Correspondents' Correspondence Budget Charade

...Budget Charade Philadelphia—Rhythm and ritual mandate that the Budget Message follow the President's State of the Union address This year, in reading the numbers, it is possible to waver between a ho-hum and noting a Presidential conviction that the electorate is swinging to the Right Before 1977 the budget year began on July 1, so about a half year of the projected expenditures were fairly in place under existing programs and a good part of the revenue guesses spanned the reasonably near future Now the fiscal year does not start until October 1, and "It's A Long Way to September " At best, Jimmy Carter can implement only three or four expenditure months before closing out his first White House term, the remaining eight or nine budget months lie, in discretionary areas, in the hands of the next President Inevitably, even "this President,1' as the new repomping goes, will shift gears frequently before October Congress will also have its erratic way as economic conditions change, world events erupt and political winds warrant That is the ho-hum side, on expenditures especially On revenues, if one believes the estimates one can even believe that "this President" has a serious clue to economic policy beyond looking Presidential for the nomination and the election To be sure, there are the fatuous and uninspiring words of his Treasury Secretary G William Miller, encouraging a "steady as we go" course—as the boat capsizes Embraced in the spirit of the financial program to come, the 636 page budget document, before appendices of course, constitutes a monumental contribution to obfuscation The main 1981 budget facts are these Expenditures are set at $616 billion Revenues, assuming you impart credence to the numbers, will come in at $600 billion Deficit $116 billion For contrast, the final fiscal 1977 figures were expenditures $402, revenues $357, deficit $45, all billions obviously To dispel confidence further, Budget Director James T Mclntyre Jr noted that the militarv outlays were entered before the December 27 Soviet invasion of Afghanistan, and well ahead of the President's tough talk and timid oil conservation stance m his State of the Union address Defense expenditures were listed at $142 7 billion, compared to $98 billion for fiscal'77 Congress and Republican campaign oratory are likely to compel higher figures Meanwhile, Carter has budgeted increases for social programs that keep pace with the decline m the value of the dollar, with some sop for youth job creation even as the Administration's feeble monetary maneuvers against inflation ravage employment in the construction industry and allied supporting sectors The eagerness of the Republicans to outdo Carter in military spending, incidentally, points to the hollowness of then stump noise on "cutting government expenditures " Judging from their standard speech texts McKinley was our most inspiring President, always good for another election so long as facts are evaded In any case, my guess is that overall the budget underestimation of inflation will force an upward revision just to maintain the tentative listed programs Add to this the expected continued crudities of the Russians and you have a trillion dollar budget in your future—possibly before the 1984 election, considering the Carter crew's inflationary anti-inflation measures To think, Lyndon Johnson shuddered at the thought of being the first $100 billion dollar President in 1963 and sought ways to dodge the number' The economic assumptions of the Budget Message can be put briefly Charles Schultze, chairman of the aptly mislabeled Economic Council, has "explained" that the totals assume a 10 4 per cent rise in 1980 consumer prices, and 8 6 per cent for 1981 Carried to one decimal point these are such nice and "precisely numbers, one might even believe there actually is an Administration policy to contain inflation My own belief is that the Carter crew will go on afflicting us with the worst inflation record in our modern history and that Schultze will continue to explain disasters as triumphs The Nixon malady lingers For 1979 the Council forecast an inflation rate of 7 4 per cent, and the outcome was a mere 13 3 On unemployment the assumption is of a rate of 7 5 per cent by about election day This resembles the standard —not necessarily accurate—forecast Also, all of it is predicated on no tax cut unless the economic situation worsens—although most of us believe it is already bad enough No tax cut through 19819 One can be skeptical as the Kemp-Roth bill gathers election-year steam, even while agreeing with Congressman John Anderson of Illinois that the other Republican candidates will balance the budget "with mirrors " As required by the Humphrey-Hawkins Act, the President reported that he was postponing a goal of 4 per cent unemployment from 1983 to 1985, and a price inflation rate of 3 per cent per annum from 1985 to 1988 Why not to a good vintage year like 2050...

