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BusinessWeek: January 11, 1993 |
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Books
DEFICIT APOCALYPSE NOW! (SAYS FIGGIE) BANKRUPTCY 1995: THE COMING COLLAPSE OF AMERICA AND HOW TO STOP IT By Harry E. Figgie Jr. with Gerald J. Swanson Little Brown -- 206pp -- $19.95 Ross Perot, meet Harry Figgie. These two guys, who surely don't need the money, have developed pretty good day jobs as latter-day Cassandras. Mr. Perot, of course, got 20 million votes and sold more than a few books by blasting the politicians and lobbyists in Washington for looting the Treasury. Mr. Figgie isn't running for office. But he, too, is doing pretty well in the doomsday business. Helped along by an apocalyptic title, his Bankruptcy 1995 has had a solid run on the best-seller lists. In it, Figgie forecasts a U.S. economy that will look much like Russia's if the deficit isn't dealt with. At least Perot came up with a solution. It's true that he never talked about it very much, but give the man his due. He publicly admitted that cutting the deficit would mean reducing benefits for the middle class and for the elderly, and even, heaven forbid, raising taxes. That's more than can be said for Figgie, chairman of Cleveland-based Figgie International Inc. and a veteran of the Reagan-era Grace Commission, which tried to ferret out federal waste, fraud, and abuse. Figgie lays the problem out all right. Indeed, the hyperbole fairly flows: The economy, he warns, will sink into absolute ruin by 1995 if the deficit isn't brought under control. Yet when it comes to solutions, Figgie sounds--dare I say it?--like a politician. His predictions of economic ruin are, frankly, silly. If the deficit goes unchecked, he anticipates a currency collapse, widespread bank failures, massive layoffs, cuts in Social Security benefits, and hyperinflation. I would like to make Figgie a little wager. I will bet him a year's pay--his, not mine--that by 1995, the annual deficit will still be in the neighborhood of $150 billion to $200 billion, and even so, our currency will be strong, inflation will be quite modest, and the U.S. economy will be, overall, healthier than it is today. That is not to say that the deficit doesn't matter. And one of Bill Clinton's biggest challenges will be to bring it under control. But the consequences are more insidious and much longer-term than Figgie suggests. For instance, a responsible fiscal policy ought to mean lower real interest rates. And getting a handle on interest payments would free up billions of dollars that could be put to more productive uses. But that's not the same as saying that bumping along as we have will cause hyperinflation in two years. Former Senator Warren Rudman (R-N.H.), a longtime deficit hawk, praises Figgie to the heights in his introduction. Bankruptcy 1995, says Rudman, deals with the deficit "in a brutally honest, straightforward manner." Rudman should know better. When it comes to the hard part--how to cut the deficit--Figgie fizzles. He opposes any tax hikes, but he doesn't ever say where he would get the $1 trillion in spending reductions that would be necessary to balance the budget by the end of the decade. Instead, he proposes appointing a "deficit general" and a small "deficit army" to find spending cuts. That's a cop-out. We already have a deficit general. He's called the President. The last one didn't do the job, and he was fired. If the next one doesn't do the job, he should be fired, too. More bureaucrats are not the answer. Figgie does seem to care genuinely about the problem, but that's only half the battle. For readers who want to know how to fix the thing, there are some better choices. For instance, the Committee for Economic Development, based in New York, has just published a report called Restoring Prosperity: Budget Choices for Economic Growth. It doesn't have much of a beat, and you sure can't dance to it, but Budget Choices is a serious look at the deficit, its consequences, and some real solutions. Oh, and at $14.50, it's 25% cheaper than Figgie's effort. | |
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