Fears over US deficit

I suppose it's true in most countries, but certainly in the United States, immediately after a national election, a presidential election, there's an emotional let-down, all the more severe here perhaps because the campaign itself is so prolonged and so pumped up with manufactured enthusiasm and indignation.

The other day, two days after the election, there was a shot of Mr Bush sitting in a small boat fishing. It reminded me of visiting a famous actor in his dressing room and watching him, shortly after he'd clawed his eyes out as Oedipus Rex, nibbling a chocolate biscuit. 'I adore chocolate bickies,' he said. The simple shock of seeing the man himself made you realise how much of a performance he'd been putting on.

Going along with the emotional let-down there's also a lull in the news, the hard news out of Washington, for a peculiar American reason. It always happens here, as it does not happen in a parliamentary country – in Britain for instance – because there, the new prime minister takes over at once, literally, overnight; an example of British briskness and despatch that Americans, when they know about it, can hardly believe.

In the American system, the new man is elected in early November and he doesn't take office till late January. Odd. Well, it's a hangover from the early days when the electors, chose men in each state, to the number of their congressmen, plus two senators, rode off on their separate journeys to meet in the capital city of their state and register the actual state vote. That took weeks and so did the long journeys of the couriers from each state to Washington to record the tally and the total.

But, surely, in the days of the telegraph, not to mention voting machines and television, this cumbersome procedure is out of date? It is, but it's not out of fashion. It's dictated by the constitution. Between now and a given date in December, the electors will record their state votes, they will be despatched to Washington and presented to the president of the Senate – who is, by the way, the incumbent vice president of the United States – and he will formally receive the count and he will then announce to a quorum of the Senate who is to be president. He will, no doubt, announce 'Governor Dukakis, 112 electoral votes, Vice President Bush, 426 electoral votes. I hereby declare George Walker Bush to be the next President of the United States'. And who do you think will make this solemn pronouncement? George Walker Bush. A funny and rare twist to an antique ceremony.

Could be worse – the interval used to be between November and March, but in January 1933, with the country floundering in the pit of the Depression and Roosevelt not taking over till March, the Congress passed and the states ratified, a constitutional amendment bringing forward the inauguration to 20 January next time, and Roosevelt's second term began on that day in 1937. The wheels of a form of government, controlled by a written constitution, grind exceeding slow.

What the interval between Mr Bush's election and Mr Reagan's going out of office means in terms of what I called hard news is that practically nothing by way of presidential initiative or congressional law-making is going to happen. While Mr Reagan is still president, he is now positively and effectively a lame duck. No point in his proposing new policies, new laws because there's no Congress there to argue them or pass them or defeat them. The old Congress is dead and the new one isn't born.

And Mr Bush can't make any serious noises about what policies he means to pursue and what not because he hasn't any present power and no legislative body to challenge. Who does he think he is? President of the United States? It's a weird system that puts government and, therefore, also, the Washington news-making machine on hold and the temptation for me – you can guess – is to forget Washington and look around for some other amusing or colourful topic of American life.

Which I should most likely be doing, were it not for one alarming story that has hit the headlines and absorbed commentary in papers serious and trivial, and which has come roaring into focus, partly because there is a news vacuum to fill, but mainly because, as one government fiscal expert said, when this alarm was sounded to him, 'because,' he said, 'the markets, Wall Street, just doesn't understand our political system.' He didn't say it in temper or irritation. He meant it literally.

And from what I've said about the suspension of presidential government, the ten-week lame-duck period, it's very much the thing to talk about, if only to try and pacify the fears of governments in Western Europe and Japan that the United States government is fiddling while prosperity starts to tumble.

Let's take this story in the rather lurid form in which, this past weekend, it hit very many of our newspapers. Listen to this.

