Stocks closed higher Friday after President Reagan and congressional leaders announced their $30.2-billion deficit-reduction compromise for this fiscal year. But the Dow Jones index had fallen 43.77 points Thursday in exasperation with Washington's foot-dragging. Net loss for the week: 25.53 points.
That sums up the dramatic impact of the agreement to lop $76 billion from the deficit over the next two years, a deal that will take considerable head-cracking by the President and Democratic leaders to muscle through the full Congress. But the pact was better than nothing or almost nothing--almost nothing in this case being $23 billion in automatic cuts under the Gramm-Rudman law.
In describing the compromise, the President engaged in both overstatement and understatement when he said, first, that the proposal sends a strong signal to the markets while, secondly, it probably is not the best deal that could be made.
Reagan and Wall Street clearly were not on the same wavelength. New York financial wizards were condemning Washington in familiar terms--harsh and uninformed--and sneering about government's inability to rearrange the deck chairs on the Titanic. The President suggested that Wall Street was more interested in blaming Washington than mucking out its own stable.