Historically the American people have supported by voluntary contributions more artistic and cultural
activities than all the other countries in the world put together. I wholeheartedly support this approach
and believe that Americans will continue their generosity. Therefore, I am proposing a savings of $85
million in the Federal subsidies now going to the arts and humanities.
There are a number of subsidies to business and industry that I believe are unnecessary. Not because the
activities being subsidized aren’t of value but because the marketplace contains incentives enough to
warrant continuing these activities without a government subsidy. One such subsidy is the Department of
Energy’s synthetic fuels program. We will continue support of research leading to development of new technologies
and more independence from foreign oil, but we can save at least $3.2 billion by leaving to private industry
the building of plants to make liquid or gas fuels from coal.
We are asking that another major industry, business subsidy I should say, the Export-Import Bank loan
authority, be reduced by one-third in 1982. We are doing this because the primary beneficiaries of taxpayer
funds in this case are the exporting companies themselves—most of them profitable corporations.
High Cost of Government Borrowing
This brings me to a number of other lending programs in which Government makes low-interest loans. Some
of them at an interest rate as low as 2 percent. What has not been very well understood is that the Treasury
Department has no money of its own. It has to go into the private capital market and borrow the money.
So in this time of excessive interest rates the government finds itself borrowing at an interest rate
several times as high as the interest rate it gets back from those it lends the money to. This difference,
of course, is paid by your constituents, the taxpayers. They get hit again if they try to borrow because
Government borrowing contributes to raising all interest rates.
By terminating the Economic Development Administration we can save hundreds of millions of dollars in
1982 and billions more over the next few years. There is a lack of consistent and convincing evidence
that EDA and its Regional Commissions have been effective in creating new jobs. They have been effective
in creating an array of planners, grantsmen and professional middlemen. We believe we can do better just
by the expansion of the economy and the job creation which will come from our economic program.
Welfare and Unemployment Programs
The Food Stamp program will be restored to its original purpose, to assist those without resources to
purchase sufficient nutritional food. We will, however, save $1.8 billion in fiscal year 1982 by removing
from eligibility those who are not in real need or who are abusing the program.
Even with this reduction, the program will be budgeted for more than $10 billion.
We will tighten welfare and give more attention to outside sources of income when determining the amount
of welfare an individual is allowed. This plus strong and effective work requirements will save $520 million
in the next year.
I stated a moment ago our intention to keep the school breakfast and lunch programs for those in true
need. But by cutting back on meals for children of families who can afford to pay, the savings will be
$1.6 billion in fiscal year 1982.
Let me just touch on a few other areas which are typical of the kinds of reductions we have included in
this economic package. The Trade Adjustment Assistance program provides benefits for workers who are unemployed
when foreign imports reduce the market for various American products causing shutdown of plants and layoff
of workers. The purpose is to help these workers find jobs in growing sectors of our economy. There is
nothing wrong with that. But because these benefits are paid out on top of normal unemployment benefits,
we wind up paying greater benefits to those who lose their jobs because of foreign competition than we
do to their friends and neighbors who are laid off due to domestic competition. Anyone must agree that
this is unfair. Putting these two programs on the same footing will save $1.15 billion in just 1 year.
Federal Regulation Burden
Earlier I made mention of changing categorical grants to States and local governments into block grants.
We know, of course, that the categorical grant programs burden local and State governments with a mass
of Federal regulations and Federal paperwork.
Ineffective targeting, wasteful administrative overhead—all can be eliminated by shifting the resources
and decision-making authority to local and State government. This will also consolidate programs which
are scattered throughout the Federal bureaucracy, bringing government closer to the people and saving
$23.9 billion over the next 5 years.
Our program for economic renewal deals with a number of programs which at present are not cost-effective.
An example is Medicaid. Right now Washington provides the States with unlimited matching payments for
their expenditures. At the same time we here in Washington pretty much dictate how the States are going
to manage these programs. We want to put a cap on how much the Federal Government will contribute but
at the same time allow the States much more flexibility in managing and structuring the programs. I know
from our experience in California that such flexibility could have led to far more cost-effective reforms.
This will bring a savings of $1 billion next year.
Space and Postal Agencies
The space program has been and is important to America and we plan to continue it. We believe, however,
that a reordering of priorities to focus on the most important and cost-effective NASA programs can result
in a savings of a quarter of a billion dollars.
Coming down from space to the mailbox—the Postal Service has been consistently unable to live within its
operating budget. It is still dependent on large Federal subsidies. We propose reducing those subsidies
by $632 million in 1982 to press the Postal Service into becoming more effective. In subsequent years,
the savings will continue to add up.
The Economic Regulatory Administration in the Department of Energy has programs to force companies to
convert to specific fuels. It has the authority to administer a gas rationing plan, and prior to decontrol
it ran the oil price control program. With these and other regulations gone we can save several hundreds
of millions of dollars over the next few years.
Defense Spending
I’m sure there is one department you’ve been waiting for me to mention, the Department of Defense. It
is the only department in our entire program that will actually be increased over the present budgeted
figure.
But even here there was no exemption. The Department of Defense came up with a number of cuts which reduced
the budget increase needed to restore our military balance. These measures will save $2.9 billion in 1982
outlays and by 1986 a total of $28.2 billion will have been saved. Perhaps I should say will have been
made available for the necessary things that we must do. The aim will be to provide the most effective
defense for the lowest possible cost.
I believe that my duty as President requires that I recommend increases in defense spending over the coming
years.
I know that you are aware but I think it bears saying again that since 1970, the Soviet Union has invested
$300 billion more in its military forces than we have. As a result of its massive military buildup, the
Soviets have made a significant numerical advantage in strategic nuclear delivery systems, tactical aircraft,
submarines, artillery and antiaircraft defense. To allow this imbalance to continue is a threat to our
national security. |
