February 8, 1982
Governor, Senator Durenberger, and Penny, our Congressmen who are here -- Tom Hagedorn, Bill Frenzel, Vin Weber, and Arlan Stangeland -- and an old friend who is right down here in front, known to all of us. Why don't you stand up here? I know they would all recognize you when you do. Harold Stassen. I thank all of you for that Paul Bunyan welcome.
I don't know, perhaps it's Paul Bunyan's influence that causes so many tall tales to be told in Minnesota. Dave Durenberger tried to tell me that it's been so cold that the walleyes jumped on the hooks just to get out of the water. [Laughter] Now, I didn't believe that. [Laughter] Then he tried to tell me it's been so cold that the Minnesota State bird is now a penguin. [Laughter] And I didn't believe that. And then he tried to tell me that it's been so cold here that the only place you can keep warm is at a Durenberger campaign rally. And that I believe.
Dave, I was going to say something about you being a Paul Bunyan yourself, and then that connotation of maybe tall tales and everything, I don't want to take away anything from what you just previously said. [Laughter] I don't want to infer that it might not -- anyway, I appreciate it.
But this Senator has spent at least 120 days each year traveling through this State. He spends an average of 2\1/2\ days a week in Minnesota and still maintains a voting record in the Senate of 95 percent. We've got some that have forgotten about going home. They now live in Washington, and they don't have a voting record like that. If every public official served his State and the nation as well as Dave Durenberger, we could lick our problems in no time.
He's been especially helpful in our effort to reduce taxes and spending. You perhaps got that idea hearing him a few moments ago. As a member of the Finance Committee, he played a key role in such areas as a State tax reform so that family farms and businesses wouldn't have to be sold just to pay that death tax. And I can tell you, he is serving Minnesota as an independent and conscientious member.
Now, let me be honest and say that I may not always agree with Dave Durenberger -- [laughter] -- but I always listen to him. He understands the kind of people you are. In some of my speeches, I have talked about neighbor helping neighbor. And when I say such things, some of the press look at me as if I'm talking Polynesian. Well, I wish those skeptics would put aside their big city newspapers and occasionally read the weekly Kirkhoven Minnesota Banner. If they had picked up the November 12th issue, they would have seen a story about 16 farmers who helped a fellow farmer who had been seriously injured in an automobile accident. They chopped and plowed 160 acres in 6 hours to get his land in shape. They donated their time, their callouses, and their equipment. Wives and friends provided the lunch. The people of Kirkhoven exemplify the true spirit of Minnesota. And so does Dave.
I came to Minneapolis today just so I could tell the citizens of this State that I admire their Senator. I respect your values and your friendship.
And now, having said that, I'm going to talk a little bit about some of the things you've probably been hearing about back there and what's going on in Washington. In the days ahead, you're going to be submerged with demagoguery about the '83 budget, which just was sent up to the Hill to Congress today. Demagoguery -- the columnist and journalist Burnham once said that when even the most skillful surgeon operates on a Democratic politician, he cannot separate demagogic from solid tissue without causing the death of the patient. [Laughter]
Now, in delivering that budget message, it was not easy for a conservative like myself to say that the deficit that we're estimating for that year is going to be about $90 billion. And yet, this budget represents the lowest annual increase in spending by the Federal Government in 14 years. When we took office, spending was increasing at an annual rate of about 17 percent. In '83, this budget, as adopted, as we've submitted it, that increase will be 4\1/2\ percent.
Now, you're hearing all kinds of horror stories about the people that are going to be thrown out in the snow to hunger and die of cold and so forth. Let me just talk a little about this. Maybe the biggest mistake -- and we're all guilty of it -- is we've used the term ``cutting the budget.'' We haven't cut a single budget. The budget in '83 is going to be bigger than the budget this year. This year's budget is bigger than last year's as it was bigger than the one before. So, there's been no budget reduced beyond or below what the budgets have been before. We have been reducing the rate of increase that has been built in and that has been submitted to us for consideration in these budgets. Seventeen to fourteen -- [applause] -- --
The safety net -- for those who must depend on the rest of us, like that injured farmer -- is still there. The outlays for the elderly in 1983 will be double what they were as recently as 1978. The income assistance to the needy, not counting social security, which was $47 billion in 1980, will be more than $60 billion in the new budget.
Our opponents have said that the only thing we must now do -- they're horrified by the thought of a deficit, and so, therefore, they say that we must increase the taxes. Forget this business of the tax cuts that we've put into effect and that we must do this, because we must not have that unbalanced budget. We've only balanced one budget in the last 20 years, and their Congress has been in charge almost uninterrupted in both Houses of the Legislature for the last 40 years. And we have known budgets consistently.
I remember when Lyndon Johnson told us that he didn't want to break the hundred-billion mark -- my, the good old days, the deficit was under a hundred billion dollars -- didn't want to break that, so he submitted a budget that he said he had -- lean and hard, and he had it down to $98 billion. And no one spoke up and reminded us at the end of the year that that $98 billion budget had ended up costing $137 billion.
In the last 6 months of 1980, the election months, when people were campaigning, the money supply suddenly increased by the highest rate in our history -- 13 percent. That was to stimulate the economy, because in 1979, what we now have, a recession, had begun to start. That -- didn't need that. That was a redundancy -- ``begun to start.'' [Laughter] Well, it had.
