September 3, 1981

The President. Reverend clergy, distinguished gentlemen here on the dais with me, President Konyha and all of you:

It's an honor for me to be here with you today and even more of an honor to be asked to serve with your president, Bill Konyha, as the cochairman of your Centennial Observance Committee.

This union has a proud history. Just 100 years ago, having only a few thousand members, you opened your first convention in Chicago. Now, it's not true that I attended that convention, also. [Laughter] Since then, you've grown to more than 800,000 members. You've served as a bulwark in America's free union movement.

Over the years, this union was responsible for improving the well-being of its members as they labored building this Nation. And through the collective bargaining system, you improved images -- or wages, I should say -- benefits, and working conditions. More than that, the United Brotherhood of Carpenters and Joiners has shown time and time again that it supports our free market system and the fundamental tenets of American democracy. It was this belief in representative government and free enterprise that gave the working people of this country unequaled freedom and prosperity.

We forget this at our peril. In these recent years when advocates of collectivism and government intervention have held sway, we should recall the wisdom of that greatest of labor statesmen, the founder of the American labor movement, Samuel Gompers. He said, ``Doing for people what they can and ought to do for themselves is a dangerous experiment. In the last analysis, the welfare of the workers depends on their own initiative. Whatever is done under the guise of philanthropy or social morality which in any way lessens initiative is the greatest crime that can be committed against the toilers. Let social busybodies and professional `public morals experts' in their fads reflect upon the perils they rashly invite under this pretense of social welfare.''

Samuel Gompers believed with all his heart that if a worker was properly and fairly paid for his work, he could provide for himself without having to hold out this hand to a caseworker for government-provided benefits. He was a champion of collective bargaining.

Collective bargaining in the years since has played a major role in America's economic miracle. Unions represent some of the freest institutions in this land. There are few finer examples of participatory democracy to be found anywhere. Too often, discussion about the labor movement concentrates on disputes, corruption, and strikes. But while these things are headlines, there are thousands of good agreements reached and put into practice every year without a hitch.

Part of successful collective bargaining is honest, straightforward exchanges. A number of Presidents have observed that of all the meetings in the Oval Office, the most direct, productive, and useful have been with the leaders of organized labor. Straight talk has always been a feature of these exchanges, and that's a tradition I want to continue here today. You and I may not always agree, as President Konyha said, on everything, but we should always remember how much we have in common.

I can guarantee you today that this administration will not fight inflation by attacking the sacred right of American workers to negotiate their wages. We propose to control government, not people. Now, today I want to express again my belief in our American system of collective bargaining and pledge that there will always be an open door to you in this administration.

During my 8 years as Governor of California, I was proud of my relationship with organized labor. Yes, we had disagreements over such things as welfare reform and budget allocation, but we followed the advice of a one-time mayor of Boston who said, ``We can disagree without being disagreeable.''

Some people would have forgotten -- except your president very graciously remined you -- that I am the first man to attain this high office who was formerly president of an AF of L-CIO union.

Now, I know that there are some who read of the pay scale of top stars and wonder why a bunch of actors need a union. Well, it's true that a handful of superstars have an individual bargaining power based on their box office rating. But what's little known is the fact that taken as a whole, the membership of the Screen Actors Guild averages about the same annual income level as members of the craft unions. As for those in the high brackets, let it be understood that they have always used their star status and individual bargaining power to help their lower paid fellow actors in the Screen Actors Guild achieve gains at the collective bargaining table.

I participated as a negotiator at that table for some 20 years and as president led the Guild in its first major strike. We followed one rule in our demands. We asked ourselves a question about each thing that we demanded at the bargaining table: Is it fair to the other fellow, and is it fair to the customer, and is it good for our people? If we were satisfied on these three points, we fought our heads off, and we secured a fair pay scale, greatly improved working conditions and fringe benefits, including a pension and welfare plan for our members.

I remember one interunion squabble in which I faced your big Bill Hutcheson. [William L. Hutcheson, former general president of the United Brotherhood of Carpenters and Joiners.] It's kind of ironic to look back on that because Bill was a Republican then. As a matter of fact, he served on the National Republican Committee, and at that time I was a Democrat. [Laughter] Now, if there's one challenge that I have for organized labor today, it is that they, in the foosteps of Bill Hutcheson, recognize that organized labor should not become the handmaiden of any one political party.

Working people in America value family, work, and neighborhood. These are the things we have in common socially and politically. When it comes to the bottom line, all of us are striving for the same thing -- a strong and healthy America and a fair shake for working people. But we weren't getting a fair shake, any of us in these recent years when it appeared that we were making more money -- and we were with regard to the number of dollars -- but the value of those dollars was shrinking by one-third just between 1975 and 1980.

