May 28, 1987 Thank you all very much, and let me say a special thank you to your chairman, Stan Gault, and to your president, Sandy Trowbridge. It's a pleasure to be here today. This is the fifth time in my Presidency that I have addressed you, the representatives of more than 13,500 of America's manufacturers. For 92 years, the National Association of Manufacturers has spoken for the concerns of industry. Ninety-two years -- you know, it's great to find something older than I am. [Laughter] In those 92 years, NAM has had many proud achievements, but none prouder than its role over these past 6 years in helping us get the American economy off the ropes and back into fighting trim.
Six years ago, when we came to Washington, our economy was taking a pounding. It was reeling from an economic one-two-three combination of soaring inflation, record-high interest rates, and stagnated growth. The real income of the typical family was on a decade-long roller coaster ride towards the cellar, while taxes had rocketed towards the sky. American manufacturing had taken a particularly heavy beating. From the mid-seventies onward, productivity growth had dropped sharply. Venture capital for starting new businesses had virtually evaporated; the real value of stocks had slipped steadily down; and America had stopped investing in its future. Things got so bad that, in 1978, leaders of America's largest and most important industrial laboratories warned that even funds for research and development were drying up and we were in danger of losing our critical leadership in technology. All in all, America was facing the most alarming economic crisis since the Great Depression of the thirties.
How had it happened? How had the greatest economy in the world been brought to its knees? Well, as one prominent historian of our times has written: ``The most detailed analysis of this stagnation and decline suggested the causes were mainly political.'' ``They were,'' he said, ``failure to control the money supply, excessive tax burdens, and government intervention and regulation.'' In short, the reason was big government -- its rules and its spending and the taxes and monetary policies it used to finance its spending. Well, what with oil shortages and all the rest, there was even a story making the rounds at the time that had one fellow asking another, ``What would happen if the Government took over the Sahara?'' And the answer was, ``Pretty soon, sand would be in short supply.'' [Laughter]
Well, this is the mess that, beginning in 1981, you helped us clean up. Where our predecessors had talked of ``malaise'' and how complex things were, we simply placed our faith in the American people. We cut their taxes and even put a brake on the growth in government spending -- though not enough of a brake. We cut regulations as well, eliminating 40,000 pages from the Federal book of regulations. All in all, we got the tax-and-spend crowd on the run, and you know the results. Today we're in our 53d month of uninterrupted growth; that's just 5 months shy of the longest peacetime expansion in American history. In this expansion we have created over 13\1/2\ million new jobs; that's more jobs than Europe and Japan combined. We have brought interest rates to the lowest level in a decade, inflation to the lowest in a quarter of a century. Real family income has risen strongly and steadily.
Since our recovery began, there's been a new sense of looking to the future in the country, and that's reflected in our investment climate. Venture capital has once again become plentiful. We have created millions of new businesses. And the stock market, which is the source of new capital for established businesses, has more than doubled in value. Not long ago, there was a newspaper story about a German entrepreneur who has built three factories here in America and is building another. These factories make products for export to Latin America and the Far East. Explaining why he located export factories here, not Germany, he gave a simple answer: taxes. ``In the United States,'' he said, ``I have to earn $1.8 million in order to put $1 million in my own reserves.'' In Germany he had to earn not $2 million or $3 million, but $4 million to do the same thing.
Well, with this kind of investment climate, America has once more become the world's technological dynamo. Every day brings headlines about new products and new advances. To cite just one area, communications technology, as one expert has said, America is ``light-years ahead of everyone.'' Jobs, growth, and opportunity -- this is what our expansion has meant to our country, and the leading indicators point to more of the same. Of course, our critics said it couldn't be done; then they said it hadn't been done. But as I've said to you a few times before, I knew our policies were working when they stopped calling them Reaganomics. [Laughter]
But there's one thing about our critics: No matter how good things are, they're always with us. They can no longer complain about the lack of jobs, not when a greater proportion of Americans have been at work this year than ever before in our history. They can no longer talk about fairness, not when we slowed the climb in the poverty rate that they began, and then put the poverty rate into the fastest fall in almost two decades. So, now they've invented new charges. They say the American middle class is disappearing, and not just the middle class -- American manufacturing, as well. America is deindustrializing. Well, let's look at those charges.
Declining middle class -- the truth is just the opposite. More than 60 percent of those 13\1/2\ million new jobs are in the high-paying managerial, professional, and technical occupations. And with families taking home more money each year, one authority on demographics has said, ``The middle class is strong and should remain healthy.''
