Bush's socks

Tom Wicker

December 17, 1991|By Tom Wicker

New York ANYONE who expected a new chief of staff to produce a fast turnaround in White House attitudes toward the slumping national economy must have been disappointed last week by testimony from President Bush's principal economic advisers.

They told the Senate Finance Committee that the President might propose an investment tax credit for business -- but only for some investments.

The secretary of the Treasury, the budget director and the chairman of Bush's Council of Economic Advisers called once more for a capital-gains tax reduction. They said they were considering but were not committed to a tax break for the middle class, and squarely opposed a tax increase on higher incomes.

If Bush decides on any kind of tax action, he'll let Congress and the nation know in next month's State of the Union and Budget Messages.

If that's urgency, what would apathy be like?

It's not that a tax credit for investment is a bad idea; the tax code included such a credit most of the time from 1961 to 1986. But if Bush won't even propose the idea -- even if he decides in favor of it -- until next month, many months more would pass before anyone could be assisted.

Congress would take time to act -- perhaps a lot of time because, under the present budget agreement, any revenues to be lost would have to be made up by tax increases somewhere else, or by spending cuts. Businesses would need time to plan and make investments, particularly since the credit would be available only for those not already scheduled.

Still more time then would be required for such investments actually to put people to work. Besides, even a tax credit might not persuade business people to make costly new investments when consumers seem to have so little confidence.

That was evidenced once again in the Commerce Department's report that retail sales rose only three-tenths of a percent in November, as holiday shopping began -- a statistic that anyone can verify empirically by checking the uncrowded aisles of department and other stores. And retail sales account for a third of all economic activity.

As for the future, the 24-nation Organization for Economic Cooperation and Development is reported to have again lowered its estimate of U.S. economic growth for 1992. Ten weeks ago, it forecast 3.1 percent growth; in two revisions, that figure has fallen to 2.2 percent.

Because of such gloomy economic news, Samuel Skinner, the new White House chief of staff, pointedly said he would focus on action to stimulate the national economy. He hardly has had time have much impact on policy, but the administration's testimony to the Finance Committee suggests that Skinner may need a good deal more than time to achieve his goal.

The economic advisers, while paying lip service to the need for helping middle- and working-class Americans, seemed more concerned about the rich.

They not only touted again a capital-gains tax break and ruled out a new tax on million-dollar incomes; but Treasury Secretary Brady pointed out that wealthy people's share of the total tax burden already had gone up. So, of course, has their share of the total national income.

President Bush may have hit inadvertently upon a better idea than any of these advisers seem to have, though his administration's policies do not reflect it. In the kind of symbolic action for which he is justly renowned -- proposing the flag-burning amendment at the Iwo Jima Monument, for instance -- Bush ventured out to J.C. Penney's and bought $28 worth of socks.

That sum will not put any of the more than 8 million unemployed Americans back to work. But they and millions of others who used to be consumers either have no money to spend because they have no jobs, or are hoarding what money they do have because they fear they'll lose their jobs.

So Bush's socks symbolize the need to stimulate consumer spending, hence the economy, by putting jobless people back to work.

That will cost money -- for public investment, for instance, in highways, bridges, sewage facilities. Like a tax credit, public investment will take time to have effect. It may require breaking the budget agreement. But it will get help directly to those who most need it; more people working will mean more people spending -- and not just for socks.

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