The true cost of inflation now comes home once again. But far more in the form of political bite than of soaring prices.
For the inflationary condition unsettles the center, gives the initiative to the right and puts liberals on the defensive. It thus shatters the fabric of national consensus.
Inflation is political dynamite because of its impact on that quintessential figure of the majority - the middle-class taxpayer with annual income ranging from $15,000 to $30,000. Most middle-income people earn higher salaries as a result of inflation. Their houses and other property appreciate - sometimes enormously.
But the increase in income tends to lag behind the rise in prices. Nevertheless, bigger taxes have to be paid because of entry into a higher bracket. Houses and other property usually cannot be sold. But far higher property taxes have to be paid because of the increased valuation.
The upshot is a decline in standard of living, despite an ostensible rise in income. The sense of having been duped, cheated and gulled - the keenest psychological consequence of inflation - is thus accomplished. It yields, on the part of the normally permissive majority, feelings of hostility toward government and most of its works, especially taxes.
In that climate, ideologues and demogogues of the right acquire heavy clout. A doctrinaire free-enterprises, former secretary of the treasury William Simon, is now taken seriously as a spokesman for business. Ronald Reagan, because he shows signs of inching toward the center, is not going enough for the Republican right. The conservatives have put a gun to Reagan's back by persuading an even more conservative figure, Rep. Philip Crane of Illinois, to announce for the 1980 Republican nomination.
With the center uneasy and the right on the warpath, the disposition of the Congress is to favor, in the name of tax relief, measures that help the rich and hurt the poor. Thus the administration sent to the Congress a tax-reduction bill tilted heavily toward persons with incomes over $15,000. What is emerging from the House Ways and Means Committee is a bill heavily tilted, especially in its reduction of capital gains, toward the higher and middle-income taxpayers. It affords a $25 reduction to taxpayers with incomes of $15,000 and under and a $245 reduction to persons with incomes of between $20,000 and $30,000.
In energy, the original administration proposals favored conservation through taxes designed to drive up prices without increasing industry profits. What is emerging from the Congress is a boost for production by higher prices for the oil and gas companies.
Rather than risk defeat of the national health insurance proposal, the administration a week ago Saturday announced it would delay the start until 1980. Only the other day a House subcommittee delayed, and perhaps killed forever, a critical measure for supplementary financial aid to the big cities.
Those developments inevitably cause leaders allied with the poorer people to build defensive barriers. Two liberal senators - James Abourezk (D-S.D.) and Howard Metzenbaum (D-Ohio) - have mounted a filibuster against the natural-gas bill. Douglas Fraser of the United Auto Workers resigned from the president's labor-management council with a blast at the "class war" attitude of business.
Far more important is the double beat on the drum struck by Sen. Edward Kennedy (D-Mass.) against concessions by the Carter administration to right-wing pressures. With ALF-CIO president George Meany at his side, he first denounced the stretchout in the national health program. In a notable speech Tuesday night, he contrasted "the self-destruct" mechanism attached to national health insurance with the favors given to the oil and gas producers in the energy bill.
What all this portends is government adrift. The Carter administration cannot make good on its major commitments. Foreign investors express their doubts, in a daily plebiscite on the administration, by moving assests from dollars into gold, Japanese yen, German marks and other currencies. American institutions, unable to buy gold or foreign currency, hedge against inflation by putting money into equities - which explains the crazy rise in the stock market.
Those who favor weak government may find this condition palatable. To those of us who prefer mastery over drift, it is appalling. It announces that the Carter administration must soon come up with strong measures to cage that political monster - inflation.