward breaking what has become the government's bad habit of chronically running up huge budget deficits, which in themselves help fuel the inflationary spiral. This could have a good psychological effect on American consumers, businesses, and banks. Why should the man-in-the-street, for instance, be expected to discipline his spending and operate in the black when the government itself is unable to balance its budget? If he now sees a serious effort in Washington to come to grips with its undisciplined ways, he may have more incentive to tighten his own belt.
This is why federal lawmakers must steel themselves in the face of howls already echoing in congressional corridors. State governors are opposing cuts in revenue-sharing money for states; mayors, too, are complaining about added burdens such cuts would pose. Hospital lobbies are preparing to fight any new hospital cost-containment legislation. Labor leaders are outraged by anticipated cuts in domestic programs. The Highway Users Association does not like the idea of an increase in the gasoline price. And so it goes. Congress will have a royal battle ahead to reconcile competing interests.
Moreover, the task of balancing the 1981 budget will be much harder than Mr. Carter allows. The President says cuts of $13 billion to $14 billion would achieve the goal. The Congressional Budget Office estimates a deficit of at least $25 billion. Even if $10 billion from oil import fees were used to help offset the deficit -- which Mr. Carter says he does not intend to do -- that would still leave some $15 billion needing to be slashed.
This, among other things, has elicited a fair amount of disappointment in economic and financial circles. Critics range from such banking voices as Felix Rohatyn, who forecasts recession and feels Mr. Carter missed an opportunity to engage the nation in a "sweeping re-examination" of the economic structure, to such liberal economists as John Kenneth Galbraith, who prefers heavy taxes on Luxury spending. Indeed, Mr. Carter's limited measures do not seem the strong prescription one might have expected if inflation is the national crisis he says it is. Even an effort to cut this year's federal budget (which ends in September) or a forcefully stated commitment to keep the budgets of the next four years in balance would have been sterner stuff.
This is a political time, however, and Mr. Carter clearly is balancing economic requirements against what he thinks is politically feasible. His first priority is to get re-elected. By coming out with a budget-balancing act now, he helps blunt the attack of his Republican (and Democratic) opponents. By postponing disclosure of the specific budget cuts he wants, he avoids rocking the primaries in the key states of Illinois and New York. By rejecting proposals for reforming the Social Security formula -- a reform widely advocated -- he no doubt has his eyes on millions of older voters.
It would be nice to think that some day the President and other elected leaders in times of crisis will do first what they really deem best for the country, Whatever the political consequences. We think the American people would respond positively to such statesmanship. But, that said, one cannot ignore that a modest anti-inflation plan is better than none at all. Mr. Carter's program does move in the right direction of bringing government spending under control and promoting savings and investments. It is now up to Congress to prove the scoffers wrong and show the determination and courage needed to follow through.
