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economic footing, sacrifices will have to be made and they will have to be shared,” Bentsen, a fellow Democrat, remarked immediately after the president’s speech. Unfortunately, despite Carter’s forceful rhetoric and new initiatives, most analysts, including some of the president’s own advisors, agree that his program will not lower the inflation rate anytime soon. Even before the president unveiled his plan the Wall Street Journal remarked, “It won’t produce any quick relief from the double digit inflation that is plaguing the nation.” A senior administration official confirmed this pessimistic assessment: “The balancing of the budget itself will not have an immediate impact on inflation, nor will the other actions.” According to most economists, balancing the budget will only reduce the inflation rate by 0.1 percent after two years. But even this paltry accomplishment on the inflation front will be offset by other components of Carter’s “anti-inflation” program. The 10 cent per gallon gasoline “conservation fee” is expected to raise consumer prices by 0.5 percent immediately and by 0.7 percent within two years. Similarly, the administration’s tight money, high interest policy will further add to inflation as businessmen recoup their higher interest costs by raising prices. Clearly, if the president’s intent is to lower inflation, then his policy will be judged an abysmal failure. But if he wishes to impose austerity on the American working class, then he is on the right track. Since cuts in the military budget have become taboo, most spending reductions will be forced on social programs. Carter has already announced that he will “defer, reduce, or cancel” most of the new or expanded programs in the original budget the White House submitted to Congress in January. In addition, Carter has requested that Congress eliminate the $1.7 billion in revenue sharing funds that go to state treasuries; $860 million earmarked for welfare reform; $265 million in capital grants for mass transit; Saturday mail delivery; and the Anti-Recessionary Fiscal Assistance program that targets, for special aid, cities with the highest rates of unemployment. Saving money will also become more expensive if President Carter has his way. In order to accelerate tax collections, Carter has proposed that the IRS withhold 15 percent of all interest and dividend payments as a contribution toward the eventual income tax that will be due. In addition, the small saver who sees his savings account eroded by low passbook interest rates and high inflation has come under special attack. Previously, those families without the $10,000 minimum needed to obtain higher interest rates could invest as little as $500 in high interest mutual funds. According to Beryl Sprinkel, an economist recently quoted in the Wall Street Journal, these “funds are one of the few places the small guy can keep even with inflation.” But not anymore. New regulations issued by Carter have lowered the yield on such investments and guaranteed that their rate of return will generally be lower than that of inflation. Carter’s final austerity measure comes in the area of employee compensation. Despite raging inflation the President has called on labor to voluntarily restrict its wage demands to no more than an 8.5 percent increase per year, barely over half the current annual inflation rate. Even without cutbacks in government subsidies, this policy would reduce most families’ standard of living by nearly 10 percent. Since there are no similar ceilings on dividends, profits, capital gains and most interest rates, this proposal comes as a major blow to low and middle income families and only a minor nuisance for the wealthy. Not surprisingly, neither Carter’s rhetoric about “pain” and “cost” nor Sen. Bentsen’s call for shared sacrifice applies to the nation’s corporations. If the President and Congress have their way, corporations will be granted tax reductions and other in centives to invest in new equipment aimed at raising productivi ty. This tentative plank in the “anti-inflation” program has been dubbed “supply side” economics. Its adherents include the Wall Street Journal, Sen. Bentsen, and Reagan’s chief economic advisor, Rep. Jack Kemp, R-NY among others, who argue that the federal government must reverse its economic priorities. Instead of devoting tax dollars to “wasteful and unproductive” social services, supply side devotees want tax cuts for business. Their rationale is simple: businessmen will invest only in geographic areas and economic enterprises that return the highest possible profit. If U.S. manufacturing is taxed too heavily, businessmen will invest in foreign countries where wages and taxes are lower; or they will speculate in real estate, commodities like gold and silver, and other profitable although not necessarily productive outlets they discover. Because of this, supply side economists argue, American productivity has not been growing as rapidly as possible. Domestic manufacturers are unable to compete with U.S. multinational corporations operating in third world countries, they point out. The nation is saddled with outmoded machinery that is unable to compete effectively with the up-to-date equipment installed by prospering multinationals. Supply side economists say that existing taxes on corporations not only inhibit investment in U.S. domestic production, but also create inflation as corporations translate lower productivity into higher prices. However, they claim that all these problems would magically disappear if the federal government would only lower corporate taxes and raise incentive to invest at home. Thus, stripped of mystifying economic jargon, supply side theory as well as Carter’s anti-inflation policies amount to abject submission to the blackmail of big business. In effect, business has gone on strike and declared that it will not invest, irrespective of the national consequences, until it receives higher profits and lower costs. By inducing a crisis whose symptoms are manifest in high inflation and a deteriorating economy, big business holds the nation hostage. If Carter and the Congress do not respond favorably, they will have to face the wrath of the voters who blame elected officials, not businessmen, for the nation’s poor economic performance. Since Carter has no desire to combat business’ stranglehold, he has shown little enthusiasm for strategies that would reduce inflation without imposing austerity on those least able to afford cutbacks. As a result, he fords himself in the historically unprecedented position of campaigning for re-election on a platform that promises nothing but “pain” and “cost.” Fortunately, there are alternatives to Carter’s anti-inflation program. And they do not require austerity for workers and more profits for business. But in order for these alternatives to work, labor must first seize economic control from businessmen who act solely on the basis of their own private gain while ignoring the national welfare. At a very minimum, an alternative anti-inflation program would include the following: higher taxes on capital gains from commodity speculation and a high sales tax on certain luxury items. This would reduce the incentive for wealthy individuals to invest in such socially unproductive outlets as rare wine, gold bullion, and porkbellies. It would also penalize those who prefer to squander their money on frivolous luxuries. At the same time, by decreasing the profitability of such investments, this would increase the THE TEXAS OBSERVER 5