The same forces that chipped away at your purchasing power ravaged the American economy with a severity unseen since the Great Depression, with the worst inflation in 60 years, almost 8 million unemployed, and skyrocketing interest rates.

I've taken the election of 1980 to be a demand by the working people of America for a change in the policies that caused their adversity. From Inauguration Day on, nothing has been more important to this administration than restoring the prosperity and freedom that is every American's birthright.

Today it's appropriate for me to thank you and working men and women throughout this land for the support that you gave to the recent economic reform struggles in the Congress. It was phone calls and letters that Americans like you made that made our economic plan a bipartisan measure. One Democratic Governor recently explained: ``The old liberal approach that more money, a few Ph. D's, and a lot of new programs will cure what ails the nation is gone in our era.'' And he's right.

Now, one of my only regrets is that some in the labor movement oppose the recovery program because they may not fully understand what we are for, what we're trying to do, and that our program is designed to improve the well-being of all the people.

In his first inaugural address, Jefferson warned government not to ``take from the mouth of labor the bread it has earned.'' But what we experienced in the last decade was bloated government feasting at the expense of the people, growing beyond all reason, and taxing away the American way of life.

Over the last 20 years, playing ward politics on a national scale, the Congress enacted for one group or another ever-increased spending plans and entitlement programs. ``Entitlement programs'' means the redistribution of your earnings. In 1967, my first year as Governor of California, these open-ended programs siphoned $57 billion from the pockets of the American taxpayer. By the end of my first year as President, that $57 billion would have been $428 billion had we not passed the economic recovery program. Is this uncontrolled spending really in the interests of the American workers?

The Federal budget has almost tripled in the last 10 years. To some of those who have opposed our proposed budget reductions, let me point out that we haven't cut spending back to less in 1982 than it was in the year of 1981. We have reduced the increase in spending from 14 percent each year to 6\1/2\ percent. Now, this is hardly cruel and inhuman deprivation. We are not, as some have said, trying to turn back the clock. We are just trying to make the rate of increase in spending about half of what it has been.

Similarly, our tax program is aimed at helping everyone. I've told you how inflation reduced the value of your dollar by one-third during the last 5 years. Well, in those same 5 years, your taxes went up by two-thirds -- 67 percent. Even those with cost-of-living clauses in the contracts found the taxes rising faster than their wages. This is why inflation is a tax. As you earned more to keep pace with the cost of living, you moved up to a higher tax bracket. You had a tax increase just as surely as if the Congress had voted to increase the tax rate. Now, that's something our tax bill, through indexing, is going to fix. After the three annual tax cuts, the income tax brackets each year will be adjusted to compensate for inflation. This is an historic reform. For the first time, it takes from government the hidden profit that government makes from inflation.

The central part of our tax program, however, is, as you know, an across-the-board, 25-percent rate reduction for every American taxpayer over a 3-year period. Without that tax rate reduction, taxes would have gone up $91 1/2 billion in 1982 and $321 billion in the next 3 years. Now is this kind of confiscatory taxation really in the interest of the American workers?

Most of our critics didn't try to answer that question. Instead, appealing to greed and envy, they held that those paying more taxes would get a larger reduction. Well, you know, Teddy Roosevelt had something to say about a situation like this. ``We must,'' he said, ``decide that it is a great deal better that some people should prosper too much than no one should prosper enough.'' Now, of course, those having a larger tax will get a larger reduction in the number of dollars. The fellow paying a $10,000 tax will get a $1,000 reduction. The fellow paying a $1,000 tax will get $100 off. But the first one will still be paying 10 times as much as the other one.

The tax rate reduction is the same percentage across the board. What is most important, three-quarters of the tax reduction will go to middle-income wage earners who presently pay three-quarters of the total income tax.

Representative government is still alive and well in the United States. Even with powerful special interest groups fighting reform, the voice of the people was heard. The status quo -- that's Latin for ``the mess we're in'' -- was giving the American people a lower standard of living and ever higher taxes. Now the foundation has been laid for an American renaissance which will astound the world, a new era of good feeling in America, a time when jobs will be plentiful and the richness of the country can be shared by anyone who is willing to work.

Having gotten control of government spending and taxes, we will now concentrate on putting America back to work and making sure that there are jobs and opportunity available to all. The number of jobs will expand, and real take-home pay will increase. And while that battle in the Congress may have been won, the war for a healthier economy is not over. The struggle for more jobs and less inflation will continue to be the focus of this administration in the months ahead. There will be the need to further trim the budget, to monitor Capitol Hill closely to ensure that what has been accomplished is not eroded.

