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Four more years - a look ahead.

This week we begin four more years of a brutish, bumbling and yet triumphant Administration. For progressives and the left, this is hardly a time for celebration.

The fears vary. Many worry that Reagan's landslide represents a lasting victory for Reaganism, that the Administration's magical mystery tour will create an enduring legacy of regressive economics, adventurist foreign policy and vicious social assaults. Others suspect that we care careering into a relatively unpredictable postconservative environment, full of high technology and global competition, which will render progressive strategizing either academic or anachronistic.

While both fears are plausible, I don't think events will bear them cut. Reaganism is vulnerable, laced with contradictions; the future is not so hopeless that we should start making funeral preparations.

This series on progressive options begins, therefore, with speculations about the shape of the near future, projecting what appear to be the most important domestic and global developments affecting our opportunities over the next four years. This first article is written as if there will be no change during the next four years in the focus and impact of progressive movements in the United States. The next two installments will discuss how to improve the left's chances of making this initial working assumption obsolete. Winning Posterity for the Gipper

The Administration's priorities for the second term are not yet fully formed. Obvious conflicts remain--both inside the government and among its conservative backers--between monetarists and supply-siders on economic policy, between extremists and realists on foreign policy and between bigots and pragmatists on social and ideological issues. Nonetheless, I think a game plan crystallized during the past year, which I will dub the Paper Eagles Plan to highlight its commitment to dollar imperialism and symbolic political commitments. It builds on five imperatives:

* As a second-term President, Ronald Reagan will be more and more concerned about his own historical record and the future of conservative politics in the United States, turning toward rhetorical coalition politics and away from the messiness of interminable conflict.

* Two interest groups, the financial community and the military establishment, are tightening their grips on Administration priorities.

* Domestic and foreign economic policy will focus more closely on the interests of those in the banking community, seeking both to protect the value of the dollars they hold and to enhance their leverage over the global economy.

* Foreign and military policy will pursue a delicate compromise between symbolic confrontations with the communist "menace" and potentially risky interventions abroad. The Administration will continue justifying the need for a bigger defense budget while trying to avoid the costs of explosive domestic opposition and the danger of becoming bogged down in a 1980s Vietnam.

* While placing increasing emphasis on the economic interests and social aspirations of those in the wealthiest third of the electorate, the Administration will downplay rightwing bigotry, which doesn't play well with yuppies and the upper crust.

Since this senario is hardly incontrovertible, the sources, logic and implications of the Paper Eagles Plan are best explored through an investigation of economic, foreign and social issues. Dollar Shackles on the Domestic Economy

The economic issue worked for Ronald Reagan in 1984, but it won't for the rest of his Presidency. In the first place, at a relatively superficial level, the halcyon days of the recent recovery have passed, with much slower growth and possibly recession in the wings. More fundamentally, reaganomics has not cured the Advancing arteriosclerosis of the U.S. economy which began in the mid-1960s.

The unemployment rate is leveling off at slightly more than 7 percent, marking the third straight business cycle since the late 1960s in which the unemployment rate at its lowest point was higher than the previous cycle's low. (Its last low was 5.8 percent, in 1979.)

Workers are not better off. Despite some increase in takehome pay from late 1982 to early 1984, production workers' hourly wages, corrected for inflation and taxes, have already peaked for this cycle and are roughtly 7 percent lower than at their previous business-cycle peak, in 1977.

Investment is also down. The net investment share, an index of how effectively the economy is adding to our productive capacity, has peaked at successively lower levels for the past three business cycles. It is ow about 10 percent below its last cyclical crest, in 1979.

The productivity slowdown persists. Overall improvement in the economy's efficiency can be measured by comparing growth in hourly output from the peak of one business cycle to that in the next. That index of productivity growth has dropped by two-thirds over the last twenty years. The improvement between 1978 and 1984, by the most recent available data, was approximately 0.9 percent, the same as it was between 1973 and 1978--hardly evidence of rejuvenation.

Since the recovery has essentially passed, there is little reason to think that any of the most regressive trends of the past four years will be reversed during Reagan's second term. More and more Americans will live in poverty. Teenagers, members of minority groups and many women will increasingly suffer job and wage discrimination. Foreclosures of family farms are likely to reach epidemic proportions. Union membership as a percentage of the labor force will probably continue to decline. Production and nonsupervisory workers' share of the total national income, which fell from 52 percent in 1978 to about 48 percent in 1984, is likely to erode, particularly because growing numbers of them are moving into relatively low-wage jobs.

