Thank you for your kind letter of October 22 concerning the importance of a healthy U.S. economy to continued worldwide economic growth.
As we discussed in Venice last June, I believe that reducing the U.S. budget deficit is vital to restoring international economic equilibrium. We have made progress. The budget deficit for fiscal year 1987, which ended on September 30, was $73 billion below the 1986 deficit - a one third reduction.
Recent events in financial markets have high-lighted the importance of prompt action on the 1988 budget to ensure that this trend continues. That is why I have called for urgent meetings with Congressional leaders and offered to begin with no preconditions.
You correctly note that my views on the potential harm of increased taxes have not changed. However, as always your advice is valued and will be carefully considered.