Nicholas Lemann and Judith Shulevitz

Dear Judith,

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How many parents do you have, anyway? Next you're going to tell me that you're also the daughter of a social novelist and a New York restaurateur.

The restaurant owners are having the same problem that all of us laborers in the luxury-sector, discretionary-spending part of the economy are having, which is that when times turn bad, we're what people cut back on first. There is no easier way to save a substantial three-figure sum than by substituting a dinner at home for a dinner at a fancy restaurant. The New York restaurants are especially vulnerable because most of them are essentially a branch of the financial-services industry and therefore can't help but dip when the Dow does. I suspect a lot of them are trying to hang on through the holidays, and then in 2002 we'll see a restaurant casualty rate that is even higher than its usual frightening level. The real question is whether the cycle of underspending and business closure and unemployment will reach down into the less lofty realms of the American economy.

Which reminds me, I've got the answer to George W. Bush's problems. You will recall that the federal surplus, which was supposed to be more than $300 billion, is now sinking with the economy, down into the $150 billion range. Therefore, according to everybody in Washington, Bush has to do one of three unpleasant things: raise taxes, cut spending on education and defense, or break open the Social Security lockbox. Both Trent Lott and Tom Daschle went to the White House yesterday to present the poor guy with difficult choices. But there's another way out for Bush: deficit spending. Why can't he just get up and say, hey, the economy's bad, it needs goosing, so let's just run a little old 1 percent budget deficit, which would be unimaginably smaller than the Reagan-era deficits? That way he gets to keep his new programs, the lockbox remains locked, and he can demonstrate extra concern about the state of the economy. It's hard to imagine that the Democrats could with a straight face claim that a small deficit in an almost recession is disastrous--certainly no Democratic economist would. And the Republicans lost their former standing as anti-deficit-spenders during the Reagan years, so they couldn't attack him either.

I think I know the answer to my question, which is that to do what I'm suggesting, Bush would have to submit a new, unbalanced budget, and that would put his tax cut, the one part of his agenda fully locked into place, back into play. Still, it's amazing how few people are even suggesting the deficit-spending option. You'd better tell all those parents of yours that they are just going to have to grit their teeth and learn to love austerity, or move to a cabin in the woods to work on their vast social novels, or something because economic help from the U.S. government is not on the way.

Love,
Nick

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