Radio Address to the Nation on the Fiscal Year 1987 Budget

February 8, 1986

My fellow Americans:

If you listened to my State of the Union Address this week, you heard what will be my number-one priority in the budget debate this year: to cut the fat out of the Federal budget and to stop anyone trying to cut the heart of your family budgets. As a matter of fact, I want the Federal Government to leave the family budget alone. As you may know, a law recently passed by Congress, Gramm-Rudman-Hollings, mandates steadily declining deficits each year. Currently, this law is being challenged in the courts. But whatever the outcome, we intend to go forward with our plan to bring the budget into balance by 1991 without undercutting the progress we've made in defense, without cutting Social Security or essential support programs, and without raising your taxes.

But a funny thing happened on the way to Capitol Hill. Those who've carped loudest about the need to cut deficits suddenly cried ``foul'' when confronted with real proposals to cut deficit spending and eliminate government waste. Think of it -- self-proclaimed deficit warriors saying that a nearly trillion-dollar budget, a sum too staggering to comprehend, more than double what government spent only 10 years ago, is so inadequate it would wreak havoc throughout the Nation.

So, once again, as they do year in and year out, they trot out their tired old litany: Tax increases are unavoidable. Well, is that so? Let me give you some facts about how a little cooperation and common sense can put us on a glide path to a balanced Federal budget without harming your family budgets or hurting any American truly in need of assistance. We begin with the projected deficit for fiscal year 1987 -- $182 billion. Under Gramm-Rudman-Hollings, we must reach a deficit target of 144 billion. So, that means we need to cut the deficit by $38 billion to get down to the 144 billion target.

Where will we get the 38 billion? Well, we're going to raise a portion by holding a little garage sale to get rid of some of our business ventures operating under government subsidies that are better left to the private sector. We're going to sell our train set, better known as Conrail. It's high time government got out of the railroad business, and that includes subsidies to Amtrak. We can no longer justify paying subsidies of about $33 for every passenger who boards an Amtrak train, or funding a system in which three-quarters of the stations board fewer than 50 passengers a day, or asking taxpayers to pay 25,000 employees who provide Amtrak services for only an average of 57,000 riders per day.

We're also going to raise some $2 billion in user fees, making sure government gets paid for government services when those services benefit special interests. For example, the U.S. Army Corps of Engineers spends almost $3 million every day to operate and improve our harbors and inland waterways, yet commercial cargo carriers pay only 10 percent of that cost. Contrary to what you've heard, defense is not off-limits. We're cutting $3 billion there; that's $3 billion below the level Congress agreed to in August.

The balance of deficit reductions we need to make to get down to $144 billion will come from $22 billion in program cuts. Now, 22 billion is a lot of money, but it's only about 2 percent of our total budget. Take out items we won't touch, such as Social Security and interest on the debt, and the cuts we're proposing come to about 5 percent of the remaining budget -- 5 cents on the dollar. That's what we're asking Congress to cut. If Congress can't cut 5 cents on a dollar, they should never again utter a word about budget deficits.

Let's face it, there's a ton of fat in this trillion-dollar government. I'm talking about government spending over $2 billion for a Los Angeles mass transit system, about as much as government could collect in revenue from all the individual income taxes paid in the State of Mississippi this year; or government spending $230 million a year for a job placement program that duplicates other programs and has failed to help workers adapt to a changing economic environment.

My fellow Americans, we're poised for an historic reversal against rising deficits. The collapse we're witnessing in oil prices will give America's economy a tremendous boost -- stretching your take-home pay further, reducing cost to industry, and making it easier for all to invest for our future. So, toss out conventional wisdom and get ready for a banner year. Already, unemployment is down to 6.6 percent, below our own projections for 1986. We're going to reach our deficit targets. We're going to preserve essential services and keep America strong. And we're not going to let anyone raise your taxes -- period.

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

Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.