The Great 1980 Non-Debate

By Christopher Byron

Voters tune out on a confused election discussion of the U.S. economy

"It is as though they were playing ring-around-reality. We know that there are big problems that demand solutions, so how come the candidates don't?" So muses Claudia Wells, 29, a secretary in Charleston, S.C., and her puzzlement is hardly unique. As Campaign '80 moves into its final three weeks, the discussion of the U.S.'s pressing economic problems has become a fractious and cantankerous presidential non-debate that is informing no one and confusing voters everywhere.

Is Ronald Reagan's "supplyside" economics--a strategy to boost economic growth by stimulating business production rather than fostering private consumption--a better way to fight inflation than Jimmy Carter's "economic revitalization" program? Is Reagan's 10% income tax cut more inflationary than Carter's 8% income tax credit on 1981 Social Security taxes? Is John Anderson right in arguing that a tax cut of any sort is not proper without a balanced budget?

To the millions of people who find their incomes squeezed, their life-styles crimped and even their livelihoods threatened by the wrenchings of the economy, such questions often seem irrelevant. As a result, voters are either tuning out or nodding off. Complains California Computer Engineer Joseph Pisaniello: "I'm not convinced by Carter's act on the economy, but I don't know whether Reagan will do any better. I don't know much about Anderson at all. I guess I'm turned off by all three of them."

To Carole Johnson, 32, married and the mother of two, who supplements her family income by driving a taxi in Boston, the prime concern of the election season is not the fine points of energy policy, or even the wisdom of John Anderson's call for a 50-c--per-gal. gasoline tax, but how to pay this winter's heating-oil bill. Meanwhile, Roger Christensen, an Ogden, Iowa, hog farmer, finds wild gyrations in interest rates to be his trouble. He finances poultry, pork and corn production with variable interest rate bank loans, and consequently no longer knows what his overhead will be from one season to the next. Says he: "I don't think the average voter can understand the economy, and I certainly don't have the solutions. But no candidate is even addressing that issue."

Many of the candidates' problems in catching public attention stem from the sheer unpredictability of the economy itself. Reasoned debate on economic policy can be confusing even under the best of circumstances, yet it is hard to imagine conditions less suited to a sensible and informed discussion than the chaotic ones that currently prevail. In little more than eight months' time, the nation's topsy-turvy economy swung in sequence from runaway inflation and exploding interest rates to supertight money and soaring unemployment. Then interest rates plunged, money became easier and inflation declined. Now, just as abruptly, a quicksilver change is occurring in the course of all three. Laments Los Angeles Attorney John Mailer: "People don't understand the economy. Even the economists don't understand it. I don't have any confidence that any of the candidates would make a whale of a difference. None of them sounds too good to me."

Not only does the economy itself seem to lurch about capriciously with each new barrage of statistics, but the candidates themselves seem just as mercurial. By constantly maneuvering to broaden their appeal, they run the risk of appearing to lack any real substance in their positions at all. Says Jim Harrington, 48, a gasoline-station owner in Burlington, Mass.: "The thing that bothers me the most about all the economic talk is that the candidates seem to be contradicting one another and then agreeing with one another at the same time." Adds Gerald Engel, a county supervisor in Milwaukee: "I ignore what the candidates are saying on the key issues, since they change their positions from day to day."

That was hardly the mood in which the campaign began last winter. With inflation nearing 20% and consumers embarked on a borrow-and-spend binge that threatened to drive prices still higher, voters told pollsters that inflation and unemployment were their main concerns. At that time Carter was determined to damp down runaway prices by the classic medicine of conservative economics: tighten up on the money supply, cut federal spending and, if necessary, push the economy into recession. By contrast, Reagan strode boldly into the campaign proclaiming the virtues of "supplyside" economics and proposing large tax cuts to restore the profit incentive. He argued that this would push up business investment and productivity without slowing down growth and tossing people out of work.

In practice, neither Reagan nor Carter has been willing to stand by the implications of his policies, and the result has been a campaign of quarrelsome backpedaling. Complains Beverly Hills Pharmacist Ted Buchalter: "The whole debate stinks. Instead of saying what they plan to do, they just keep knocking each other all the time and screaming about what the other guy didn't do."

