Remarks at a Fundraising Luncheon Honoring Governor Richard L. Thornburgh in Philadelphia, Pennsylvania

May 14, 1982

Reverend clergy, Governor and a very lovely first lady, the chairman, the officials here of the party, and Senator Specter, and even two of my Cabinet members who are from your State, all the other distinguished guests here at the headtable:

I thank you. It's always a great pleasure to see your fine Governor and to return to this beautiful State.

I never miss the chance to visit Philadelphia, America's historic treasure. For one thing, there aren't too many cities that have been around so much longer than I have. [Laughter] You know, your own Ben Franklin once said, ``Work as if you were to live a hundred years. Pray as if you were to die tomorrow.'' And ever since he told me that, I've been doing just fine. [Laughter]

But this is a happy day. I am here to speak for a man of merit, a leader who certainly has earned my and, I know, your respect and the admiration of people across the political spectrum. He's a man of principle, impeccably honest, cool under pressure. He has a grip on Pennsylvania's problems, a solid program for her future, and the courage and wisdom to make that program work. No one is more qualified to be the next Governor of the great State of Pennsylvania than your current Governor, Dick Thornburgh.

I'll go a step further. A State that can produce a Ben Franklin, Betsy Ross, Andrew Carnegie, Andrew Mellon, Marian Anderson, and Andrew Wyeth, not to mention the Philadelphia Symphony, Penn State football, and Pennsylvania Dutch cooking -- [laughter] -- appreciates real quality. The people of Pennsylvania appreciate Dick Thornburgh, and, Dick, I predict next November they're going to vote to keep you right where you are, doing a great job for your State.

And he has done a great job. He worked with your legislature to pass, I know, one of the toughest anticrime bills in the Nation -- and I don't know of anything that is more needed nationwide than that kind of legislation -- also a bill to get able-bodied individuals off the State welfare rolls. And he's reduced the State bureaucracy by nearly 5,000. Most impressively, he has balanced your State budget four consecutive times, and he's done it the right way, by holding down spending. And it's already been said -- and I have been told before -- the first Governor elected since 1946 to go a full term without raising State sales or income taxes.

Now, as you know, there are no strictures against unbalanced budgets in Washington. Spending other people's money has become an art form. The same people who sound so convincing when they denounce benefits [deficits] {White House correction.} on network television still have their hands in the Nation's cookie jars. The big spenders would have been right at home with Oscar Wilde. He's the one who said that he knew of only one way to get rid of temptation: Yield to it. [Laughter]

You know, if the gentlemen will forgive me here, someone once said that a woman flees from temptation and man gets down on his knees and crawls away hoping it'll jump on his back. [Laughter] Well, Bastiat, the French economist, many years ago said that public funds seemingly belong to no one and the temptation to bestow them on someone is irresistable. And in that regard, I can say that government has proven that thing about crawling away, and they certainly did let it jump on their back.

Over the years, policies of tax and spend have given us double-digit inflation, a trillion-dollar debt, the highest interest rates in more than a century, and the heaviest peacetime tax burden that we've ever known. But when you insist that we reduce the budget the right way -- the Dick Thornburgh way -- by reducing spending and holding down taxes, they act as if you've committed some kind of sacrilege. Proposing that in Washington is a little like getting between the hog and the bucket. You get buffeted about a bit. [Laughter]

Well, I don't think we were put on this Earth to make government bigger. Our task is to restrain spending, create incentives, provide hope, opportunities, and help our economy grow again. Our loyalty will always be to the little taxpayers and never to the big tax spenders.

Our administration promised a program of tax incentives so industry could retool and families could save again for their future. We've kept that promise with the first decent tax reduction in nearly 20 years, and we won't go back on our word. With your support, with responsible Republicans and Democrats working together, I believe that we can pass a sound budget that sharply reduces projected deficits next year and in the years beyond, while it preserves our tax incentives, protects the needy, and permits us to continue rebuilding our nation's defenses.

But even that won't be enough. We want to handcuff the big spenders once and for all. We need all the pressure we can get, all that you can bring to bear on this Congress to pass a constitutional amendment to mandate on the Federal Government balanced budgets. We must be able to do this just like Dick Thornburgh balances his State budget and all across America families balance their own budgets.

