Remarks and a Question-and-Answer Session With State and Local Officials During a White House Briefing on the Program for Economic Recovery

May 28, 1981

The President. I am pleased that you're here because I think, in large part, one of the things underlying the program upon which you've been briefed and are going to continue to be briefed today is the balance between State and Federal and local government. And I think that balance is the key to economic recovery in our country and recovery of a lot of other things that you have to deal with every day.

You know what's best for your States; you know what's best for your communities. You are the closest to the people; you hear them. And we in this administration want a partnership with you, and I think with such a partnership there'd be no limit to what we can accomplish.

We need your help in getting the consolidation of categorical grants into block grants. Granted, there are going to be reductions in the budget, as you've been told. But I think if you were given the flexibility to use those block grants with your judgment, the way they should be, set your priorities, that I don't think that you'll feel the pain of those cuts as much as maybe somebody in the bureaucracy up here's going to feel them.

Now, I know that this afternoon that's going to be the subject that you hear, so I'm not going to get into great detail about it.

There is one other thing that I think -- if you haven't heard today -- that you would be interested in -- our task force on regulations. So far, more than 100 of them have been targeted for elimination, and more than a third of that 100 will remove the restrictions that are presently imposed on local and State government entities. And having been in State government myself, I've got some experience with some of those regulations and restrictions and the additional paperwork that they call for.

You know what's happening in the country. You're closer to the people, and you hear the cry of the people for some reform. We hope that we'll soon have -- I'm hoping anyway; I know Don Regan has spoken to you this morning already about it -- but I hope that very shortly we'll have a bipartisan tax policy similar to the Gramm-Latta bill, one that we can all go forward together on.

One last point here: Senator Paul Laxalt is chairing a task force and an advisory committee, chairing both of them, and they're on federalism. This, if we'll only look at it, is the secret of America's success. We're unique in all the world in that we were set up to be a federation of sovereign States with as much law as possible kept at the local level.

Now, you hear a lot of jokes every once in a while about silent Cal Coolidge. But I think the joke is on the people that make jokes, because if you look at his record, he cut the taxes four times. We had probably the greatest growth in prosperity that we've ever known. And I have taken heed of that, because if he did that by doing nothing, maybe that's the answer that the Federal Government better -- [laughter] -- --

But I have a quote -- 1926, from Cal Coolidge. He said, ``No method of procedure has ever been devised by which liberty could be divorced from local self-government. No plan of centralization has ever been adopted which did not result in bureaucracy, tyranny, inflexibility, reaction and decline. Of all forms of government, those administered by bureaus are about the least satisfactory to an enlightened and progressive people. Being irresponsible, they become autocratic. And being autocratic, they resist all development. Unless bureaucracy is constantly resisted, it breaks down representative government and overwhelms democracy. It is the one element in our institutions that sets up the pretense of having authority over everybody and being responsible to nobody.''

Now, I know that time is limited, but we can have some dialog, at least, here before they grab me.

Q. Mr. President, Joe Malone from Boydentown City, New Jersey. Much has been said about the possibility of a national workfare program. Will the administration be getting involved in a national workfare program?

The President. This is what we are hoping we can achieve. It was an experiment that we tried in California, when we reformed welfare out there, of getting the able-bodied welfare recipients to work at useful community projects in return for their welfare grants. And the way we operated it there -- I don't know what the plans are that are going forward over in Senator Schweiker's office now, but I know he's heart and soul in favor of this, in support of it.

What we did was, they worked 20 hours a week, not 40. And we assigned representatives from the State labor department to them as, what we called, job agents. In other words, we did not want them as permanent. We started first by getting every element of local government, from school districts to communities, counties, whatever, to submit to us those things that, as we defined it, they would be doing if they had the manpower and the money, but which they were otherwise not able to do. In other words, don't invent, make work.

And we screened all those to make sure they were legitimate undertakings. Then these people were sent for to go to work, report for work in those projects. And the job agents watched them, and on the basis of what they saw, they actually acted as agents and went out and tried as quickly as possible to move them from those jobs into private enterprise jobs. And this was most successful in putting tens of thousands of people through that program out into private enterprise jobs at a time when unemployment was increasing in the '73 - '74 recession.

There was another sideline benefit. Thousands of those people who were notified didn't report, and we stopped sending the checks, and we never heard from them again. [Laughter]

Q. Mr. President, I'm Virgil Brown from Cuyahoga County, Cleveland, Ohio. How do you propose to get fair treatment for, let's say, in a State like Ohio, where we have Cleveland, which is a very urban area, and you have rural areas, and if the block grants are going to come through the State, how do we get fair treatment out of that?

The President. Well, again, I just have to feel and have faith that a State government has got to be fair in this or there will be a different State government. And we haven't had an opportunity -- I haven't had yet -- in the arranging of this program to talk about whether there would be any recourse kept available for the Federal Government if someone tried unfair tactics. But I've met with all the Governors on this, and I know a number of them are very supportive, and I believe these are honorable men who are not going to let that happen. They think they represent all the people.

Q. Jim Long from Indianapolis, Indiana. Mr. President, I have a question on Federal revenue sharing. I feel, and I'm sure a lot of other local officials feel, that we should be helping ourselves, like you do here at the national level. And at the same time, I think some of us are going to have to be prepared enough to know what's going to happen with regards to Federal revenue sharing and whether it's going to be done away with in the near future or not.