Deindustrialization -- since our recovery began, American manufacturing productivity has shot ahead at the fastest rate in 20 years. Overall our manufacturing productivity is way above that of our next closest international competitor. Manufacturing output has soared almost 30 percent. And we've added more manufacturing jobs than either Europe or Japan. As one commentator has said, talk about the decline of the middle class and related charges is ``an exercise in statistical mythmaking designed to advance a political agenda.''
Well, you know, when I hear all the charges that our critics shoot at us, it reminds me of a story. When you get to my age, everything reminds you of a story. [Laughter] This one is about a fellow who went into the Army. In boot camp, he spent hours on the firing range learning to shoot. When he was done with boot camp, they gave him one of those medals that says ``Marksman'' on it. He went home -- very proud -- on leave, and near the edge of town he saw somebody's homemade firing range -- a wall, and on the wall lots of chalked bull's-eyes, in the middle of every bull's-eye, a bullet hole. Well, he wanted to see who could shoot like that, and finally he tracked down a 7-year-old boy. He asked the kid, ``How'd you do that?'' And the boy answered, ``I take my gun, I line up my sights, and pull the trigger. Then I take my chalk, and I draw a circle around the hole.'' [Laughter] Well, that's about how ``on target'' the charges of our critics have been.
I said these charges were to advance a political agenda; protectionism is part of that agenda. And some here in Washington point to our trade imbalance and say that the only answer is to throw out the international rule book and get tough. I remember the last time we got tough that way, in a way they mean tough. It was called Smoot-Hawley, and it brought on, or at least deepened, worldwide, the Great Depression.
Where unfair trade practices are the problem, we have and will make full use of our trade laws, laws that conform to our international agreements. Our recent semiconductor action is an example of how effective we can be. In the past 6 years, we've used the sanctions provided for in our trade laws more extensively than any other administration. Our goal is clear: Trade must be free, and trade must be fair. But the problem isn't always abroad. Here at home, we're working to make America more competitive. And the most important way to do that is to put a leash on runaway Federal spending. And that's why I'm here today: to ask your help in that effort, because here in Washington, the big spenders are on the hunt again. One Washington insider said recently that, ``You can see the pendulum starting to swing back toward more spending.'' And you know what that means. If the big spenders get their way, it'll be tax time again in Washington.
Already both Houses of Congress have passed budget plans that gut defense and raise taxes. And how they could attack pay and weapons for our men in uniform who are committed to protecting freedom and democracy, it's beyond me. The leadership of the House has come up with so many ways of increasing taxes that Capitol Hill is starting to talk about the ``Tax-of-the-Month Club.'' [Laughter] They've even suggested putting off the final year of tax reform. Well, let me say this in plain, unmistakable English: The ``Tax-of-the-Month Club'' is one club the American people aren't joining, and I'm not either. Congress' answer to the deficit problem is more taxes for more spending. It's time to say no to the free spenders. I will veto any legislation that raises the American people's taxes.
Now, this is not the time to give up on our battle against deficit spending -- not now, just as we've begun to make progress. In the first term, we slowed the growth of spending; this year we're going even further. Because of Gramm-Rudman-Hollings, when this year is ended, the deficit will be down by about $50 billion. Yes, this year, for the first time in 14 years, the Federal Government will spend less, after taking out inflation, than it did last year. And as a proportion of gross national product, the deficit has declined from 6.3 percent in 1983 to less than 4 percent this year. But now the word among the big spenders on Capitol Hill is, as one lobbyist said a few months ago, ``It's feeding time again.'' The session wasn't 12 weeks old before this Congress began showing its true colors and passed two outrageous spending bills over my veto. NAM worked with us to try to stop those bills, and let me say, for all Americans, thank you.
Now, although you were behind us in those veto battles, I'm sure many of you didn't have the time to study the bills in detail, so I thought I'd give you a few samples from one of those porkers -- [laughter] -- the highway bill. This year's highway bill included 152 demonstration projects; 5 years ago, had only 10. That's because, traditionally, demonstration projects are supposed to test, that is, ``demonstrate'' new and revolutionary methods for building and maintaining highways -- period. Well, in this highway bill, Congress authorized a project that will -- in the words of the highway bill -- ``demonstrate the effectiveness of parking facilities in relieving on-street congestion.'' Another project will demonstrate -- to quote again -- ``methods of improving access to a flood memorial.'' The flood of projects like this is part of why I demonstrated where to park my veto pen. Override or no override, it was a bad bill.