The opening two paragraphs of a story, four columns wide, that appeared on the front page of the San Francisco Examiner. The headline reads, 'Economists Waiting for a Fall' and the sub head, 'Bush's Economic Time Bomb'. And now, 'After six years of economic expansion built on enormous public and private debt, the faceless fear of a great American financial collapse is beginning to take on some ugly features. More and more analysts see grave possibilities that weak spots in the economy could combine into calamity. The sense of foreboding is not limited to gloom theorists, but is spreading among moderate voices in financial circles and is being heard from top government officials.'

That was the lead into a story about the appearance last week before an independent economic commission which has only an advisory function, the appearance of Mr Alan Greenspan, the chairman of the Federal Reserve Board, the man who, more than any other, is independent of administration policy and can, as he chooses, raise or lower interest rates – a power which, any time he cares to exercise, is well understood in Wall Street and can cause immediate rocketings or slumps in the market.

Another headline on the same story reads, 'Economists Fear Imminent Collapse'. Good heavens! If things are as bad as that, why didn't Mr Bush and Mr Dukakis say so in the long months of pleading and warning and preaching and nattering?

Well, they did go into it. Mr Dukakis did, at least, because the only really dramatic note he could play on was a warning that the country was in heavy debt, the deficit was huge and 'Oh, things are going to be awful for your children and grandchildren!' Mr Bush discreetly shut his eyes to the vision of what might happen to our children and grandchildren, preferring to applaud and rejoice in the present thumping prosperity which the great majority of Americans are enjoying.

If a Democrat running in 1928 had had second sight and warned everybody that the Coolidge prosperity was a mirage, was a very enjoyable mirage, and that some time at the end of 1929 there would be a thundering unholy crash, nobody would have believed him and he would have lost too. Perhaps Mr Dukakis has second sight, but a big majority of the voters preferred to believe that he hasn't.

What they're all talking about is the deficit and, as I mentioned right after the election, one big failure of Mr Dukakis, as of everybody else, was a failure to dramatise for ordinary people the fate of the country if the deficit does not continue to go down and down. The deficit is a word as grey and unexciting as Mr Dukakis's other word, competence, and to the American people, the deficit has appeared like a remote haze on a sunny horizon. The thought that it might move in on us as an economic hurricane has never been made vivid or plausible.

Now, suddenly, everybody's up and ringing fire bells and sirens. The papers, some papers, are doing it, as I suggested, because there's no solid news out of Washington, but the money markets, the stock market, have been reacting in a wobbly fashion for the precise reason that that government money man noted. They are acting or reacting as if Mr Bush could act now, tomorrow, next Tuesday. As another expert put it, a fiscal man with much experience of Washington, 'The market pressure on Bush is a healthy thing, but their timing is off, they jumped too early. There's nothing he can do about it until he's president.'

Now, you could read that line with a despairing inflection to suggest, 'Oh, the pity of it! What a dangerous system!' But what the man is saying is, 'Yes, it's good that Wall Street is bringing its prestige to bear, to say that the deficit should be the first order of business during the first months of Mr Bush's presidency. The deficit will be no worse in February and March than it is now and this pressure will guarantee that Mr Bush and the new Congress will do something.'

Now that is quite plainly what Mr Alan Greenspan also was saying in his public appearance before that economic commission. Not that Mr Bush must be called into shore from his Florida holiday and start issuing edicts. Mr Greenspan was stressing that the coming spring must be the time for Mr Bush to give of his best to persuade Congress, most of all the House, which is the dictator of all money bills and is in the end the body really responsible for the amount and direction of government spending.

In the meantime, the papers, still trying to make up for a paucity of news, speculate on various shivery possibilities which, in truth, have always been there. If the bankrupt federal savings and loan insurance system begins to collapse, if Latin American debtors suddenly renege on billions owed to US banks, if the Japanese are suddenly unwilling to finance the American debt... well, both the Latin Americans and the Japanese know that their default would shatter them, also.

So, in this news-less interim, it's as well to remember that the American system allows this breathing space, which doesn't mean that the players, the new president and the new Congress have taken their eyes off the ball and are unready for the fray in the next quarter.

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

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