November 30, 1981
Thank you all very much. It's always a pleasure to be here in Ohio and have a chance to acknowledge the great help that your Governor has been to me over the years. It seems now a long time back, but I turned to him for counsel and advice when I was a brand new Governor. We didn't know each other. We met, and I had his unstinting and very effective support then, and counsel and advice, and I had it last year in the election, and I'm having that same kind of support now for our economic program.
I'm also delighted as I see -- and I know that some of your Congressmen are here: Del Latta, Bob McEwen, Clarence ``Bud'' Brown, Ed Weber, Clarence Miller, Ralph Regula, John Ashbrook, and Willis Gradison. And the only thing I want to ask of them is: Are you sure the other fellows went home? [Laughter] I'd hate to leave them back there without us.
These are exciting times. The Columbia has been orbiting the Earth, Senator Glenn is in orbit around New Hampshire -- [laughter] -- and the Federal budget is off somewhere in the wild blue yonder. You know, we're completing 14 months without a budget. Your State isn't run that way, and we didn't run California that way. In fact, I don't believe I can remember any State ever practicing the fiscal irresponsibility that has characterized the majority party leadership in Washington over these past three or four decades.
In the debate over the continuing resolution the weekend before Thanksgiving, some of those who must share responsibility for our economic situation protested that I was making a theatric gesture over a mere $1 or $2 billion. Well, in the first place, they must be practitioners of the new math. The figure in dispute was nearer $10 billion over and above the budget that I'd asked for in September.
But aside from that, how does one use the word ``mere'' in talking about a billion or $2 billion? A few years ago, one of that same spendthrift fraternity, trying to explain the increase in government spending, said in all seriousness, ``Well, you know, a billion here and a billion there; it adds up.'' [Laughter] Well, he was right. Their billion here and a billion there have added up to a national debt of more than $1 trillion. Now, that's an unimaginable figure. Just think, if we started paying off that debt at $1 billion a year, it would take us a thousand years to lift the mortgage.
Speaker O'Neill says that I know less about the budget than any President he's ever known. Well, maybe we're not talking about the same kind of budgets. [Laughter] I presided over eight balanced budgets as Governor of California, and he's only seen a balanced budget once in his 27 years in Congress. And I could point out that since I became President, there hasn't been a Federal budget for me to look at. [Laughter]
But let me state something that I know about the Federal budgets of the past few decades. Thanks to the tax-and-tax and spend-and-spend policy of our opponents, those budgets are always much bigger at the end of the fiscal year than they were at the beginning, and they were too big at the beginning.
Now they've found an easier way to spend. It's called the continuing resolution. Now, let me explain what such a resolution really is. It's a means whereby spending can go on out of control. The resolution simply says that government can continue at a prescribed spending level while it goes on talking about a budget for 14 months.
Well, in the fiscal year that ended October 1st, the continuing resolutions came in way over the budget figure announced by the previous administration in 1980. And now the same process appears to be starting and is going on for 1982.
Let me give an example of how the spenders can assure themselves of a free hand. Within the total amount passed in the resolution, they can shortchange, shift funds around, and apply them -- well, deny them to necessary things like health care, for example. Then they add that money that should have gone for that purpose to some pet program of their own. They do this knowing that health care will run out of funds before the year end, making a supplemental appropriation necessary, because no one can stand by and allow people who are ill to not have medical treatment. Now, I wonder sometimes if the Speaker thinks I don't know that. [Laughter]
The other thing they like about continuing resolutions is that if they're vetoed, all but a few government functions grind to a halt. It is against the law for government to go on without funding. Checks can't be issued, and government employees can't even volunteer to work a day without pay. Now, there, the Speaker was right about the things I don't know. I didn't know that it was considered impossible to veto a continuing resolution, so I vetoed one. [Laughter]
Now Nancy and I have flown to California for the holidays, and now we've flown back here, and I'm still waiting for the sky to fall, and it hasn't. You know, if it goes on like this, a fellow might be tempted to try doing some of those other things they say are impossible, like reducing the size of government, eliminating inflation, reducing tax rates, and even maybe having a budget, before we're finished.
Yes, we're in a recession, and its causes go way back beyond January 20th, 1981. Tax policies and inflation reduce the ability of the people to save. This reduced the pool of capital needed by industry to modernize and keep abreast of new production methods. One hundred dollars in a savings account from 1960 to 1980, 20 years, plus compound interest, has after those 20 years a purchasing power of only $83 -- $100 plus interest combined.
In 1960 the average weekly earnings for a worker with three dependents was $73, after deducting income and social security taxes. By 1970 it had increased to $80. By 1980 it had fallen back to only $74.
