… but early on today's agenda, was a talk with our correspondent Bob Shieffer at the British Embassy. Thatcher said the economy will play a large part in her talks with President Reagan:
Of course, the United States' economy affects the whole world and the deficit is one of the things which affects the strength of the United States dollar and you cannot say that that is due to the weakness of Europe or the weakness of other countries. Germany has a very strong economy. We have had four years of recovery, although we have not begun to solve our unemployment problem. Switzerland is a strong economy. Japan is an immensely strong economy, yet they have all suffered from the strength of the dollar, and the question we all ask is how much longer does it go on, because I have known a weak dollar in my time as prime minister, I have known a strong dollar. Once you get to extremes, the position does not hold, and naturally there is a great question mark over what will happen. [end p1]
Bob Shieffer, CBS
Well, will you have some advice or what will you tell President Reagan about what ought to be done about the deficit?
I never say what I am going to say to President Reagan before I see him. That would be most discourteous, but let me point this out: before the election, I remember his State of the Union Message when he said: “Look! We have got to have a down payment to reduce the deficit!” and that was put in hand; and this one too: “Proposals to reduce the deficit” and people here talking about the deficit as a very great problem. So there is no unawareness of it and there is no unwillingness to take action.
Bob Shieffer, CBS
I noticed one commentator in London said it is becoming more difficult for pro-American governments like the British Government to urge and to move public opinion in ways that both the United States and Britain want because of the deficit. Is that indeed a problem for you?
I do not think that public opinion would quite put it that way. I think that where we do a great deal of discussion about politics there is discussion about really what is almost a triple deficit: a comparatively large budget deficit in the United States in proportion to your saving; an enormous trade [end p2] deficit; and now it looks as if you have got a capital deficit. Any country would be worried about that, because it cannot go on that way without having enormous consequences for the rest of the world, and if it does that, then it will rebound again on consequences for America.
But we do discuss these things together to see what can be done about them and my reading of the American Administration is that action is being taken to reduce the deficit and of course Congress will have its own views.
Bob Shieffer, CBS
You met with Mr. Gorbachev. You will now be meeting with President Reagan to talk about the coming arms talks between the United States and the Soviet Union. How do you feel about that? Do you think there is a real chance that there can be some kind of arms control agreement?
I am optimistic about it, but I do not expect too much too soon. Incidentally, you almost put Mr. Gorbachev and President Reagan in the same breath. I see President Reagan quite often because we work together. The United States consults with its close allies and we are very grateful for it. I do not see Mr. Gorbachev or people from the Soviet Union very often, but I took the view that we simply must talk together, otherwise we do not get a greater understanding of how they think and how they approach things, and if you do not know how they think and the context in which they think, you can make errors of judgment and [end p3] it was a very successful meeting, because he talked quite openly and debated very easily, so I felt that we were getting that kind of understanding which is going to be necessary if we are going to get the results we want from those arms talks in Geneva. You have got not only to get into a technological discussion; you have got to have some idea of the problems and the way in which they approach things, and some underlying understanding and confidence that you can get somewhere and that both sides want to.
Bob Shieffer, CBS
Well let me ask you this. I take it that Mr. Gorbachev is, from what we know about the Soviet Union, more or less the number two man there. Did you come away from those meetings with a feeling that he wants an arms control agreement? That the Soviet Union sees the necessity for an agreement?
I believe the Soviet Union does and I think that there are two reasons: first, because the weapons we deal with get more and more horrendous. That of itself makes any nation think. And, of course, we have a generation in power there, as here, which still remembers the last war and would never wish to have another conflict if it can possibly be avoided.
And, secondly, I think that the expense of maintaining the weaponry that we have now is getting such a strain on economies that everyone wishes to have mutual security, and we can never let that go, but at a lower cost and a lower level of weapons. That is in our mutual interest. No conflict in our mutual interest. A lower cost in our mutual interest. And it [end p4] is that which gives the talks the prospect of success.
Prime Minister Margaret Thatcher with Bob Shieffer.