July 10, 1987 Thank you. I once heard a magician get a hand like that before he started, and he finally told them that as an encore he'd sing ``Yankee Doodle Dandy'' while he drank a glass of water at the same time. [Laughter]
I know that most of you are no strangers to briefings here or up on Capitol Hill. You've supported us in the past on so many crucial issues and so many crucial battles. That's why I know when you heard about the new economic bill, the Bill of Rights that we unveiled a week ago, you probably anticipated being invited here. In fact, some of you may even be thinking of that epitaph on a tombstone in the old cemetery that read: ``I expected this but not quite so soon.'' [Laughter]
But we've done much together during the last few years. In fact, seeing you also reminds me of another story. People are always saying I have a weakness for stories. I don't know how that got started. [Laughter] Anyway, this one's about an unforgettable American and great musician, Louis ``Satchmo'' Armstrong. A tourist comes up to him one day in New York and says, ``I can't wait to hear your performance tonight. I'm on my way to get tickets right now. By the way, how do I get to Carnegie Hall?'' Satchmo replied, ``Just practice, baby, practice.'' [Laughter]
And hard work -- your hard work -- and support of millions of Americans hasn't just brought us a long way in a few years; it's created a revolution. And sometimes the hardest thing in the world is to understand how the present will look to historians of the future. But take it from me, once you've had a little time to think about what's happened, we may even be astonished ourselves. So many old myths have been exposed and old ways of doing things changed.
When we first proposed tax cuts, for example, there were those who were certain that our plan would cause even larger deficits, because revenues would shrink. We all know what happened. An economy featuring growth and opportunity produced $44 billion more in revenues by 1985.
And then there were those who said our plan was a giveaway to the rich. Well, guess what? According to figures recently pointed to by Senator Bill Roth of Delaware, since our tax cut plan was installed, the payments of lower and middle income earners have shrunk by 11.1 percent while the payments of high-income taxpayers have increased by 12.6 percent. Of the $44 billion increase in tax revenue from 1981 to 1985, 81.6 percent was paid for by the tiny 1.5 percent of all taxpayers whose income was over $100,000. In fact, taxes paid by all those with incomes above $50,000 rose by $63.5 billion, and this allowed for a substantial $18.9 billion tax decrease for those with incomes below $50,000.
And then, finally, there were those who said that cutting taxes would cause more inflation. Boy, do I remember that one. Believe me, the now-embarrassing quotes make a lengthy list. Anyway, after 2 years of back-to-back, double-digit inflation -- the first time that had happened since World War I -- we saw inflation head downward and stay down. Today it's between 3 or 4 percent, and once again the critics were wrong.
There were other stories, too, not just predictions that unemployment was going to go higher but that high levels of unemployment were here to stay. Some folks even said we had to get used to unemployment rates of 7 and 8 percent or even higher. But we created over 13 million new jobs instead, and last month the total unemployment rate hit an even 6 percent.
So, you see, it's more than a question of just silencing our critics; America astonished the world. Chicago school economics, supply-side economics, call it what you will -- I noticed that it was even known as Reaganomics at one point until it started working -- [laughter] -- all of it is fast becoming orthodoxy. It's not just that Milton Freidman or Friedrich Von Hayek or George Stigler have won Nobel prizes; other younger names, unheard of a few years ago, are now also celebrated. People are reading George Gilder. They know what the Laffer curve is. And a few months ago the French Government inducted Paul Craig Roberts into the Legion of Honor.
And the acclaim given these economists and thinkers is evidence of a worldwide revolution, proof that they were right and the conventional wisdom was wrong. They were right for a very simple reason: They understood the power of the human spirit. They understood the capacity of the individual, once released from the stultifying hand of government, to reach and climb, and build and dream, and to achieve and succeed, and make life better for all humankind.
And from the outset, this idea of economic freedom has been our political lodestar. That's why in creating our political revolution for this economic freedom our goal was simple, as Jefferson said about the revolution of his own time: ``to place before mankind the common sense of the subject.'' All we said was this: Give the American people a chance, and they'll come through. They'll make the difference. They'll get us out of the worst economic mess since the Depression. And they have, building one of the mightiest prosperities in our history, a prosperity that I know every one of us in this room is determined to keep making stronger with every passing month and every passing year.
