Michael Horowitz, not being an economist, won't attempt to defend the specifics of supply-side economics. But give him an hour or two, and he'll offer a spirited, near-evangelistic, defense of Reagan's budget- cutting, pro-business approach to government.
Horowitz, who 20 years ago was a liberal professor of civil rights law at the University of Mississippi, is today the conservative counsel to Reagan's budget director, David Stockman. "I'm working for this administration for precisely the same reasons that I went to Mississippi in the mid-'60s," he said during a recent interview: "Because I believe that the whole notion of America as a place which can really offer something to the poorest people, to people moving up the ladder, is at stake."
Black people, poor people, old, weak and sick people, he now believes, were being done in by their friends. If they are to be saved, it will be at the hands of those they perceive as their enemies.
"Take the issue of inflation," he offers. "During the decade of the '70s, you had lots of politicians out there who were talking about the need for higher AFDC payments, and you had other 'less caring' politicians who were talking about the evils of inflation. The fact of the matter is that during the decade of the '70s, with the inflation that took place, we had a 30 percent decline in the real value of AFDC payments.
"Or take the issue of home-buying, which is really such a traditional way in which people begin to take that first step up to some kind of middle-class existence. Between 1977 and 1980, just through the phenomenon of inflation alone, the median price of a home went from $48,000 to $65,000. The median interest rate went from 9 percent to 15 percent, so that the typical monthly payment on a 30-year mortgage for the typical American home went from $402 to $821 a month."
Nor is there any doubt in Horowitz' mind what caused the inflation. It was excessive government spending--much of it on programs that were originally designed for the poor but became increasingly "universalized": student loans and school lunches, for instance. In addition, many of the low-income programs wound up--inevitably, in Horowitz' view--benefiting the rich.
"The classic example is the housing area, the Section 8 housing program for delivering housing to the poor. During the flush years of Section 8, we could never, because of the cost of the program, accommodate as much as 10 percent of the eligible poor population in subsidized housing. But we now owe, as a country, more than $200 billion that we're still going to have to pay off in what is in effect mortgages for Section 8 housing already built, much of it crummy, ready to fall down damn near before it's ready. Do you know what the average subsidy is per unit of Section 8 housing in the country now? It's somewhere between $7,000 and $10,000 per unit per year. Now you and I know that the poor people are not getting $600 or $800 a month worth of apartments from Section 8. The Section 8 program is a more a subsidy program for developers and builders than a housing program for poor people."
So what does work for poor people?
"During the decade of the '60s-- the so-called less compassionate decade when all the income transfer and Great Society programs did not reach anything like the flood tide that they reached during the '70s, but when the private-sector productivity was growing at something like 31/2 percent per year--median black family income rose from $7,200 a year to $11,800 a year. That's in constant 1979 dollars. Literally a 50 percent increase in the wealth of the median black family. In the decade of the '70s, when private sector productivity was (growing) at the rate of 11/2 percent on the average, median black family income fell. And that was true even though there was a higher proportion in the '70s of two-family incomes in black families."
But talk about the importance of economic growth sounds like "the green eyeshade" approach, Horowitz complains. "Nobody translates that into caring and compassion: partly because there's not some personal official or statute which can be seen as the linkup between poverty at the moment and a somewhat better condition the next moment, and partly because conservatives are uncomfortable articulating their ideas in terms of a moral social vision. The truth is, the poor don't have a prayer unless we can generate an end to inflation."
I wouldn't argue with the theory. But in practice, the policies that have slowed inflation have also brought on massive unemployment, record federal deficits and a major erosion of programs designed to aid the poor.
Some of those programs may have been flawed. But from the viewpoint of the poor, it's hard to see that Reaganomics is better.