March 15, 1984
Ladies and gentlemen, in my State of the Union Message, I proposed a bipartisan negotiation to develop what I called a downpayment on the deficit. I urged Democrats and Republicans to come together on the less controversial issues to enact a deficit reduction program quickly that would reduce the deficit by a hundred billion dollars over 3 years.
To help get the process moving, I've had a series of meetings with the Republican leadership who are here with us today, except for two -- Senator Dole, who is busy on the Hill, and Senator Mark Hatfield, but who are both in total agreement with this plan. Senator Hatfield is appearing at Harvard right now.
Our objective has been to reach agreement on a deficit reduction package that could be passed by the Senate and that would be supported by the bipartisan group representing both Houses of Congress. I'm happy to announce that the congressional leadership and I have agreed on a balanced package that is comprised of three basic elements.
First, we have agreed to save $43 billion over 3 years from the nondefense portion of the budget. These savings can be achieved by passing the Senate Finance Committee's pending entitlement reforms and Grace commission savings, a farm program target price freeze, the pending reconciliation bill's Federal pay cap and COLA delays, and a freeze and cap on nondefense discretionary programs.
Second, we have agreed to close certain tax loopholes to raise revenues by $48 billion over 3 years. There would be no increase in tax rates. The changes in tax law would close certain loopholes of questionable fairness.
Third, we have agreed to further reductions in defense spending, which will slow our defense buildup somewhat but which will not seriously reduce our national security to a point of unacceptable risk. The changes we've made will amount to defense budget authority reductions over the next 3 years of approximately $57 billion and 3-year defense outlay savings of about 40 billion. This, I should note, is in addition to the reductions that we already made before submitting our budget to the Congress.
The enactment of all these proposals will save $18 billion in interest payments on the Federal debt. This would bring the 3-year total savings to some $150 billion, a substantial downpayment on the deficit.
For the 1985 budget, it would mean $9 billion in additional revenues, and I repeat, without increasing tax rates. Domestic spending will be reduced by 9 billion, and defense budget authority in 1985 by 14 billion. It is a fair and balanced package, one that can be easily implemented. It merits the support of all those who are responsibly concerned about deficits. It's worthy of prompt attention and positive action by the Congress.
And I want to thank the Republican leaders of the Senate and the House for their constructive effort and cooperation. I hope their Democratic colleagues will now join with them in enacting this downpayment on the deficit. And with that, I can tell you that Secretary Don Regan and Dave Stockman will be prepared to brief you as we leave here in the Press Room.
Q. Think the Democrats are going to go for it, sir?
Q. How is this different from what the Democrats propose?
The President. What?
Q. How is this different from what the Democrats proposed in your little conferences up to now?
The President. Ask that in the briefing in there.
Q. Why should the Democrats go along, sir?
The President. Why shouldn't they?
Q. Well, because -- --
The President. They've been complaining that they want the deficit reduced, and after 50 years of raising the deficits, here is a chance to start reducing it and going the other way.
Q. Do you have any indications that the Democrats are going to go along? Have you been talking to them?
The President. No. We had to find out that we were all agreed ourselves.
Q. Didn't know whether you were going to go along yet, right?
The President. All of us have worked out what we think is a responsible plan, and we're going to submit it to them.
Q. Do you have anything to say now that King Hussein has rejected your peace plan firmly and finally?
The President. I'm not going to suggest another news item here other than what we've been talking about. We'll talk about that at a time when there's no more news. [Laughter]
Q. How about tomorrow?
Q. How about at 6:35?
Q. Are you still behind Mr. Meese?
The President. I've just opened myself up to a charge of manipulating.
Q. Guilty.
Q. Mr. President, are you going to talk to us on your way to Camp David tomorrow about Hussein?
The President. What's that?
Q. Are you going to talk to us about Hussein tomorrow on the way to Camp David?
The President. Let me see how well you treat this. [Laughter]
Note: The President spoke at 4:51 p.m. in the Rose Garden at the White House.