But restoring fiscal integrity to the Federal Government and health to our economy will require more than budget reductions. A number of important projects have been sitting on the back burner until the tax and spending cuts were in place.

An attack on waste and fraud will now be given the attention it deserves. In March we established a Council on Integrity and Efficiency to coordinate this effort. It can be expected to set in motion several new strike forces to make certain that we get solid results. This drive will include every part of the Federal Government, including the Department of Defense. The private sector will face scrutiny, too.

We will announce shortly the establishment of a National Productivity Advisory Committee. It will be composed of labor leaders, management, academia, and will make recommendations aimed at keeping American business and the American worker ahead of the competition, which is the real way to secure jobs for the future.

The aggressive deregulation drive Vice President Bush is leading will continue. We've made headway here and are beginning to feel the dividends. Within days of entering office, the price of oil was decontrolled. Critics howled that it contributed to inflation. Now that half a year has passed, the news media talks about how lucky we are to have an oil glut. Well, maybe chance had something to do with it, but the increase in domestic oil exploration unleashed by decontrol didn't hurt. In the first half of this year, more than 16,000 oil wells were successfully completed, almost double the 1979 figure.

In the area of industrial deregulation, we came forward with a plan to help the automobile industry, proposing changes or elimination of 34 specific regulations which, over a 5-year period, will save the American motorist $9.3 billion and release $1.4 billion in company funds which have been invested in federally mandated equipment and facilities. And we've just begun.

We've now talked about three of the pillars of our economic program -- control of spending, reduced taxes, and regulatory relief. There is a fourth pillar -- a stable monetary policy. Over the past decade, we've heard a great deal about fine-tuning the economy with the use of interest rates and money supply. We tried it and went on a financial roller coaster from which we still haven't recovered.

During the last 10 years, as a result of runaway inflation, savings plummeted to the lowest point in recent history. With savings down, the pool of money available for loans dried up. Simultaneously, the Federal Government ran large deficits. We haven't balanced the budget in the last 10 years. This reduced the resources available for building loans, because Uncle Sam was out competing in the money market, borrowing to fund those deficits. Is it any wonder the interest rates burst through the ceiling?

The administration is dedicated to licking inflation and bringing down interest rates permanently, and we've taken the first steps toward that goal. The dollar is strong, and our tax program gives tremendous new incentives to save. The Federal Reserve is following a conservative and careful approach to the money supply, which will ensure that once recovery begins it won't kick off another round of inflation.

Interest rates will come down. And when they do, they'll stay down because the underlying economic problems that caused them to skyrocket in the first place will be cured. And that's when genuine prosperity will begin.

Nowhere is there a greater need for a good dose of prosperity than in the construction industry. Unemployment in your industry is running roughly double that of other segments of the economy, with 768,000 out of work.

You know, a speaker always hopes that he can identify in some way with his audience. Well, my first summer job, when I was 14 years old, was with an outfit remodeling old homes for resale. And before the summer ended, I'd laid hardwood floors, shingled roof, painted ceilings, and dug foundations. There wasn't a very clear distinction in those days between craft lines in a small town. There also weren't any bulldozers or skip loaders in those days, so the grading was pretty much pick and shovel. I started with that and moved up to those other things I just mentioned. I remember one hot morning. I'd been swinging a pick for about 4 hours. I heard the noon whistle blow. I'd been waiting for that sound. I had the pick up over my shoulder ready for the next blow, and when I heard that whistle, I just let go and walked out from underneath it, let it fall behind me. And I heard a loud scream and then some very strong, profane language, and I turned around. And the boss was standing right behind me, and that pick was embedded in the ground right between his feet. Two inches either way and I'd have nailed him. [Laughter]

I remembered that incident when I heard some of the screams about our budget cuts. The screams sounded about the same.

But you know, I don't need to tell you the housing construction is in a pit. In 1972, a great year for the housing industry, there were 2.4 million housing starts. Eight years later, 1980, there were only 1.3 million. At the time of the passage of our tax and spending reforms this year, the housing industry was still sinking. This administration is committed to getting America building again, and that means more business and more jobs.

Second, we're moving forward with particular attention to your needs. In June I established a Presidential commission whose only job is solving the housing problem. Some of the best minds in the country are on that commission, and I can assure you that we'll take their recommendations as seriously as we did our effort to cut spending and taxes. They've found that up to 20 percent of the cost of a home is due to redtape, bureaucratic delays, and government regulation. We'll do everything we can to eliminate these impediments at the Federal level and plan to work with the State and local communities to see what can be done there to clear away some of the damaging web of controls, regulations, codes, and other restrictions.

