Another dour audit of the credit-dependent domestic economy from a Wall Street Journal editor whose 1987 jeremiad (Beyond Our Means) has proved regrettably prophetic. Three years ago, Malabre warned that free-spending Americans and their government were living on borrowed time—and money. Despite a prolonged recovery/expansion, he now points out, total debt outstanding at the start of 1990 topped 180% of GNP, a level not reached since the 1930's, when business activity was contracting. The yearly interest rate on federal obligations alone exceeds $300 billion, about the size of recent Pentagon budgets. By his painstakingly documented account, moreover, trends remain unpropitious in capital investment, compensation, education, health care, productivity, research, savings, trade, welfare, and allied areas; there's also a dollar-draining S&L bailout to manage, and the cold war's so-called peace dividend is, momentarily at least, being spent "somewheres east of Suez." On the plus side, the author argues that the US has a wealth of ways and the will to overcome its socioeconomic woes. For openers, he proposes revision of the Internal Revenue Code, including a hike in the peak marginal income-tax rate, elimination of certain deductions, and imposition of a national sales levy. Spending cuts figure prominently on Malabre's reform agenda as well. Farm subsidies, entitlement schemes that mainly benefit the middle class, the Export-Import Bank, Israel, the SBA, and overly expensive weapons systems are but a few of the possible targets he identifies. In the meantime, the author insists, elected officials must provide more forthright and bolder leadership if the US is to meet the challenges to its prosperity posed by the leveraged legacy of the recent past. An eleventh-hour alert that offers a chilling and tellingly detailed worst-case scenario for the wages of profligacy.
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