Is This Any Way for the Government to Wage War on Inflation?
The politics of fighting inflation from Washington is increasingly becoming the politics of put- ting it to the weak and subsidizing the powerful.
A few days ago, at the height of the struggle over the cotton dust lung disease standard that pitted White House advisers against the Department of Labor, a White House aide told the press that their winning the battle would “give credibility to the Administration’s anti-inflation drive.” “Winning” involved further delaying and weakening an already modest proposal to protect textile workers from the ravages of brown lung disease.
Fortunately, President Carter reversed himself and supported Labor Secretary Ray Marshall’s plea. But it was a close enough call to reveal the mind set of his economic advisers, which is to press the inflation fight against people who are unorganized to plead their case and who generally avoid taking on the organized industries.
CONSIDER THE INFLATION priorities of Carter’s economists. They generally have favored energy policies which raise prices further and render the consumer more vulnerable to the monopoly power of big oil. They have not contradicted the Administration’s support for a $4 billion consumer tax to subsidize the airlines’ purchases of new jets. They have condoned a proposal sent to Congress which would raise sugar prices by hundreds of millions of dollars a year.
While advisers Charles Schultze, Robert Strauss, and Barry Bosworth take out their anti-inflation fervor on the crucial health, safety, and environmental programs, the massively larger, bloated corporate subsidy handouts by Washington escaped their attention. If Federal deficits are said to feed inflation, why not reduce the wasteful or unproductive spending of the taxpayers’ money in military contracting, atomic energy subsidies, agri-business handouts, government procurement waste and corruption —to list a few of many deficit-producing welfare schemes for corporations. Indeed, the Carter Administration is doing very little even to oppose Congressional forces bent on eliminating the tiny Renegotiation Board which recovers excess profits from private military contractors.
When will Messrs. Schultze, Strauss and Bosworth look into the fertile area of tax preferences or expenditures to encourage more efficient tax policies for economic development and small taxpayer equity?
MANY MEMBERS of Congress, while talking anti-inflation to the folks back home, also are proceeding to vote for more taxpayer handouts to business. The Senate passed and the House is considering a bill to give about $60 million to clothing manufacturers who bought the flame retardant chemical Tris for use in their product. Tris in now believed to cause cancer. So, instead of these manufacturers suing the chemical companies for damages, they are going to Uncle Sam for their millions.
The point to these corporate handouts is that they do not work toward a more competitive, safer, efficient, full-employment economy. They do not result in more consumer justice. They do not address basic problems and abuses of the concentrated corporate economy.
What would a fair and effective anti-inflation policy look like? First, it would expand on the Civil Aeronautics Board model. The CAB is moving to inject more competition into the airline industry. As a result, passengers have more choices to save money through lower rates on more routes. Where price competition is possible in a deregulated industry, deregulation would be likely to produce lower prices.
Second, the Carter Administration should step up its anti-monopoly enforcement effort. Anticompetitive prices keep the price of food, energy, housing, drugs, and other necessities much higher than a competitive market would permit.
Third, the White House should tailor its other anti-inflationary policies to the most important areas of the economy such as food, energy, and housing. Private economist Gar Aperovitz has been urging this leverage strategy on the President’s advisers for a year with little success. Yet, should inflation remain at current or higher levels, Carter will find it difficult to avoid imposing a selective, mandatory price-wage control policy in these key industries.
It could well be that the willpower in Washington to oppose powerful inflationary forces will not emerge until inflation gets worse. Congress, for example, seems not ready to respond to Carter’s modest hospital costs containment program designed to hold price increases to no more than 9 percent a year. That tells the public that still the victims of high prices receive far less consideration on Capitol Hill than the generators of inflation.