Archive (Thatcher MSS)
Personal and party papers, Cambridge

Economy: Reagan letter to MT (concern at US budget deficit) [fell by one third between 1986 and 1987;"my views on the potential harm of increased taxes have not changed"] [declassified 2007]

Document type: Declassified documents
Venue: White House
Source: Thatcher MSS
Editorial comments:

Released by the Cabinet Office FOI 246199; a copy is in the Thatcher MSS. Margaret Thatcher’s original letter has also been released and can be read on this site.

Importance ranking: Key
Word count: 149 words
Themes: MT contacts with Ronald Reagan, Conservatism, Leadership, Foreign policy (USA), Monetary policy, Public spending & borrowing, Taxation, Economic policy - theory and process

Dear Margaret,

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.