President Reagan, in his first appearance since the assassination attempt on March 30, stood before a joint session of Congress, basking in what was the highest popularity rating of his Presidency.
In what was billed as an Economic Policy Address, the President, still not 100% recovered from his wounds, gave an outline of his plan – a plan which had been on the books for some time and a plan which was already drawing fire from opposite sides of the aisle:
President Reagan: “For example, in the next 3 years, the committee measure projects spending $141 billion more than does the bipartisan substitute. It regrettably cuts over $14 billion in essential defense spending, funding required to restore America’s national security. It adheres to the failed policy of trying to balance the budget on the taxpayer’s back. It would increase tax payments by over a third, adding up to a staggering quarter of a trillion dollars. Federal taxes would increase 12 percent each year. Taxpayers would be paying a larger share of their income to government in 1984 than they do at present.
In short, that measure reflects an echo of the past rather than a benchmark for the future. High taxes and excess spending growth created our present economic mess; more of the same will not cure the hardship, anxiety, and discouragement it has imposed on the American people.
Let us cut through the fog for a moment. The answer to a government that’s too big is to stop feeding its growth. Government spending has been growing faster than the economy itself. The massive national debt which we accumulated is the result of the government’s high spending diet. Well, it’s time to change the diet and to change it in the right way.
I know the tax portion of our package is of concern to some of you. Let me make a few points that I feel have been overlooked. First of all, it should be looked at as an integral part of the entire package, not something separate and apart from the budget reductions, the regulatory relief, and the monetary restraints. Probably the most common misconception is that we are proposing to reduce Government revenues to less than what the Government has been receiving. This is not true. Actually, the discussion has to do with how much of a tax increase should be imposed on the taxpayer in 1982.
Now, I know that over the recess in some informal polling some of your constituents have been asked which they’d rather have, a balanced budget or a tax cut, and with the common sense that characterizes the people of this country, the answer, of course, has been a balanced budget. But may I suggest, with no inference that there was wrong intent on the part of those who asked the question, the question was inappropriate to the situation.
Our choice is not between a balanced budget and a tax cut. Properly asked, the question is, “Do you want a great big raise in your taxes this coming year or, at the worst, a very little increase with the prospect of tax reduction and a balanced budget down the road a ways?” With the common sense that the people have already shown, I’m sure we all know what the answer to that question would be.
A gigantic tax increase has been built into the system. We propose nothing more than a reduction of that increase. The people have a right to know that even with our plan they will be paying more in taxes, but not as much more as they will without it.
The option, I believe, offered by the House Budget Committee, will leave spending too high and tax rates too high. At the same time, I think it cuts the defense budget too much, and by attempting to reduce the deficit through higher taxes, it will not create the kind of strong economic growth and the new jobs that we must have.
Let us not overlook the fact that the small, independent business man or woman creates more than 80 percent of all the new jobs and employs more than half of our total work force. Our across-the-board cut in tax rates for a 3-year period will give them much of the incentive and promise of stability they need to go forward with expansion plans calling for additional employees.
Tonight, I renew my call for us to work as a team, to join in cooperation so that we find answers which will begin to solve all our economic problems and not just some of them. The economic recovery package that I’ve outlined to you over the past weeks is, I deeply believe, the only answer that we have left.
Reducing the growth of spending, cutting marginal tax rates, providing relief from overregulation, and following a noninflationary and predictable monetary policy are interwoven measures which will ensure that we have addressed each of the severe dislocations which threaten our economic future. These policies will make our economy stronger, and the stronger economy will balance the budget which we’re committed to do by 1984.
When I took the oath of office, I pledged loyalty to only one special interest group—“We the people.” Those people—neighbors and friends, shopkeepers and laborers, farmers and craftsmen—do not have infinite patience. As a matter fact, some 80 years ago, Teddy Roosevelt wrote these instructive words in his first message to the Congress: “The American people are slow to wrath, but when their wrath is once kindled, it burns like a consuming flame.” Well, perhaps that kind of wrath will be deserved if our answer to these serious problems is to repeat the mistakes of the past.
The old and comfortable way is to shave a little here and add a little there. Well, that’s not acceptable anymore. I think this great and historic Congress knows that way is no longer acceptable.”
Here is the complete address from President Reagan of April 28, 1981.