Radio Address to the Nation on the Deficit

November 29, 1986

My fellow Americans:

When Nancy and I celebrate Thanksgiving weekend each year in California's Santa Ynez Mountains, we find it a wonderful opportunity to be together with family and friends and, like so many Americans, a chance to reflect on all the Lord's blessings to our country.

We've been particularly conscious this year of one blessing that has made this holiday season a happy one for countless more Americans, Americans who in years past were trapped in want and poverty. Only 4 years ago, as our economic policies were just taking effect, we began what became the second-longest peacetime expansion since World War II. This year the stock market has hit all-time highs, while inflation continues near all-time lows. Only this week new figures show inflation running at less than 1 percent in 1986, the trade deficit continues its substantial decline, and, above all, today more Americans are working than ever before. So, contrary to those many predictions over the last 4 years -- some of them still being heard as late as last August -- there is no recession. Our expansion is not only with us but continues gaining momentum, and, of course, that means more jobs for more Americans. It's this last development we should be especially grateful for. In the past 4 years we've created more than 12 million payroll jobs, and that means 2.2 million people have lifted themselves out of poverty since 1983.

As perhaps you know, it's budget preparation time in Washington. And recently, in reviewing these statistics, I reflected back on some of the solutions suggested a few years ago to our economic problems -- they have been the worst since the Great Depression. I can especially remember one make-work jobs program that Congress came up with, a $5.4 billion extravaganza that would have helped a relatively tiny number of people. Because it was just this sort of marketplace intrusion and government boondoggle that had put our economy in trouble in the first place, I decided that, Thanksgiving or not, this was one turkey we didn't need. And to resounding criticism from Congress and the media, I put a stop to it. Well, instead, we continued with an economic policy that lowered tax rates, cut spending, and abolished unnecessary regulations -- and what a jobs program that turned out to be. We've averaged over 250,000 people finding jobs each and every month. And last month alone, close to 300,000 Americans went to work.

So, I think there's a lesson never to be forgotten here: It's people, not government, who create wealth, provide growth, and ensure prosperity. That may sound elementary enough, but the history or our economic difficulties, especially the terribly big deficits we run each year, stem directly from our failure to remember that government consumes wealth, it doesn't create it. You see, it's a kind of legacy from a period when I was back in college studying economics. Following the theories of a noted English economist of the period, John Maynard Keynes, economists and politicians used to say that when bad times occur the only way to restore prosperity is to spend our way out of it with massive new government programs paid for by borrowing. ``We owe it to ourselves!'' they used to chant. But everybody knows you can't spend yourself rich any more than you can drink yourself sober. And you can't prime the pump without pumping the prime. And that's why the automatic recourse to government spending sent interest rates and inflation skyrocketing, slowed the economy, caused unemployment, and gave us what they call today a structural deficit -- that's a deficit that goes up automatically each year because of a vast array of Federal programs that Congress refuses to reduce and, under the law, the President can't cut back by himself.

Since our first day in office, we've been going after this structural deficit by, first, asking for major spending cuts and, second, asking for reforms like the line-item veto and balanced budget amendment that would, well, unstructure the structured deficit. So, while we've been occupied with the Iranian issue over the past 2 weeks, let's not forget that there are many other issues that concern us. And this deficit problem remains a major priority. In order to pursue this issue and all the others like it on our domestic and foreign agenda, we must be certain to maintain peace in the world and keep our defenses strong while, of course, sparking our domestic economy to even greater growth. As Jefferson once said, his one fear about our Constitution was that it permitted government to borrow. Well, government has borrowed too much and spent too much. So, believe me, I'll be back in Washington next week, determined to work with the Congress to get deficit spending under control and keep America growing with record numbers of jobs for American people.

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

Note: The President spoke at 9:06 a.m. from his ranch in Santa Barbara County, CA.