Now, of course, our opponents have a different strategy. You don't have to guess what it is. You hear it night after night on the evening news. Now, they also claim to be against deficits. But there's a catch. Defying all the lessons of history and plain common sense, they propose to reduce deficits by huge tax increases. They want to eliminate the third year of our tax cut and indexing, which they protest is excessive. And you've guessed it. They say that indexing is unfair because it favors the rich at the expense of everybody else. Now, you know that's as ridiculous as most of their other standard demagoguery.

First of all, the definition of rich -- most of us accept that that means people that have acquired or accumulated or possess wealth, but in their book it also means anyone who is in a certain level of income, regardless of whether they've accumulated anything or not. And the truth is, indexing, as we know, simply means taking our progressive tax structure and indexing it so that when a working man or woman gets a cost-of-living increase, they are not pushed by that into a higher percentage of tax -- into a higher tax bracket. Even though they've only kept pace with the cost of living, they have not improved their earnings. Well, the people that they call rich don't benefit by indexing. They're already in that top bracket. There isn't anything that they can get pushed into. This is for the people who work and earn.

Let's go beyond propaganda and look at a few facts. First, there's nothing more unfair than what inflation and taxation have done to the pocketbooks of middle America. Not many years ago, only 3 percent of those who work and earn were in a 30-percent tax bracket. Today, 20 percent or more of the work force is paying that tax rate. And when social security, State taxes are included in the total tax burden, many families nationwide are facing a 40- to 44-percent tax rate.

I was pleased the other day to find out that already, just with our little 5-percent tax cut, and in spite of the built-in increase in the social security tax, that May 5th, that was the target day -- that's when the average American finishes -- from January 1st to May 5th -- working for the government, and from then on can keep the money he earns. And I was pleased to see that we've moved that up about 3 days. Now you don't have to work quite as long. And as soon as we get the other tax cuts in place, we'll move the date way up a ways at which you start working for yourself.

Without our tax cuts and indexing, more and more families will be pushed into the highest brackets, once reserved for the super rich. Now, where is the fairness in telling all those unsung heroes working to make ends meet that, no matter how hard they try, Uncle Sam will be waiting to get his hands in their pockets for more of their money? That's not the America I grew up to believe in. We're not trying to help the rich. We're trying to preserve one of the few systems left on Earth where people at the bottom of the ladder can still look forward to getting rich.

Here's one point that every American must understand: The third year of the tax cut is needed most by the very people that liberals would claim to protect by eliminating it. Doing away with that final 10-percent cut in 1983 and doing away with indexing means middle-income families would end up losing about 45 percent of their entire personal income tax reduction by 1985. And since our total tax cut barely offsets the huge tax increases already built into the system, eliminating that third year and indexing would translate into another punishing increase in their total tax burden. And that's what those who oppose our budget say would be fair.

Well, we're not going to let it happen. Fairness demands that our tax program be fully protected. The people want it. They need it. And nothing less in our economy will suffice. The interests of the American middle class must not be squeezed and sacrificed in that old swamp of economic illiteracy which has so bogged down our industrial machine. I'm not accusing anyone of ignorance on the other side. It's just there are so many people in Washington who know so many things that aren't true. [Laughter]

Now, you've been hearing a lot about how our program is hurting the poor. And every day they try to dredge up things and show us the incidents that prove that this is true. Well, I'm here to tell you that most of those examples we can prove were not the result of anything that we've done with regard to budgeting or our economic program.

You've been hearing that we're hurting the poor and those who must depend on the rest of us through no fault of their own. Well, in 1980 -- and I don't very often brag about increases in spending, and I'm not bragging about this -- I wish that we could make our system so that it wasn't necessary -- but we said that we would protect the safety net, that we would see that nothing was done to bring harm to those people who had to have our help. In 1980, the budget of Dick Schweiker -- Health and Human Services was $195.1 billion. In 1983 the budget submitted will call for $274.2 billion. The '80 budget for HHS was 33.8 percent of the total budget. In 1983 it'll be 36.2 percent of the budget. The defense budget that so many are complaining about is only 29 percent of the budget. In other words, that increase from 195 roughly to 274 billion represents our keeping our promise to protect the safety net.

