'From the American century to the American crisis'
They called in Felix Rohatyn when New York City went broke. He found it with a deficit of $1.7 billion and helped bring it into a $500 million surplus. Now he writes an article in the London Economist telling what he would do for the United States -- which has financial troubles, too. He is a general partner in Lazard Freres and is currently chairman of New York's Municipal Assistance corporation, so nobody can call him a radical. He thinks Ronald Reagan's goals are impeccable -- reduce government spending, reduce taxes, reduce interest rates, strengthen our defense, balance the budget. The trouble, he thinks, is that they include "inherent contradictions."
It's easy to criticize Ronald Reagan of course, so what does Mr. Rohatyn propose himself? It's an elaborate program, too long to detail here, and in a controversial subject he offers some controversial ideas. He thinks the Reagan plan hints at a "short, sharp recession" induced by tight money and by lower government spending. He praises the President for "great personal qualities" and says he has changed the direction of social and economic America more fundamentally than anyone since FDR in 1932. but the money markets are still skeptical of the Reagan program. He sees need for a "fallback position" in case of need 12 months hence.
About the boldest of the Rohatyn proposals (and some of them are radical) is to take advantage of the present glut of oil to impose a fee on imported crude oil that would translate into a 50-cent-per-gallon tax at the pump. Yes, that wuld give America $2 gasoline. I heard Rep. Henry Reuss (D) of Wisconsin, chairman of the Joint Economic Committee, propose the same thing last week when economist Walter Heller was testifying. "Our gasoline tax is four cents a gallon," Chairman Reuss said; "Italy's is $2 gallon." the plan would give an exemption or rebate to the worker who uses his car to go back and forth from his job. Rohatyn offers the import tax to balance the budget: it would put $50 billion a year into the Treasury, he figures; a kind of defense spending tax, to pay for part of the proposed arms increase.
there's another thing about defense, argues Mr. Rohatyn. A great many of the volunteer soldiers now come from lower-income families and ghettoes where black youth unemployment is currently 50 percent. Fairness requires that the middle class participate more completely in the defense drive, he argues, "not only with their money but with their children." In short, he wants a draft. He agrees with some at the Pentagon that the standards of performance of the volunteer army do not match the requirements created by the new sophisticated weaponry.
Ideas like these are probably too extreme for White House and Congress; there is always the search for easy answers to agonizingly complicated problems. Easy answers so far haven't been found, however, and the unbalanced budget and the nuclear missile still snarl at us. Mr. rohatyn insists that "in less than 25 years we have gone from the American century to the American crisis." His language is not alarmist. He says the US is the "only contry in the world today whose biggest problems are its biggest opportunities ." But the social and economic problems are there. He urges the liberal camp to give up the fond hope of cradle-to-grave security: "By attempting to reduce the element of risk it succeeded in eliminating many of the incentives to create wealth." On the other hand he doubts "that today's conservatism will provide all the answers." Maybe, he says, liberalism's hour will come again, but in that case "liberalism will have to come out of the political boudoir and get back to the inner-city streets , to the factory floor, and to the defense of our vital interests. Because that is where reality lies."