Stockman Says Media Is Japan Bashing

Backlash against Japanese direct investment in the United States is a “media preoccupation of the week” and will have no lasting political effects, former White House budget director David Stockman said today.

Stockman is now a partner in a private investment bank, The Blackstone Group, which helped engineer the recent Sony Corp. takeover of Columbia Pictures Entertainment Inc.

In a speech to a reporters’ group here he predicted that a decline in U.S. reliance on foreign capital and a lack of grass-roots political concern over Japanese merger and acquisition moves will gradually take the issue off the public agenda.

Stockman said most Japanese direct investment does not have enough impact on voter sentiment to have any real effect on Congress, and that as Japanese spending is diffused through the economy, reaction will become increasingly favorable.

“The negatives of direct investment are not as obvious as they are in trade,” he said.

“No one is going to throw out a senator because he didn’t take a forthright stand against Japanese direct investment.”

Stockman also predicted that the dramatic easing of East-West tensions will result in U.S. defense spending being cut from about 7% of gross national product now to no more than 4% in 1993.

That could relieve the current account deficit and cut the U.S. need for foreign capital by about $150 billion a year, he said. “The defense cuts will gather enormous momentum and will make the budget deficit manageable,” he said.

He said the current concern over Japanese direct investment was almost entirely “headline-activated” during a period when there was a vacuum of other things for the media to be preoccupied with.

“Eastern Europe will now displace other issues on the front burner of attention,” he said.

He said the level of Japanese direct investment in the United States is too minimal to be considered an invasion, and is not likely to grow significantly.