Yes, President Reagan is somewhat more defensive now. It is clear that the euphoria generated by his solid and quick legislative victories over the economic recovery package has diminished as he confronts an unresponsive financial market and growing resistance from pressure groups in Congress and among the public at large. The Democrats are finding their voice again. Even some Republicans are beginning to protect their own political turf. Washington is returning, as well-respected political commentator David Broder puts it, to the more normal state of "politics as usual."
But this is no reason for impatience. Wall Street gurus seem to be tempting the country with a sense of panic again -- ironically at a time when there are some positive signs to be seen. The public should bear in mind that what the stock market does has only peripheral effect on the economy as a whole. Panic over the looming budget deficit, moreover, is totally unfounded and simply a psychological reaction. Studies show that the US government deficit as a proportion of the gross national product is much smaller than in such economically sturdy economies as West Germany and Japan. After 20 years of such deficits anybody's economics -- Keynesian or non -- calls for moves to bring a balance. But not frenzy if the project takes time.
What positive signs do we have in mind? Without exaggerating them, they at least should be mentioned as the search for economic stability goes forward. Inflation has dropped from a 12.4 percent annual rate in 1980 to about 8-9 percent now; the underlying deflator, too, is declining. Interest rates seem to be inching downward. Labor unions are under pressure to moderate wage demands, and some are doing so, opting for job security instead of big raises. And there are signs the United States may be turning the corner on the decline in labor productivity. We have now witnessed six straight quarters of 2 percent annual increase in productivity.
It is true the economy is headed for a slowdown, perhaps a recession, as still-high interest rates and limited money supply contract business activity. But that, after all, is supposed to be the whole point of the monetary exercise -- to brake the economy, bring down inflation, and then start up the economy again at a less rapid rate in order to avoid another inflationary explosion. The process is slow; it is also painful. But it is widely accepted as a necessary step in curing inflation.
What, then, of the President's "supply-side" program? No one yet knows whether it will work and many legitimate doubts are raised about the President's assumptions (that tax cuts will translate into massive savings, for instance). But, even if it does work, it will take time. Mr. Reagan is not being unreasonable when he asks the public to withhold judgment until the program actually goes into effect and has been in operation a while.
However, the President did miscalculate earlier this year on his budget figures and the priority now, if the economic package is to keep its original outlines, is to make further spending cuts. Some of Mr. Reagan's still sketchy proposals look worthy -- eliminating certain tax loopholes for businesses holding federal contracts, for instance, and imposing fees on users of waterways and other federal services. But there has been a less-than-bold attack on the big-ticket items. After first courageously taking on social security, for instance, the President has done the politically expedient thing of dropping such proposals as a delay in cost-of-living raises and calling instead for a bipartisan committee to come up with a plan. Obviously he wants to spread the political risks.
Nor has President Reagan gone after the defense budget with the same standard of close examination as he has applied to social programs. In the end he may find himself increasingly losing political ground if he contiues to slice away with what can seem indifference at his "safety net" for the poor and disadvantaged -- and even at such middle-class benefits as tax credits for energy conservation -- when the amount of waste and inefficiency in the military establishment remains high.
It is possible in fact that President Reagan is not as wedded to his proposed his eyes on the far right wing of his party, he may be leaving it to Congress to make further reductions in the Pentagon budget.
All of which is to remind ourselves again that there is no fast or foolproof way to turn the American economy around. The President moved forcefully and effectively in the early months, largely because it was perceived he had a popular mandate for his actions and because he stepped on few constituencies with strong political power. Now, as opposition grows -- and as his own forecasters proved overoptimistic on the size of the 1982 deficit -- he must tough it out in a normal give-and-take battle with the lawmakers. The American people, for their part, must tough it out too. They are given to wanting quick results, but there will be no substitute for holding to a steady, patient course.