But to achieve what we achieved economically, we first had to make political changes. Our guide here was still the same: Trust the people -- put the facts before them, then trust the people. And thanks to dedicated Americans like you, we got our message out. And the people spoke, and they demanded change. But let's remember it didn't come easy. Our victories took months, sometimes years, of preparation. And all the way along we heard about how our calls for reform and change were just meaningless rhetoric, that none of our goals had a chance of legislative passage. Now, I learned a long time ago to take this sort of skepticism with more than a grain of salt. In fact, I call it the Harry Warner Factor. You see, it was Harry Warner, of Warner Studios, back in the days of silent films, when they were talking about talking pictures, and he said, ``Who the hell wants to hear actors talk?'' [Laughter]
But let's face it, old myths die hard. [Laughter] Lately, we've been hearing from Capitol Hill about a return to the old days. In fact, this week Congress pored over 100 different ways to increase taxes. Maybe they should use next week to look for 100 ways to cut spending. It's all a matter of setting the right priority. I'm here to tell you today -- and I hope Congress takes notice -- what ails us now is what has always ailed us: The Federal Government is too big, and it spends too much money. So, let me assure you, any budget-busting spending legislation or tax increases sent down here from Capitol Hill are heading right back up Pennsylvania Avenue stamped with the most respectable four-letter word I know: V-E-T-O.
But think of this, too: Hasn't the time come to get around this year-in and year-out battle on the budget and taxes? The burden always seems to fall on those fighting fiscal abuses. Don't we need to stop fighting for 2 yards and a cloud of dust and put the ball in the air instead? And isn't it time to institutionalize our economic reforms? We have to make sure the great American spirit is never again shackled by big government, that the future of other generations of Americans is never again mortgaged on the national debt.
With our new Economic Bill of Rights we can do just that. We can get a balanced budget amendment, a line-item veto, a super majority on tax increases. We can pass truth-in-spending legislation that will force the Federal Government to be candid with the American people, to say how much new programs are going to cost and spell out the intent to finance them. And by packaging these changes into a bill of economic rights, we're only making our message easier to understand. And we're making that larger point I talked about earlier. There is no end to what the human spirit can achieve if it is left alone to strive and succeed. We know freedom works politically; our first Bill of Rights was testament to that fact. And now we need to drive home the lesson of the last few years, the lesson of the new economics: that economic freedom works too.
``Progress is a nice word,'' Robert Kennedy used to say, ``but change is its motivator and change has enemies.'' But there's a way to overcome those enemies, and once again, that's by getting the American people to come through. And that's why I want to ask for your help today. I'm confident that slowly but surely we can win this fight. For one thing, an election year is coming up, and I've always noticed -- and perhaps you've noticed, too -- that it's a time when folks up in the Congress seem more inclined to show the voters how much they support fiscal responsibility and lower taxes.
So, let's get together, you and I, and provide them with that opportunity. Let's work to get the provisions embodied in our Economic Bill of Rights on the floor of the House and Senate. Let's give our public servants a chance to show their stuff: to vote for less spending, lower taxes, and revolutionary new safeguards against government encroachment of our economic freedom.
I want to thank all of you for coming by today. And I know that you're all thinking now, ``Will he loan me the helicopter so I can get out to Rehoboth?'' [Laughter] Well, believe me, I understand that thought; I'd like to go to the beach myself. But, you know, tonight's a full moon -- [laughter] -- and with all that budget-busting legislation under consideration, well, I just think I better stay in town. [Laughter]
I want to just say one thing to you, again, about those figures to make a point definite with you. Those figures about the people in the upper brackets paying more, a greater share of the tax burden than they were before the tax cuts. Now, what we did was completely different than those who have said, ``Well,'' you know, ``tax those people up there, the fat cats.'' We're hearing more of that today. Why are they paying a higher percentage at lower tax rates? Because when you make it worthwhile, the tax shelters don't look as attractive, and there's a reason to have a little ambition and make a dollar if you can keep more of it.
Remember back when it was a 90-percent bracket? I was in Hollywood at the time. You'd be surprised how many actors started turning down parts after they got in that bracket. Who wants to work for 10 cents on the dollar? So, that's exactly what has happened in this instance. We have put incentive where it should be, and so everybody is paying their fair share of taxes. And we're going to keep it that way.
So, thanks to all of you and the help that you're going to give us. God bless you. Thank you all.
Note: The President spoke at 10:53 a.m. in Room 450 of the Old Executive Office Building.