COMMENTARY
1 JdLJiL IJK. jtlJLJLJL
David McKinnon, Editor
Janet Chaoy, Managing Editor
Kf.n Siman, Associate Editor
Alison Dams. Nrm Editor
Lvnne Thomson. Features Editor
Ann Mi amY. fuutant Managing Editor
Jonathan Talcott, Associate Editor
Mimi Peel, ifrtj Editor
Bos Henson. Sports Editor
Fkank Cuuwn, Photography Editor
Staff: Jackie Blackburn. Scott Bowen, R. L. Bvnum, Jennifer Cakcal, Tom Conlon, Matt Coopeb, Vince Ckaole. Todd
Daw. Bau Din an. Bonnie Fovst. Becky Gamuson. Lokna Gralla, Chkbtophek Haw, Shakon Johnson, Bob
Kimplcton. Dense Lyon. Alex McMillan, Jemy Now ell. Mimi Peel, David Rankin, Danny Reid. Yvette Rufein. Guha
Shankak, Al Steele. Lynda Thompson, Charles Upchurch, Randy Walker, Mickey Weaver, Scott Wharton, Susan
Wheelon. Chip Wilson. D.F. Wilson. Advertising: Paula Brewer, manager, and Mike Tabor, coordinator. Business:
Rejeanne V, Caron, manager, and Anne Sink, assistant manager. SecretaryReceptionist: Linda Cooper. Composition:
L'NC Printing and Duplicating Department. Printing: Hinton Press, Mebane.
Facade for failure
Saying the nation needed the "discipline" of a mandatory balanced budget, Pres
ident Reagan announced Monday his intent to campaign actively for an amend
ment to the Constitution which would require a balanced federal budget.
It was the ultimate in political hypocrisy coming from the man who has introduced
the largest federal deficit in history.
Like his recent support for a constitutional amendment to allow prayer in public
schools, Reagan's Monday announcement was a blatant attempt to assuage con
servatives who have become suspicious of Reagan's commitment to the platform he
campaigned on in 1980 a balanced budget, prayer in schools, outlawed abortions,
and a hard-line foreign policy.
But Reagan should have found a less risky measure to appease the right, for his
proposal not only contradicts his long held view of limited federal intervention, but
severely ties the hands of Congress.
While the amendment may sound appealing to voters who have become
disgusted with continuing deficits, (and stands a reasonable chance of passing in
Congress) it is both impractical and dangerous. While it does allow deficits when
approved by three-fifths majorities in each House, the amendment fails to take into
consideration the realization that budget deficits may be necessary at times. And it
also fails to realize that budget-making is an uncertain process and very rarely do
early estimates correlate with the final product And what if the difference results
in a slight deficit? Congress would, after. all, be violating the Constitution.
While Reagan's call for the amendment may be to his immediate political bene
fithe shows little of the discipline he invoked in Tuesday's speech.
We ask, where is Mr. Reagan's discipline? He has shown no sign of reevaluating
his policy of writing blank checks to the Pentagon and cutting taxes at the same
. time.
Reagan himself has the power to introduce a balanced budget. It is unfortunate
that he is using the amendment, which if passed might take effectafter he leaves
office as a facade to cover his budgetary shortcomings.
Sun Belt recession
In Florida boom development has drained water tables so low that the ground
literally collapses into sinkholes that consume improvements on the surface in
single giant: gulps.
The side effects of the so-called Sun Belt's economic high-protein diet are easy to
; see in Florida', where the natural gaps in the limestone lying under the surface make
their presence known in a pretty obvious way. But the new economic giant that is
the Sun Belt is showing some other gaps in its strengths as well, as surveys of the ,
Sun Belt in the 1980sare showing. Far from being invincible, the regionespecially :
the Old South component seem to have become newly vulnerable to larger
trends, r , ' . '
Jn Arizona, which boasted the highest growth rate of any part of the Sun Belt in
the 1970s, sharp declines in copper prices have caused one county, Greenlee, to go
from the nation's lowest unemployment rate last year to the highest this year, 57.8 .
percent. In Texas the oil boom of the last decade produced uncontrolled develop
ment in Houston that has given the city some of the nation's worst traffic, conges
tion and planning problems. The end of the oil boom has produced business con
tractions that have caused the most dislocating of the current bank and business .
failures,' the Perm Square Bank closing. The Reagan administration's "New
Federalism" has meant an end to decades of special federal aid to the South, while
the region remains the nation's poorest.
. The most dangerous qf the flaws in the Sun Belt's success is the one most inex
tricably linked to its success, however, its new-found vulnerability to the
vicissitudes of the national economic pace. Aside from its vulnerability to par
ticular market fluctuations, the South in particular is becoming uniquely dependent
on the national growth rate because of its new status as a manufacturing center.
For the first time ever, its unemployment and bankruptcy rates have begun to track
national averages almost exactly.
And with the current national joblessness and business-failure rates at extraor
dinary levels, that tracking may spell new political problems for President Reagan,
who relied heavily on the South for his margin of victory in 1980. If the Reagan ad
ministration fails to carry the nation through the current recession in good shape, it
may find traditionally Democratic but traditionally conservative voters in the South
returning to the Democratic fiajf of. that tradition in seeking an alternative that at
least promises prosperity. :
Social Security:
baby boom problems
By JONATHAN TALCOTT
The present problems with the Social
Security program have several solutions, all
of which should be given careful cpnsidera
tion by people under the age of twenty-five.
