The official description of it was “lean and austere,” but that was a modest understatement compared with some of the things Americans—particularly the ones on whom he will most depend for re-election in 1980—were saying this week about President Jimmy Carter’s new budget. His peremptory hitch to the nation’s belt covered pretty well everything except defence spending. The poor, blacks especially, were marked down as the worst sufferers from cuts in governmentsponsored jobs, training programs and welfare benefits.
“The real Mr. Carter is standing up at last,” said a prominent Washington labor leader. “Like his predecessors he goes for guns over butter.” ^
As always with the world’s £ largest capitalist economy the figures were numbing, i The budget provided for total a? federal spending in 1980 of m $532 billion—more than half a trillion dollars—an increase of $38 billion or 7.7 per cent over 1979. Income for 1980 was expected to total $503 billion, leaving Carter with a deficit of $29 billion and allowing him to reach his much heralded goal of shrinking America’s imbalance to below the $30 billion mark.
The most striking entry was that for defence. In 1980, the U.S. will probably
spend $125.8 billion compared to the $105.2 billion that was actually spent in 1978. The new figure will more than keep up with the pace of inflation, while other programs will lag. In the education sector, for instance, the budget figure was $30.2 billion, only $3.7 billion or about eight per cent higher than last year and in reality a cut of at least two per cent.
That sort of tight-fistedness made difficult reading in Canada, too. While Canadian trade experts were unwilling to cry too loudly too soon, there were clearly losses to set against any possible gains. Traditionally, the departments of defence and, indirectly, transportation are the big spenders on Canadian goods and services. The National Aeronautics and Space Administration (NASA) and the Environmental Protection Agency (EPA) rank next in importance. So, while the defence increases were good news—the Pentagon spent about $175 million in Canada last year—the other cuts were not.
The spending program will dominate congressional affairs for most of this year as the politicians tussle for changes that will bring more funds for their special constituencies. But the most significant byproduct of the president’s belt-tightening seemed likely to be a split in his own Democratic Party. In hitting at the major voting blocs who put him in power— the blacks, labor unions, big-city dwellers and the liberal-leaning coalition which represents them—the president seemed to have provided his two most powerful rivals within the party— Governor Jerry Brown of California and Senator Edward Kennedy of Massachusetts—with near-perfect launch pads at the party convention next year. Carter took the risk, he said, because a policy of restraint was “imperative if we are to overcome the threat of accelerated inflation.” By dishing out the bitter medicine now he was saving Americans from debilitating economic illness in the early 1980s. The unanswered question was: would the voters believe him?
Power brokers with the influence and authority of Senator Edmund Muskie of Maine were quick to point out that the administration’s austerity measures could only reduce inflation by half a percentage point at most, while prices rose by nearly 10 per cent last year and are forecast to go up anywhere from
seven to nine per cent in the next 12 months.
In the vanguard of the anti-budget movement, United Auto Workers President Douglas Fraser was mobilizing his newly-formed “Progressive Alliance” to fight the phasing out of the government-backed schemes now employing or training youths who would otherwise never find a job in today’s market. “We ask ourselves what sacrifices General Motors has made in the new era of austerity,” he said recently.
Kennedy, who looked like joining the
bandwagon, said most Americans would support spending cutbacks but only if they were even-handed. The president’s new budget gave tax writeoffs to the rich while “burning” the poor, he said.
More biting criticism came from Vernon Jordan, one of America’s most influential black leaders. “The conditions of black Americans verge on disaster,” he said. “More than 50 per cent of black teen-agers are unemployed, with no prospect of work.” The old are another badly-hit group, so badly that 76-year old Nelson Cruikshank, the president’s adviser on the aged, threatened to quit. The budget is detailed in a library of green-backed massive volumes, packed with charts and scales, facts and figures. What they boil down to is that out of every tax dollar, 39 cents are headed for direct benefit payments to individuals, 24 cents for defence, 16 for grants to states and localities, 12 for other federal operations and nine cents for interest payments.
Nearly a quarter of every dollar, therefore, is going on defence. The costs there are staggering. One item alone, an eighth Trident submarine, is to be built for an estimated $1.7 billion. It could be the largest item on any such shopping list in history.
Carter’s rationale for that was the need to “strengthen our NATO forces and maintain the strategic balance.” But the accent on defence also amounts to a total about-face. Before he came to power, he promised to cut defence spending and increase social services. He has switched horses as a result of the Pentagon’s assessments of Soviet strength and the CIA’s perception of the need to deter the Kremlin’s expansionism. The question is whether he can sell this “guns before butter” approach successfully. William Lowther
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