I have told before of a neighbor of mine out in California who is building a home for himself. He got so frustrated with the paperwork that he glued all the pages together and he put up two poles in front of the house he was building and strung this ribbon of paper between the two poles. It was 250 feet long, just for permission to build his own home.

Last month Secretary of Housing and Urban Development Samuel Pierce announced that the redtape which clogged the pipeline preventing the construction of 50,000 low-income housing units had been cleared away. It took an agreement between HUD and the Office of Management and Budget on a financial adjustment factor. Now, this may not represent new allocation, but it certainly represents progress.

And finally, our tax program contains numerous provisions which will encourage building. The reduction in time needed for the depreciation of plant and equipment will quickly free cash for industrial construction, which will translate into more jobs in short order.

As for long-term needs, we're committed to providing the raw materials and energy sources you need to get the job done. To grow and prosper the country needs energy, especially those of you in the construction industry. The mismanagement of this vital component of American progress would be funny if it weren't so damaging. It's a monument to the inefficiency and confusion of the bureaucratic marketplace.

We're advancing on a broad front to ensure that our energy needs and those of the next generation of Americans are met. We started with oil control, but we're also taking the necessary steps to ensure a steady flow of energy from natural gas, nuclear power, coal, and other sources.

What is important for us now is not to be tempted again by those promising a quick fix or something for nothing. We'll come out of our current financial difficulties because, like every generation before us, we're going to knuckle down and work our way out. What our tax bill does is ensure it'll be profitable to do that work. Nevertheless, energy and dedication are still necessary to reach our goal.

Now, you know, it isn't true that I fought at Gettysburg; I didn't even go up San Juan Hill. But as a small boy, I saw Americans march off to war to save the world for democracy. I cast my first vote for Franklin Roosevelt in the depths of the Great Depression. And when totalitarian forces threatened to send civilization into a new dark age, I saw this Nation put itself together and in 44 short months strike a mighty blow for freedom.

I mention these traumatic events only because they illustrate how time and again Americans have met the challenges. I don't believe Americans of today are any different from those doughboys of World War I or the GI's of World War II. And certainly our domestic problems are no greater today than those we overcame in the Great Depression we went through between those two wars.

I would like to speak of one more thing. Earlier in my remarks, I spoke of the history of organized labor in our country and quoted Samuel Gompers, the founder of the American Federation of Labor. The United Brotherhood of Carpenters was a mainstay of that early crusade and of the federation. The AF of L supported municipal, county, State, and Federal employees when they began to unionize. But from the very first, organized labor predicated its help and support on the condition that public employees could never be allowed to strike. Indeed, they insisted that unions of government employees would recognize this in their constitutions.

They were the first to point out the difference between public employment and private employment -- that government could not close up shop, that government workers were employed by the people, and the people could not give any group the right to coerce the people's elected representatives. However, to protect the rights of government employees, labor offered to support legislation to ensure wages and working conditions comparable to those for similar work in the private sector.

When the National Labor Relations Act, known to most of us as the Wagner Act, was ratified in 1935, even liberal labor leaders such as Phillip Murray and John L. Lewis proclaimed they had no intention of allowing any segment of government to be organized with the right to strike.

President Franklin Delano Roosevelt declared: ``Militant tactics have no place in the functions of any organization of government employees. A strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of government until their demands are satisfied. Such action, looking toward the paralysis of government by those who have sworn to support it, is unthinkable and intolerable.'' He likened public employee strikes to insurrection.

Reflecting these views, the Federal Government has a law prohibiting strikes by public employees. Some other levels of government have adopted similar statutes and ordinances. Yet in recent years some in labor have retreated from labor's earlier stand against public employee strikes. Strikes against the public safety by public employees have increased over the last many years, and many, like this last strike in PATCO, were in violation of the law and of oaths sworn to by individual union members.

Our very freedom is secure because we're a nation governed by laws, not by men. We have the means to change the laws if they become unjust or onerous. We cannot, as citizens, pick and choose the laws we will or will not obey. And I hope that organized labor today and its leadership will recognize that you, the rank and file they represent, are the supreme authority in our land, that you are the employers of all who serve in government, elected or appointed, and none of us in government can strike against you and the interests of you, the sovereign people.

I thank you once again for allowing me to be here.

Mr. Konyha. President Reagan, we're so thrilled that you took the time to come here to speak to this assembly. Now, I want to present you with a gift from the assemblage, and if nothing else, it will be a token of appreciation for attending our 100th anniversary. Thank you very kindly.

The President. Thank you.

Note: The President spoke at 10:27 a.m. at McCormick Place. Following the address, the President left Chicago and returned to the White House.