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Mr. Speaker, Mr. President, distinguished Members of Congress, honored guests, and fellow citizens.
Only a month ago, I was your guest in this historic building and I pledged to you my cooperation in doing
what is right for this Nation that we all love so much.
I am here tonight to reaffirm that pledge and to ask that we share in restoring the promise that is offered
to every citizen by this, the last, best hope of man on earth.
All of us are aware of the punishing inflation which has, for the first time in some 60 years, held to
double digit figures for 2 years in a row. Interest rates have reached absurd levels of more than 20 percent
and over 15 percent for those who would borrow to buy a home. All across this land one can see newly built
homes standing vacant, unsold because of mortgage interest rates.
Almost eight million Americans are out of work. These are people who want to be productive. But as the
months go by, despair dominates their lives. The threats of layoffs and unemployment hang over other millions,
and all who work are frustrated by their inability to keep up with inflation.
One worker in a Midwest city put it to me this way: He said "I’m bringing home more dollars than
I thought I ever believed I could possibly earn, but I seem to be getting worse off." And he is.
Not only have hourly earnings of the American worker, after adjusting for inflation, declined 5 percent
over the past 5 years, but in these 5 years, Federal personal taxes for the average family increased 67
percent.
We can no longer procrastinate and hope that things will get better. They will not. Unless we act forcefully
and now the economy will get worse.
National Debt
Can we who man the ship of state deny it is somewhat out of control? Our national debt is approaching
$1 trillion. A few weeks ago I called such a figure—a trillion dollars—incomprehensible. I’ve been trying
ever since to think of a way to illustrate how big a trillion is. The best I could come up with is that
if you had a stack of $1,000 bills in your hand only four inches high you would be a millionaire. A trillion
dollars would be a stack of $1,000 bills 67 miles high.
The interest on the public debt this year we know will be over $90 billion. And unless we change the proposed
spending for the fiscal year beginning October 1, we’ll add another almost $80 billion to the debt.
Adding to our troubles is a mass of regulations imposed on the shopkeeper, the farmer, the craftsman,
professionals and major industry that is estimated to add $100 billion to the price of things we buy and
it reduces our ability to produce. The rate of increase in American productivity, once one of the highest
in the world, is among the lowest of all major industrial nations. Indeed, it has actually declined in
the last 3 years.
I have painted a pretty grim picture but I think that I have painted it accurately. It is within our power
to change this picture and we can act with hope. There is nothing wrong with our internal strengths. There
has been no breakdown in the human, technological, and natural resources upon which the economy is built.
Four-point Proposal
Based on this confidence in a system which has never failed us—but which we have failed through a lack
of confidence, and sometimes through a belief that we could fine tune the economy and get a tune to our
liking—I am proposing a comprehensive four-point program. Let me outline in detail some of the principal
parts of this program. You will each be provided with a completely detailed copy of the entire program.
This plan is aimed at reducing the growth in Government spending and taxing, reforming and eliminating
regulations which are unnecessary and unproductive or counterproductive, and encouraging a consistent
monetary policy aimed at maintaining the value of the currency.
If enacted in full, this program can help America create 13 million new jobs, nearly 3 million more than
we would have without these measures. It will also help us gain control of inflation.
Tax Increase Rate Reduction
It is important to note that we are only reducing the rate of increase in taxing and spending. We are
not attempting to cut either spending or taxing levels below that which we presently have. This plan will
get our economy moving again, increase productivity growth, and thus create the jobs our people must have.
And I am asking that you join me in reducing direct Federal spending by $41.4 billion in fiscal year 1982,
along with another $7.7 billion user fees and off-budget savings for a total savings of $49.1 billion.
This will still allow an increase of $40.8 billion over 1981 spending.
Full Funding for Truly Needy
I know that exaggerated and inaccurate stories about these cuts have disturbed many people, particularly
those dependent on grant and benefit programs for their basic needs. Some of you have heard from constituents,
I know, afraid that Social Security checks, for example, were going to be taken away from them. I regret
the fear that these unfounded stories have caused and I welcome this opportunity to set things straight.
We will continue to fulfill the obligations that spring from our national conscience. Those who through
no fault of their own must depend on the rest of us, the poverty stricken, the disabled, the elderly,
all those with true need, can rest assured that the social safety net of programs they depend on are exempt
from any cuts.
The full retirement benefits of the more than 31 million Social Security recipients will be continued
along with an annual cost of living increase. Medicare will not be cut, nor will supplemental income for
the blind, aged, and disabled, and funding will continue for veterans’ pensions.
School breakfasts and lunches for the children of low income families will continue, as will nutrition
and other special services for the aging. There will be no cut in Project Head Start or summer youth jobs.
All in all, nearly $216 billion worth of programs providing help for tens of millions of Americans— will
be fully funded. But government will not continue to subsidize individuals or particular business interests
where real need cannot be demonstrated.
And while we will reduce some subsidies to regional and local governments, we will at the same time convert
a number of categorical grant programs into block grants to reduce wasteful administrative overhead
and to give local government entities and States more flexibility and control. We call for an end to duplication
in Federal programs and reform of those which are not cost effective.
Restore Programs to States and Private Sector
Already, some have protested that there must be no reduction in aid to schools. Let me point out that
Federal aid to education amounts to only eight percent of the total educational funding. For this eight
percent the Federal Government has insisted on a tremendously disproportionate share of control over our
schools. Whatever reductions we’ve proposed in that eight percent will amount to very little in the total
cost of education. They will, however, restore more authority to States and local school districts.
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