President Declares War but Can’t Pay for Troops

In the capitalist democracies ... we’ve accepted that the poor will always be with us. When enough of the population becomes comfortable and secure, those left outside will inevitably be neglected.

--John Kenneth Galbraith

When the middle class and the rich finally figure out that the poor, who would be forever with us, are the work force of the 21st Century; that it is not just the poor people who would always be with us but drug addiction and the social disorientation felt even in the suburbs, then they will see that the misery of the poor is our misery.

Now that we’re not focused on the Cold War, we are free to look at our society and ourselves. Drugs have shocked us into a new self-realization of the condition of this society. Even before drugs, the homeless came as a shock. It wasn’t just a matter of the compassion we felt when seeing the homeless, but a matter of ineffectuality. As with drugs, we could see, perhaps as never before in America, that our society had fundamental problems we seem unable to cope with.

At the same time, the middle class is beginning to figure out that the rich are doing better than ever, while they are stalled, at best. Just as they are unsettled by the homeless, they are beginning to become unsettled about giveaways to the rich when the quality of public schools is collapsing for lack of funds.

They know that the top tax rate used to be 70% and now is going to be 28%. They remember that when the first tax reform bill was announced, President Reagan was willing to settle for a top rate of 38%. And they can’t figure out why now it is going down to 28%. What was so bad about 38%? That’s what the President of the rich wanted. It doesn’t take a tax genius, just a school parent or someone who lives in an unsafe neighborhood, to realize that billions of dollars that might be used for falling bridges and the drug war will end up in minks and Jaguars when the top rate drops to 28%.

So the middle class is saying, “Wait a minute. We haven’t gone anywhere in the last 12 years. The guys above us are doing great, the people beneath us, well, they may not be working hard enough, but we also haven’t done so hot. And with the plague of drugs and everyone being mugged who is not rich enough to move to an island somewhere that has a dock you can take up at night, we’re threatened.”

The middle class is bound to come to the same conclusion about GOP tax policies that John Kenneth Galbraith summed up with his usual penetrating irony: “Reagan said you’ve got to give the rich more wealth because they don’t have enough incentive to work for you through investing. As for the poor, you’ve already given them too much. They lost their incentive.”

Reagan spent eight years telling us the homeless, whose numbers his policies helped increase, chose to live on the streets. He told us there was no reason to be poor. Look at all those want-ads in the paper, he said. Let’s face it, he added, we already put money into curing poverty and it didn’t work. So, why try again?

He told the middle class they had no moral obligation to the poor and they’d be dummies to waste their money on the terminally indolent. In essence, he sold the American public a kind of modern Pelagianism--the exaggeration of the powers of humanity to life without grace.

George Bush campaigned in that way, but it was never his instinct. As soon as the campaign was over, his speech writer, Peggy Noonan, started pouring out volumes of Democratic poetry.

The real meaning of Bush’s rhetoric has not been properly appreciated: He has rejected Reagan! His call for a kinder and gentler America is a response to the disturbed sensibility of the middle class. There are poor people, he says. There is a second city. On Martin Luther King Jr. Day he said there are many poor people and minorities who must be admitted to the circle of opportunity. It’s not trees that pollute, it’s acid rain! Drugs are a federal problem. Education is deteriorating. In an economy where most women have to work, there is need for day care.

Having never admitted to any of these realities made Reagan stronger politically. His rhetoric could never be tested by the resources he put up to deal with the needs he admitted.

Politically speaking, the rejection of Reagan will prove to be Bush’s mistake. He’s admitted the needs, but figures he can forget the rest, or blame the Democrats for breaking Gramm-Rudman to pay for social programs. But he can’t get away with that now, not after coming up with $166 billion to bail out the savings-and-loan industry. If he can pay for that, he can pay for this.

For the moment, we seem to be able to get by with a kind of charming acquiescence in our leadership. The smiling face of good fortune, like Dan Quayle, has been Bush’s companion. Without flexing a military muscle, Poland is turning democratic and capitalist. Bush has not yet had any occasion to take a position that has put him on the wrong side of the polls.

But that will change when it becomes clear that coping with our interdependent problems requires aggressive leadership and money. What happens then?

Bush has declared war, but can’t pay for the troops. Would Winston Churchill declare war against the Nazis and then call the accountants to see if he could afford it? You can’t do that.

You can’t say “I don’t believe in tax increases” when you ask for $5 billion in revenue increases and raise the federal government interest costs by $100 million a year by borrowing money to bail out the savings-and-loans. You can’t send Transportation Secretary Samuel K. Skinner to the National Governors’ Assn. to say “We agree with you, we need infrastructure rebuilding, that’s why I have traveled to three states to help you pass local taxes,” and then not seek the passage of new federal taxes. And you can’t send Budget Director Richard G. Darman to Congress to tell members if they try to salvage social programs this year they must bear the onus for raising taxes next year.

At some point you have to be realistic and say, “Look, what we need here is revenues. I’m on the line, we’re raising taxes.” If you don’t say that--and yes, I am willing to--you can’t get away with the kinder-and-gentler rhetoric.

You can’t be fooled by Walter Mondale’s experience and think that anybody who stands up now and tells the American people the truth about taxes is going to lose. Not true.

But you can’t raise taxes the old way.

First, the need has to be absolutely apparent. Drugs, crime and AIDS have taken care of that.

Second, you cannot say “taxes” in the abstract. That means everybody, Cuomo, the corporation, the taxicab driver. That’s silly. You have to say which tax and on whom. That immediately identifies who will bear the burden. Everybody else is off the hook, and they’re with you.

If you say you are going to tax 12% of the people, the other 88% will be with you. Let’s ask why the top tax rate should be 28%, instead of 34%, or even the 38% Reagan initially sought? Revenues from that kind of adjustment would solve much of our budget problem. Let’s ask why not put a 1% surcharge on federal income tax to generate $10 billion to fight crime?

Thirdly, and unfortunately, you have to identify the specific purpose of the tax. We’ve lost the opportunity in the American political process to say, “I--the governor, the state Legislature, the Congress--am going to tax you. I’ll spend it well.” Those in government must show how the revenues are going to be spent: on infrastructure, education, on drugs.

The Reagan message was seductive: “You can have all your money back in tax cuts, I’ll give you the strongest defense ever, $750 billion more than before, and I’ll still balance the budget.” It’s called Nirvana. A cornucopia of endless fruits and abundance stimulated by tax cuts.

It’s real name was Fantasy. Reagan’s worst sin, though, was that this fantasy seduced the nation into a state of indifference. Now, however, there is an awakening. The key word here is interdependence. What affects one of us affects all of us, in our own society and globally, whether we are talking about the underclass or the environment.

This new self-realization of interdependence is unsettling to the middle class. It creates a certain anguish; it rouses people from the complacency of the Reagan years. Once people get into the mood of looking around and once they accept that things are not right, then you can start talking to them about how to straighten out the house. The American electorate is close to that mood now.