OPINION Page 4 Friday, Nbvember 5, 1982 The Michigan Dailyl w Edited and managed by students at The University of Michigan Sinclair Iv- ,' / Vol. XCIII, No. 50 420 Maynard St. Ann Arbor, MI 48109 S1 Editorials represent a majority opinion of the Daily's Editorial Board Wall Street reacts IN AUGUST of this year, President Reagan stood in the Rose Garden and told the world that Wall Street was reacting with joy to his economic, policies. The Dow Jones Industrial's jump of 38.81 points on August 17, Reagan said, was all due to the magic of Reaganomics. But things have changed since August, and the boys in downtown Manhattan are now telling the President 'that he is wrong. Reaganomics scares them, and the in- jection of Democrats into Congress is going to be a big help. The day-after-election record-setting Wall Street rally means a number of things, analysts say. One is that the election brought no surprises. Neither the Republicans nor the Democrats were mauled. Another is that enough Democrats made it into the House to break the ideological hold the Reagan administration had over Congress, a hold that was killing the economy. In August, no one on Wall Street said the market's phenomenal rise was due to a bright economic picture. Quite the contrary, the quickening recession was leading to a slack in inflation and a major drop in interest rates, an event for which the Bache-Merril, Lynch- Loeb Rhoades analysts were dying. Again and again Reagan took the credit for the index rallies, and in an ironic way he was right, but not in the way he intended. The market was reacting to bad news, not good. With 26 seats in the House coming over to the Democrats in this elec- tion-and few of those seats are on the conservative edge of the Democratic party-the administration will be for- ced into compromises on the economy. No longer will skillful political per- suasion and armtwisting swing a defense spending or tax cut vote Reagan's way.The block to the left is now too strong. So Wall Street heaved an enormous sigh of relief, and in the process, shot the market to record highs. The message the business leaders of the nation are sending the White House is very clear and contradicts Reagan's political happy talk of the past two months: The economy needs correc- tion, not Reaganomics. Compromise with the Democrats, cut defense spen- ding, cancel the 1983 tax break, and reduce the staggering federal deficit. Now the president must listen, and listen carefully. z A re public works projects a solution to the 'depression'? .0 By Franz Schurmann Social Security warning T HE SOCIAL Security system system cannot continue to operate as it wheezed some more this week. has in the past. Today, in order to cover the Novem- It wasn't terribly surprising that ber Social Security checks totaling Social Security officials waited until some $12.2 billion, the old age trust the day after the election to announce fund will take out a $1 billion loan from today's loan. Social Security has been the disability benefits trust fund, a delicate subject for politicos for another separate fund within the Social years-and the prospects that the Security system. needed changes will be made to the The loan is more than just borrowing program soon seem remote. The two from Peter to pay Paul. For the first obvious solutions to the problem- time since Social Security started either cutting benefits or increasing paying benefits in 1940, the old-age taxes-are anathema to members of fund has literally run out of money and both houses of Congress. President has been forced to start raiding the Reagan, who in 1980 campaigned for other funds for cash. Years of ac- Social Security reform, has relegated tuarial insanity are finally catching up the matter to the "National Com- with the system, and this first loan is a mission on Social Security Reform." warning sign of very serious problems But the government cannot which will confront the Social Security equivocate any longer. As today's loan system in the upcoming months. to the old-age benefits trust fund shows, the system is running out of Simply put, the Social Security money rapidly. system is broke. For several years, the The nature of the problem dictates program has been paying out more that, one way or another, a decision on money than- it has been collecting. At Social Security will be made in the current rates, it will gobble up the two coming months. Either the gover- healthy trust funds in the system nment will take a deep breath and start sometime in 1984, at which time it will to look at various alternatives or it will be left with no money, considerable continue to put the issue off until, one debts, and no apparent means of presumes, benefits are cut. The longer paying its debtors. Pensioners will the government waits, the more receive their benefits in full and on remote a satisfactory solution time this month, but it's clear the becomes. NEVER MINPTHE FINE PgINT-Y0U CAN SEE THE 6ENERALTREMP HAS BEEN UPWARP' IL7I When Nobel economist George Stigler suggested at a White House reception that the country is in a "depression," he made more than a political gaffe. Use of the word, tabooed in official circles, implied a call to government to abandon its hardline supply- side position and use its powers to get the economy moving again. Stigler is a member of the Chicago school of economics, devout opponents of government intervention in the economy and true believers in the great curative powers of the market. THUS, HIS implied call for government ac- tion was reminiscent of John Maynard Keynes' abrupt ideological switch in 1929, when the great advocate of market forces called on the British government to fight the depression with big public works programs. While there are no signs that Stigler ad- vocates similar ideas, or that the Reagan administration is considering them, there recently has been a spate of proposals, mostly from liberal and neo-liberals, for creation of 1930s-style public works programs. Newsweek, in its agenda for action on jobs, called the notion of replicating the New Deal's Works Progress Administration (WPA) programs "nearly irresistible." America's infrastructure needs major repairing, no doubt about it. There are two kinds of infrastructure: human (meaning schools, hospitals, nursing homes, etc.), and physical (roads, rails, ports, etc.). Few if any of the proposals call for a big jobs program for the former. The stress is all on rescuing the interstate highway program from crum- bling, on rebuilding sewage systems, on repairing dams. SUCH PROGRAMS could put to work thousands of jobless, particularly the young and able. And they presemably would meet with broad popular approval. A newspaper survey of citizens' political concerns in Evan- ston, Ind., for instance, indicated that filling potholes was their top concern. For many liberals, such a new infrastruc- tural restoration program is economically feasible for one simple reason: Even a small amount of "fat" cut from the swollen defense budget could get the program off the ground. Robert Kaus, writing in the October issue of Harper's, puts the cost of creating one million new public works jobs at $12 billion, less than 5 percent of the current defense budget. Ironically, the Reagan administration, by having insisted on a huge defense budget and radically pared down social spending programs, may have set itself up politically for a switch of funds from defense to public works. If the economy does not recover, the administration may have to bite the bullet and institute such a public works program. A REAGAN public works program, if it should materialize, would probably move through Congress with ease. But it would be a dangerous illusion to think such a program would or could be the beginning of a new WPA, of a neo-Keynesian type of pump- priming action for the economy as a whole. In the 1930s, WPA was much more than a broom-and-shovel operation meant as work- fare. It was part of a vast government program to build a new physical infrastruc- ture which would be necessary for an expan- ding consumerist society when things got bet- ter. The giant Tennessee Valley Authority (TVA) project laid the basis of the South's in- dustrialization and modernization. The government built the first transcontinental highway system, literally paving the way for suburbanization and interstate commerce. It built'giant dams like Grand Coulee and Hoover to generate power for expanding cities and industries. Then, there was a national consensus as to the kind of physical-and human-infra- structure the nation needed. Now, it is just the opposite. APART FROM maintaining the existing in- frastructure, there is no consensus over whether to build new or no roads, rails, air- ports, and dams. Liberals-then vigorously in favor of high growth-now have become ad- vocates of zero or slow growth. High growth, in the eyes of the environmentalists, has become identified with rapacious developers. The lack of consensus is even greater in regard to the kind of human infrastructure an increasingly aging population wants. Not* surprisingly, the proposals for public works programs remain silent on this subject. Another reason for not rushing headlong in- to vast new public works projects is the fact that the New Deal programs worked best during World War II, thanks to the gover- nment's ability to militarize society and pay workers low real wages from which a healthy sum was extracted in the form of savings bonds. That got down the mountain of debt and set the stage for the postwar consumer boom. Clearly, World War conditions do not exist today, for which we may be thankful. If a new public works program financed with defense budget fat passes Congress, most Americans probably would welcome it. But it would be naive to think it could be the first stanza in some great 1980 replay of the New Deal. Schurmann is a professor of history and sociology at the University of California at Berkeley. He wrotethis ar-@ ticle for Pacific News Service. LETTERS TO THE DAILY: Free scrimmage 'too little, too late' To the Daily: Basketball Coach Bill Frieder calls his free-of-charge in- trasquad scrimmage "something special" to try to involve Michigan students in the up- coming basketball season. As a student season-ticket holder, I think the free of charge scrim- mage is too little, too late. The idea of an attention-getting scrimmage simply does not ad- dress a much larger problem with Michigan basketball's at- tractiveness to students. The problem concerns the scheduling of many Michigan home basketball games. For the second season in a row, students who live out-of-town will lose a number of games due to vacation days. Last season ('81-'82), spring break. I am from Grand Rapids and I don't know how many of these "vacation games" I will be able to return to AnnArbor for. As students, we are supposed to be getting a break on the cost of the tickets since we get them for half price. But for me and other out-of-town students who try to return for the games, the savings is erased by travel costs. Then to rub it in, last year the athletic department stated that it was sorry that three Big Ten games were scheduled for spring break-but they said it didn't matter much as the "die-hard" fans all live in Ann Arbor anyway. Just what does a guy have to do? When I read that the athletic denartment did not care if I came going to' anotherMichigan basketball game again. I won- dered what those fools in the athletic department really thought of student participation? I do feel that Coach Frieder is concerned and wants to attract a good student crowd. Coach Frieder has brought teams into Assembly Hall and Mackey Arena and he knows what a screaming bunch of crazy students can do to an opposing team. One of the best, loudest crowds in recent Crisler Arena history attended the Michigan- University of Toledo NIT game in 1981. Crisler was really rocking with a great basketball crowd, but it took 7,000 Toledo fans to do it Whv rcn't we fill Crisler Arena the Big Ten season? Why can't the band cut loose and take charge of the crowd throughout the game as it does in Yost Ice Arena for hockey games? This year games will be a lot of fun to watch, and I can see only good things in the future for the Michigan basketball team. It would be great to build a wild, en- thusiastic student section that would raise the roof off Crisler's Cathedral or Cazzie's Castle and delight Don Canham with a string of sellout crowds for every game. It is nice to know that the team and the coaching staff wants student participation. I wish the athletic department would start to see things the same way.