May 2, 1988
Thank you very much, and thank you, Ed Donley. And a special thank you to Vice Chairman and Chairman-to-be Bill Kanaga and to President Dick Lesher. And to Chairman Ollie Delchamps -- and I hope he's listening in -- let me say, get well soon, Ollie. We all want to see you back in the saddle and riding tall. And a thank you to my favorite rock group. [Laughter]
You know, looking around at you who've been both generals and soldiers in the crusade we brought to Washington years ago, it reminds me of an old Hollywood story. I know you're shocked to hear that. [Laughter] Anyway, it was on the evening in 1939 when "Gone with the Wind'' premiered. And that first showing was in Atlanta, and Margaret Mitchell, the author of the book, sat next to Clark Gable. And it came to the famous scene in which Scarlett O'Hara is nursing what looks like a single wounded soldier, and the camera pulls back and reveals thousands of Confederate troops, many also injured. And as those thousands appeared on the screen, Gable heard a little gasp next to him. And Mitchell leaned over to him and whispered, "My Lord, Mr. Gable, if we'd had as many soldiers as that, we'd have won the war.'' [Laughter]
Well, looking at all of you, I know why we've won so much of our war these last few years. When the history of our time is recorded, I believe that you, the members of the United States Chamber of Commerce, will occupy a place that few can match. I've heard talk over the years about a Reagan revolution, but in many ways I believe it would be better to call what we've done your revolution. You gave us your drive. You gave us your support. And let me say to two personal heroes of mine, Dick Lesher and Richard Rahn [vice president of the chamber] -- and I know everyone here will second this -- for 8 years here in Washington you have given us energy, wisdom, intellect, and leadership, and that's why we've come so far. The victory ribbons on your regimental colors read like a list of the great legislative battles over economic policy in this decade: Gramm-Latta, Kemp-Roth, Gramm-Rudman-Hollings. And let me interject my thanks to all of you for also standing with us in a battle we lost: the battle to sustain my veto of the Grove City legislation.
But to return to economics, today perhaps we're a little blase about our incredible accomplishments, but who in 1979 would have thought it possible that in less than a decade the top marginal tax rate on personal income would drop from 70 percent to less than half of that, that the era of high inflation be brought to an end, and that without reigniting the inflation we could light the torch of economic growth and see its lustrous beacon shine for longer than has ever been recorded in peacetime.
Eight years ago, in the now-distant epoch of double-digit inflation, 20-percent interest rates, and official handwringing about the limits of growth and the fatigue of our national economic mettle, we said -- you and I -- that the way to rebuild America was to restore faith in the greatest constructive force of all: the American spirit of enterprise. And to those who called for more government planning, more regulations, and even more taxes, we said that, in a nation, as in a man or a woman, economic success is not a matter of bricks, mortar, balance sheets, or subsidies. No, if a national economy is to soar, first the inventive, enterprising, pioneering, dreaming entrepreneurial spirit of the Nation's people must soar. And that meant not more regulations, but fewer; not more government decoration [direction], but less; and, yes, not higher taxes, but lower taxes.
You know, sometimes I think that government tries to be a little like the politician of the opposite party who was seeking the oratorical heights, and he said, "If they don't stop shearing the sheep that lay the golden egg, they'll pump it dry.'' [Laughter]
Well, I can't help remembering the fear and trembling and utter disbelief that greeted the arrival of our creed here in Washington. Sometimes it reminded me of a scene of a horrified crowd in some old science fiction film -- "Attack of the Killer Tomatoes,'' maybe. [Laughter] Well, it occurs to me as I approach the end of my Presidency that the unparalleled resistance that greeted our policies and that we still face, despite our unparalleled success, was born of more than an ordinary political clash. After all, the struggle between those wanting more and less government spending was not due to Washington -- new to Washington, I should say. Neither was the struggle between those who wanted higher and lower taxes, or less defense versus a strong defense. No, our arrival in Washington represented not another skirmish among partisans but a collision of constellations. As George Gilder has written, in his words: "The central conflict in the economy pits the forces of statist bureaucracy against entrepreneurs.'' And he adds that on one side are those who believe the economy, the Nation, and the world require, as he puts it, "control by large corporations and governments.'' On the other are those who believe our future depends on "small companies, entrepreneurs, inventors, and creators.'' And that's his list, not mine.
