Reaganomics in the saddle
You can agree or disagree with the Reagan brand of economics. But there is no denying the significance and magnitude of the President's accomplishment in just seven months in office. With the two prongs of his economic package now approved -- huge government spending reductions and massive personal and business tax cuts -- Mr. Reagan has set the nation on a new path of experimental economics. He has also demonstrated that, through a single-minded focus on the issue at hand and strong, politically shrewd leadership, it is possible to overcome the sense of immobility that has gripped government in recent years because of endless confrontation between Congress and the White House. Things are moving in Washington. This in itself must give many Americans a feeling of lift.
Will it all work, though? Not since Roosevelt's New Deal has there been such a radical turn in national policy and so much general uncertainty -- among the public, economists, businessmen, Wall Street -- that the prescribed solutions fit the problem. It is the President's expectation that the savings which the weathiest individuals and businesses realize from the tax cuts will boost productive investment, generate jobs, and spur new economic growth. Reversing the social trend toward greater and greater federal spending and cutting back governmental regulation of business are further designed to free up the private sector and place more responsibility on the states.
Doubtless the nation needs some corrective to the expansion of federal government. Just as in earlier decades it needed a more humane and socially sensitive approach in Washington to the hardships of those disadvantaged and discriminated against, to the deterioration of the environment, to the exploitation of consumers and workers. Mr. Reagan rightly senses that the vast middle class thinks the pendulum of social service has swung too far and some restraint is in order -- not to abandon basic and essential programs but to slow the momentum of program growth.
If the goals have broad public support, the specific policies raise some questions. The original Reagan tax-cut bill, for instance, had a clear-cut simplicity to it. But all the special- interest benefits added to it in the bidding war with the Democrats are expected to result in much bigger deficits than the administration now projects. Balancing the budget, as Mr. Reagan intends, may prove difficult without scaling back on new military programs or social security -- or stepping up taxes again. IT is also not known what kind of political backlash the administration might confront when those hardest hit by the spending cuts begin to feel the pinch. When it comes to monetary policy, moreover, there still seems to be limited understanding of how to regulate the supply of money without causing severe recession.
Yet, for all the unknowns, the nation is clearly prepared to give the President a chance to prove out his theories. The massive public response to Mr. Reagan's recent television plea for support showed that. Indeed there is something satisfying in the simple reasoning that you don't know if something will work until you try it. For the purposes of a decisive conservative experiment, therefore, it is better that Congress has gone along with the Republican rather than the Democratic tax-cut program. If the President's bold supply-side approach does not succeed, the public and its leaders will know enough to chart other paths.
Perhaps Mr. Reagan's paramount achievement will lie simply in changing the psychological temper of the country. All it may take to turn around the feeling of economic malaise and quicken activity is the public perception of self-confident, determined leadership in the White House -- a mood not unlike that during the Franklin Delano Roosevelt years when people felt something was being done and therefore began working with a sense of hope. If this proves to be so -- and the economy begins to respond -- there is no end to what other far-reaching changes might come from the Reagan presidency.