Once upon a time, a governor of California said his feet were "set in concrete" against proposals for withholding Californians' taxes. Then one day, Gov. Ronald Reagan opened a press conference by tapping the microphone, which crackled. "What you hear," he said, "is the sound of concrete cracking around my feet." Today, congressional Republicans long for the sound of concrete cracking around the presidential feet.
Reagan says he is immovably opposed to substantial new revenue measures. But severe deflation is driving revenues down and outlays up. And Reagan is making his presidency dangerously brittle with uncompromising rhetoric about a budget that is going to be substantially compromised, with or without his help. Perhaps this is not the moment for him to bend, but he should behave in March in a longheaded way. He has about six weeks to initiate a compromise. Otherwise, the budget will be wrenched away from him, and with it his capacity to lead.
As the revenue structure is now, there are $200 billion deficits in the onrushing future--perhaps as soon as fiscal 1984. That is a recipe for returning Republicans to the wilderness, and for a national lurch to the left with credit allocation.
Sometime in May, Congress will face what could be an action-forcing deadline: the need to vote to raise the debt limit. Congress cannot whittle away huge deficits with 100 little cuts. No coalition can be held together for that.
Congress requires a few simple, large strokes to attach to the legislation increasing the debt limit. A substantial start could be a one-sentence statute: a 10 percent surcharge on taxes. A surcharge is, historically, an emergency measure. It could have an expiration date, say, two years out, and would leave Reagan's tax-rate cuts on the book. The Fed might ease monetary policy quickly, with dramatic results, in response to some such measures.
Reagan argues that this is the first postwar recession in which there is a recovery-igniting program (the July tax cut) in place. Certainly some sort of recovery is possible, if not probable, in the near term.
But even worse than no recovery in the third or fourth quarter would be a short recovery in which increased demand for private-sector credit collides with federal debt-financing demands, and the recovery would be aborted by surging interest rates. This would confirm investors in habits of despair. They would not invest with five- or 10- year horizons; they would just move their money around among short-term instruments, not financing the economy's productive structure.
The threat to the economy is clear. The threat to the Reagan presidency is at hand.
Presidents are vulnerable to a process by which the public comes to think that a president's virtues are not really virtues. The public began by liking the fact that Jimmy Carter was a stranger to Washington, but soon considered him merely naive. For Reagan, it can be a short step from the public's perception of him as admirably forceful and principled to a perception of him as recklessly rigid in the face of conditions that are radically in flux.
The commonest way a politician forfeits public confidence is by not seeming to mean what he says. But another way is to seem to care more for consistency than for making what one says appropriate to changing circumstances. Generally, politicians have problems of believability because they are considered too pliable. But a politician can generate skepticism about his prudence by seeming to be a person who would rather break-- and break a lot of the nation's crockery--than bend.
Last year, Reagan got into an expensive bidding war with Rep. Dan Rostenkowski (D-Ill.) to buy votes for their tax cuts. Both men were standing to the right of the 1976 Republican platform. So Reagan missed a chance to shrug amiably, compromise moderately, and thereby tie Democrats to his gamble. Now he has a second, perhaps final, chance to compromise in a way that blurs partisan identification with the economic program, to his advantage.
His new budget was stillborn. Now his task is to avoid stalemate (government by continuing resolution) or suffering a dictated surrender. The largest challenge of his presidency is to fashion what can be perceived as a common solution to a common problem. Much now depends on four horsemen--Sens. Baker, Dole, Domenici and Laxalt. The majority leader, the chairmen of the financial budget committees and the president's closest Senate friend must simultaneously orchestrate a compromise and crack concrete.