Felix G. Rohatyn, who helped save New York City from bankruptcy, said yesterday that the Reagan administration's emergency plan to "avoid an economic Dunkirk" would leave the country far from a safe harbor.
Speaking on the CBS television program "Face the Nation," the chairman of New York's Municipal Assistance Corp. declared that the strategy planned by Reps. David Stockman (R-Mich.) and Jack Kemp (R-N.Y.) responded to only half of Prime Minister Winton Churchill's famous wartime words, "I have nothing to offer but blood, toil, tears and sweat." The question, Rohatyn continued, was to see "if we can avoid the blood and tears." q
Stockman, who is the director-designate of the Office of Management and Budget, and Kemp, co-author of the Kemp-Roth program for cutting taxes advocated by candidate Ronald Reagan, last month issued a paper outlining a plan of economic action for the first 100 days of the new administration.
In addition to personal and business income tax cuts, it calls for cutbacks in government spending in fiscal 1981 in such areas as hiring and "ineffective or low priority" programs such as youth unemployment, air and space, and arts and humanities. It urges, "regulatory ventilation" by deferring or rescinding regulations on such things as air bags and government standards on asbestos exposure.
In the energy field, the Stockman-Roth proposal would, for example, accelerate licensing of completed nuclear plants and remove all end-use restrictions on natural gas. Finally it advocates insulating the Federal Reserve from political pressures and the need for short-term tinkering with interest rates to leave it free to concentrate on one goal: the soundness of the system and the stability of the dollar.
Responding to the emergency plan, Rohatyn said tax cuts, budget cuts and regulatory-reform were not enough to get the country back on track. He urged the new administration to consider a six-month freeze on wages and prices, an idea so far rejected by Reagan. Taking a cue from former presidential contender John Anderson, Rohatyn also called for a 50-cent tax on gasoline and an increase in defense spending. He further said the incoming administration should "do something" about farm prices, federal pensions and restoring the draft.
Deploring the "overexpectations" built up by Reagan's victory, Rohatyn said there was no "painless solution" to the "20-year binge" the country has been on. He noted it took five years to rescue New York City from bankruptcy instead of a projected three. A wage freeze was worked out and the city given time to refinance its debt and bargin with labor, he said, actions needed now at the federal level.
Rohatyn offered the curious observation that without New York's written press, in which its denizens could read every day just how bad the financial situation was, the Big Apple would have gone under. Such a situation doesn't exist in the rest of the country, and television just can't portray how badly off the country is, he said.