Mikhail Gorbachev is having a devil of a time dismantling the socialist state. The Soviet people are in an uproar, angry because their economic privileges are being yanked. Ultimately, Gorbachev may be deposed because of popular unrest.
But you don`t have to ask Gorbachev to know it`s easier to go from capitalism to socialism than from socialism to capitalism. Just ask the Congress of the United States.
Wait a minute, you say, this isn`t the Soviet Union; our country is the home of free enterprise and free markets, not state control of economic decisions.
You might be saying this as you sit there in a home subsidized by the mortgage interest deduction, wearing clothing that is priced higher because of the multifiber agreement, eating food produced through government farm subsidies, complaining to parents who are protected by Medicare and Social Security.
You might also be ready to put your money in a bank protected by federal deposit insurance, take a cross-country train trip on highly subsidized Amtrak or fly on an airline where federal controllers make sure the skies are safe.
The Soviet Union is a socialist country with capitalist elements. This is a capitalist country with socialist elements. In the Soviet Union and the U.S., the socialist elements are under attack, simply because both countries found that they are too expensive.
Many people bemoan the fact that Congress cannot control the budget deficit and cannot reach agreement on taxing and spending. The level of anxiety is extremely high because government seems incapable of governing and living within its means.
But if we pause and put this in perspective, Congress` dilemma should be a cause for joy, not anxiety. Dwelling on the history of U.S., government finance should also give rise to patience, for it will take years to sort out the level of taxation and services that will satisfy a new generation.
The federal budget is full of the priorities of previous generations, happily voted by senators and representatives who could spend the generous dividends of solid economic growth and expand programs for the needy and the middle class. Roosevelt`s New Deal, Kennedy`s New Frontier and Johnson`s Great Society were truly American responses to truly American problems. Congress became a spending machine.
But in the 1980s, there was a major revolt against the high levels of taxation required to finance these decades of add-ons. Ronald Reagan rode this revolt into office and slashed taxes according to the wishes of a new generation. Unfortunately, his supply-side economics confused people. He led them to believe that lower tax rates would bring in a flood of new revenue to finance what some chose to call the American welfare state.
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But Reagan`s view of taxation, i.e., that income-tax rates should not go any higher, still remains as gospel with Americans. At the same time, many people have not prepared themselves psychologically, or economically, to accept the implications of this belief.
Many people still believe the illusion that there is so much fraud and waste in government, that the hard-nosed elimination of it will maintain farm subsidies, Medicare payments, Social Security, food stamps, income tax deductions and other government goodies without major change. Fraud and waste abound but not $100 billion worth.
The American revolt against higher taxes means that the current level of taxation is insufficient to pay for the current level of services. A budget deal this year will not solve this problem, though it could make a good down payment on it.
What`s going on in Washington is a fundamental change in the nature of American government of the last 50 years. With no money to dispense or to prime the pump, Congress must focus on the uncomfortable job of scaling back the magnitude of government services established in flusher times. Or it must convince people that they should be taxed more-very hard and very dangerous in these days.
It is good that they are doing this openly, with all the hostilities between opposing points of view in society being discussed fully. If there are generational clashes, let them be debated and voted upon. If there is conflict over taxing the rich, let the issue be aired so the public can understand what is occurring.
As in the Soviet Union, the U.S. government is going to move closer to a free market as it dismantles some aspects of the welfare state. This will be a decade-long job, in my view, because Americans are hopelessly confused about what they want from Washington. With so much confusion, their representatives are afraid to make the tough choices.
So don`t despair over the long debates, the White House-Congress confrontations and the temporary closure of government over the budget. It`s democracy in action.