Last week the workers of the Ford Motor Company voted wage and benefit concessions so that their company will be more competitive and their jobs more secure. Automobile workers have been on a tawdry binge for many years, receiving salaries 70 percent higher than the average American industrial worker. Now, quite on their own, Ford workers are sobering up. They see that their products must compete, and next year they will be making less so that they can, as the phrase has it, get Ford going again.
Unfortunately, their congressmen and senators, if they have their way, will force these prudent workers to take home even less. The honorable gentlemen on Capitol Hill are embarrassed by that $91.5 billion deficit that hangs out from the budget like the sagging belly of an aging burlesque queen. They want to cover it up before the Ford worker and his fellow Americans discern its raffish meaning.
The honorable gentlemen say it will help to cut the military budget. But by slenderizing here how much of the deficit will disappear? $5 billion? $15 billion? The more desperate say $30 billion. That will still leave a $61.5 billion deficit protruding from beneath their vests. And if the friendly Russians are not so friendly after all, these economies may prove to be penny wise and pound disastrous. Recall, if you will, that on the eve of Germany's 1939 blitzkrieg into Poland, British pols were still putting down Churchill's pleas for greater military outlays as wasteful.
So let the American pols cut our military budget. Perhaps those American bishops so recently smitten by the Age of Aquarius are right; perhaps peace can be assured by meditation and holy water. Nonetheless, even with a pared-down military, the pols will remain in a fever to raise the Ford workers' taxes. Unless they mothball the fleet, that deficit will remain as the flabby evidence of just how slovenly the honorable gentlemen have been about managing the people's resources. Thus the Ford worker must pay for Capitol Hill's profligacy.
For years now, the solons and numas in Washington have been writing truly idiotic welfare laws, laws that enjoin the government to pay more and higher benefits whether the Treasury can afford to or not. The fact is that the non-defense budget has grown at an unparalleled rate in recent years. In dollars of constant purchasing power the United Sates spent less on defense in 1980 than in 1960. Its proportional share of GNP was halved, but non-defense spending grew stupendously. Since 1970, Medicare and Medicaid have grown 436 percent. Through the 1970s, welfare programs grew 21/2 times as fast as GNP and three times as fast as wages. Between 1970 and 1980, real spending per individual poverty client grew 82 percent, not counting increases in Social Security, Medicare and federal employee retirement programs. Yet, if the president's critics are to be believed, the poor remain desperate. Better that the Ford workers should take pay cuts and tax hikes than that these flabby programs-- many of them obvious failures--should be cut or restructured.
Despite all the pained expressions over President Reagan's budget-cutting and tax-cutting measures, government continued to grow in fiscal 1982 as did the Ford workers' taxes. Thanks to tax bracket creep and the growth in Social Security and nonfederal taxes, Reagan's tax cuts for fiscal 1982 faded into nothingness. The government probably expanded in real terms by 5 percent and growth in non-defense spending roared along to gouge a record 17.4 percent of the GNP, up from 15.9 percent in fiscal 1979. If the honorable gentlemen are in earnest about eliminating their deficit, and if they have any sympathy for the Ford worker who already pays too much in taxes, they must slow the growth of federal non-defense spending.
Martin Feldstein, an economist who speaks with rare breadth and authority, urges that these outlays be steadily reduced until they match their 13 percent share of GNP circa 1970. This can be done if Congress keeps non-defense spending's growth below the economy's growth. It can be done faster if cuts of as little as 2 percent per year are made in real non-defense outlays over the next six years. Feldstein advises that these modest cuts be made in the Social Security retirement, disability and Medicare programs. Then, too, farm subsidies could stand a reduction. Working people's wages have been reduced enough.