January 11, 1986
My fellow Americans:
Just this week, we had some very good economic news. Jobs are up, and unemployment is down -- all the way down to 6.8 percent, the lowest rate in more than 5 1/2 years. So, I'd like to talk to you today about the new strength of the American economy and what we can do to keep our economy growing.
You'll remember that when our administration took office in 1981, inflation was raging in the double digits. Today inflation is down to less than 4 percent. In 1981 interest rates were soaring. The prime rate reached more than 20 percent, and interest rates generally were at the highest level since the Civil War. Now interest rates have tumbled; the prime itself has dropped by more than half, and we expect long-term interest rates to drop still further.
When we took office, strong economic growth seemed an impossible dream. Today we're enjoying one of the strongest economic expansions since the end of World War II. Business productivity in the third quarter of 1985 increased at a strong annual rate of 3.7 percent. Real business fixed investment, as a share of real gross national product, hit a record high in 1984, rose to a new high in 1985, and is reaching for yet another historic high. This investment means our economic engines are being recharged with new means of production -- new high-tech equipment like computers, communications systems, and electronic gear -- and at a faster rate than ever before.
Perhaps the best news concerns the creation of jobs. During 1985 alone, the number of payroll jobs increased by 3 million; and today almost 110 million Americans are employed, the largest proportion of the Nation's population in our history. Last weekend in the Washington Post, I noticed that there were almost 50 pages of help wanted ads. And since September 1982, according to the Conference Board, the nationwide help wanted index has almost doubled -- a sure sign of economic vitality. Unemployment, as I mentioned, is down to 6.8 percent. When you focus only on those who've been unemployed 27 weeks or longer, the number drops still lower.
And, even here, in the case of the long-term unemployed, there is hope in the form of our Job Training Partnership Act. This act replaced old programs that were training people for jobs that didn't exist anywhere close by and spending as much to do it as it costs to send someone to a good college. Our job act combines Federal efforts with those of State and local industry to train people for jobs that are close at hand. It costs less and succeeds more often, much more often.
The economy is in better shape today because we've worked hard to get the Federal Government out of your pockets and off your backs. We've cut taxes, limited government regulation, supported sound monetary growth, and taken commonsense steps like deregulating the price of oil. This last measure made oil prices tumble and brought OPEC, the oil cartel that used to push us around, to its knees. But now we must force the Government to go on facing up to its responsibilities, most notably to reform our entire system of taxation and to bring Federal deficit spending to an end.
The Gramm-Rudman-Hollings amendment, which I signed into law in December, calls for us to deal with deficit spending head on. It mandates smaller and smaller Federal deficits until 1990, when the Federal Government will have a balanced budget at last. But while the amendment tells us that we must bring deficit spending to an end, it leaves crucial questions about just how to do so unanswered. Well, I will continue to say that as far as I'm concerned, a tax increase is out. I, furthermore, intend to insist upon the maintenance of a strong national defense as the first duty of government to the people. Instead, our administration will meet its Gramm-Rudman-Hollings obligations by submitting budgets which eliminate government inefficiency and curtail needless expenses like vast amounts for Amtrak and subsidies for those who don't need them.
On tax reform, we want to make corporate rates lower and bring down individual rates for you, the American people, in order to provide the incentives that spur economic growth. The tax reform bill passed last year by the House has its weak points, but it succeeded in lowering both corporate rates and income tax rates for most individuals. Now the bill goes to the Senate. We'll have a chance to improve it, but, believe me, the special interests are going to be there, lobbying just as hard as they can. If we're to protect the interests of all the people, I'm going to need your support.
My friends, I'm convinced that with your help we can succeed on both these issues, giving the people tax reform and the Government a sense of fiscal responsibility. Together, we'll build on the economic successes we've already achieved and lead America on into a new era of opportunity and growth.
Until next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.