Cuomo's choice: What was lost?

TOM WICKER

December 24, 1991|By Tom Wicker

New York -- MARIO CUOMO warned the nation that he would not run for president unless New York's massive budget crisis was resolved first. Those who thought he was merely playing games found out last week that he meant what he said.

That's a welcome change from the usual political double talk and deniability. But there's no use pretending, as some Democrats are doing, that the party's chances for 1992 have not been hurt.

Cuomo would have been the most commanding and articulate figure the Democrats could have put up -- and articulateness is one quality, among many, badly needed in the White House.

George Bush is undoubtedly relieved that Cuomo has taken himself out of the race, but the president is by no means out of the woods. A gaggle of administration experts met with him last week to debate his economic options, including whether to declare an emergency that would permit him to break last year's budget agreement with Congress.

What's to debate?

General Motors has announced it will close 21 plants, lay off 9,000 white-collar workers in 1992 and eliminate more than 70,000 jobs in the next few years. The company's troubles are not all due to the recession, but a sluggish economy speeded this long-needed "restructuring" of what used to be the flagship of U.S. business. And all those lost jobs won't help recovery.

For the week that ended Dec. 7, first-time claims for unemployment insurance rose by 79,000 -- about twice the number forecast, and a strong sign that the economy is not slowly recovering, as usually claimed, but is contracting.

In the New York metropolitan area, more than 400,000 jobs have been lost since 1989. In Manhattan alone, job losses in the last two years have wiped out all the private-sector growth of the 1980s, and there are now fewer non-government jobs than there were in 1980.

And that's only a sampling of the pre-Christmas bad news, with stores still uncrowded and layoffs increasing everywhere.

And since GM has not specified which of its plants it will close, uncertainty about their personal futures must be a matter of real worry for most of that huge work force.

Chairman Alan Greenspan of the Federal Reserve -- which dropped the discount rate a full point on Friday -- has conceded that he had underestimated the seriousness of the situation, and that "the economy is struggling." But Greenspan, in testimony to the House Ways and Means Committee, continued to insist that nothing should be done that might increase the budget deficit.

There's the rub for the White House. In last year's settlement with Congress, it was agreed that any revenue losses or increases in spending would be offset by gains or cuts elsewhere, so that the deficit would not rise. Bush would have to declare an emergency to break the agreement, which he has so far refused to do.

But all the options discussed at the White House last week would run up the deficit. They apparently included an increase in the personal exemption for income-tax payers, a tax credit for middle-income earners and a one-year cut in the onerous and regressive Social Security payroll tax.

With a presidential election coming up, the struggling economy is an acute political concern for the White House. With so many unemployed and so many fearful of losing their jobs, taking stimulative action might well be more immediately popular with voters than holding the line on the deficit.

So some administration aides want to send Congress a stimulative proposal designed to have bipartisan support and win quick passage.

Others argue for a distinctly Republican proposal, based on conservative ideas, like Bush's familiar call for a reduced capital-gains tax. Such a plan, they concede, might win little congressional support but would provide a strong conservative platform for the campaign.

Greenspan, meanwhile, cautions against "short-term fiscal stimulus" that might not be helpful to long-term growth.

This debate seems mostly defensive and technical: What's best for the administration politically? What's best for the economy in the long term? There's little suggestion of acute administration concern for the human misery of recession -- which occurs in the short term and surely seems like an emergency to those who suffer it.

Mario Cuomo, better than anyone else, could have dramatized that for the nation.

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