Editorials
THE MAKING OF BUDGET II WHAT WITH THE RESIGNATION of Alexander Haig, continuing war in the Middle East, the opening of strategic arms talks between the superpowers, the furor over Hinckley's...
...Capital spending, in turn, would increase productivity, driving down inflation...
...troops in Lebanon would turn us into another occupying force, with all the onus from the Arab states that such a position inevitably would entail...
...After months upon months of build-up - sparring, negotiating, name-calling - followed by the actual contest with its many feints, clinches, and wild punches, the denouement was disappointing...
...Q. What will happen now...
...But now they are being heralded as a stimulus to consumption, i.e., spending rather than saving - a demand-side exit from the recession, retaining, of course, the bias toward the wealthy from their earlier rationale...
...They said that the stimulative tax-cutting of the supply-siders and the dampening tight money of the Fe,d and the monetarists would work at cross purposes with one another...
...But the administration's plan for economic recovery seems a very risky gamble, one that might be examined more carefully if it weren't the poor's welfare being disproportionately used for stakes...
...The Lebanese operation already served as a heavy drain on their fragile economy, and keeping reserve troops drawn from their civilian occupations for a long period in Lebanon would be an economic disaster in a country where inflation already runs over 100 percent...
...The July I tax cuts were originally proposed in order to encourage savings - that was the excuse for biasing them toward upper-income brackets, since the rich save more...
...Taken as a whole, domestic social spending is still gradually increasing...
...should work, and it is only with such a solution in view that we should consider a presence in Lebanon...
...A. No, but it means we should put a price-tag on our participation...
...Reagan has got what he wanted from the Fed, and far more of what he wanted from Congress than any president since FDR...
...Many of the programs specifically for the poor are being cut, absolutely, not just slowed: AFDC from $7.8 billion to $6.4...
...jobs and training from $5.6 billion to around $3 billion...
...ISRAEL IN LEBANON Q. Can Israel's invasion of Lebanon be justified...
...The president himself, as well as assorted administration apologists, claimed that the administration had merely slowed the growth of programs for the poor...
...involvement with the Sinai occupation to which U.S...
...Q. Does this mean the Israelis will stay in Lebanon for a long time...
...Bankruptcies for the businessman and unemployment for the worker have reached levels unknown since the Depression...
...State Depart- ment estimates are that in Beirut alone 10,000 civilians were killed or injured, and the Israeli forces are still poised at the edge of the city as this is written - all this in a war in which the International Red Cross estimates that 600,000 people have been turned into refugees...
...It's that last point which ultimately concerns us here...
...But who are the terrorists in this case...
...Who said that...
...Q. But wasn't there some PLO provocation...
...Begin and Sharon to the contrary, Israel must realize that constant recourse to military action will not provide any lasting solution...
...Comparisons are made by those who urge such U.S...
...A. Yes...
...Later, it was said that the program couldn't be judged till we saw the effect of last year's tax cuts for business, or until the personal income tax was cut five percent last October...
...A. Not if they can help it...
...hip-deep into the unique socio-religious quagmire that is Lebanese politics...
...In retaliation, the Palestinians then shelled Israeli towns...
...Now, judgment must wait upon the impact of the additional tax cut this July 1. Or upon the impact of next year's cut...
...A. The Lebanese government has been for all practical purposes non-existent since the PLO and the Syrians began to occupy the country, destroying the previous delicate balance between rival religious and political groups...
...Stationing U.S...
...They said the president's budget cutting would be offset by his proposed military expenditures and by the drop in federal revenues owed to a flagging economy...
...The Israelis say that they want not one inch of Lebanese territory but that they will not withdraw until there is a well-policed buffer zone in the south-In keeping with Commonweal's usual summer schedule, only one issue will be published each month during July and August...
...It is extremely unlikely that the Israelis can recreate a strong and stable government in Lebanon...
...This, the Israelis said, was intolerable, and the invasion followed...
...ern one-third of the country to eliminate any shelling by the PLO of Israeli towns...
...But the treatment of the poor is not the only thing that could be discussed about this budget, perhaps not even the most important thing...
...In point of fact, the three men picked up by the British police in connection with the crime were deadly enemies of Yassir Arafat and the PLO leadership...
...The spurt in real economic growth would, produce new tax revenues so that a balanced budget could be quickly achieved despite the lowered tax rates...
...Originally, its new economic course was supposed to have an immediate impact, thanks to "an electric effect on expectations...
...One administration defender claims the programs can only be evaluated in terms of average income levels over the next twenty years...
...But most of that spending is not now and never has been for the poor...
...Terrorism has hurt rather than helped the Palestinian cause...
...might well induce the Soviet Union to do likewise for its client, Syria, with all the dangers that such an eyeball to eyeball confrontation could bring...
...Food stamp benefits have been seriously cut, once inflation is taken into account - and in the face of growing numbers of eligible citizens...
...Things would be much worse if Congress hadn't modified the president's proposals...
...Rather than demoralizing them further, the cuts will give them the gumption to go find the jobs that have somehow eluded ten million other out-of-work Americans...