Yet before we came to Washington, the powers that be saw the economy as a kind of a repertory theater: a few well-known actors -- business, labor, government -- performing a few well-known plays. Well, we said this is not the way the world works; that there's a great surging, yearning, creative energy in this land of questing freedom; and that because of it, America is continually being born anew. New companies, new technologies bloom and have their day. Some grow; some fade. Some businesses become titanic overnight; others remain tiny. But just because this process of conception, birth, and growth is so fertile, so diverse, and so dynamic, government cannot regulate it, subsidize it, or control it. Government had just better get out of the way and let it happen.
You know, I sympathize with the liberals. When we first started talking about the economy in these terms, they predicted disaster. We predicted growth. And this year more people have been at work than ever before in the history of our country. A greater proportion of the work force has been employed than ever before. And after a decade of a falling roller coaster, real family income has been rising steadily ever since our expansion began more than 5 years ago. Exports are high and climbing. And in industry after industry, American manufacturing is the world leader. Unemployment is the lowest in almost 14 years, and month after month brings new word of hundreds of thousands of new American jobs. And over 90 percent of these new jobs are from businesses that are 5 years old or less; that is, entrepreneurial businesses, just the kind we've been talking about and the liberals dismissed.
You've got to hand it to our critics, though. With all that good news mounting, they didn't give up. When the stock market fell last October, they could hardly wait to dance on the grave. And when I said the economy was strong, they said I was "irrelevant.'' Well, the first quarter economic figures came out last week. You've seen them. Gross national product, up; domestic demand, up; personal consumption, up; durable goods spending, up; spending on services, up; business, fixed investment, up at a 21-percent annual rate; wages and salaries, up; exports, up. My question is: Who's irrelevant now?
It used to be, if you were a liberal and things just weren't going your way here, you could find friends abroad. Well, even that's getting harder. India, France, New Zealand, Australia, and now Great Britain have followed this new path and have adopted the recipe for what some call the American miracle. Yes, they've begun to cut tax rates, privatize state-owned industry, and reduce regulations. France even presented the Legion of Honor to a supply-side alumnus of our administration, saying it was "for the renewal of economic science and policy after a half century of state intervention.''
Well, yes, it's hard being a liberal today. It's a little like the story of when Mark Twain, at the time a young and relatively unknown writer, first met Ulysses Grant. General Grant was always a man of few words, and Twain was flustered and couldn't think of a thing to say. And after a long silence between them, Twain stammered, "General, I'm embarrassed. Are you?'' Well, the liberals should be embarrassed.
To an economy that is strong and hearty, they're trying to feed a junk-food diet filled with empty calories. Some of the emptiest are in a box marked the "Trade bill.'' The plant-closing restriction is the bill's worst provision, although not the only bad one. Mandatory plant-closing notification has no place in Federal law. It's a subject for labor-management negotiations, not government regulation. And before they start to argue with me on that, let me remind them, I was elected president in my union 6 times. And by the way, I'm calling it plant-closing notification because that's what it's called in the press. But it covers wholesalers, retailers, services -- every sector. And it applies to layoffs as well as closings.
You may have seen articles lately saying, "Well, this restriction is not all that bad.'' Well, yes it is. It's a shackle on smaller companies that want to take the leap and become large -- one more risk, and a big one, if they cross the threshold and fall under the regulation, an important reason to say, let's hold off growing that big for awhile. And it's a ticking bomb in the back seat of any medium-size or larger company that is stripping down and overhauling so it can keep on the track with foreign racers.
The bill's elaborate exemptions that tell who must give notice and who doesn't have to will detonate lawsuits sending managers to the courtroom just when they're most needed in the factory pulling their weight. Whenever the choice is a close call about whether a company is so distressed that it doesn't have to give notice, legalities will swamp the crucial economics of holding customer loyalty and maintaining creditor confidence -- and, so, of saving American jobs.