Reagan had initially fashioned his economic strategy around the controversial proposal of conservative Economist Arthur Laffer that steep tax cuts would stimulate growth, lead to even larger tax receipts for Government later and thereby actually reduce the federal deficit instead of increasing it. Thus the Republican candidate has supported the Kemp-Roth bill, which would cut income taxes by 30% over the next three years.

Under pressure from both Carter and more moderate Republicans, Reagan has moved toward a less radical economic position. He no longer argues that the tax cuts would not reduce Government revenue. Yet he still calls for a substantial 1981 reduction of $31.5 billion in income taxes for individuals and about $5 billion more in relief for corporations.

Carter has also performed his share of economic legerdemain. With unemployment rocketing upward all spring, he began to distance himself from his own policies that had led to the downturn in the first place. As the election moves closer, Carter has found the Federal Reserve Board to be a convenient scapegoat. Though the Board is dominated by his own appointees, Carter is blaming it for the high interest rate policy that he himself earlier supported. In August Carter unfurled his version of supply-side economics, a plan to "revitalize" American industry in order to boost productivity via a series of tax cuts. He advocates a $6.2 billion reduction of personal taxes to offset the increases in Social Security taxes that are due to take place next January. He also favors about $13 billion in assorted investment aid to businesses.

Though they have ostensibly similar goals, the programs of Carter and Reagan are actually quite different. Of the two, Carter is far more cautious about how far he is willing to go in cutting taxes to stimulate growth. Some critics charge that, in the current inflationary climate, the Reagan tax cuts would push prices up even faster. Warns Economist Jagdish Bhagwati of Columbia University: "If one argues that budget deficits are a major source of inflation, then, paradoxically, I would be much more worried about inflation if the Republicans came to power rather than the Democrats."

The programs of the two leading candidates also differ with respect to the roles they provide for the Federal Government in the economy. Carter is much more willing to have the Government enter into the marketplace in order to get unproductive, ailing industries back on their feet. Toward that end, he has appointed an advisory board of business, labor and Government leaders to recommend specific revitalization steps, and calls for special tax breaks to companies that are struggling to stay in business. Reagan, on the other hand, has urged less Government involvement throughout the economy.

John Anderson's positions are even less clear than those of the two leading candidates. His proposal for a 50-c--per-gal. gasoline tax has not been mentioned much lately. Anderson argues against any tax reductions until the federal budget is first brought into balance. As a measure of fiscal responsibility, his position is sound. But taxes will rise next year by about $90 billion, as inflation pushes people into higher and higher income tax brackets and ever escalating Social Security taxes bite deeper and deeper into their take-home pay. That would help choke off any possible economic recovery by adding to the squeeze that inflation is already placing on consumer spending.

A President's economic advisers are important to the health of American business because they formulate the programs that the President advocates. At present it is unclear who might dominate economic policy in a second Carter Administration. Treasury Secretary G. William Miller, who has earned a reputation for bending easily with the political wind, is likely to remain. But Carter's chief economic adviser, Charles Schultze, has already said privately that he does not want to stay for a second term.

Ronald Reagan's economic brain trust, and presumably the leading officials in a Reagan Administration, are mostly strong conservatives who previously served in the Nixon and Ford Administrations. These include George Shultz, former Treasury Secretary and now vice chairman of Bechtel Corp.; Alan Greenspan, Ford's top economic aide and currently a private New York consultant; and Charls Walker, onetime Deputy Secretary of the Treasury and a powerful Washington lobbyist. Anderson's economic advisers are relative unknowns. His main aide is Robert Walker, a legislative assistant on his congressional staff.

With unemployment hovering at 7.5%, while the underlying rate of inflation begins to bottom out at the still very high level of 10%, the U.S. economy clearly needs help. But so far, the three candidates' cures are being largely ignored. The unwillingness of voters to pay attention illustrates clearly that the next President, whoever he may be, will encounter a corrosive public doubt about his ability to get hold of the economy and to put it right. By Christopher Byron. Reported by William Blaylock/Washington

With reporting by William Blaylock

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