AS YOU raise your glass tonight to the fiscal
New Year there will be plenty to sing Auld Lang Syne to. On Oct. 1 major parts of the Reagan economic program lock into place.
Of course, you won't wake up tomorrow to a wholly altered landscape. Some parts of the Reagan program have already begun--the rescissions in many programs made last spring, for example, and the anticipatory cutbacks that prudent states and localities have phased in.
Still, important things will start happening tomorrow. For one, your paycheck will get bigger because federal tax withholding will go down. Don't plan a spending spree. Even if you're a taxpayer earning $26,000 a year with three dependents your weekly take-home pay will rise by only about $5. Higher up the income scale, however, the gains will be more substantial, and with the new tax breaks for certain kinds of investment there should be a fair amount of portfolio churning. This will be good for brokers and for certain kinds of financial institutions and in the long run it may--or may not, depending on a host of other factors and policies--translate into better economic growth and more jobs and income for everyone.
On the darker side, some people will be much worse off--though most of them won't know it right away. That's perhaps the most important thing about the coming fiscal year and those likely to follow. The changes won't come all at once because most of them will have to filter down through state and local governments that will be doing their best --in the face of shrinking local tax resources and a disastrously bad municipal bond market--to cushion the shock.
Governors and mayors try hard to offset losses partly because they know, much better than federal policy-makers, that despite all the talk about fraud and abuse, the lost federal dollars bought goods and services that contributed importantly to the health of communities. They bought not just help for the old, sick and poor, but less shabby downtowns, cleaner air and fewer potholes in the roads as well. Still the mayors and governors have other reason for concern. When the hollering starts about this cutback in service or that failure in help, it won't be directed at some distant presence in Washington, but at the state and local officials who run the programs on a daily basis.
How loud the hollering gets--and how difficult it becomes to stifle--will probably depend less on what happens tomorrow than on the health of local economies and the size and shape of the much larger federal budget cuts looming on the horizon. But the battleground has clearly shifted in the direction of state and local governments, and the fighting may get fierce.