More than crocuses are budding in Washington these days. Hope, that missing ingredient in a capital so long besieged by problems, also seems to be blossoming everywhere.
The recession is over, the policy makers proclaim. The leading indicators are soaring, the statisticians tell us. The country is on the mend, the president proudly reports. At long last the boom commences, the business leaders predict.
Let us hope so, but let us also not overlook serious questions still before the country. Two, in particular, stand out. Is the recovery real? If so, what are we going to make of it?
In the advent of spring a year ago, when many political and business leaders were predicting a great boom was about to begin, the respected Wall Street economist and analyst Sam Nakagama correctly foresaw the continued decline in the economy. That isn't the only time subsequent events have proven the validity of Nakagama's economic forecasts. His track record thus makes him worth listening to, especially when it comes to examining a crucial fact of late 20th Century life: oil.
Lately, Nakagama has been cautioning his clients about indulging in premature optimism over hopes for an imminent powerful economic recovery. He advises them to watch the developing oil situation carefully. His question is whether the current break in oil prices, threatening to shatter the Organization of Petroleum Exporting Countries' cartel, will proceed gradually in a rational manner or whether it will lead to a destructive price war with fateful consequences for the world economic order.
The OPEC deliberations take place against a backdrop of an irrational Mideast war pitting two mortal foes, Iran and Iraq, in a battle to the death marked by religious fervor.
Nakagama's concern is that the bitterness and zealousness of the Iran-Iraq conflict make it unlikely for them to agree to a rational oil price and production agreement sought by OPEC leaders. Thus, if an oil price war erupts under such circumstances, it could lead to a sharp plunge in oil prices. That could deepen the worldwide economic slump and possibly usher in a real depression.
"There is a general tendency among economists, bankers and high officials to recoil from the idea that oil prices might plunge below the $26-$28 a barrel range," he writes. "The prospect is simply too horrifying. Yet, such an outcome seems more logical to us than the idea that the Iranians and the Gulf Arabs will amicably adhere to a production quota agreement.
"It may be recalled that oil prices climbed to the present lofty levels in two steep jumps, once in 1973-74 as a result of the Yom Kippur War and the accompanying oil embargo and again in 1978-79 as a result of the Khomeini revolution in Iran."
He believes that unless an oil import tax is imposed to protect domestic energy production and conservation, "a plunge in oil prices would deal another stunning blow to the economy and the banking system."
And he goes on to say, employing rather apocalyptic language:
"It may be argued that last year's moderate decline in oil prices was a key factor in the deepening of the global economic slump. Given that earlier experience, we believe there is good reason to fear far-reaching economic and financial reprecussions from a steep plunge in oil prices.
"If a price war breaks out, a precipitous drop to the $15-$20 range is quite conceivable. In that event, the economic and financial shocks would register very high on the Richter scale . . . . An oil price collapse would create an emergency situation. The primary danger is that a crash in oil prices would lead to a crash of the oil-drilling and service industries and to the crash of domestic and international lending."
He says, somberly: " . . . An oil-price war could lead to the greatest crisis for the world economy since the 1929-34 period."
Nakagama isn't predicting such a calamity, as he stressed to this reporter recently. Nor is he trying to be an alarmist, and certainly other analysts read the situation optimistically. But his words are a sobering reminder that, euphoria notwithstanding, economic uncertainty still exists.
But assume, as everyone hopes, the fears are unfounded, the price war doesn't occur, the boom truly begins. What then? What steps can we expect from the president and his administration?
If the hoped-for recovery takes place, Ronald Reagan will be presented with a historic opportunity comparable in some respects to that facing Franklin D. Roosevelt 50 years ago this weekend as the New Deal began to reshape American life. The question is how he will respond to it.
He can seize the moment aggressively, with a bold series of actions designed to lead the nation into a different, and better, future. A key ingredient would be how he envisions the role of the federal government. That is, whether he sees the federal government, and his presidency, as an active or passive agent in the process of change.
Through a bipartisan approach, and an appeal to the widest segment of American society, Reagan could set in motion the forging of a new, more realistic partnership between the federal government, industry and labor and our academic institutions. Together, in comprehensive fashion, they could begin planning for the research and development and retraining programs necessary to build a more productive and competitive society.
That would require Reagan to put aside his notions of government as something to be dismantled and discarded.
His other course would be to continue operating essentially as he has for two years--passively, if not negatively, in the free-booting, laissez faire, let-the-market-forces-work manner that has characterized his presidency to date.
Either way, the stakes are profound. They indicate that forces far out of the ordinary are stirring as spring comes to Washington this year.
NOTE: In a recent column discussing concerns of career Voice of America employes that their agency might be politicized by ideologues, I promised to report back on conditions as they develop there. Herewith, an update.
At the recent Conservative Political Action Committee conference here, VOA's new director, Kenneth Y. Tomlinson, was asked what he thought about the following observation said to have been made in the conservative journal, Human Events: "The Voice of America had some liberals in it, and it needed some thorough housecleaning." Tomlinson replied:
"Well, I have to say, quite candidly, that my job under the charter which governs what the Voice of America must be, is not to run purges, is not to turn the Voice into a voice of conservatism representing what my point of view might be. My job is to place balance on the Voice of America. My job is to place creativity on the Voice of America. My job is to ensure that the Voice of America reflects the voices of America, including the voices you've heard today . . . . "
All of which ought to be reassuring to VOA employes.