Radio Address to the Nation on the Federal Budget
April 12, 1986 My fellow Americans:
I'd like to speak this afternoon about our nation's budget and your own. By April 15th, the same date by which you and I must file our Federal income tax returns, the Congress is required by law to pass a budget resolution. This resolution must tell in outline form how much the Congress intends to spend in 1987 and how it intends to raise this money from you, the American people. As the Congress puts this budget outline together, there is good news and bad news.
The good news is that, in large part, as a result of our policies of low taxes and limited government, our economy is breaking records. Inflation is at its lowest level in nearly a decade and a half. Interest rates have toppled. The prime rate, which was running at more than 21 percent when we took office 5 years ago, has fallen to just 9 percent, the lowest point in nearly 8 years. And as interest rates continue to fall, mortgage rates are coming down, making it much easier to buy homes.
One piece of good news deserves special mention: the dramatic drop in oil prices. When our administration took office, we at once decontrolled the price of oil. Some predicted this would send gas prices at the pump through the roof; not so. The production of oil and other fuels increased, putting pressure on the OPEC oil cartel. Today the OPEC cartel has been dramatically undercut, and oil prices have collapsed from about $34 per barrel in 1982 to about $13. Some are having to make a difficult adjustment to these new, lower prices. But overall, less expensive oil represents a tremendous boon to our economy. Already, you're beginning to pay less for petroleum products of all kinds, including heating oil and gasoline. Isn't it good to be able to put a gallon of gas in the car for less than a dollar again?
The good news, in the largest sense, is that our nation now has the chance to continue building sustained and vigorous economic growth, the likes of which we haven't seen since the 1950's and 1960's -- a lasting era of good times and prosperity. We need only bring marginal tax rates down lower and get government spending under control, cutting the Federal budget, not the family budget.
Now for the bad news: As the April 15th deadline approaches -- the deadline American taxpayers must meet whether we want to or not -- the budget resolution the Congress must put together is nowhere near completion. In the meantime, the leadership of the House of Representatives is resisting all attempts to control spending. Indeed, a supplemental appropriations bill now under House consideration would include provisions which could increase Federal expenditures over $30 billion over the next 3 years and take away my authority to defer needless spending. And in the Senate recently the Budget Committee voted in favor of a plan that over 3 years would raise your taxes by nearly $50 billion.
Part of the problem here is misguided thinking. Many don't understand that the real trouble isn't just the Federal deficit itself, but government overspending. You see, the more the Government spends, the more resources it takes from the private sector, the greater the upward pressure on interest rates, and the lower the rate of economic growth. Whether the Government obtains its funds through taxation or borrowing, the root problem remains the same -- government use of spending to take over more and more of the economic life of our nation. This smothers the private sector incentives that keep our economy vibrant. A tax hike now would only encourage the Congress to spend more. All that we've worked so hard to achieve, all the good economic news, could be harmed. That's why I want to say to you again today: My veto pen is inked up and ready to go. Sometimes a President just has to spell relief, V-E-T-O.
We submitted a budget to the Congress last February that meets the deficit-shrinking requirements set by the Gramm-Rudman-Hollings act, and does so while avoiding a tax hike. At the same time, our budget keeps America's defenses strong. We also urge the Congress to pass a balanced budget amendment to the Constitution and a proposal to give each President a line-item veto -- two measures that would make certain, once and for all, that government spends no more than government takes in. My friends, that's all it would take -- just the line-item veto and the balanced budget amendment, a strong defense, a responsible budget, and a commitment to lower marginal tax rates further -- to turn all the good economic news of recent days into the beginnings of a new and lasting prosperity. Isn't it time the Congress got government out of the way and let the good times roll?
Until next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.