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Reagan is not likely to give much ground in London. Speaking with reporters before leaving Washington, he defended his budget policy in a way calculated to deflect criticism at the summit.
Said the President: "I will be talking to people who also have deficits at pretty much the same percentage rates of their gross national products as ours." Using an argument that the other heads of government are most unlikely to accept, he insisted that interest rates are "not connected to the deficit [but] are tied to the lack of confidence of so many in the market, as to whether we are determined to hold down inflation." Aides note that high interest rates are not all bad; they indirectly help produce a huge trade deficit that hurts the U.S. but helps other countries because it means they are selling more goods and services to American customers.
Chances that the London summit will resolve these disputes are slim. The previous economic summits have concentrated on building a spirit of cooperation and have rarely achieved specific agreements on complicated financial matters. Looking back on the eight economic summits he attended as West German Chancellor, Kohl's predecessor, Helmut Schmidt, once reflected that the meetings were valuable not so much for what they accomplished as for what they avoided. He had in mind primarily resistance to curbs on free trade. Still, political harmony and economic discord are not an enduring combination—a point which the London gathering may well impress on the U.S. President.
— By George J. Church. Reported by Douglas Brew with the President and Mary Cronin/Galway, with other bureaus