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Inflation and possible remedies

This is one of those moments when one just wonder whether changes in the mechanics of government are necessary in the United States. The US is suffering from its most dangerous bout of inflation in its history. The rate of inflation is somewhere between 11 percent and 18 percent, depending on how you calculate it and what you include in it. This is double-digit inflation. The country is probably on the parapet of a spiral so fast that the inflation really may get beyond control.

Almost everyone is in agreement that this is a bad thing and that it should be corrected. If anyone thinks that there is any good in this kind of inflation , I have not heard him or her named. And what is even more redmarkable, there is almost total agreement among economists that the time has come for a severe curb on the rate of government spending.

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The politicians all pay lip service to the preaching of the economists. But what are the political facts of the moment?

The essential central fact is that the government of the US is headed by a President standing for re-election who is being pushed by every form of political pressure to increase rather than reduce government spending. Considering the nature of the pressures upon him the remarkable thing, probably, is that he has kept the level as low as he has.

Right now he is under the pressure of the military "hawks," unleashed by the Soviet invasion of Afghanistan, to increase military spending massively. And giving in to that pressure has proved to be politically popular. At the same time he is under challenge for the nomination of his own party by Senator Kennedy of Massachusetts who is the candidate and the hero of all those constituencies who favor higher spending on social services. The Senator is the very symbol of the idea of more spending to cure social ills, real or imagined.

In order to fend off the "hawks" on his right and Senator Kennedy on his left Mr. Carter has himself become Lady Bountiful in those departments of spending which can most easily be influenced by the President. Federal grants in aid to the states and cities are the newest and latest device for handing federal money around the country. It was invented by Richard Nixon on his way to the 1972 elections. It was spectacularly successful in winning him votes, and winning that election. Any successor is bound to find the device attractive, particularly when he is being hassled along the road to election day by a heavy spender in his own party.

The President is helpless towards most of the federal budget. The lion's share of it is mandated by legislation. But when it comes to grants to states and cities, the President still has at least theoretical power to open or close the tap. But think of the howl which would go up from any state or city which had its grant from some pet project cancelled, or even shaved down a little. Is any President up for re-election likely to turn down on the taps? Of course not.

Mr. Carter's defense is that getting re-elected is the first step towards curbing the inflation. Once re-elected, he would have four years ahead of him with nothing to lose and everything to gain, in terms of his record in history, from taking brave action to check the inflation.

And while being sorry for Mr. Carter in his painful, "having-to-spend" predicament, we might also shed a tear for his Republican rivals who like to promise military strength, prosperity, and end to inflation, a sound dollar and lower taxes as well. One of them, John Anderson, has had the political courage to state (out loud) that this can be done only by mirrors (i.e., not in fact).

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But what can a Republican contender do? He must promise to stabilize the economy to satisfy his own constituents. Yet to promise any curb on spending would probably be the end to his political career. The oldest rule in American politics is that you can't beat a spender with a nonspender.

Would going over to a single six-year term improve matters? It probably would help. At least the President would not need to spend during his first four years to get re-elected.

Probably better still would be the parliamentary system with a separation between the function of head of state and head of government. The head of government would be a prime minister who could be dismissed and replaced whenever his performance left something to be desired. The head of state could call an election when matters needed such action, but not by the calendar. The combination of an election fixed on the calendar and a four-year term once renewable has in fact combined to give the United States a dangerous inflation rate without a visible change of handling it until after election day.


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