THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, November 19, 1994 TAG: 9411180030
SECTION: FRONT PAGE: A16 EDITION: FINAL
TYPE: Opinion
SOURCE: By ROBERT RENO
LENGTH: Medium: 68 lines
If you can't afford a house, blame Newt Gingrich.
This is stretching the blame game, of course, but not as absurdly as some of the soon-to-be speaker's flights into the nether realm of punitive economics.
The Federal Reserve, of course, did not raise interest rates Tuesday because it was terrified of Gingrich's fiscal policies. But the fact is it might well have. And even as the Fed was announcing the biggest increase in interest rates in 13 years, there were other reports that thousands of Americans were already being squeezed out of the housing market by the five rate increases the Fed has enacted so far this year.
The Federal Deposit Insurance Corp. reported that its index measuring the health of the housing market declined in the third quarter, largely because of higher interest rates. And the National Association of Realtors reported its index of housing affordability dropped significantly in the third quarter for the same reason.
Budget Director Alice Rivlin suggested that the major tax cuts promised by Gingrich - as yet unmatched by corresponding spending cuts of the remotest specificity - could spook the already inflation-obsessed Fed to raise interest rates even higher because ``inflationary dangers would be much more real.''
What we have now are congressional Republicans yelling for a vastly more stimulative fiscal policy and a Federal Reserve, still dominated by conservative Republicans, moving steadily in the direction of a more restrictive monetary policy. Not to be simplistic, but what does this remind you of?
A lot has changed since 1981. But if you'll recall it was Ronald Reagan's promises of tax cuts, more defense spending and a balanced budget by 1984 that were followed by the biggest deficits in history and a decade in which interest rates averaged higher than in any period since the Civil War. Gingrich's promise of tax cuts, more defense spending and a balanced budget by 2002 does have a certain ``here we go again'' ring to it.
Anyway, Newt can always fall back on another of his promises. This week he was pledging to end boozing as we know it by 1997. Gingrich told a dinner of 200 fat-cat contributors that ``if you take up the moral cause of re-establishing for every American the pursuit of happiness I believe within two or three years we'll have dramatically less drug addiction, dramatically less alcoholism.''
Again, Newt was weak on specifics. But if I get his gist, it is that the skid-row drunkards and dope fiends of the nation will be so happy to have their capital gains taxes reduced they will all take the pledge. Even if a few millionaires go overboard and celebrate their good fortune with a martini binge, it'll still average out to sharply lower rates of substance abuse.
Only a person with Newt's reputation for sobriety could make such a suggestion without the risk of people suspecting he'd been into the cooking sherry. It ranks in fatuity with his crack about the South Carolina woman charged with murdering her children being the personification of counterculture liberalism. And they said Surgeon General Joycelyn Elders was out of her mind for suggesting that we at least study the question of whether violence and crime could be reduced by decriminalizing drugs. MEMO: Mr. Reno writes for Newsday. ILLUSTRATION: Drawing
NEWT GINGRICH
by CNB