Prevailing economic policy is not merely a product of the greed and callousness of fat cats. It also reflects the heated sectoral struggle that raged behind the scenes while U.S. economic policy was being formulated during the 1960s and 1970s. On one side, many industrialists favored devaluation of the dollar to help offset the deterioration of their position in international competitive markets: if a devalued dollar could purchase fewer West German marks and Japanese yen, U.S. customers might purchase less West German steel and fewer Japanese transistor radios. On the other side, most financiers wanted to defend the value of the dollar to protect the exchange value of their dollar holdings, thus helping preserve their position as the world's leading bankers.

In 1979, after a series of international financial tremors resulted in a sharp run against the dollar, Paul Volcker's Federal Rserve Board moved dramatically to protect the dollar's reign, sharply reducing the growth of the money supply and driving up interest rates. As a result, the value of by nearly 75 percent from 1979 to the end of 1984.

The consequences for the economy were traumatic. Slower monetary growth and high interest rates plunged America into the longest and deepest recession of the postwar period, helping inflate the Federal deficit, which always swells during recessions because of declining revenues and rising social assistance expenditures. Persistent U.S. trade deficits grew even worse, with the dollar buying so many more marks and yen that it became much more attractive for U.S. customers to buy West German steel and Japanese radios, not to mention automobiles and videocassette recorders. Employment in declining industries such as those producing stted and automobiles, many facing stiff import competition, was devastated. Meanwhile, Third World debt burdens increased sharply, both because slow growth in the advanced countries reduced their demand for Third World exports and because astronomical short-term interest rates bloated the debtor countries' repayment obligations.

The U.S. economy has been held hostage, in short, to the interests of the banking community. U.S. economic policy has placed the value of the dollar ahead of the interests of U.S. industrialists, the needs of U.S. workers and the financial condition of many Third World countries, exacerbating what my colleague Gerald Epstein calls the triple debt problem of budget deficits, trade deficits and global indebtedness.

Those skewed policies are not likely to change in the next four years. Volcker's term extends through mid-1987. Donald Regan, Wall Street's other principal emissary to the Administration, has moved over to run the White House staff. Administration pressure for a unification of Fed and White House economic objectives has already intensified. As a result, the Federal Reserve will try to keep interest rates high enough to serve two objectives--to prop up the dollar, even in the face of record trade deficits, and to blackmail Congress into trimming Federal budget deficits. It will continue to rely on the Internationaly Monetary Fund's hardnosed bargainingwith Third World debtors to cope with global indebtedness. The Administration will give high priority to the passage of a unified tax-simplification pacage in order to divert efforts to trim the deficit by repealing the massive tax reductions of 1981-82, to win upper-middle-class support by lowering the top marginal income tax rates, and to tie up Congress while the Fed does its dirty work.

The forecast: Stagnation, spreading industrial wreckage and a rising possibility of a sudden collapse of the dollar or Third World default or both. All this in the service of a strong dollar and the interests of U.S. bankers. Defending the Paper Empire

Many on the left still fear that the President will order troops into Nicaragua. I think those fears are misplace. The Paper Eagles Plan will likely emphasize symbolic foreign confrontations and the avoidance of costly military involvements. The dollar can reign anywhere: bankers don't need U.S. armed forces to protect their access to any particular country. And the military establishment seems increasingly aware of the risks of intervention, a lesson learned not just in Vietnam but also in Lebanon.

To develop this somewhat unconventional projection, I have rated the Cold War Quotient (CWQ) of six major foreign policy issues (current and prospective) on a scale of 0 to 10. A ranking of 0 indicates a tasty bone tossed to the moderates in the Administration (or to moderate opponents outside), and a 10 indicates a zealot's epiphany.

Arms Negotiations: CWQ 3.5. We can expect little substantive progress from the new arms negotiations with the Russians, but the Administration wil keep talks of some find going because they serve as a somkescreen for other projects with a higher CWQ or provide bargaining chips with Congress for new weapons systems. As I.F. Stone noted in the recent Nation symposium, "The Administration is going to Genva because it has finally realized that an arms negotiation fig leaf is an essential component in maintaining the arms race" [see "What Will Come of the Geneva Talks?" January 12].

Central America: CWQ 5.0. Continuation of support for the contras in Nicaragua and encouragement to the right in El Salvador seems likely, but the Administration will probably not risk any deeper involvement in the region. A policy of "moderation"--relative to the dire expectations that have been aroused--offers many advantages, including favorable treatment in the media and leverage with an increasingly wary Congress.

