Economic recession and military spending cuts - 30 April 1993

Coming back to San Francisco after the unusual interval of the year, I was struck by the same small signs of recession that hit us in London a month ago after a similar long absence.

I went to pick up the out-of-town papers from a favourite shop on Russian Hill and incidentally seize a delicious snack from the little French deli across the street. The newsagent had gone out of business and so had the Frenchman, sad for them but not to worry there are heaven know hundreds perhaps thousands of delis and lunch counters and bistros run by in all over 200 ethnicities, what we used to call nationalities.

In the evening, we have two old friends to dinner, where shall we take them to? Our steady favourite, founded I don't know maybe 25, 30 years ago, by a Hungarian couple who fled from the Russian invasion of 1956, who met in the emergency clearing house and escape hatch of Vienna. Came to America with nothing, got on their feet in Berkeley with a tiny pancake parlour – in the Hungarian cuisine pancakes a wrap everything from veal to asparagus soufflé, they made a conspicuous success when they opened a large restaurant and then a larger one here in San Francisco overlooking the Bay and this became one of the best, if not the best Hungarian restaurant, true Hungarian, not the Viennese overlay we almost always encounter. The best certainly on this coast, they were never chic, but they prospered exceedingly so there is never much of a question the first night. I dialled them. The number you have reached is that of the former home of Paprika Fona, but in July it will be the home of the new exciting family blah, blah, blah restaurant. All people can tell us was that they had folded. I hope the Fonas are basking in a laid-back retirement.

Now that would have been the picture, the talk in almost any city in the United States three years ago, but since the election we've been saying that the economy really did pick up last summer at the latest; because George Bush said so, nobody believed him and we preferred to believe with Mr Clinton that things were just awful.

But we're all agreed now that the American recession is well and truly over. The latest news is not so. The Wall Street Journal on Monday put it with typically dispassionate bluntness, "stocks are sliding adding to evidence that Clinton's honeymoon with the stock market may be over", bond prices declined. Worse, I'm saying worse, orders for durable goods those are things like motorcars and dishwashers that have or or guaranteed to have a life of their own for three years or more. Durable goods orders fell by 3.7% the biggest drop in 15 months raising new questions about the vitality of the economic recovery. Vitality is a tactful word; relapse is another way of putting it.

And California is a special case. No state in the country has been hit so hard so conspicuously, conspicuously perhaps because the economy of California is greater than that of all but nine foreign countries. Californians do not yet recognise a recovery. The state went for Mr Clinton with a cry of hope that he not the old firm or style of Reagan and Bush could somehow bail California out that is quite an undertaking.

One of the first positive things that President Clinton did was to have his secretary of defence go over the Bush administrations list of military, naval and air bases/stations that must be closed under the pressure of the last Congress. Of course as always, a Democrat controlled Congress. For years and years the Democrats have nagged away at the need to cut the defence budget beyond what either the Republicans or the Pentagon thought wise. Mr Clinton's list of likely closures is formidable and accords with the Democrats' long-time dogma. Almost any Democrats, senator or congressman, will vote for shutting down the military bases on principle, but the moment you start to do it another principle comes into play, the Nimby principle – not in my back yard. And this is where Californians, with more cause than most, rise on their hind legs and scream, they have between a quarter and one third of all the military bases and stations in the United States, consequently California presents a prime target for economy, a state where you can be seen to be making the most dramatic cuts in the defence budget.

Now, most people who don't live near a naval base, a military fort, in fact I suppose most people in any big country, when they talk about defence are thinking of bombs and tanks and guns and missiles, but they constitute in the peaceful pauses between wars less than half of the defence budget, which is taken up by wages, salaries, pensions, housing, transport, medicine. And the people who do live hard by or even a mile or two away from a military base know something else, which is at the heart of the Californians' cry to have no more of there bases closed. It is the life of the towns and the livelihood of the ordinary citizens in and around the bases.

With the defence plants already shut down and the military and naval base gone here and there, California has already added another quarter of a million to its already high unemployment. If all the California bases on the president's list are closed, it's estimated that another 350,000 people will lose their jobs.

President Clinton has sent a panel of experts so called around the country visiting the bases that are due for closing, it came this week to Oakland, across the Bay from here. The panel called witnesses to make their case against shutting down in the San Francisco Bay area, which alone has six naval installations, one air force base and the old Presidio down the peninsular at Monterey, which is the headquarters for the defence department's intensive foreign language training – all are due to close.

Among the witnesses where the governor of the state, Mr Pete Wilson, and the new senator Dianne Feinstein who used to be mayor of San Francisco. Governor Wilson is an ardent Republican and Senator Feinstein a fervent liberal Democrat, but you can be sure that they were comrades in arms when it came to fighting the president's list and pleading the superior facilities and military preparedness of the California bases, they know of course they're not going to save all of them, but they made a persuasive pitch for an air force base just inland from here at Sacramento. The alternative western base would be a 1,000 miles inland in Colorado, their strongest case was about keeping Alameda, a naval air station on an estuary here. An admiral testified that Alameda's free berths for nuclear aircraft carriers would be almost impossible and ruinously expensive to reproduce elsewhere. The naval station that is down as the open alternative if Alameda is closed is way to the north in Washington state. The California witnesses pointed out with zest that that station has no housing as yet, no hospital and no piers for nuclear carriers and so on and so on. Every state the presidential panel goes to will hear the same arguments, the same complaints of unfairness, the same pleas for mercy from the axe.

Senator Feinstein was very powerful in saying that this has come at the worst possible time for California. By 1988, the loss in defence-related jobs could be 650,000.

Well 50 years ago exactly, California got its first steel mill in a state without ores, easterners mocked at the prospect of Californians running more than 2,000 miles east to Pittsburgh to get their ores, but they found them almost next door in Utah. And that find introduced, introduced industry – steel, fleets of freighters, aeroplanes, weapons, research and development – to this state; it turned California from an almost wholly agricultural state, the supplier of the fruits and vegetables to half the nation into an industrial and farming state. California boomed through the war years and on into the '50s and the next three decades and became the most prosperous state in the Union, but yea so, so it has felt harder than any other state the long recession. Every corner of this huge state over 800 miles long, 200 wide has a particular story and what is so striking to me after a year away in a state that I've visited at least once or twice every year since, oh since 1939, is the still firm grip of recession.

In Los Angeles, it's a cause for despair for reasons we thankfully can't go into here. San Francisco is a special case; its economy has taken a triple beating. The earthquake for a time almost banished tourism, Desert Storm scared people enough not to travel by air and all the airlines have suffered grievously since and the general recession applied the triple whammy.

Today, this tumbling city glitters with that heavenly light, which made Matisse in New York wonder how do you paint such light? And the tourists packed the cable cars and flock all over Fisherman's Wharf and switch off in the fast ferries to visit Alcatraz and meditate on Al Capone, but if you live here there's no corner of life that doesn't still feel the cold hand of the recession that won't withdraw.

Latest social note, the city pound just announced that lost dogs would now be kept alive for no more than three days in which to pray or win for a saviour. There's not enough money to maintain the old, the immemorial tradition of feeding and maintaining the lost and the strays for five days.

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