Remarks at a ``Salute to a Stronger America'' Republican Fundraising Dinner in Houston, Texas

November 13, 1981

Mr. Chairman, Governor Bill Clements, Rita, I can't thank you enough for that introduction and for what you said about this. I'm kind of sorry that we can't steal you for California -- [laughter] -- because I know how well you did in redistricting here. [Laughter] They redistricted California from the other side, and the only Republican district left is just south of Tijuana. [Laughter]

Governor John Connally, Nellie, Congressman Bill Archer and Jim Collins, Ron Paul, Jack Fields, Tom Leoffler, our State chairman, our national committemen who are here, the guests here at the head table, and those that we honor tonight and who, I can assure you, are serving so well in your Nation's Capital. I, like Mike -- yes, we both came from the office, so no black tie. But I would like to call to your attention that I am wearing a tie tack that is the seal of the State of Texas. And I think my cuff links make up for no black tie because they're a map of the State of Texas, and they were given to me by your Sam Hall. [Laughter]

Now, Mike Deaver and Jim Baker, it's true, told me that they're taking me on a turkey shoot tomorrow. And when they brought this up, I asked them, ``Why are we going all the way to Texas to shoot turkeys?'' [Laughter] And they said that, well, down here you had a different kind than the turkeys I'd been seeing. [Laughter]

And you know, Bill, when you said something about if I were a Texan or not -- I don't know, I love Texas, too, and I love all the people of Texas who've been so wonderful to me every time I've ever been here. And I remember a story about Lyndon Johnson when he was President, and maybe it applies to States, too. But he was leaving the South Lawn of the White House, and the two helicopters were there, and he happened to be going toward the wrong one. And one of the security stepped up and didn't want to, with all the press covering this, make it obvious, said, ``Mr. President, that's your helicopter over there.'' And Lyndon stopped and said, ``Son, they're all mine.'' [Laughter]

I don't know whether that works with States or not, but anyway, I suppose you've been wondering what we've been doing up there these last 9 months or so. Well, this dinner, as you've been told, expresses what we've been trying to do, and that is to make America strong again -- I'm so grateful for John's generous words about that -- to make it strong economically, militarily, and spiritually. And I believe we're on the right track for all three.

Yes, the interest rates are high. We have a recession. But those interest rates have dropped 3\1/2\ percent since September. Inflation is just a little more than half what it was when we took office.

And to show you how it's going, this morning in one of the last meetings we had before we left to come here, the Secretary of Agriculture was waiting for me at a Cabinet Council meeting and presented me with a giant replica of a check. It was for $27 million that the Department of Agriculture has saved on personnel and travel costs -- not a budget item, just saved by management.

Yes, I know that recently it's been announced that we have 500,000 more unemployed than we had a year ago. And I haven't been able to figure it out yet, because we have 260,000 more employed than we had when we took office.

Militarily -- military enlistments are up, so are reenlistments. The educational level of those enlisting is higher than it has ever been, and the morale of our Armed Forces is something that makes you proud every time you see it.

I received a letter from a young lad who's a sailor on one of our submarines. He said he was writing, and he was writing on behalf of his 180 shipmates. And he said he just wanted us to know how good it felt to be an American. And he said, ``We may not have the biggest Navy in the world, but we've got the best.''

Spiritually -- I have things happen almost every day that turn me inside out. And you'd be surprised how many of them have come from Texas: messages from associations, from individuals, groups, clubs, telling me that with regard to the call for voluntarism what they're doing to now step in and do the things that, as they say, ``We always should have been doing except we got in the habit of thinking government should do them.''

And one of your cities here -- to tell me how the leading corporate heads and business heads in the city had met, the special projects they were engaged on, that they had decided to increase their United Way campaign target by 20 percent, just because there was more need now to do things voluntarily.

The letters from individuals -- from an elderly lady in New Orleans who explained, told me her age and I won't repeat it, but it was considerable. She was black, but she said, ``Thank you for doing away with the war on poverty.'' She said, ``Thank you for letting us once again try our own muscle and not become helpless dependents.''

Then I received a letter from a man who said he is on -- he lives and is supported by the government. And he said, ``If it means cutting what I receive in order to restore fiscal integrity to this land,'' he said, ``you cut what I receive.'' His letter was written in braille. Thirty seven years ago as a GI in World War II, he lost his eyesight.

Somebody once told me before I became Governor -- I think maybe I repeated it to Bill once when he was getting ready to take over as Governor here -- that some days you'd go home feeling 10 feet tall. Well, I want to tell you, yesterday -- you know, George Bush is heading up a task force to cut away and hack away at those regulations which have tied the hands of local government, which have tied the hands of business and industry in this country, and they're having great success.

But a couple of days ago, we ran into another regulation, and I told the press about it, because I learned about it in time for a press conference we were having -- about a little girl in the Midwest, 3\1/2\ years old, who couldn't live at home. She has been ill virtually since birth. Maybe you saw it on television. We never intended that; I did not give her name or anything. But the enterprising press found out and on the news that night publicized it. She has spent her entire life in a hospital, requiring a care that costs about $12 thousand a month, and she could be cared for at home for $1 thousand per month. The doctors think she'd be better off at home. Her parents, a lovely couple, want her at home, but they can't afford that, and so the $10 thousand or $12 thousand a month is being paid by the government -- but under a regulation that would cease if she went home.

Well, when they made it public and who it was, yesterday when I came to the office, Dick Schweiker over at HHS was happy to tell me that that regulation no longer applies to her and she's going home. Some days this job is more fun than other days.

