Reading the latest news out of Wall Street set me to thinking about how presidencies get into trouble. Take a look back at Jimmy Carter. What went wrong? He seemed to be doing all right for a while, but his presidency sort of trickled away. He lost credibility as a president.
So far as I can remember there was no sudden moment or specific incident that caused a reversal of public confidence in the ability of Mr. Carter to manage his country's problems. His downfall was the gradual accumulation of a general public awareness that "things" were not getting better.
He was not able to get control of the economy. He could not squeeze down the budget by enough to make a real difference. His promise to balance the budget by the end of his four years went glimmering. The inflation increased rather than decreased.
In this sort of thing going to happen to President Reagan? I think not. It seems to me that Mr. Reagan is going to suceed or fail as a president over one issue and that one is coming up fast. Can be make good on his plan to get control of federal spending and bring the budget into balance during his fourth year? So long as he is perceived to be making headway in that direction he will probably retain public confidence and continue to be credible as a president.
But suppose there is a moment when it becomes obvious that the plan is not working, that federal spending is not down by enough to give promise of a balanced budget, that inflation and tight money are going to continue right through his four years?
The new from the Reagan ranch was that the budget deficit for next fiscal year is going to be much worse than planned -- unless new cuts are found. That news caused a downward slide on the stock exchanges -- because the bigger the deficit the more money the government will have to borrow. That in turn means less money available for business and industry and higher interest rates for what is available. And right on schedule comes news that the inflation rate is up again.
In other words it looks very much as though Mr. Reagan is rigth now at the decisive crisis in his presidency. Can he find another $20 billion or $30 billion to cut out of the federal budget? If he can, then the semi-panic in Wall Street will subside because lower interest rates would still seem to be a credible possibility. But if he cannot find those extra billions of disposable surplus in the budget -- well, then there can be a more sudden loss of credibility than happened with Mr. Carter.
It can be sudden rather than gradual for the reason that the Carter story is immediv ately behind us and still fresh in memory. We can look back and realize that Mr. Carter's failure to cut the budget led to tighter money and more inflation. There would be less lag this time between the realization of a continuing imbalanced budget and the loss of confidence.
Does Mr. Reagan have a way out of this onrushing crisis?
There are ways of staving off a loss of confidence. The sortie from the US Sixth Fleet into the Gulf of Sidra was an obvious public relations success. Libya is not a popular place with most Americans. US pride had been hurt by the failure of Mr. Carter's effort to rescue the Americans being held as hostages in Iran. Here was a quick, easy military victory over an obstreperous small country.
But that sort of thing, even if repeated with equal superficial success, can only gain temporary popularity. It is no lasting balance for the damage which would flow from a failure to keep the Reagan economic program inside the boundaries of credibility.
Mr. Reagan's fellow countrymen have high hopes for that economic program. They yearn to be able to believe that it is sound, and can succeed, and can bring the inflation rate under control and can as a result improve the condition of the individual American.
The first returns from that program have encouraged the high hopes for a happy conclusion. Congress did accept the tax-cutting parts of the plan. Congress did go along with most of the original budget cutting proposals. And the economy seemed to be responding. The inflation rate was coming down through spring and early summer.
But now we get a shock wave of doubt for which there is only one remedy. That would have to be another round of heavy budget cutting sufficient to keep alive the prospect of a balanced budget in 1984. Everything, it seems to me, hinges on whether Mr. Reagan can find the further cuts.