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It's All Coming Home to Roost

NOW is the winter of our discontent.Nothing seems to be going right. At home, there is a stubborn recession. Some people are hurting; more are scared. Abroad, there is looming fragmentation and chaos in the Soviet Union. We wanted communism to collapse, but not this much. These problems demand attention precisely at the time when budget constraints limit the ability of the United States to deal with them. The traditional way of dealing with a recession is to pump more money into the economy by cutting taxes and increasing government spending. But we cannot do that, because the federal budget deficit is already out of sight. The government needs more revenue, not less. It needs to spend less money, not more. At a time when we desperately need flexibility in budgetary polic y, we are in a fiscal straitjacket of our own devising. This has a ripple effect. States are hit with a triple whammy: federal payments are down, the slower economy means that local receipts are down, but costs are up. More people are homeless, more are on welfare, more are getting medicaid and unemployment benefits. This squeeze is passed on to counties and cities, and that's where the buck stops. This is trouble not only for long-suffering cities but also for suburbs, which until recently were thought of as affluent. ANOTHER effect: American leadership is threatened abroad, not by enemies or rivals but by our own weaknesses. Consider the Soviet threat, in some respects more ominous now than in the days of Khrushchev and Brezhnev. The country may be breaking apart politically. This is something which the US might not be able to do much about in the best of circumstances, but those who think it does not matter should contemplate a world in which the Ukraine and Kazakhstan, respectively, are the third and fourth biggest nuclear powers. Deteriorating economic conditions in the former Soviet republics raise the specter of social collapse, chaos, and who knows what kind of demagogue coming to power. It would be in nobody's interest to repeat what happened in Russia in 1917 or in France in 1791. This is a danger the US, in company with Europe and Japan, could help forestall through economic assistance. But it would be expensive, and Washington has no spare money. It may be that the US has no political will, either. Foreign aid has not been popular since the early days of the Marshall Plan almost 45 years ago. It is doubly hard to argue that aid ought to be sent to foreigners when the government has no money to help Americans who are suffering. Budget constraints keep the US from doing what needs to be done, but political temptations may drive it to do what ought not to be done. So far as the recession is concerned, the easiest thing to do would be to have some in flation, but this would only postpone (and ultimately make worse) the pain of higher taxes and/or reduced services. So far as foreign policy is concerned, the threat of mistaken policy is more diffuse but no less real. It consists of an anti-foreign mind-set, combining elements of xenophobia and jingoism. Given the American foreign trade deficit, it is easy to see this developing into a protectionist trade policy. This would have results opposite to those intended, making trade problems worse, not better. It would hurt our friends, invite retaliation, and likely transform the American recession into a world depression . Ambassador Robert Strauss warned in Moscow the other day about a developing climate favorable to demagogues. In this respect, too, Americans need to examine their own situation. David Duke, a demagogue if there ever was one, got 40 percent of the votes cast in a record turn-out for governor of Louisiana. Exit polls and precinct analyses indicate he was supported by a majority of white people. In the trenchant phrase of Sen. Daniel Patrick Moynihan (D) of New York, the 1980s were the decade when the United States borrowed a trillion dollars and threw a party. The party is over now, and we are left with a trillion-dollar deficit.

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