WELL, HE DID IT. President Reagan repeatedly declared at his press conference, without backsliding or evasion, that budget negotiations with Congress are on. Everything but Social Security, he said, is open to discussion. That includes both revenues and defense spending. Under the pressures generated by the stock market crash, the president has moved to resolve the impasse over the budget -- the most immediately useful thing that he can do. The Democratic leadership in Congress has responded with unusual dignity, and let pass the president's angry expostulations about alleged congressional overspending.
Some good luck turned up, at last, at the end of the week with the publication of the economic numbers. They all reinforced the president's position that the real economy of production and jobs is as strong as ever, and that the collapse of the past week is -- so far -- limited exclusively to the stock market. It's his job, as well as many other people's, to keep it that way.
To do that, they might begin by taking a careful second look at Friday's numbers. They show what's been going well, but also what's been going wrong. While growth is up, it's being driven mainly by personal consumption. Business investment rose last summer, but as a share of GNP it's still in the same range as in the Carter years, when Mr. Reagan, then a candidate, rightly argued that it was far too low for the country's health. The personal savings rate is currently less than half as high as in the Carter years.
The inflation in consumer prices last month was gratifyingly low, but since the beginning of the year it has been running at an annual rate of more than 5 percent -- compared with 1.1 percent last year. The administration probably contributed to the past week's panic by its repeated references to the inflation figures as moderate and tolerable. For investors they are ominously high, and those murmurs of official satisfaction gave substance to the fears that the administration hoped to coast through the election campaign on rising inflation.
That's why it is not going to be enough simply to get a budget enacted -- particularly if it's a budget that, after the past year's dramatic drop in the deficit, allows it to begin drifting upward again. That will happen if the budgeteers do no more than meet the Gramm-Rudman-Hollings requirement for a $23 billion reduction in the deficit. A target of $35 billion would be safer.
The week ended better than it began. You could hardly say that markets are calm, but at least they have been temporarily stabilized. The crash was a warning. To prevent a relapse will take more than a token tax increase. It will require changes in patterns of high consumption and higher borrowing that have gone beyond economic policy to become national habits.