Radio Address to the Nation on Economic and Budget Issues

October 23, 1982

My fellow Americans:

Over the years, we Americans have faced many hard choices, and politics being politics, there have been a few who have tried to obscure the issues and exploit them for political gain. But time after time, the common sense of the American voter has outsmarted those who would mislead us. Abraham Lincoln had a simple motto: ``Trust the people.'' I don't think anyone since has improved on that advice. Given the facts, the American people can be counted on to make the right decision.

So today, in the midst of this noisy election year, let's clear the air for a moment and talk facts, not opinions. Specifically, let us expose six big myths that are being spread by people who ought to know better.

Myth number one -- and I'm sure you've heard this one again and again -- is that increases in defense spending in recent years are one of the main causes of projected Federal deficits. The fact is that the defense share of the Federal budget and the gross national product has been shrinking sharply over the last 20 years. It was 9 percent of the gross national product in 1960. This year, it's only 6 percent.

It's nondefense spending that's been growing. During the last 22 years, while defense spending was shrinking as a part of the gross national product, nondefense spending nearly doubled -- from 9 percent of the gross national product to nearly 18 percent. If it weren't for the drastic growth in nondefense spending, we'd actually have a big budget surplus today.

Myth number two is a whopper you've been hearing a lot from the people who'd like to take back your tax cuts. They claim that the other cause of big Federal deficits is the well-deserved tax relief we won for you over the objections of the big spenders in the Congress. That just isn't true.

The reality is that the effect of the tax cuts enacted in 1981 was mainly to hold tax rates even, to keep the hard-pressed American taxpayer from being bled even drier through further hikes and the bracket creep caused by inflation. Between 1980 and '85, taxes, as a share of the gross national product, will drop by less than 1 percentage point. The real culprits for those whopping deficits are the same congressional big spenders who voted down the balanced budget amendment.

Myth number three -- and I'm sure you've heard this one, too -- is the charge that this administration has slashed Federal social spending and caused a lot of human hardship. Well, that sounds bad. But is it true? The answer is no.

This administration is spending approximately three times as much on nondefense spending as the Kennedy administration spent in 1963, and that's even after you adjust the figures for inflation. Yes, we're doing everything we can to cut waste and root out cheaters. But the budget for the Department of Health and Human Services is greater than at any time in America's history. It amounts to 36.2 percent of the budget. It was only 33.8 percent of the 1980 budget. There are only two budgets in the world larger than our '83 Health and Human Service budget of $274.2 billion -- the total budget for the United States and the Soviet Union.

It's easy to see how the myths persist. Not too long ago, a family of six in a Northeastern State was portrayed on television as destitute. That family was eligible for programs totaling $1,159 per month, tax free.

Myth number four is an especially cynical one because it tries to exploit the real suffering many people are feeling and feeds on the kind of fear and despair that I spoke of last week and which can slow the recovery we all want. It claims that the 11 million people who are currently unemployed won't find jobs until after the recession is completely over and we're back to full recovery.

In effect, this myth cruelly condemns millions of our friends, neighbors, and family to a future without hope. The reality is a lot better. Bad as current unemployment is, in most individual cases it's a temporary problem. For example, of all the workers who became unemployed last July, one-third were no longer unemployed within 30 days, and two-thirds were off the unemployment list within 60 days. Now, true, some of those people had withdrawn from the job market. But the majority of them had found new jobs and were helping achieve the economic recovery we're all working so hard for.

Myth number five would have you believe that America's best days are behind us, that we're falling behind our foreign competitors in our standard of living. Well, what's the fact behind the myth? The good old U.S.A. is still the most productive of the world's major industrial countries. In 1980, the last year with reliable information, real per capita income in the United States was 14 percent better than Germany, 20 percent better than France, and a whopping 35 percent ahead of Japan. In the last 2 years, with those countries suffering from the same worldwide recession we're experiencing, the United States is still number one.

And finally, there's the biggest and cruelest myth of all -- the doom-peddling argument that there is no end in sight for this bitter recession. The reality behind the myth: We aren't out of the woods yet, but we're getting there. Inflation and interest rates are down. Yesterday a leading bank lowered its prime rate to 11\1/2\ percent, and others will follow. Real wages and retail sales are moving up. Housing starts and car sales, so vital to recovery, are both heading up again. And the strong surge of investor confidence we've witnessed in recent weeks means new growth for our economy and more jobs for our people.

It's been a long, hard fight, going on for much more than the last 2 years, and it isn't over yet. But thanks to your patient courage and your ability to see the truth behind the political fairytales, America is on the road to lasting recovery.

Until next week, thanks for listening, and God bless you.

Note: The President spoke at 12:06 p.m. from Camp David, Md. The address was broadcast live on nationwide radio and television.