A clearer view of 2011 can be gained by looking back at 1982. In October 1982, the national unemployment rate was 10.4 percent. Businesses across the country, including a bunch in Iola, were taking bankruptcy. Interest rates were coming down from historic highs, but were still in the 14 percent range. The federal deficit was high, so high that Sen. Bob Dole of Kansas and President Ronald Reagan, the idol of conservatives here and abroad, combined forces to pass a huge tax increase.
You read that right, the two most powerful conservatives in the U.S. worked together to raise taxes — despite howls from Rep. Jack Kemp and his fellow supply-siders, that the middle of a recession was exactly the wrong time to raise taxes. Wrong, said Reagan and Dole, the time to raise taxes was when the budget was running a deficit and no more spending cuts were smart.
And you remember correctly, 30 years ago Sen. Dole saw that the Social Security program was an expensive entitlement that cried out for reform. So he led the movement which resulted in a gradual increase in the retirement age and increases in the amount of revenue brought into the program.
This combination of revenue increases and benefit reductions “rescued” Social Security — until now, when another fix is required to keep this bedrock social program safe, secure — and solvent — for another couple of decades or more.
Today’s fix should also increase revenues and reduce benefits, just as Sen. Dole’s did.
Today, nearly 30 years later, the U.S. is in another deep recession. Unemployment isn’t as high as it was in 1982, but bankruptcies are just as common and this recession has already lasted longer and a full recovery is too far into the future to predict with confidence.
Two other differences stand out: Interest rates today are historically low so that economic remedy isn’t available. The other difference is that yesterday’s political leaders weren’t hog-tied by ideology and could work together in bipartisan, reasoned solutions to the economic problems they faced.
Dole and Reagan worked together to pass one of the biggest tax increases in the nation’s history. They increased taxes because the government was spending more than it was taking in and going rapidly into debt. And, yes, they also lowered spending. Cutting spending and raising revenue reduced the deficit and took pressure off the economy. And, yes, the decisions were backed in Congress by Democrats as well as Republicans.
Back then, the members of both parties considered themselves to be Americans first.
NOV. 23 is the deadline for the 12-member deficit reduction panel of the U.S. Congress to produce a bill that will cut the deficit by $1.2 trillion over the next 10 years. If it fails to do so, the law that established the panel says across-the-board spending cuts will be imposed that will cut military spending as well as the rest of the budget, entitlements included.
As of today, the six Republicans and the six Democrats who make up the committee are working hard to avoid doing what they exist to do. The Democrats don’t want to cut Social Security, Medicare and Medicaid. The Republicans don’t want to raise taxes. That’s the way they were on day one; that’s the way they remain today.
Conclusion: the country is, indeed, going in the wrong direction. Backward.
— Emerson Lynn, jr.
