CAN a nation with a trillion-dollar economy be running out of money? That startling question is forcing itself upon every government official who must shape a budget, from President Nixon down to the head of the smallest local mosquito-abatement district. By most measures of private wealth, the U.S. is the world's richest country. But in terms of its ability to pay for the public services—health care, education, welfare, garbage pickup, pollution control, police and fire protection—that make the life of its citizens pleasant, or at least tolerable, or in some cases even possible, the country seems almost to be going broke.
This anomaly has come as a bitter shock. Americans have long thought that they had the resources to accomplish practically any goal that they set for themselves. Political liberals have argued for years that economic growth could pay for a vast improvement in housing, health care and education programs, and leave an ample margin for tax cuts besides. Only a few years ago, liberals and conservatives alike thought that the major question of public finance was how best to use the "peace dividend" of $30 billion a year that they expected the U.S. to collect once the Viet Nam War ended.
Doubled Burden. Today, that hubris has been drowned in a rising sea of red ink. In 1970, federal, state and local governments spent $60 billion more than they took in, and the deficit certainly yawned even wider last year. Meanwhile, taxes keep going up and up. Though federal taxes have been reduced since 1960, the cuts have been offset by severe increases in state and city income taxes, sales taxes, property taxes, Social Security taxes and "sin" taxes on liquor and cigarettes. Between 1960 and 1970, the tax burden on each American man, woman and child almost doubled, from $711 to $1,348. Many Americans, worried about just what will be taxed next, could echo the Beatles' song, Taxman:
If you drive a car, I'll tax the street,
If you try to sit, I'll tax your seat,
If you get too cold, I'll tax the heat,
If you take a walk, I'll tax your feet.
The higher taxes and higher spending have brought little if any improvement in public services. In many cases, the nation's streets are dirtier, its mass transit more decrepit, its public hospitals more understaffed, its streets more crime-ridden today than in decades. The knowledge that they are paying more and more for less and less service has bred in many citizens a suspicion that they are being cheated, and has fanned a mood of rebellion.
In Connecticut, an outburst of voter anger frightened the state legislature last August into repealing an income tax that had been passed just six weeks before; that was a hollow victory for the rebellious citizens because the lawmakers were quickly forced to impose some of the nation's highest taxes on sales (61%), on gasoline (100 per gal.) and on cigarettes (210 per pack). In Kansas City, voters last December defeated a property tax increase that civic leaders of both parties had campaigned hard for on the. grounds that it was urgently needed to improve the city's schools. Across the country, citizens last year voted down 65% of all bond issues proposed to build new schools, hospitals, sewage plants and other facilities v. an average of a 30%