The President. Well, you mean Federal revenue sharing; you mean by way of the block grants that we're talking about. Let me tell you, we need your help, because this is going to be probably one of the most difficult of all the parts of our reform program to bring about. There is a great reluctance on the part of the Federal Government to trust the people out there, and they believe that inhaling the fogs off the Potomac imparts a wisdom that is not generally shared. [Laughter] But we are going to need help to get that. There's a reluctance to give up that authority.

I have to tell you that I think the block grants -- my long distance dream is that the block grants are only a bridge, that the real ultimate goal should be to transfer the actual sources of taxation to State and local governments.

Q. Gary Thalen, Mr. President, and I'd like to thank you for this afternoon here, and appreciate the administration's effort in their deregulation program and the bureaucracy that causes so many problems on counties and municipal governments. Thank you, sir.

The President. Thank you.

Q. Mr. President, this is just a little change in the procedure here, but one of our constituents in Cape May County, New Jersey, wrote a poem. And I think he might have sent it to you, and I said I was going to read it if I got the opportunity. [Laughter]

``Faith and a dream is all that we need to carry us on like a galloping steed. With eyes to the future, let us pray, God bless America and the American way.'' Andrea Lippia wrote this from Cape May County, and I'd like you to have it.

The President. Thank you very much. Thank you. And I agree, this country started with a dream.

Q. Mr. President, we're going through the same process -- I'm Marie Muhler from New Jersey -- on our budget as the Federal Government is. The only information that we are getting from our bureaucrats in every area in government at the State level is a list of all the cuts. What we would like to know is the information about the block grants, some idea. If there's a billion dollar cut, we want to know just what portion -- is it 20 percent that can be restored in block grants, is it 70 percent? -- or some way to lobby our congressional delegation so that those of us that are in a minority have the ammunition to say, fine, maybe those are the cuts, we make these decisions, and this is where we have to trim before we adopt our budgets.

The President. Well, I think very possibly this afternoon you might get an answer to that in the briefing that will be on block grants. If not, I certainly will make sure that that is a consideration. I think all of us are aware that most of the screams of pain that we're hearing are coming from the bureaucracy and not from the supposed victims of our cuts.

Q. Mr. President, my name is Hazel Gluck. I'm an assemblywoman from New Jersey. I know one of the cornerstones of your economic recovery program is your tax cut plan. I read with great concern, through the media, through the New York media and the New Jersey media, that Wall Street, the financial community, is resisting the tax cut plan because they feel it's inflationary. How do you address that?

The President. Well, one thing that I address it on is that I have never found Wall Street a source of good economic advice. [Laughter] They are sitting there watching anything that they think may change the interest rates and the bond market and so forth, and it is true that they have not recognized history, for that matter.

John F. Kennedy proposed a broad, across-the-board income tax cut over a 2-year period, and it was implemented after he was gone. But the economists were rising up and telling him that this was going to reduce Federal revenues by $83 billion, and he had some very good answers, such as he said, ``A rising tide raises all boats.'' And he stuck to his guns.

Well, they made about a $143 billion mistake, because when the score was finally in, the government had actually increased its revenues at the lower rates by more than $50 billion. In other words, proper tax cuts can stimulate the economy. The individual pays less tax but there are more individuals paying it, and the economy is broadened at every level.

This happened with regard to the cut in the capital gains tax. They reduced the rates in the capital gains tax, and the next year the government got more money from the lower rate. Now, what was the answer to that? The answer was that when the tax rates are at a certain level, those people with money to invest start looking for tax shelters, and they're not going to increase productivity with tax shelters. And once you make it more profitable, they bring that money out of the tax shelters and start investing in industry, in America, and backing entrepreneurs with commercial ideas and so forth.

You can go all the way back. I mentioned the tax cuts in Coolidge's era. Every one of those tax cuts resulted in more revenues for the Government because of the increased prosperity of the country as a whole.

As I say, I think that Wall Street, in all due respect, I think they're looking through a very narrow glass, and they've only seeing one facet.

Q. My name is Emily Morris, and I reside in a county that is three to one Democrat registration. I want to applaud you on your program, to let you know that I support it and many of my race support the program as well, and also to let you know that direct services to people do not have to be phased out or eliminated. We can look for other options and other alternatives, and I want you to know that in Delaware that's the way we're going to be going.

Thank you very much.

The President. Oh, bless you, and thank you. Thank you very much. I could take advantage of this. They said that I could only take one more question. That would be a great one to quit on. If you'll all forgive me, I'll take this gentleman here. I know you've had your hand up before.

Q. I'm Chuck Hebner, speaker of the house, in Delaware, also. I applaud your practical approach to the regulation problem, but I'd like to call your attention, if I may, to one of the most pervasive regulatory bodies we face. That is the Federal courts and the Federal judges, particularly. I don't want you to try to fetter them, sir, but I wish there was a way to channel their practicality, and I just ask you to take a look at that problem.

The President. We are aware of that problem and, of course, probably the best thing I can do is wait until it's my turn to appoint some. [Laughter]

Thank you all very much.

Note: The President spoke at 11:34 a.m. in Room 450 of the Old Executive Office Building. The briefing was given for State, county, and city officials from the north-central States.