Well, those who are for the provision insist that it won't hurt us because, after all, many European countries have similar restrictions themselves. Yep, and that's among the reasons for Europe's poor job performance over the last 6 years. If we had done as poorly, our unemployment rate would be up like theirs, not down from 10.8 percent to 5 1/2 percent. What would organized labor say then? Anyone who would copy Europe in this way is no friend to American workers. For America, plant-closing restrictions are like playing Russian roulette with a machine gun -- a sure loser. I've said it loud and clear again and again: I want to sign the right trade legislation this year. For example, greater protection for intellectual property and greater negotiating authority in the current round of international trade negotiations are good ideas, and they're in the bill, but they don't make up for so much else. In the form it was passed, I will veto the trade bill.
The future or the past, that's what's at stake in the trade bill, and that's what's been at stake in every battle we've fought together these last 8 years. In essence, our opponents want to move the United States toward what Latin American economists like Hernando de Soto have called a mercantilist system. As Peruvian writer Mario Vargas Llosa has described it, this means, in his words, "a bureaucratized, regulating state that puts the principle of redistribution of wealth over creation of wealth.'' And as Llosa concludes, redistribution has "meant the concessions of privileges and monopolies to small private elites that depend on the state and on which it, in turn, is dependent.''
Well, making America's economy more like that may not seem smart. Well, for those who look at the transformation of our industrial base with trepidation, it offers great comfort. Our opponents want to seize the seasons and stop time from flowing by. They look to the future with fear. They fear new technologies, new businesses, new international competition. We look to the future with hope and optimism. And why shouldn't we? We've made a long journey and, despite all the predictions of disaster, a good one. We aren't at the end yet. Of course, in the years ahead, as we work to reduce further the disincentives in the tax code, we should cut the capital gains tax. When you tax something, you get less of it. The capital gains tax is a tax on innovation, and we need more innovation, not less.
We also must get control of Federal spending, once and for all. Congress has had control of the budget process for 14 years and made a mess of it. One thousand page continuing resolutions you can hardly lift -- forget about vetoing by the line, I'm ready to veto by the pound. [Laughter] But it's time to strengthen the President's hand in the budget process. It's too late for me to have the benefit of this, but it's time to give the Presidency what 43 Governors have, what I had as Governor of California and used 943 times without getting overridden once -- a line-item veto. We need a 2-year budget cycle and more privatization. Last year Congress cut the Coast Guard and gave the money to Amtrak. I'd rather stop all subsidies to Amtrak and give those dollars to the Coast Guard to fight drugs. And most important, we need a no-fault insurance policy for taxpayers -- insurance against reckless spending -- a balanced budget amendment to the Constitution.
Now, this is just a short distance on the path of our unfinished journey. We're like the pioneers who settled this great land, who struggled across the prairie, who braved the mountain passes and deserts, who conquered a vast frontier. It is love and faith that drive us on -- love of the liberty and opportunity that America has offered so many for so long; faith that we, with our strength and our wit, can, like the pioneers and the patriots before us, help build, preserve, and perpetuate that heritage. It is a great gift God has given each of us -- making us Americans. Who knows why some are so blessed. It's a mystery we cannot fathom but can only adore and be thankful for.
In these last 8 years you've shown your thanks by helping to rekindle America's fire of opportunity and optimism, by helping to ensure that it would burn for the generation to come, by feeding the flame that will guide our journey into the future. Yet the journey is not over, and without you, America could yet turn back. So many hopes rest with you -- so many dreams. And this is my appeal to you, my old comrades in arms, on this, our last gathering of my Presidency: Don't let that fire dim! Keep America on the path to the future. Do this not for me but for this land we love and cherish so well. Thank you, and God bless you all.
Note: The President spoke at 11:02 a.m. at DAR Constitution Hall. He was introduced by Edward Donley, former chairman of the U.S. Chamber of Commerce.