The Old Age and Survivor's Insurance
trust funds which pay for retirement and
survivbrs' benefits will run out by June
of 1983 if Congress does hot take legislative
action, according to' a report made by the
OASl trust fund's board of trustees. The ac
tion that Congress takes could either tem
porarily patch up the program or overhaul
it completely. People who are at the tail
end of the "baby boom" generation could
suffer if the program is not changed dras
tically. The origins of the present problems in
the Social Security program can be found
in the constant changing and expansion of
the program, the amendments to the act in
1972, and demographic factors.
Since its beginnings in 1935, Social
Security has been altered severely. The ori
ginal idea of setting up national trust funds
for retirement was in fact abandoned in
1939. After 1939, the entire program worked
on a pay-as-you-go basis. Amendments to
the act made in 1950 required a cushion of
funds be built into the now imaginary trust
funds in case of a recession. A recession
automatically limits the possible intake of
revenue for the program by limiting the
amount of taxable income. But while in
come levels remain depressed, Social Secu
rity benefits continue to rise at a predeter
mined rate. The size of the Social Security
program has contributed to its present pro
blems. In 1940 only 60 percent of the work
ing population was covered by the Social
Security program. By 1975, 90 percent of
the workers participated in Social Security.
The amendment to the Social Security
Act in 1972 insured that annual increases in
benefits would be substantial and cpnse-
quently almost destroyed the program.
Congress tied the increase in benefits to the
increase in the Consumer Price Index. The.
elderly began to get benefit increases that
far outdistanced increases in wages..
The 1977 amendment attacked the initial
problem created by the 1972 amendments
but left the inherent flaw intact, Another
payroll tax increase was passed to staye off .
bankruptcy and the benefit calculations
. were changed. Benefits were still linked to.,
the Consumer Price Index but the calcula
tion formula created smaller initial benefits.
According to some members of Congress
the program was set for "the next fifty
years." y - .
Now the time has come for solutions to
the problem in both the short-run and the
long-run. In December of this year President
Reagan's bipartisan commission on the
future of Social Security will report on what
it has found. .
To solve the problems of Social Security
in a more permanent fashion, the commis-.
sion will probably recommend one or
several of the following options:
Increase the retirement age from 65 to 68.
Freeze benefit increases for a year.
Reagan proposed this in the beginning of
this year. ., .
Fund Social Security i through general
revenues. . :
Fund Social Security through a value
added tax (a kind of national sales tax). This
has been proposed by a few members of
Congress.
Change the method for benefit calcula
tions, again.
All of these are proposals for a possible
and probable solution to the Social Secu
rity crisis, but not necessarily the best solu
tion. Certain economists advocate drastic
changes in the Social Security system that
may not be politically feasible. For ex
ample; Martin Feldstein, a professor of eco
nomics at Harvard University and the chair
man of the National Bureau of Economic
Research, believes the present system of
public retirement insurance hurts the
economy and should be replaced by a pri
vate program. Feldstein contends that pri
vate savings levels have been cut by 40 to
50 percent in the last 40 years because of
Social Security. Feldstein argues that peo
ple spend money that they would normally
save for retirement in anticipation of Social
Security benefits. Without high private sav
ings levels, there is less capital investment
The decrease in capital investment causes
a decrease in overall economic productivity.
Less goods are produced and fewer jobs are
available. Basically, Feldstein contends
that supporting the elderly through the
v--7 i ii ,r a vi awi gi iv.1 uuwi iui vi 111 . .i
causes us to put an unnecessary burden on
future generations.
Feldsteirv's idea is not unique. Many
economists have similar suggestions. Feld
stein is just one example of an extreme,
practicable and considerate solution. Con
siderate that is to the present generation of
college students.
If the present system is allowed to con
tinue without major reform, the present
generation of college students will have to
carry a heavy burden to support the elderly
and may not receive their rightful benefits.
xSince today's college students are the tail
end of the "baby boom" they will be sup
sporting5 a Ven. large number of retired
i workers- But just as they are the end of the
"baby boom" they are the beginning of the
"baby bust7'.. The "baby boom" ran from
5 the end of World War II to the beginning of
. the Ms. In 1957; the heart of the baby
boomf fertility "rates reached the level of
. 3.69 children per woman. By 1977, the fer
; .tilityjate had dropped to T. 79.. By the year,
2050 there will be two people putting into
' the Social Security system for every one
person taking out According to the OASl
: board of trustees, by the year 2050 there
( will be a 75 percent increase in the ratio of
; beneficiaries to contributors requiring a 142
' ; percent increase in the current payroll tax
;rate. .': . . .
What all the figures come down to is that
when a 20-year-old today is 68 years old in
.' the year 2030 he will have suffered from a
gradually increasing burden of taxation
- over his lifetime and will be looking for
ward 'to an uncertain future. His children
might not be willing to contribute 30 per-
: cent of their taxable income to make sure
that he has the comfortable retirement that
he thinks he deserves. Sounds a lot like to-
day. Maybe Mr,, Feldstein is right and its
time for more than a patch-up job.
- Jonathan TaIcott,: a junior history and
English major horn : Litchfield, Conn., is
associate editor for The Tar Heel. '
fetters to the editor?
The Tar Heel welcomes letters to the editors arid contribu
tions of columns for the editorial page. : .
14 The Tar Heel Thursday, July 15, 1982