South Africa: CWQ 5.7. U.S. foreign policy will become much more visible both because of mounting opposition in the United States and because of the likelihood of serious domestic unrest in South Africa. While I suspect few members of te Reagan Administration rigidly support apartheid, many U.S. corporations consider continued access to cheap South African labor and raw materials vital. Also, the United States needs South African gold to avoid becoming dependent on the Soviet Union--the only other significant producer of the metal. Those imperatives will make it difficult for the Reagan Adminstration to pressure Pretoria to grant concessions to blacks.

Military Spending: CWQ 7.8. They used to call him Cpa the Knife, but Caspar Weinberger might now be dubbed Un-Cap the Pentagon. Apparently spurred more by an abstract and pious militarism and by the defense industry than by any particular foreign policy strategy, Un-Cap and his supporting hawks are likely to push for an annual growth in real military spending of at least 5 percent over the next four years. The Strategic Defense Initiative, otherwise known as Star Wars, provides an irresistible stalking-horse for their appeals. Conversely, risky military involvements overseas could tarnish the Pentagon's image and make Congress more tightfisted with appropriations.

Intervention Somewhere Else: CWQ 8.4. If stalled in Central America, the hawks may search for quicker, more exciting and much less costly interventions to save the world from communism. In a speech last November 28, Un-Cap argued against allowing "our miltiary forces to creep--or be drawn gradually--into a combat role in Central America or any other place in the world." The two most plausible targets for new interventions are either a mouse that won't roar, like Grenada, or a pro-American authoritarian regime which the zealots hope can be saved if we act quickly and decisively enough. Reagan's blindinglysimple-minded analysis of Philippine opposition to Marcos as entirely communist exposes the mentality that could make the second kind of intervention possible. The principal advantage of intervention somewhere else over escalation in Central America is that it would take the citizenry--and, most important, the antiwar forces--by surpris. If the cost in lives and money could be kept low and the effort succeeded in permanently retiring the Clare Boothe Luce Memorial 'China First' Trophy for saving some country, any country, from the communists, the rewards would be commensurately great.

Antiterrorist Raids: CWQ 9.4. My divining rod signals that should the Administration find itself stalled on several fronts, domestic or foreign, it will seek to demonstrate its vigilance and machismo. Striking a blow against the forces of international terrorism would be a tempting tactic. Such gestures pose a minimal risk of getting bogged down in a war and often yield a rich political harvest. Since there will undoubtedly be many provocations, one or two counter-terrorist raids per year seem likely. Making America Safe and Comfortable for a Few

Because one objective of the Paper Eagles Plan is to build a broad conservative coalition, the Administration's positions on social issues in the new term will resemble a middle-class velvet glove concealing a Falwellian iron fist. I've rated the Selfishness and Nastiness Quotient (SNQ) of four prospective (and overlapping) clusters of issues. A score of 0 reflects the least egregious affront to democratic values and a perfect 10 indicates something that will send chills up and down even Jesse Helms's spine.

Celebrating the Bloom of Life: SNQ 3.4. At least implicitly, the issue of age will become an increasingly important thread running through social debate. Yuppies will continue to celebrate their good fortunes, encouraged by the Administration's easing of their tax burdens. Rising Social Security taxes will induce further resentment among working Americans against the meager provisions made for senior citizens. Rising teen-age unemployment may breed anger and a higher crime rate among young people. And the continuing crisis in public education will spark more local protests about where all those property-tax dollars are going. The generation gaps will widen accordingly.

Revenge of the Wastes: SNQ 3.8. We can expect a number of chemical explosions and new Love Canals to mar the face of the land during the next four years. The new Administration, needless to say, is unlikely to favor imposing the cleanup costs on the offending corporations. expect a running legislative battle over the allocation of costs for cleanup and indemnification.

The Quest for Scapegoats: SNQ 7.3. With growing unemployment, intensified frustration among pro-life groups and a rising tide of illegal immigration, we are likely to see more hostility toward people who are nonwhite, pro-choice or poor. (With its sense of the national mood, the White House solicited "clean-cut, all-American" actors for its Inauguration showcase.) We can probably expect the Administration to push for stricter immigration controls. After Reagan has appointed some pro-life justices to the Supreme Court, the right will step up its campaign to have Roe v. Wade overruled. And with the Administration turning its face, private vigilantism and abortion-clinic bombings may accelerate, with self-defense groups and the Ku Klux Klan proliferating. (Will the C.I.A. distribute manuals for domestic contras a well?)

