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Carter's balance-the-budget plan vs. 18% inflation

Critics are warning that urban poverty and unemployment could spread in a recession and that cutting social programs in the 1981 federal budget may aggravate the situation.

Among those registering concern about the pattern of proposed budget cuts tak ing shape within the administration and Congress are leaders of the nation's cities, social workers, labor unions, and health-care interests. They will be lobbying hard in the coming weeks to soften the blow they say they are about to feel.

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These complaints no doubt were to be expected. But if budget-balancing helps control inflation, then the groups affected by the cuts will be benefited, President Carter contends. Moreover, cuts in budget request for certain social aid programs do not equal termination of the programs.

But the critics, many of whom belong to the umbrella group Coalition on FY 1981 Budget, warn that the $13 billion to $18 billion in cuts proposed by the President and congressional leaders will do little to control the dizzying inflation rate while jeopardizing the welfare of persons who would be in the most precarious position in the event of a recession. Meanwhile, they complain, military spending is escaping the cuts and may actually receive an additional increase.

US cities would be affected by proposals to trim $1.7 billion from general revenue-sharing and undisclosed amounts from "countercyclical" assistance (meant to aid areas most hurt by recession), the Comprehensive Employment and Training Program (CETA), and from a youth employment initiative.

"If a recession comes," warns National League of Cities spokesman Randy Arndt , "we could easily have a situation like that in 1974 where the cities were the first to go into it, and the last to come out."

Mr. Arndt says it is typical of urban economics that during a recession "you lose jobs first in cities, and that is where the most people live." The unemployed then fall into the "demand sector," Mr. Arndt says, needing food stamps, employment, and housing assistance.

Money from revenue-sharing would be used by a city to bolster local relief programs, while countercyclical aid, CETA, and youth employment would provide jobs.

Al Gonzalez of the National Association of Social Workers calls it "patently unfair" to consider trimming money from food stamp, health care, employment assistance, and other such areas while leaving untouched the current funding levels for highways and the military.

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"It really hurts the people who contribute least to inflation," says Mr. Gonzalez. he adds: "But we know we cannot prevent these cuts. We are going to try to protect some of the really essential programs."

One program recently deemed essential by a vice-presi" dent's task force is youth employment. A massive three-volume study has just been published detailing what some sociologists see as the connection between unemployed youths and the slide into chronic, lifelong unemployment.

In response, the President in January proposed a new $2 billion-a-year program aimed at rectifying the problem. But indications now are that the initiative will be deferred at least until next year or dropped altogether in order to save money in the budget.

"It is the loss of discretionary, innovative, controllable new initiatives like these that will really hurt us [by increasing joblessness] in the long run, " Mr. Gonzalez says.

Solar energy and mass transit advocates also are cautiously monitoring the budget. As last week ended, Congress and the President seemed likely to trim $ 250 million to $500 million in mass transit grants and an as-yet-undisclosed amount from solar energy research and development.

Hospital interest groups indicate they will try to blunt a likely new attempt by the Carter administration to hold down medicare and medicaid expenditures by legislature a lid on hospital costs.

Some economists have contended that experimentation with new social programs -- added to the government's tendency to adjust existing health and welfare programs yearly according to the rise in the consumer price index -- actually contributes to inflation. But others say military spending, too, is to blame.

Leon Shull, national director of the Americans for Democratic Action, which helped organize the 1981 budget coalition, says budget cuts in social programs "will do little or nothing to cut our raging inflation." He says the fact that few, if any, military programs are being cut is evidence of a shift in the Carter administration's commitment to "those already being hurt by discrimination, youth, and old age."

AFL-CIO president Lane Kirkland and American Federation of the State, County, and Municipal Employees president Jerry Wurf both said they were displeased with the emerging budget cuts. Their groups, as well as the 1981 budget coalition -- which includes five labor unions and more than 20 other interest groups -- plan to step up lobbying efforts against many of the proposed cuts this week.


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