President Reagan warned Congress on Thursday that he will veto any attempt to tamper with what he considers his major economic accomplishments.
In his annual report on the state of the nation’s economy, Reagan said he found it to be performing well in the fifth year of recovery from the recession of 1981-82.
He cited as achievements passage of a massive revision of the income tax code, the development of 12 million new jobs since the recession and declines in the rates of interest and inflation in recent years.
“Our market-oriented policies have paid off,” Reagan said. “By October, the current expansion will become the longest peacetime expansion of the postwar era.”
The President said that several problems remain, however. He mentioned the $34-billion farm subsidy program, huge federal budget deficits and widening trade gaps as high-priority issues for action in Congress this year.
Opposes Trade Barriers
Reagan reiterated his opposition to a tax increase as a way of reducing the budget deficit, and he warned Congress that he would veto any legislative attempt to erect trade barriers as a way of correcting the imbalance of trade.
Beryl W. Sprinkel, the President’s chief economic adviser, told the Joint Economic Committee of Congress on Thursday that the Administration still expects the trade deficit to shrink by $30 billion this year. That expectation is the underpinning of Administration hopes for slightly accelerated economic growth in 1987.
Sprinkel told the committee that the trade deficit is “on the verge of improvement,” although he conceded that the improvement has yet to be reflected in the monthly statistics.
In November, the trade gap reached a record $19.2 billion, a development that prompted the Administration to renew efforts to depress the relative value of the dollar as a way of pressuring Japan and West Germany to help America solve its trade problems.
Plea to Major Partners
The economic report again asked that the nation’s trading partners do more to stimulate their own economies to expand markets for U.S. goods abroad. It said that the United States cannot rely on a weaker dollar alone to bolster its trade fortunes.
Economic expansion in the United States has slowed substantially in the last two years because of the trade imbalance. The gross national product grew just 2.5% in 1986–the smallest gain since the recession year of 1982–but Reagan said the economic recovery, now in its 50th month, is showing renewed strength.
The “Economic Report of the President” expounded on many of the proposals Reagan introduced in the 1988 budget plan he presented to Congress and in his State of the Union address Tuesday night.
It repeated a call for government efforts to make American businesses more competitive with foreign firms, an initiative that the Administration is pushing in the hope of derailing protectionist trade legislation.