Two former high government officials - one a Democrat, the other a Republican - said Monday the next president "courts catastrophe" if he fails to place international economic issues at the top of his policy agenda.
And they bluntly made a bipartisan pitch for increased taxes."It is our judgment that the world economy is poised between integration and disintegration," said William Eberle and Richard Gardner, co-chairmen of the Aspen Institute program on "The United States and the World Economy."
"If we dither, if we succumb to `politics as usual,' we court catastrophe," they said.
Eberle, chairman of Manchester Associates, was U.S. Trade Representative under presidents Nixon and Ford, while Gardner, professor of law and international organization at Columbia University, was ambassador to Italy under President Jimmy Carter.
The two made their comments and outlined a set of recommendations on the U.S. budget deficit, international finance, trade negotiations and Third World debt and development as a part of ` ?1-page "letter to the president-elect" they said would be hand-delivered to either Republican George Bush or Democrat Michael Dukakis on the day after the election. Many of the recommendations were developed in Aspen Institure seminars.
"The day you take your oath of office, you will assume responsibility for our net indebtedness to foreigners, which will then total nearly $500 billion," the two said in their letter. "Almost no matter what you do, in your first year in office that debt will grow by at least $120 billion.
"That debt is the `bill' for our consumption binge of the past seven years," they said. "Before we have any realistic hope of stopping the growth of that debt, our total net indebtedness to the world will be close to $1,000 billion by 1995 and our annual payments on it will exdeed $70 billion."
They said that if the world's financial markets "are not convinced that the major countries are embarked - individually and collectively - upon a credible program to restore a sustainable global financial balance, the foreign lending on which we have come to depend to finance our external deficit could dry up.
"If that happens, we could witness a dramatic drop in the dollar, a sharp rise in interest rates, the collapse of stock and bond prices, and a major recession."
And, striking a theme that Dukakis has unsuccessfully sought to raise, the two warned, "The longer we continue to consume more than we produce, the longer our descendants will have to consume less than they produce."
The two urged the president-elect to set as a target the reduction of the U.S. domestic and external deficits to about $50 billion a year by 1992, the end of his first term. Both these deficits now exceed $130 billion annually.
But they said the targets could not be reached solely by economic growth, as Bush has suggested, and that there would have to be not only cuts in discretionary spending but also in entitlement programs and new taxes. Bush has flatly rejected any tax increases and has suggested cuts in capital gains taxes would spur economic growth.
On international economic issues, the bipartisan co-authors called for more development aid, greater defense burden-sharing and more open markets from Japan and Europe, especially from Germany.