Remarks About Federal Tax Reduction Legislation at a Meeting With State Legislators and Local Government Officials

July 23, 1981

I'm glad to have this chance to talk with you all today, although I must say I stand here with kind of mixed emotions. I know that you've been briefed, and I know that others have addressed you, and the Vice President, I know, has been talking to you about regulations, and I wonder if there's anything that I can say that won't have been said before. But I'll try for just a few minutes, and then we'll get to a dialog instead of a monolog from me.

I think the American people are on the verge of making some historic changes in the way their government is run -- changes that will return this country to the way that it was supposed to be run all along -- and your help is a key to making sure these changes are made.

Today in the Congress, the Senators and Representatives from your States and districts are negotiating on the final dimensions of the largest budget cuts in our history. And they're also determining how much flexibility you'll have in deciding how money in your communities is to be spent. They're also reaching the crucial stages in the struggle to give the American people a meaningful tax cut -- a struggle that will leave more money where it's earned -- to offset the largest single tax increase in the history of our country, an increase that was passed last year.

Now, the tax debate may have gotten confusing and differences have begun to blur. Yesterday in this room we met with a number of newspaper editors, and I was amazed at how little they understood of what really is going on in the debate. And it concerned me, because when some of them suggested to me that, well, maybe I ought to explain this, I wanted to say. ``Well, you can help.'' [Laughter]

There is a blur about it, but there's one indisputable fact in the fight that's going on now, or the debate, about the tax bill. The House leadership is offering the American people a tax increase, no matter what we may say about it or how many cuts may be enclosed in their bill. We think that our bipartisan bill, in fact we know, offers a real tax cut. The proposal coming out of the Ways and Means Committee provides for a 15-percent cut during the time when your real tax burden will go up by nearly 22 percent due to that built-in tax increase. Now, that is a tax increase, no matter how much they reduce it or somewhat.

We would offset that 22-percent climb with a 25-percent cut to actually eliminate the tax increase and at least have a few points below the present level. The Democratic leadership talks magically of a mystical trigger that would, after the second year, provide enough of a cut to match ours in that third year. But that trigger was designed by people who don't really believe in cutting taxes. And they're the ones who raised the taxes on the American people in the first place.

And I have a feeling our tax program is designed to stimulate the economy, to offer optimism to people to where they will move forward and begin expanding productivity in this country. I have a hunch that the American people are just cynical enough that a trigger that 3 years from now is supposed to, maybe, cut the taxes again -- they'll figure no one is ever going to pull that trigger. So, we think of it as avoiding a long-term commitment to the American people to cut taxes decisively and permanently.

And our bipartisan bill, supported by an overwhelming majority of Democrats and Republicans in the Senate and supported by members of both parties in the House, makes that kind of commitment. And I'd like to say a word to you about my own strong personal commitment to this. Let there be no doubt I'll go any place, any time, to ensure that the working people of this country get their first real tax reduction in nearly 20 years. Anything less will not get the economy back on track.

The economic mess that we're in doesn't mean there's something wrong with our American system. Our economic system is sound, and our way of government is the best yet devised. But we've abandoned basic principles of that system. Of everyone in government, you know best what is happening in the workplaces of this country, to family budgets, and to savings accounts. You know what's happening to the productivity and what is not happening in investment. You're closer to the people, and you hear their cry for reform. With your help, the Members of the Congress may also hear that cry.

Our program of budget cuts will discipline the Federal Government to live within its means, and the bipartisan tax rate cuts will once again reward the hard work and the spirit of enterprise that is the foundation of our economic program.

We've also taken important steps to reduce the burden of overregulation, as I'm sure the Vice President told you, and established a coordinating task force on federalism and a federalism advisory committee, both chaired by Senator Paul Laxalt, who was Governor of Nevada, to restore power and authority to local governments.

Thomas Jefferson wrote that ``Were we directed from Washington when to sow and when to reap, we would soon be wanting for bread.'' Well, figuratively speaking, I'm afraid that's exactly what's been happening. To return America to prosperity, we must call on the people at the local level, on the talent in our State legislatures, in our county seats, and our city halls. We must respond to the needs and the dreams of our people, and you are the officials who know best in government what they are.

I believe as our Founding Fathers did that local governments should do as much as they can, because they can do so much so much better than distant officials in some faraway bureaucracy. We're unique in all the world. I had this borne in on me at the summit meeting in Ottawa the other day. We are a federation of sovereign states with as much law as possible kept at the local level. And federalism has been the secret of America's success, and it will be a priority again. America must return to her first and well-charted course. And with your help, that's exactly what we're going to do.

Thank you.

Note: The President spoke at 11:36 a.m. in the State Dining Room at the White House.