Tough Medicine

“The joy ride is over,” says David A. Stockman, who is viewing the American economic roller coaster from the perspective of Wall Street these days. Now that he is out of the shadow of the White House woodshed, the former director of the Office of Management and Budget is free to speak his mind on Reagan Administration policies. What he said during his first television interview Sunday is what most suspected he meant to say all along, but he kept getting shushed up by the White House.

“We just can’t live with these massive deficits without traumatic economic dislocations,” said Stockman, now a New York bank executive. The solution? A tax increase of as much as $100 billion. Further, he said the Administration’s tax reform plan is preposterous because it offers to give more tax cuts when the nation cannot afford the ones it has had since 1981.

The money the Administration proposes to save from loophole-closing and deduction elimination should be applied to deficit reduction, Stockman said. He also suggested a two-year spending freeze that would include the Defense Department, Social Security and cost-of-living increases in other federal programs.

That’s tough medicine, but not substantially different from that offered by many respected economists and governmental leaders.

Stockman’s proposals are similar to those being pushed by Rep. Anthony C. Beilenson (D-Beverly Hills) within the House Democratic Caucus. Beilenson thinks the Democrats can reap political capital by endorsing a bold plan to balance the budget over the next three years.

Some Republican leaders in the Senate have endorsed similar budget and tax measures all year long.

Members of the National Assn. of Business Economists believe economic growth will increase slightly next year, but at a far slower rate than expected by the Administration. More than half the group’s members expect the economy to slip into recession late next year because of the budget deficits. And now, The Los Angeles Times Poll indicates that public opinion has shifted dramatically away from tax reform and toward deficit reduction. By a margin of 4-1, Americans believe that cutting the deficit should have priority over reform of the tax system.

The poll results are particularly relevant. The poll indicates that people are willing to make sacrifices to jolt the nation out of its fiscal folly and off the joy ride tracks. They need a leader who will tell them some stiff medicine is the only answer for a sound economic future. Mr. President?