...This stuff, as goals and forecasts, gets printed At public expense, no less —and with further windy elaboration m the Economic Report, which is now being turned into a document of apologetics for nonperformance —Sidney Weintraub Italian Jitters Rome—Since a majority of the Italian people accept and even welcome the United States' stewardship of the Western world, it is not surprising that they have been shocked and dismayed at the imprisonment of 50 American diplomats in Iran Their sympathetic emotional reaction, however, is not matched by confidence in America's resolve to fulfill its leadership role The man m the street sees the United States as a helpless giant being held at bay by the maniacal head of a third-rate power Most politically uncommitted Italians view with astonishment and concern the praise lavished by some sectors of the American press on President Carter for steering a supposedly prudent and patient course in the Iranian crisis While their astonishment derives from an interpretation of the role and responsibilities of the world's most powerful nation different from that of the U S., the Italians' concern is essentially rooted in their self-interest The U S handling of the Iran crisis, they fear, reflects not so much restraint or moderation as the unwillingess, if not inability, to use force to protect the nation' s honor and its citizens' lives And if this is the political or psychological legacy of the Vietnam War, they are asking, how can they—or for that matter any of their neighbors—count on the United States as a protector in the event of Soviet aggression in Western Europe^ Indeed, the concurrence of American meekness in Iran and Soviet ruth-lessness in Afghanistan has created an atmosphere of pessimism on the Continent that may develop into the sombre mood that prevailed m 1936 when the European democracies showed their impotence in the face of Hitler's naked aggression France, for example, seems ready to revert to its pre-World War II policies of appeasement, as was indicated by the Pans government's refusal to take any meaningful retaliatory measures against either Iran or the Soviet Union At the same time, West Germany has been striving to reconcile its loyalty to the Atlantic Alliance with the exigencies of Ostpolihk It was not surprising, therefore, that the joint statement issued by the leaders of both countries following their meeting of last week in Paris contained little of substance As for the Italian government, a weak coalition whose days are numbered, its reaction has consisted of some vague condemnations and pious expressions of hope On January 11, the Italian delegate to the UN did not help matters when he told the General Assembly that he opposed any UN resolutions against the Soviet Union But whatever the intentions of Prime Minister Francesco Cossiga, his government lacks the parliamentary strength required to enact and enforce a policy aimed at bringing pressure on the Russians Nor will its successors, in the current legislature at least, be in any stronger position Moreover, since Italy depends on Middle East oil more than the U S does, it is wary of taking part in international sanctions against Iran Only with the assent of the Italian Communist Party (PCI), which musters approximately one third of the national vote, could Italy lodge an effective protest against Soviet brutality and Moslem arrogrance Yet the PCI, its alleged Eurocommunism notwithstanding, issued a lukewarm condemnation of the Soviet invasion of Afghanistan and was careful to balance this with a sharp criticism of U S policies in Central Asia The party daily, Unita, described the intervention as the fruit of "perverted logic," but then went on to say, "Moscow's desire to keep Afghanistan under control is understandable in view of repeated U S attempts to eliminate it from the Middle East " Compared with the French Communist Party, which has tacitly supported the Soviet Union's invasion by accepting the explanation that troops were sent into Afghanistan to forestall a foreign invasion, the PCI has shown greater independence from Moscow Nevertheless, its ambiguous a-plague-on-both-your-houses posture has confined it to condemning the taking of hostages in Iran and the invasion of Afghanistan, while barring possible retaliatory moves against the perpetrators Small wonder that here in Italy, a country in the throes of endemic political instability, galloping inflation and rampaging terrorism, a thoroughly pessimistic view of the international situation prevails The Italians would like the United States to provide the free world with the firm direction they fail to get on a national level President Carter's admission that he had been deceived by the Soviet leaders' violation of accepted international rules of behavior did not reassure