Now, yes, there are individual programs in there that have been changed. When you find a program, for example, in which thousands of people who've been dead for an average of 7 years are still collecting benefits from the government, I think it's proper to change that program. [Laughter]

I received a letter from a lady in Pennsylvania -- Mrs. Eugene Bennett, lives near Butler, Pennsylvania. She said, ``Mr. President, I'm a senior citizen who'll be 76 years old, and when I hear someone blaming you for all that's happening, my feathers get ruffled, and I say my piece. This has been years coming on, and you expect the President to get everything in order in a few months? Bah!'' [Laughter] Well, I thank her, and I happen to believe that Mrs. Bennett is right. You can't undo in 30 weeks what they took 30 years in doing.

Our program didn't solve it all then. But it's beginning to work. Last month, the Consumer Price Index fell three-tenths of 1 percent -- not just a decrease in the increase; it fell below zero. And that's the first such drop in 17 years. For half a year now, it's been averaging 3.2 percent. If inflation had kept running at the double-digit rate it was in 1980, a family of four on a fixed income of $15,000 would be over a thousand dollars poorer in purchasing power than they are today. So, simply by bringing down inflation, we've given them a $1,000 raise.

Do you remember the so-called misery index in the 1976 Presidential campaign? My predecessor invented that. He combined the rate of inflation and unemployment, just simply added them together, and then said that President Ford had no right to even ask to be President, again because adding inflation and unemployment at that time brought what he said was the misery index of 12.2. And so the decision was made. And in the last quarter of 1980, it wasn't 12.2; the misery index was 20.8.

I'm happy to tell you that for the first quarter of 1982, the misery index is 9.8. I didn't even have any misery getting it down to that. I kind of enjoyed it. [Laughter]

Unemployment is too high. But unemployment is a lagging indicator, as we know. Tragically -- and that, I think, is the greatest tragedy of a recession, economic hardship -- it is the last to recover and to begin to climb, the employment rate, when the economy recovers. But there are beginning signs that -- we've been in the trough, we've been at the bottom -- the Labor Department recently reported that 189,000 permanent, full-time jobs were available at State-operated job banks in March -- the first monthly increase since last fall.

The skyrocketing interest rates we inherited devastated the housing industry. But now, as we've begun to bring those rates down, housing starts have been increasing steadily over the last 5 months. Retail sales jumped 1.4 percent last month, and automobile production is scheduled to increase in the second quarter of 1982. We're also seeing more predictions that the actual deficit for fiscal year 1982 will be significantly lower than the $119 billion predicted by the Congressional Budget Office.

Now, of course, I don't place much faith in those various deficit forecasts. I have found that, having gotten a degree in economics myself, it truly is a dismal science. And I don't think that when you start predicting out that far ahead they're going to be very solid projections. But you'll remember our opponents said that their last budget was going to be balanced. And it wasn't, by a long way. If it turns out that the Congressional Budget Office couldn't accurately predict the deficit for a fiscal year which only has 4\1/2\ months to run, why should they be any more accurate in their forecast of what the deficit will be 4 years from now, not 4 months?

Finally, Americans are beginning to save again. The savings pool is beginning to expand. In the 6 months since that first 5 percent of our tax cut took effect, the rate of personal savings rose to 5.7 percent from 5.1 percent the year before -- not great, but going up. And with inflation down, it pays to be a saver again. And it helps our country, because more savings means more capital to finance new investment, jobs, and economic growth. It also indicates lower interest rates ahead.

We've come a long way. We've accomplished a lot in a very short time, and this is no time to turn back. What we need now is the courage to stay on course.

In his poem ``Columbus,'' James Russell Lowell wrote of that momentous voyage across the Atlantic. The crew had been told again and again that they would soon see land on the horizon, and they saw only water. They were tired, hungry, lonely, desperate, and ready to mutiny. But as Lowell wrote, ``Endurance is the crowning quality and patience all the passion of great hearts. One day with life and heart is more than time enough to find a world.''

Well, with our courage, with the assurance of continued leadership of great Governors like Dick Thornburgh, we can endure, and we can prevail. We can find that world and bequeath peace and prosperity to our children and their children. I know we will.

And I thank you for this very wonderful luncheon, this opportunity to be here with you all. And I just want to tell you, you do what you know in your hearts is right, because Washington would be an even lonelier place if Dick Thornburgh were not in the capital here in your State.

God bless you all.

Note: The President spoke at 2 p.m. in the Grand Ballroom at the Bellevue Stratford Hotel. Prior to his appearance at the luncheon, he attended a reception for Governor Thornburgh at the hotel.