With that great increase in the money supply, the interest rates went to 21\1/2\ percent. Inflation went to the neighborhood of 14 percent. We knew in, just a couple of years before, the only time in the history of this country when we had double-digit inflation in 2 years, back to back, and followed each other. The unemployment -- there were about 8 million unemployed in this country. And already there were spots in which you had to say ``depression.''
When we took office, there were places like Flint, Michigan, where the unemployment rate was 20 percent, other communities, almost as bad, but it was spotty. So, they didn't see it as being like the worldwide and the nationwide depression that we'd had in the great thirties. But in that year of '80, we had increased the taxes -- in fact, in the 5 years preceding '81, we had the biggest tax increases in our history, doubled the taxes, and, at the same time, we did all these other things, increased unemployment and increased inflation. Now, what makes them think that raising the taxes now will not do the same thing, that that is an answer, to go back to the same things that they've been doing, put the money supply on a rollercoaster, going up and going down, inflation skyrocketing.
Well, today the interest rates are about 15\3/4\ -- well, there was a jump in some of the bank rates up a point or so, but they're down from what they were when we started. Inflation is down. And for the first time, we're approaching single-digit inflation. And, yes, unemployment is up because of this recession. It's the cruelest thing, I think, that can happen to people, when people who want to work and can find no work.
But here's why we believe that our tax program is their answer. This country in these recent years has had the lowest rate of savings of any of the great industrial nations on the part of our people because of our tax system. This country's industrial machine, which is now unable to compete with the other industrial nations, because we've had the lowest rate of investment in new machinery and plant and equipment -- the average industrial plant and equipment in America is 17 years old. In Japan, it's only 10 years old.
Just since August when the first slight phase of our program went into effect, there has been a definite increase in the percentage of the people's earnings that is being saved. That will form the capital pool where industry and business can turn and get the money they need to expand and modernize and become once again competitive. We're not being outcompeted because the American working man isn't as good as any other. We're being outcommitted, because with the best working people in the world, we haven't given them the tools they need to compete on the international scene.
And already, we can tell you that that $90 billion deficit of 1983 will actually be smaller in proportion to the gross national product than the deficits were in '75 to '78, when we were coming out of that '74, '75 recession. Those who opposed our plan and fought against it and, indeed, were saying that it had failed before it even started, which -- the start, as I say, was last October 1st -- now they're strangely quiet about those last 6 months when the increases took place in inflation and in tax rates and there were 8 million unemployed. We didn't go to the present 9 million from full employment. We were pretty well on our way there to begin with.
Our plan is based on the idea that government spending, the rate of increase in government spending, must be reduced until it comes down within the limit of the normal increase in our revenues that we gain from taxation.
The second point is that we must have an economic program of taxes -- as we have now -- that will stimulate and offer incentives to the economy to broaden the base of the economy so that even the government will get the revenues it needs, but from smaller assessments against each individual.
And the third phase of it is thousands of regulations that have been passed over the last few decades conflicting, competing regulations inflicted on local government, on State government, and on the private sector -- unnecessary regulations, some you could laugh at, if they didn't hurt so much. Well, under the Vice President, we've had a task force working on those regulations. And already, as I said the other night in the State of the Union address, there are now 23,000 fewer pages in the Federal Record [Federal Register], which lists the Federal regulations, than there were when we started a year ago. And we're going to do more.
And we have a task force at work also on fraud and waste and extravagance in government. When people say that our programs, if we're reducing the amount of money, with the increase needed for some of the social programs, we're trying to get at the people who were never intended to participate in those programs in the first place, but who, through the conflicting Federal regulations and loopholes, legally or technically are participating, and there is no real need for them to be helped at the expense of their neighbors. This is what we're trying to do and to change.
To give you an example of how much out there is to be found and how much we're counting on in the coming year, our task force just with one foray -- not a nationwide investigation of this as yet -- has found that in one program, 8,500 recipients of benefits are still receiving those benefits, and they have been dead an average of 7 years. That's why the other part of our program, which you can call the fourth point I proposed the other night, which is the federalism program to get government in at least 40-odd programs back into the hands of local and State governments where it can be run properly by people closest to the scene and not mismanaged by the Federal Government.
I've talked longer than I intended to, but I'm just going to say one more thing. A lot of the demagoguery you will hear will be about the fact of the defense budget, and if anything has to be cut, why don't we cut that? We don't cut it because that's what's been going on for the last several years, and it will take us until the middle of the 1980's before we can even begin to come close to equating what the Soviet Union has built up to threaten us with.
It is absolutely necessary that we restore that capacity to defend ourselves. And when I look at these young people down here -- and I'm so happy to see them here and to participate -- I just want to tell you one thing. When we build up our national defenses, it isn't with the idea that some day you're going to go fight a war. The idea in building them up is that we will be so strong that no other generation of young Americans will have to bleed their lives into foreign battlefields or beachheads someplace out in the oceans.
I promise you one more thing -- that as we build up our national defense, our national security, we will not stop or let up one minute with getting those other fellows across the table from us and now talking legitimate arms reductions.
Well, that's all, except to tell you, you just confirm everything that Dave and I and the others there believe. You have to get about 50 miles, at least, away from the Potomac River and the District to get back to the real world.
God bless you. Thank you very much.
Note: The President spoke at 5:40 p.m. in the Celebrity Room at the Carleton Dinner Theater.
Prior to speaking at the rally, the President attended a Durenberger for Senate reception, which was also held at the dinner theater.