Place Your Bets: Taking Odds on What Reagan Will Do Next
There is an outfit in England that sets odds and takes bets on the outcome of the Presidential race in the United States. If this firm wants to expand its business, it could propose ten-to-one odds that the following predictions will materialize President Reagan gains a second term:
- President Reagan, despite his pre-election promises, will raise taxes. The booming Reagan deficit is expected to reach $280 billion, according to the non-partisan Congressional Budget Office which estimated the national debt at $3.1 trillion by that time. Doug Baridow, a former Reagan White House aide, reminded readers of the Washington Post recently, that following the 1981 Reagan tax cut (mostly for the wealthy), the Reagan government pushed through Congress four successive tax hikes. All these tax increases, sometimes called “tax reform measures”, were preceded by Mr. Reagan denying they were going to be proposed.
- Real interest rates will remain at historic highs or higher, leading to reduced ratio of exports to imports and a burgeoning foreign trade deficit costing many American jobs.
- The level of net domestic investment will fall from the 1971-80 rate of 4.9 percent of GNP to 4.0 percent of GNP over the period of 1986 to 1989. Net domestic savings will drop from 6.9 percent to 3 percent of GNP over the same periods. These are projections by the Brookings Institution. The London odds-maker could hedge his bets by just taking wagers on a decline in those two key economic indicators.
- Inflation, now around 4.5 percent, will climb to over 10% as the temptation for government to “monetize” the huge debt becomes irresistible. Inflation has come down due largely to the deep recession of 1981-1982, the real reduction in world oil prices, the food production surplus, and the wage concessions by American workers.
- Social insurance benefits will be cut, contrary to Mr. Reagan’s pre-election assertion to the contrary in recent weeks. Medicare cuts will be top priority for installing larger deductibles. Reaganites will propose that a larger share of social security income be included in the income tax base, that the retirement age for full social security benefits be raised to 67 and that more of those benefits be taxed.
- Enforcement and other implementation of national consumer, environmental and worker health and safety programs will be well below their level throughout the Seventies. Besides being soft on cancer prevention programs and consumer fraud, the weak Reagan government will continue to set lows in the number of anti-monopoly cases it brings to the courts.
- Statistically, the rich will get richer and the poor will get poorer. The maldistribution of wealth and benefits is getting worse, the number of Americans in poverty is increasing and much of the middle class is being squeezed downward on the economic ladder. Especially bad news for families with incomes at $25,000 a year or lower.
- Unemployment will Q0 up from present levels of 7.4 percent and the average wage of American workers will go down, reflecting the loss of higher paid jobs in heavy industry and the growth of two-tier labor systems within the same company.
- Reagan will propose sharp cuts in the $15 billion federal program of aid to education, including financial aid to college students and handicapped youngsters.
- Reagan will spend even less time on the job in Washington and more at his California ranch. Measured in days away from work, the London odds-maker can give even higher odds than ten-to-one and not get any takers. For by 1988, more Americans will know what they wished they knew in the autumn of 1984.