Radio Address to the Nation on Economic Growth and Tax Reform
August 3, 1985
My fellow Americans:
The month of August marks an important milestone for our country. Four years ago we took our first giant step toward putting this economy back in your hands when I signed our bill to lower and permanently index the tax rates of every working American. After being held back so long, a ringing declaration went forth that the dream of economic freedom was alive and well in America's soul. And you responded, bursting ahead with energy and enthusiasm, ignoring all those who were downright panic-struck that Washington could no longer reach deeper and deeper into the pocketbooks of your families. While they were busy predicting disaster, you began transforming our economy from top to bottom.
From the nightmare of interest rates that, at 21\1/2\ percent, had pierced the highest level since the Civil War, double-digit inflation raging like an uncontrollable virus, long gas lines, and the worst tax burden in peacetime history, we awoke to a new dawn of progress -- swift, sure, and steady progress that has continued for 4 years and is continuing today. Inflation, which has been as high as 13 percent, has not just eased but has sharply declined to less than 4 percent. The prime interest rate, while still too high, has dropped to its lowest level in almost 7 years. And decontrolling oil prices did not send the price of gas at the pump skyrocketing as some said it would; prices are lower today than 4 years ago.
Progress regained has renewed our confidence. We can see and feel that confidence in the vigorous increases in consumer purchases, in greater incentives to save, and in the advances to record levels in the stock market. All of us are building a new America, a dynamic America that's created nearly 8 million jobs in the last 32 months and almost 500,000 last month alone; an enterprising America with a record 635,000 new business incorporations last year, the auto, housing, and construction industries rejuvenated, and spectacular breakthroughs in new technologies; and, most important, a successful America with one of the most impressive economic expansions in postwar history. Even as we speak, new strength in factory orders, jobs, leading economic indicators, and equity markets show the U.S. economy flexing its muscles for another big push toward greater prosperity.
But this building of a new America is not complete. We still face a great challenge in reducing the deficit, but those who insist that spending cannot be cut any further and that we must increase your taxes to reduce the deficit are flatout wrong.
Last February I submitted a budget calling for large savings, including elimination of 17 costly and wasteful programs. The budget resolution finally agreed to by the Congress this week represents a good-faith beginning to tackle the deficit the right way -- by reducing what government can spend, rather than simply taking more of what you earn so government can keep spending levels high. But when Congress votes on the various spending bills this fall, we will review each one line by line to be sure they don't contain excessive spending levels or might jeopardize our national security.
Let's all recognize that spending has not been cut to the bone and that a tax increase would only reduce our incentives to work, save, and invest and ultimately weaken our economy and make deficits far worse. Sometimes it's difficult to remember that you didn't send us to Washington to feed the alligators; you sent us to drain the swamp. We didn't come to raise your taxes, but to lower them. And what better moment than this anniversary of our first tax cut than to sound the trumpet once more.
This nation is poised to forge ahead, poised to give every citizen the noble chance to break free and taste the thrill of high adventure. Our next great advance must come from a total overhaul of our tax code. And make no mistake, that day is coming. As Congressman Dan Rostenkowski, chairman of the House Ways and Means Committee, indicated this week, ``Reports of the death of tax reform are greatly exaggerated.'' We can pass an historic tax reform to sweep away unjust loopholes favoring the powerful few. We can reduce the top rate of tax to 15 or 25 percent for all but a tiny fraction. We can reach for excellence and make America the most powerful success story for growth and human progress the world has ever known. And, yes, with your help, we can continue the success we began 4 years ago.
Till next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from Camp David, MD.