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SUPPLY SIDE ECONOMICS, Reaganomics, laissez-faire economics. Lafferism, Catchy phrases all, but none captures the political strategy behind the Administration's economic policy to date At every turn, President Reagan has sought to ascribe favorable economic news to his program of sweeping tax and budget cuts, while blaming downturns on structural factors and Democrats. Only one phrase can properly describe that tactic: having your cake and eating it too. As the President's most recent statements suggest, that opportunism remains the centerpiece of his economic program.
Asked at his press conference two weeks ago whether Americans are really better off today that before he took office. Reagan observed that the rate of inflation has dropped to just more than 4 percent since his inauguration. The reason, he suggested, was simple: the Fed's commendable tight-money policy and the federal government's newfound fiscal responsibility.
Skyrocketing unemployment, though, wasn't his fault. It seems that economic bottlenecks and the sloth of the jobless--not his own austere budgetary and monetary policies--are the culprits behind the 9 percent unemployment rate, the nation's highest since World War II.
Now the President appears likely to take another step to free himself from the harmful political consequences of his economic measures. At the same news conference, Reagan indicated he supports in principle a burgeoning grassroots movement to ratify a 27th constitutional amendment that would require a balanced federal budget. Proponents expect the President's formal endorsement this spring. That clever tactic would allow the President and his Capitol Hill adherents to proclaim their support for balanced budgets on the 1982 campaign trail--while pushing through what will prove the largest federal deficit in history.
But the proposed amendment is more than a campaign ploy. Fifty-two senators have already co-sponsored a bill to draft the amendment. It faces tougher going in the House, but Republican supporters hope to pressure wishy-washy representatives into publiclychoosing sides before November rolls around.
Public pressure on wavering legislators could easily tip the scales. Thirty-one state legislatures have already called for the measure, reflecting a groundswell of opposition to deficit spending probably unmatched since the days when Reagan idol Calvin Coolidge snoozed in the Oval Office. And many fence-sitters have only minor doubts. The President, for one, has delayed announcing his support only until he is assured Congress won't use the amendment as an excuse to jack up taxes.
OPPOSING THE AMENDMENT could cost Democratic members of Congress bundles of votes at a time when they can ill afford to lose any. Much of Middle America remains convinced that deficits represent fiscal irresponsibility; explaining to constituents that deficits only represent national loans against future budgets hasn't won too many elections. But Congress would be wise to oppose the amendment vigorously, for it is rife with complications--and in tampering with the Constitution, it could conceivably mortgage the nation's future more than any deficit, even Ronald Reagan's.
For one thing, the proposal would probably allow deficits only in the event of "emergencies"; Congress would have to approve such budgets by a three-fifths vote. Yet to those who govern America today, emergencies do not mean hungry children or jobless bread-winners. More likely, they would invoke the escape clause to permit renewed hikes in military spending--hardly what this nation needs.
And a mandated balanced budget without tax increases would require Congress and the President to trim more than $100 billion from a budget already stripped bare of social essentials. But with Reagan and Caspar Weinberger calling the shots, you can guess where the bulk of those new cuts would come from.
On a more theoretical plane, an amendment limiting Congress's budgetary discretion would represent a fundamental change in the nature of the Constitution itself. Many scholars today argue quite convincingly that the Founding Fathers designed the Constitution with two principal purposes in mind: to keep the political process open and accessible--and to safeguard eternal American values, like free speech. Not surprisingly, the one amendment that sought to enshrine a more timebound value into the Constitution--the 18th Amendment, which established prohibition--was resoundingly repealed 14 years after its 1919 ratification.
Yet the glorification of balanced budgets has reoccurred only recently, and, in fact, enjoys far from broad support. Try as he has, the President has failed to sound the death knell of Keynesian fiscal policy. If anything, the unemployment and recession that has partially resulted from his diminished social budget suggests just how efficacious federal outlays could be, deficit or not. A 27th amendment establishing balanced budgets would likely go the way of the ill-fated 18th amendment once America again saw the need for direct federal stimulus to the economy and succor for its needy.
The danger, of course, is that a balanced-budget amendment would last just long enough to provide political capital for the President and his backers. Congressional supporters could else out victories by running on platforms of fiscal responsibility, while at the same time winking at this year's record deficit. The losers would include their more ideologically honest opponents, the needy, and the Constitution, whose very legitimacy lies in its impartiality to political parties and their programs of the moment.
None of which, of course, seems to bother the President. For him, this latest masterpiece of indirection represents just one more shroud in which to cloak the shortcomings of his economic program.
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