them Although they are willing to give him credit for his honesty and candor, they question what they see as his continuing belief, despite all the danger signs, in the viability of detente —Silvio F Senigallia Japan Plays It Cool Tokyo—If there is one issue the Japanese wish would simply fade away, it is that of sanctions against Iran and the USSR Under increasing pressure to cooperate with the Western nations, Japanese economic planners, diplomats and politicians avoid mentioning sanctions whenever that is possible, when it is not, they betray a fear that borders on paranoia or nightmare Since Japan depends entirely on imported energy, nothing worries officials here more than provoking Iran to cut off its oil shipments Only a few weeks ago, a dozen Japanese importers signed contracts with the National Iraman Oil Company to purchase an average of 519,000 barrels a day, or 11 per cent of the company's total output, for the next mne months at approximately $30 a barrel For the Japanese, the Iranian crisis is over In the view of local political analysts, if the U S wanted Japan to join any action against Iran, it would have to threaten to restrict the flow of Japanese exports to the U S Since Japan is looking forward to a trade surplus with the U S of well over $10 billion this year, such a move could hurt The Tokyo government would then have to balance the cost of rebuffing the U S against that of angering Iran Japan is also reluctant to take part in sanctions against the Soviet Union Although it does not import Russian oil, it does rely on the Soviet Union for permission to fish within its 200-mile limit Last December, the two countries agreed once again to exchange fishing privileges The feeling is that Moscow would break the new agreement, which in tact benefits Japan more than it does the USSR, if Tokyo participated in the imposition of sanctions At stake, too, are five huge development projects in Siberia in which Japanese industy has plunged $ 1 5 billion dollars Because the Soviet Union so desperately needs Japanese expertise and technology, the belief is that it would not cancel the projects if Japan merely cut down on some of its exports, such as industrial products and steel But Japan would certainly resist —and might even refuse—a U S request that it pull out altogether as punishment for the Soviet invasion in Afghanistan Officials doubt that the United States would retaliate m this instance for their refusing to be cooperative To the average Japanese, the issue of sanctions is something discussed in newspaper articles of remote interest It would become a matter of public controversy, though, if Japan ever felt the full impact of the oil ensis m the form of scarcity, inflation and reduced economic growth So far, nothing of the sort has happened Oil prices have risen and the government has had to impose some energy-saving measures, but these have done little more than remind the man in the street that a problem exists out there on the horizon The disciplines of lowering the heat and stopping an elevator or two in office buildings are only minor irritants And m a country criss-crossed by railroad lines, restrictions on the sale of gasoline hardly cause the kind of inconvenience experienced in the U S What is of overriding importance is that the country continues to thrive The gross national product expanded by 6 per cent last year and is projected to increase by 4 per cent this year Consumer prices are going up by no more than a few per cent a year Industrial plant expansion, slowed down somewhat during the rise in oil prices last summer, is now enjoying a sharp upsurge All this would be jeopardized, of course, if the U S insisted that its "ally'' join a united front against Iran or the Soviet Union True, Japanese officials have promised to do their utmost" to help Washington, but they define the word differently than their American colleagues The depth of the disagreement became apparent during recent visits to Japan by two high-ranking Americans, Defense Secretary Harold Brown and Special Envoy Philip Habib Brown sugested, among other things, that Japan give "economic" aid to Pakistan, and Tokyo replied, guardedly, that it would consider "humanitarian" aid should the turmoil in Afghanistan spill across the Pakistan border Habib commented that he fully understood the Japanese position, although it was perfectly obvious he was not fully persuaded by it Clearly the United States will have to resort to tough talk, probably behind the scenes, before Japan comproises on matters affecting its own basic interests—particularly its need for imported oil Short of this, the Japanese will continue to issue lukewarm statements of support that will do little to advance the present White House strategy toward either Iran or the Soviet Union —Donald Kirk...