The inflation rate this past year was, so say the robed readers of the Consumer Price Index, 13.3 percent. This is an especially positive development. It is the very best rate of peacetime inflation in 35 years. Our president is to be congratulated.
I say the very best, because as a child of the Keynesian economic enlightenment, my education for years consisted of many long and sometimes sibilant tirades about England's incomparably advanced system of political economy: its nationalized industry, its pervasive welfare system, its emphasis on governmental services over private-sector production. Well, we now have an inflation rate congenial with the schemes of every British social reformer. Can the rest of their governmentally provided paradise be far behind? Thirteen percent inflation, a declining productivity rate, huge government deficits, very little private savings, very little investment -- I feel like a citizen of London! Up at the Harvard Club or over on some luscious ski slope in Gstaad, wherever he is, I bet Dr. Galbraith is proud. lIf only Sidney and Beatrice Webb had lived to see this day. Of course they would be 121 and 122 years old, respectively, but no matter.
Lamentably, inflation is not popular with the popolo minuto. In America, things get more and more expensive for the average Yank, and it is getting harder and harder for him to muster the cash to pay for them. This is true for everyone but Uncle Sam. For him, it gets easier and easier. The reason for government's prosperity is that, as inflation forces the average Yank to earn more and more just to remain even, he is thrown into higher and higher tax brackets. Thus the government, aided and abetted by its progressive income tax, carries off ever larger chunks of the sweating Yank's paycheck. According to Lacey H. Hunt, chief economist for Philadelphia's Fidelity Bank, when the average family earns a 10 percent income increase, its federal income taxes rise by about 16 percent. Today the average American is being taxed at the same percentage of his income as yesteryear's rich were taxed. Unfortunately, his income will not buy what the income of yesteryear's rich would buy.
Inflation might force you to cut your budget next year. Yet, as a patriot, I am proud to report that inflation will not commit similar depredations against our government. According to our president's 1981 budget, next year the U.S. government will spend 12 percent more to subsidize housing, 4.6 percent more for education, 13.5 percent more for "health and human services," 15.6 percent more for the Labor Department's employment and training schemes and over 12 percent more for defense. Moreover, remember our government was not stinting on these items in fiscal 1980.
This, Carter tells us, is a "prudent and responsible" budget. Viewed a certain way, it is. He wants to continue his personal growth in the White House after the 1980 election, and so it is only prudent and responsible for him to hand out the boodle. Most of the programs that this boodle supports are failures in terms of social benefits, but in terms of political benefits they are a proven success, making Prof. Harry Hopkins one of the most influential political scientists of modern times.
Not only is the budget prudent; it is also, of course, "humane." Doubtless, throughout America's thousands of shantytowns, millions of candles are being lit before wall shrines to our president. And all the servants of health and humanity -- the educators, the welfare workers, the job trainers, the builders of subsidized housing -- are breathing easier. Surely the taxpayer should be grateful, too. Conquering inflation is our president's "No. 1" goal. After this felicitous budget he might be able to continue the struggle.
In his fierce war against this diabolical economic phenomenon, he is not without allies. All the pols are with him. The Democrats and Republicans may divide on many issues, but against inflation they present a united front: sonorous in their denunciations of it, selfless in their heeding exertions against it. Yet what can they do?
OPEC taunts them from beyond the three-mile limit. Big Labor and Big Business intrigue endlessly and cunningly. These are powerful opponents even for the heroes of Capitol Hill. What to do? If the pols can have no effect on OPEC, Big Business and Labor, how about government? Is it also beyond their control? If it is, the pols obviously serve no purpose other than to satisfy our needless appetite for low comedy. If government is not beyond their control, I suggest they finally make good on their election-year testimonials to their own compassion and sense of justice. I suggest they prohibit the federal government from clandestinely grabbing ever more of the average Yank's income. They could do this by simply shifting the tax brackets upward in tandem with inflation's rise. This is called indexing. tOur heroes on Capitol Hill have figured out how to index government's benefits. Let them index government's taxes.