When this administration began, interest rates were the highest they'd been since the Civil War -- 2 ½ percent. Taxes were taking a higher percent of the workers wage than food, shelter, and clothing all put together. Yes, we've had an increase in the number of unemployed, but there already was great unemployment in the auto industry, in steel, and in construction. While there are more unemployed today, there are also more working. There are 266,000 more people working today in the work force than there were when we took office.
There have been other changes. Inflation is a little more than half of what it was, and interest rates have fallen by more than 4 percent in the last few months. Some banks now are at 15¾ percent, and on the way in here -- I didn't have time to write it down -- someone just told me outside that the prime rate of the Fed has dropped today and gone down again.
We've already cut the rate of increase in government spending to less than half of what it had been. We said unnecessary regulations must be eliminated. Well, last year the Health and Human Services Department, the old HEW, the regulations filled 316 pages of the Federal Register. Now they fill six.
And we've just begun to phase in the biggest single tax cut in history. In 1977, you will remember we were handed the biggest single tax increase in history. It hasn't all gone into effect. That legislation passed increases in the social security payroll tax that will go on from now till 1987, the next increase will be in January coming up.
Now many of those responsible for that increase are now the most vocal opponents of our economic program, both the cuts in spending and the reduction in tax rates. With all their opposition to what we proposed doing, they have yet to suggest anything other than a return to their bankrupt policies of higher spending and higher taxes. All they can say is they're against what we're trying to do, but they haven't anything new to offer against those things that have gotten us into the mess we're in.
What we don't need is more spending, and what we don't need are taxes, and what we do need is a lot less of both. Our programs are designed to encourage savings, investment, and productivity. They'll get this economy moving again, growing again, and lift the standard of living for all Americans.
John Kennedy knew this 20 years ago when he proposed a tax cut based on the same principle. He knew an economy stifled by restrictive tax rates can never produce enough revenue to balance the budget, just as it can never produce enough jobs or enough profits. History proved him right. After enactment of the Kennedy tax cut, the rate of increase in employment almost doubled. The rate of growth in gross national product went from a little over 3 percent before the tax cut to 5 percent after the tax cut, and personal savings jumped from 2.3 percent to 8 percent of the American people's earnings. If our tax policies result in an increase of only 2 percentage points in the level of savings, that will mean $40 billion more in the money available for investment and mortgages.
In November of 1980, the American people voted overwhelmingly for change, for a new beginning. Together we've set a new course for freedom and prosperity. I believe that America can and will heal itself as it has so often in our past history.
Ours is a special destiny, both as Republicans and as Americans. Abraham Lincoln once said, ``We Americans, the freest people in the world, will determine our own fate. If it is to be greatness, we will have built it,'' he said. ``If it is destruction, then we will have wrought it. As a nation of free men,'' he said, ``we must live through all time or die by suicide.'' That responsibility is now ours. Let it never be said that ours was the first generation of Americans to falter.
You're gathered here as a kind of headstart on preparing for the 1982 campaign. Well, let me tell you, we need more Republican Governors if we're to realize the great strength built into our Federal system of 50 sovereign States. We need our Republican Congressmen returned to Washington. In the recent battle, they stood together 100 percent in the final vote that brought us more time to work out the budget. We need more like them. We need a majority in the House to match our majority in the Senate. And I could point out, you'll have an opportunity to send a new Senator to increase our narrow majority there.
And if you need encouragement, let me tell you just one thing. There's one Democrat Congressman already that has announced that he will seek reelection as a Republican. And in announcing that, he said he believes in our Republican principles and he believes in our economic program. And he has supported it all the way. Well, I promised him for what he's doing, and I will promise you for what you're doing -- just because of what you are -- we will not retreat 1 inch in our determination to proceed with our program and to restore fiscal integrity, productivity in the industry of America. We're going to stick with it.
Thank you all very much. And let me just close with one thing. A lot of wonderful things happen, and there are some days when you go home feeling 10 feet tall. And part of it is what I'm hearing from all of you, the people of this country, wonderful letters that are just unbelievable, ranging from a sailor in a submarine that goes to the trouble to write and tell me -- he says, ``Okay. So we're not the biggest navy in the world, but we're the best.'' And then the other day I received a letter that I thought was one for all time. It had to be translated from the braille. A GI that had lost his sight in World War II in Germany wrote, in braille, to tell me that if cutting his pension would help get this country back on its feet, he'd like to have me cut his pension. But we're not going to cut his pension. But we're sure going to get this country back on its feet.
Note: The President spoke at 6:25 p.m. in the Presidential Ballroom at the Westin Hotel. He was introduced by Governor James A. Rhodes of Ohio.
Following the reception, the President attended a meeting at the hotel with major Ohio Republican contributors, and then returned to the White House.