Now, if you talk to the big spenders around town, you'll probably hear them say that the public mood has shifted, that polls show that the American people want more spending. Well, let me ask you to show them a little common sense. The American people don't want more spending; they want better results. For example, the American people care about the family farmer, and so do I. But neither they nor I want a farm program that makes farmers less able to compete in the world markets. And no one wants one that gives, as our current law does, more than $1 million a year in farm aid to each of 144 wealthy dairy farmers as well as to the members of the royal family of a foreign country whose American farms are bigger than their entire country.
Anyone who tells you we can't cut the deficit without raising taxes and attacking defense is just not telling you the truth. Last year we got the special interests out of the tax code; now it's time to get them out of the budget. And the way to start is by changing the way Congress does business on the budget. Ever since the middle seventies, when Congress shoved the President out of the way and took over the budget process almost entirely, deficits have soared. Today Congress' budget process is in shambles, with missed deadlines and budget resolutions that mean nothing. I have agreed to have members of my administration sit down with Congress and talk about the budget process. Congress needs a way of ensuring that it will honor budget decisions once it agrees to them -- no back-door spending, no missed targets. Budget process reform is essential, but let me add, the basic problem here is that Congress is attempting to do something it was never intended to do.
Our founders intended the President to represent the broad national interest, including the interest in an overall limit on spending. That's why they gave the President the veto. But in recent years, Congress has found ways to encroach on Presidential veto power. This year, for example, the Government is being financed out of a single, gigantic, catchall resolution. My choice: sign or shut down the Government. One scholar who's looked at this and other changes has concluded that ``current legislative practices have vitiated the veto, in effect, presenting the President with an offer he can't refuse without appearing to be responsible for a governmental crisis.'' And this scholar said, it's ``hard to escape the conclusion that government can't control itself. We may be heading for a constitutional crisis.''
Well, this is why I've said, over and over again, it's time to give the President what 43 Governors have, what I had when I was Governor of California: the ability to veto spending, project by project, a line-item veto. If the President abuses the veto, Congress has the power to override him. Truth is, they just don't want to have to vote on some of those pure pork items when they're out there standing alone in the open and not buried and hidden in the budget bill.
We also need a constitutional provision that 44 States have written into their own constitutions. Polls show that 70 percent of the American people support a balanced budget amendment and have for years, but we can't even get an up and down vote in Congress. The reason: The big spenders don't want a balanced budget, pure and simple.
Well, maybe it's getting time for the American people to take matters into their own hands. An amendment enters the Constitution when three-fourths of the States approve it. But first, someone has to draft the specific amendment for all of them to consider. Under the Constitution, Congress can do that, or the States themselves can call a special convention to frame the common language. It takes 34 States to call such a meeting. Thirty-two have already issued a call for a meeting to draw up a balanced budget amendment. Now, I would prefer having Congress do the drafting, but one way or another, we owe it to our children to see to it that, before the decade is out, the Constitution of the United States of America includes a balanced budget amendment.
You know one of the principal goals of my last 2 years in the White House will be setting America on the road to eliminating deficit spending. In the last 6 years, we've taken America from the worst economic crisis since the Depression to one of the longest peacetime expansions, as I said, in our entire history. We have slowed inflation, produced a new era of growth and opportunity that has reached all Americans. We came into office with a plan: lower tax rates, less regulation, monetary stability, and controlled Federal spending through a constitutional amendment. We put three of the four parts into practice and got four of the best years in our history. But unless we get the big spenders in Congress under control, we could see inflation and stagnation returning. That's what the budget battle is all about: making the next 4 and 8 and 20 years as good as the last 4. Continued growth and opportunity for a generation -- that's what's at stake.
Next week I will fly to Venice for my seventh economic summit. I'll ask the leaders of the other industrial nations to stimulate their economies. We want them to buy more goods, not only from America but from throughout the world, so they can help us make prosperity worldwide. And I'll tell them that we, for our part, will finish putting our own house in order. I will tell them that I will spend this summer and fall going to cities and towns all over America. I will be asking the American people to help us keep the deficit spenders in Congress from wrecking America's economic future. This is my pledge; this is my promise. It's a fight I look forward to.
It's 40 years now since the end of the Second World War. These have been the most prosperous 40 years in the history of man. But if we can achieve the goals that I will set out in Venice, the next 40 can be even better. Here at home, I'm counting on your support in all these months ahead. America has come to a time for choosing. Will we complete the work we began 6 years ago, or will we turn back to the days of tax and spend and stagnation and decline? Help us see to it that the choice is to go forward so that the golden promise for America's future and the world's can become a reality.
Thank you, and God bless you.
Note: The President spoke at 11:25 a.m. in the Grand Ballroom at the J.W. Marriott Hotel.