"Um." White Haven played with his empty wineglass while his mind raced. The numbers were worse than hed feared, yet he understood Caparellis logic. And the First Space Lord was right. But he was also wrong. Or, rather, he was running dangerously low on "right" options.
"Were building up our fleet strength as quickly as we can, Ham," William told him, then grimaced. "Of course, thats not as quickly as Id like. Were beginning to stress the economy pretty hard. Ive even got permanent secretaries and undersecretaries in my department talking about a progressive income tax."
"You what?" That brought White Haven upright in his chair once more, and his eyes widened when his brother nodded. "But thats unconstitutional!"
"Not exactly," William said. "The Constitution specifies that any permanent income tax must be flat-rated, but it does make provision for temporary adjustments to the rate."
"Temporary!" White Haven snorted.
"Temporary," William repeated firmly. "Any progressive taxes have to be enacted with a specific time limit, and they automatically terminate at the time of the first general election after enactment. And they can only be passed with a two-thirds super-majority of both houses in the first place."
"Hmpf!"
"You always were a fiscal conservative, Hamish. And I wont say youre wrong. Hell, Im a fiscal conservative! But weve already quadrupled the transit fees on the Junction and levied special duties on our own merchant shipping, as wellnot to mention increasing import duties to a two-hundred-and-fifty-year high. So far, weve managed not to have to rob Peter to pay Paulor at least not to resort to armed robbery with violence in the process. But without something like a progressive tax, we wont be able to keep that up much longer. Weve already had to restrict cost of living increases in government pensions and assistance programs... and Ill let you imagine for yourself how Marisa Turner and her bunch reacted to that."
"Not well, Im sure," White Haven grunted. Then his eyebrows rose. "Youre not saying New Kiev went public about it, are you?"
"Not directly. Shes been more nibbling around the edgessort of testing the water. The Opposition hasnt come right out and criticized me and Allen over it yet; theyre only at the we regret the harsh necessity stage. But I cant guarantee theyll stay there." It was Williams turn to snort. "They sure as hell arent holding their fire on the basis of principle, Ham! Theyre afraid of whatll happen to them at the polls if they seem to be seeking partisan advantage in the middle of a war."
"Is it really that bad?" White Haven asked anxiously, and this time Caparelli responded before his brother could.
"It is and it isnt, My Lord," he said. "Were doing everything we can at the Admiralty to hold budgets down, and from a purely military perspective, theres lots of slack yet in our industrial capability. The problem Lord Alexander and Duke Cromarty are facing is how we can use that capability without crippling the civilian sector, and even there, we still have quite a lot of slack in fact. The problem is that politics is a game of perceptions, and the truth is that we are reaching the point of imposing some real sacrifices on our civilians."
White Haven blinked. The Thomas Caparelli hed known for three-quarters of a century wouldnt have made that remark, because he wouldnt have understood the fine distinctions it implied. But it seemed his tenure as First Space Lord was stretching his mind in ways White Haven hadnt anticipated.
"Sir Thomas is right," William said before the Earl could follow that thought completely down. "Oh, were not even close to talking about rationing yet, but weve got a real inflation problem for the first time in a hundred and sixty years, and thats only going to get worse as more and more of our total capacity gets shifted into direct support of the war at the same time as wartime wages put more money into the hands of our consumers. Again, this is for your private information, but Ive been in closed-door negotiations with the heads of the major cartels to discuss centralized planning for the economy."
"We already have that," White Haven protested.
"No, we dont. Im talking about true centralization, Hamish," his brother said very seriously. "Not just planning boards and purely military allocation boards. Complete control of all facets of the economy."
"My God, itll never fly. Youll lose the Crown Loyalists for sure!"
"Maybe, and maybe not," William replied. "Theyre more fiscally conservative than we are, but remember that the centralization would be under Crown control. That would appeal to their core constituencys litmus test by actually strengthening the power of the Monarch. Where wed get hurt would be with the independents we might lose, especially in the Lords... and the toe in the door it would offer the Liberals and Progressives." He shook his head with a worried frown. "Its definitely not something were looking forward to, Ham. Its something were afraid we may not have any choice but to embrace if were going to make use of the industrial and economic slack Sir Thomas just mentioned."
"I see," White Haven said slowly, and rubbed his lower lip in thought. The Liberals and Progressives had always wanted more government interference in the Star Kingdoms economy, and Cromartys Centrists had always fought that idea tooth and nail, especially since the Peoples Republic had begun its slide into fiscal ruin. The Centrists view had been that a free market encouraged to run itself was the most productive economy available. Too much government tampering with it would be the case of killing the proverbial goose that laid the golden eggs, whereas the very productivity of an unregulated economy meant that even with lower tax rates, it would ultimately produce more total tax revenues in absolute terms. The Liberals and Progressives, on the other hand, had argued that unregulated capitalism was fundamentally unfair in its allocation of wealth and that it was governments proper function to regulate it and to formulate tax policies to influence the distribution of affluence in ways which would produce a more equitable balance. Intellectually, White Haven supposed both sides had their legitimate arguments. He knew which viewpoint he supported, of course, but he had to admit that his own heritage of wealth and power might have a little something to do with that.
Yet whatever one Hamish Alexander might think, Cromarty and William must truly be feeling the pressure to even contemplate unbottling that particular genie. Once the government had established tight centralized control of the economy for any reason, dismantling those controls later would be a Herculean task. There were always bureaucratic empire-builders who would fight to the death to maintain their own petty patches of power, and any government could always find places to spend all the money it could get its hands on. But even more to the point, the Liberals and their allies would be ablequite legitimately, in many waysto argue that if the Star Kingdom had been willing to accept such control to fight a war, then surely it should be willing to accept less draconian peacetime measures in the fight against poverty and deprivation. Unless, that was, the fiscal conservatives wished to argue that it was somehow less moral or worthy to provide its citizens with what they needed when they werent killing other people?
"We see some other alternativesand some bright spots on the horizon," William said, breaking into his thoughts. "Dont think its all doom and gloom from the home front. For one thing, people like the Graysons are taking up a lot more slack than wed anticipated when the war began. And did you know that Zanzibar and Alizon are about to bring their own shipyards on-line?"