Ripening Repression: SNQ 8.2. What Diana R. Gordon calls the crime/justice juggernaut will threaten civil liberties and social justice. In 1982 alone, thirty state prisons were opened, and ninety corrections facilities or additions were under construction. Nearly 1.25 million people are emplyed in crime-control jobs. The Comprehensive Crime Control Act of 1984 sets dangerous precedents, particularly eviscerated the exclusionary rule for evidence that is seized illegally. The trend toward making arrest records widely accessible through vast computer networks threatens the employability of millions of Americans. Perhaps the most ominous possibility is the use of campaigns against international terrorism t justify abridgments of First Amendment rights. The Struggle Over Political Party Strategies

During Reagan's first term, many of us thought the Republicans would move toward a more unified conservative center of gravity, thus sharpening the distinctions between them and the Democrats. The contrast between thh two parties' conventions reinforced that view. Now, however, it appears that the lines between the parties will blur even more, with three distinct and parallel orientations emerging in each.

Courting the Sunrise Constituencies. Already the neoliberals represent an important and cohesive faction in the Democratic Party. Gary Hart served as its point man in the last election, but many others wait in the wings. As Thomas Byrne Edsall points out in The New Politics of Inequality, a new generation of Democratic leaders--the Dodds, Bradleys and Bidens, the Wirths and Gephardts--is rapidly gaining power in Congress and will constitute an important locus of power in the next four years.

Similarly, a group of young Atari Republicans is coming to the fore. In the House they have formed the Conservative Opportunity Society (C.O.S.e. They like Reagan and are mad about Jack Kemp, and they sound almost exactly like the neoliberals on every critical issue except foreign policy and on some social issues like abortion. Compare a classic neoliberal text--Paul Tsongas's The Road From Here or Hart's A New Democracy--with the C.O.S. bible, Window of Opportunity, by Representative Newt Gingrich. Both rhapsodize about high technology, tax breaks, entrepreneurial initiative, market incentives and educational innovation. It is no surprise that many members of Congress speak of a possible merger between the Bradley-Gephardt and Kemp-Kasten tax bills. Other such convergences of neoleft and neoright can be expected.

Don't Forget the Traditional Industries. Last year, it appeared that the Democrats might not only monopolize the discussion about industrial policy but actually offer some serious proposals for top-down planning. Now it appears that a significant movement may develop within the Republican Party Representing the interests of large industrial cpaital, and that it will vie with liberals for the corporatist torch, aiming to revive struggling industries and perk up limp profit sheets through government investment subsidies. Since business interests gravitate to where the political power is and since the Republicans have at least four more years of it, that strategy is bound to spread within the G.O.P., leading to possibility of collaboration between its proponents in both parties to counter the allure of high-tech glamour and help older giants now reeling from the blows of international competition. With his usual political acumen, Kevin P. Phillips provides strategic guidelines for this trend in his book Staying on Top. As Phillips concludes, "Any new U.S. trade and economic strategy in the 1980s will represent not so much a triumph of any one side as a fusion of ideas and viewpoints that tilt in the business nationalist direction."

Courting the Rest of Us? But where does that leave the rest of us? Although the interests and needs of the vast majority of Americans do not appear to be central to the strategies of either party, we aren't written off entirely.

The Republicans hope to court the nonaffluent by repeating the themes of 1984: There's hope for the future. Let's make America great again so we can stand tall. The fundamentalist right will add its murky elixir of evangelical appeals and reactionary views on ideological, racial and gender issues to the brew.

The mainstream Democratic Party is trying to walk a much finer line. It proclaims its traditional commitment to fairness while avoiding a real commitment to any significant progressive economic initiatives. Its 1984 convention served as a paradigm: attention was paid to the Rainbow Coalition, but how many of Jesse Jackson's platform plants were adopted?

How will the Democrats resolve their ambivalence about the rest of us? Will they echo the Republicans' pious and sometimes repressive ideological appeals? Or will they address the legitimate problems and needs of roughly two-thirds of the citizenry?

The next installment of this series will explore strategies for trying to put the rest of us back on the polical agenda.
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Title Annotation:Ronald Reagan presidency, part 1
Author:Gordon, David M.
Publication:The Nation
Date:Jan 26, 1985
Previous Article:Hamletmachine.
Next Article:His last inaugural.

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