...There is a tremendous disproportion between the harm Israel claims to have suffered at the hands of the Palestinians and the damage it has inflicted on the innocent in Lebanon...
...Other officials argue, quite rightly, that the poor's best prospects lie in economic recovery...
...Q. Does this mean that the U.S...
...A. There are weighty arguments against our doing any such thing...
...Capital expenditure by business is down, understandably so in view of high interest rates, sagging demand, and general economic uncertainty...
...Despite devices like All-Savers certificates and IRAs, the savings rate is running about normal for a recession period...
...The administration has declared the budget its compass for leading the economy out of the swamp - and the poor, like all the rest of us, have an obvious stake in that journey...
...The administration has prepared its defenses...
...troops are committed, but there is really little similarity between the two situations...
...Having previously, and probably unwisely, encouraged the country to believe that only a balanced budget by 1984 could deliver a sound economy, and having promised only a $45 billion deficit in 1983 on the way to that balanced budgt, the president must now allow for a deficit of twice that size (or much more, if one doubts the administration's slippery figures...
...Despite the heavy casualties in Lebanon, there are still 600,000 Palestinians in that country and over a million more on the West Bank and the Gaza Strip...
...In the meantime, inflation would be controlled by slashing government spending so as to minimize interim deficits and by maintaining the Federal Reserve's tight money policy...
...During the budget debate, the administration tried to deny that its proposals struck unduly at the poor...
...You're right, the administration has answered, so let the poor and the unemployed pay for it...
...accede to Israeli wishes on this...
...In the days before the invasion, the Israeli ambassador to London was shot, and Israel immediately blamed the PLO...
...Unfortunately, no one, rich or poor, can have any confidence that the course the administration is plotting will lead to economic high ground...
...Reagan took office pledging to cut taxes (disproportionately for the rich) and "unleash" business from regulation, thereby providing both incentive for expansion and new funds for capital spending...
...The U.S...
...should weigh the Lebanese question very carefully, and before it agrees to send troops to relieve the Israelis of their self-imposed burden, there must be a solemn guarantee from Palestinians and Israelis alike of a genuine effort at conciliation and compromise, with the ultimate goal a reasonable answer to the Palestinian demand for autonomy and a national home, as well as of security for Israel...
...The administration's one distinct accomplishment, bringing down the rate of inflation, has been achieved by that unprecedented post-Depression unemployment (along with a few lucky breaks, like the springtime oil glut) and by the consequent "labor discipline" - in short, by the oldest trick in the economics manual...
...There is no such thing as a free lunch, say the economists...
...George Shultz, then a Reagan economic advisor...
...They didn't miss much...
...These claims are transparently false...
...No matter how many members of the PLO the Israelis manage to kill, the bulk of the Palestinian people will still remain and their real grievances will only fester and grow worse...
...What the Israelis want: the U.S...
...In fact, Mr...
...The PLO over its lifetime has made a terrible mistake in not renouncing terrorism in favor of political means and in not publicly accepting the existence of Israel...
...Messrs...
...THE MAKING OF BUDGET II WHAT WITH THE RESIGNATION of Alexander Haig, continuing war in the Middle East, the opening of strategic arms talks between the superpowers, the furor over Hinckley's acquittal, the demise of the ERA, and even the birth of the latest Prince Charming, most people stopped paying attention to the final rounds of this year's fight over the budget...
...The full nationwide extent of the toll taken by the Israelis is not yet reliably known, but early U.S...
...Budget II turned out to be a weak remake of Budget I. The Democrats folded, Ronnie triumphed again, the Dow Jones stood up and cheered (momentarily), and the poor took it on the chin...
...No matter - the Israelis proceeded to carry out large-scale bombing raids against the PLO in Lebanon...
...What has all this to do with the poor...
...A. Not by us...
...But that's not the only oddity about the administration's claims to a new economic approach...
...so have other programs aimed at providing health care for women and children...
...It is for such a solution that the U.S...
...So far, the critics have been right...
...The president's critics said his plan wouldn't work...
...Huge deficits would loom, and the administration would remain trapped between the dangers of runaway inflation and strangulation by high interest rates...
...they are too identified with one fac- tion, the Christian Phalangists...
...Other lines of defense include grumbling at the Fed and complaining that the president hasn't been given all the tax and spending cuts he asked...
...Some administration officials quietly believe that these cuts are a positive benefit to the poor...
...to organize and be a part of a multinational force that would allow their troops to withdraw...
...should flatly refuse to organize or participate in such a multinational effort in Lebanon...
...They said that the tax cuts would be an unreliable way to obtain new capital expenditure...
...The next issue will be dated August 13...
...Q. Should the U.S...
...Why, that model of moderation and sagacity now chosen to fill the Haig boots, Mr...
...About three million poor children have lost their school lunches...
...We should be willing to play a role in Lebanon only if the effort is made part of a genuine larger effort to finally solve the Palestinian problem...
...Such an action by the U.S...
...Funding for pregnant teenagers has been cut drastically since the adminst-ration took office...
...It would put the U.S...
Vol. 109 • July 1982 • No. 13