Well, right now the economy -- of course there's a lot of second-guessing about the economic plan that we adopted. We were determined to reduce government spending, to reduce the percentage of the gross national product that the government was taking in taxes, and some with the best intentions now would reject tax reduction as being financially unsound while there is a Federal budget deficit. But a deficit can result from waste and the weakness of the economy. And we can try to eliminate the deficit by raising taxes which further weakens the economy, or we can restore to full prosperity this nation and balance the budget with the revenues that such an economy would generate.

In the 14th century there was a Moslem philosopher -- I've told about this a few times -- who knew this about the economy. He said in the beginning of the dynasty, the dynasty reaps large tax yields from small assessments; at the end of the dynasty, it is reaping small tax yields from large assessments. Well, John F. Kennedy knew this in the 20th century. And he said our true choice is not between tax reduction on the one hand and avoidance of large Federal deficits on the other: An economy stifled by restrictive tax rates will never produce enough revenue to balance the budget, just as it will never produce enough jobs or enough profits.

Well, President Kennedy was selling a tax cut proposal against all the advice of the leadership of his own party and against that kind of economist that has got a Phi Beta Kappa key at one end of his watch chain and no watch on the other. [Laughter] Well, he had his way, and he got his tax cut. And he was asked by, again, those same people, ``Well, what if it doesn't work?''

Well, I'm being asked now the same question by the Democratic leadership of Congress. And John Connally told you who has been responsible all these years for the problems that we're now in. Perhaps we should just refer them to the history of those years just prior to the Kennedy tax cut, when employment in America was increasing by 1.19 percent a year, and how in the years immediately following, the rate of increase in employment was almost doubled. The real gross national product, the rate of growth, went from a little over 3\1/2\ percent before the tax cut to over 5 percent after the tax cut. The savings, the growth rate of personal savings, jumped from 2\1/3\ percent to 8 percent of the American people's earnings.

Now, this is not only evidence of recent history of what can happen when more money rather than less is left in the hands of the people. There is more: 1969 -- there were 698 American business firms, each one with a net worth under $5 million, who were in the stock market, raising by way of that marketplace $1.4 billion to fund expansion and continued growth. And then in '69, the capital gains tax was doubled. And shortly thereafter, there were only four such firms in the stock market raising a mere $15 million.

With the help of your Congressmen and, yes, with the help of you, because, believe me, when the phone started ringing in Washington when we asked for it, and the telegrams and the letters -- there were an awful lot of them that were coming from the State of Texas. With their help and your help, we have passed the greatest reduction in Federal spending in history. We didn't get all we asked for; we got about $35 billion worth.

And now the recession, brought on by high interest rates and the increased cost of government borrowing to pay for the built-in deficits that we inherited, has altered our estimates of revenues and deficits for the next few years ahead. And so immediately, someone pushed the panic button and says we should call off the tax cuts or we should pass new increases in taxes so that we could take back with one hand what we'd given with the other.

The Democratic leadership in September proclaimed that our plan doesn't work. Well, as John told you, it didn't start until October. [Laughter] But they were like Monday morning quarterbacks who were sounding off on Friday night. Our plan, as I say, didn't start till later, and we won't really feel the effects of it, as John indicated, for some time now, because additional tax cuts will go into effect in January, more in next July, and so forth.

Now, in the meantime, we are asking for additional cuts in spending, and that isn't new. When we got the first package, we told them that there were at least 70-odd billion dollars in unspecified cuts that we would require over the next 3 years to make this plan work. But there's one thing I don't believe we need and one thing I'm against: We're not going to have a tax increase.

Our program was designed to stimulate the economy, increase productivity, and create jobs.

Now, let me give you a figure that doesn't appear, static numbers that are used in estimating the future deficits. They're all related to the budget. We must cut the budget x amount or we must get more tax revenue by a tax increase to meet this size budget.

Well, let me tell you some figures that aren't static. If our belief in improving the economy is correct, by just reducing unemployment by 1 percentage point, you will reduce the deficit by $25 billion. And you can take it from there as to having a goal. What should it be? To stifle the economy with increasing the taxes on the people's backs, or to improve the economy by placing not only 1 but 2 and 3 percentage points of those unemployed back to work in an industrial America that is once again leading the world? That's what our target is.

You know, Senator Kennedy at a dinner just recently, the 90th birthday party was being celebrated for former Governor and Ambassador Averill Harriman. Teddy Kennedy said that Averill's age was only half as old as Ronald Reagan's ideas. And you know, he's absolutely right. The Constitution is almost 200 years old, and that's where I get my ideas.

Marie Montessori, when she was asked why she didn't reply to her critics, replied if she were climbing a ladder and the dog came yapping at her heels, she would have two choices. She could either stop and kick the dog, or she could continue to climb the ladder. And she preferred to climb.

Well, I'll confess, I'm awfully tempted every once in a while to do some kicking. [Laughter] But I think that all of you sent us up there to climb. And with the help of these people that you've sent from your State, and those others from other States up there, I think we have a great team. And no matter how much they pick on us, we do enjoy each other. We're working together. And we're doing just exactly what you sent us up there to do: We're going to make a stronger America, with your help.

Thank you very much.

Note: The President spoke at approximately 9:45 p.m. in the Imperial Ballroom at the Hyatt Regency Hotel. The dinner was sponsored by the Texas Republican Congressional Committee and the Texas Republican Campaign Committee.