Message to the Congress
Transmitting the Fiscal Year 1989 Budget
To the Congress of the
As
we consider the state of our Nation today, we have much cause for satisfaction.
Thanks to sound policies, steadfastly pursued during the past 7 years,
By
reordering priorities so that we spend more on national security and less on
wasteful or unnecessary Federal programs, we have made freedom more secure
around the world and have been able to negotiate with our adversaries from a
position of strength. By pursuing market-oriented economic policies, we have
uncorked the genie of American enterprise and created new businesses, more
jobs, improved production, and widespread prosperity. And we have done all this
without neglecting the poor, the elderly, the infirm, and the unfortunate among
us.
Seven Years of
Accomplishment
Let
me note a few of the highlights from our Administration's record of
accomplishment:
The
current expansion, now in its sixty-third month, has outlasted all previous
peacetime expansions in
Since
this expansion began, 15 million new jobs have been created, while the
unemployment rate has fallen by 5 percentage points -- to 5.7 percent, the
lowest level in nearly a decade. By comparison, employment in other developed
countries has not grown significantly, and their unemployment rates have
remained high.
Inflation,
which averaged 10.4 percent annually during the 4 years before I came to
office, has averaged less than a third of that during the past 5 years.
The
prime interest rate was 21.5 percent just before I came into office; it is now
8.5 percent; the mortgage rate, which was 14.9 percent, is now down to 10.2
percent.
Since
1981, the amount of time spent by the public filling out forms required by the
Federal Government has been cut by hundreds of millions of hours annually, and
the number of pages of regulations published annually in the Federal Register
has been reduced by over 45 percent.
Between
1981 and 1987, changes in the Federal tax code, including a complete overhaul
in 1986, have made the tax laws more equitable, significantly lowered earned
income tax rates for many individuals and corporations, and eliminated the need
for 4.3 million low-income individuals or families to file tax forms.
At
the same time, real after-tax personal income has risen 15 percent during the
past 5 years, increasing our overall standard of living.
The
outburst of spending for means-tested entitlement programs that occurred in the
1970's has been curbed. Eligibility rules have been tightened to retarget
benefits to the truly needy, and significant progress has been made in
improving the efficiency and effectiveness of these programs.
We
have begun the process of putting other entitlement programs on a more rational
basis. This includes medicare, which was converted
from cost-plus financing to a system that encourages competition and holds down
costs.
Federal
spending for domestic programs other than entitlements has been held
essentially flat over the past 5 years, while basic benefits for the poor, the
elderly, and others in need of Federal assistance have been maintained. This is
a dramatic improvement over the unsustainably rapid annual growth of these
programs that prevailed before 1981.
The
social security system has been rescued from the threat of insolvency.
Our
defense capabilities have been strengthened. Weapons systems have been
modernized and upgraded. We are recruiting and retaining higher caliber
personnel. The readiness, training, and morale of our troops have been improved
significantly. Because we are stronger, enormous progress has been achieved in
arms reduction negotiations with the
Federal
agencies have undertaken a major management improvement program called ``Reform
'88.'' This program has two main objectives: to operate Federal agencies in a
more business-like manner, and to reduce waste, fraud, and abuse in government
programs.
Some
functions of the Federal Government -- such as financing waste treatment plants
-- are being transferred back to State and local governments. In other
instances -- such as water projects -- State and local governments are bearing
a larger share of costs, leading to more rational decision-making in these
areas.
Finally,
we have made real progress in privatizing Federal activities that are more
appropriate for the private sector than government. Notable examples include
the sale of Conrail, the long-term lease of National and Dulles Airports, and
the auction of billions of dollars in loan portfolios.
Related
to this shift away from the Federal budget are our achievements on cost sharing
and user fees, shifting the cost of projects and programs where appropriate to
non-Federal sources.
While
we have reason to be proud of this record of achievement, we must be vigilant
in addressing threats to continued prosperity. One major threat is the Federal
deficit.
Deficit Reduction, the
Agreement, and G-R-H
If
the deficit is not curbed by limiting the appetite of government, we put in
jeopardy what we have worked so hard to achieve. Larger deficits brought on by
excessive spending could precipitate rising inflation, interest rates, and
unemployment. We cannot permit this to happen, and we will not.
BUDGET
SUMMARY
[In
billions of dollars]
1987 1988 1989 1990 1991 1992 1993
Receipts
854.1 909.2 964.7
1,044.1 1,124.4
1,189.9 1,258.1
Outlays
1,004.6 1,055.9
1,094.2
1,148.3
1,203.7
1,241.0
1,281.3
Surplus
or deficit ( - )
-150.4 -146.7 -129.5 -104.2 -79.3 -51.1 -23.3
Gramm-Rudman-Hollings
deficit targets
-144.0 -144.0 -136.0
-100.0 -64.0 -28.0
-0.0
Difference 6.4
2.7 -6.5
4.2 15.3 23.1 23.3
Footnote:
Note. -- Totals include social security, which is off-budget.
The
Congress acknowledged the pressing need to reduce the deficit when, in December
1985, it enacted the Balanced Budget and Emergency Deficit Control Act,
commonly known for its principal sponsors as the Gramm-Rudman-Hollings (G-R-H)
Act. This Act committed both the President and the Congress to a fixed schedule
of progress toward balancing the budget.
In
1987, the budget deficit was $150 billion -- down $71 billion from the record
level of $221 billion reached in 1986. This was also a record decline in the
deficit. To some extent, however, this improvement represented one-time
factors, such as a high level of receipts in the transitional year of tax
reform. Economic forecasters predicted that without action the 1988 and 1989
deficits would be higher than the 1987 level. In order to prevent this, and to
preserve and build upon the 1987 deficit-reduction progress in a realistic
fashion, last fall the Congress modified the G-R-H Act. Specifically, it
required that the 1988 deficit target be $144 billion and the target for 1989
be $136 billion.
Last
year, members of my Administration worked with the Leaders of Congress to
develop a 2-year plan of deficit reduction -- the Bipartisan Budget Agreement.
One of the major objectives of the budget I am submitting today is to comply
with that agreement -- in order to help assure a steady reduction in the
deficit until budget balance is achieved.
The
Bipartisan Budget Agreement reflects give and take on all sides. I agreed to
some $29 billion in additional revenues and $13 billion less than I had
requested in defense funding over 2 years. However, because of a willingness of
all sides to compromise, an agreement was reached that pared $30 billion from
the deficit projected for 1988 and $46 billion from that projected for 1989.
In
submitting this budget, I am adhering to the Bipartisan Budget Agreement and
keeping my part of the bargain. I ask the Congress to do the same. This budget
does not fully reflect my priorities, nor, presumably,
those of any particular Member of Congress. But the goal of deficit reduction
through spending reduction must be paramount. Abandoning the deficit reduction
compromise would threaten our economic progress and burden future generations.
This
budget shows that a gradual elimination of the deficit is possible without
abandoning tax reform, without cutting into legitimate social programs, without
devastating defense, and without neglecting other national priorities.
Under
the Bipartisan Budget Agreement, progress toward a steadily smaller deficit and
eventual budget balance will continue, but this projected decline rests on two
assumptions: continued economic growth, and implementation of the Agreement. If
the economy performs as expected, and if the Bipartisan Budget Agreement
reflected in this budget is adhered to, the deficit should decline to less than
3 percent of GNP in 1989. For the first time in several years, the national
debt as a proportion of GNP will actually fall. Reducing the deficit and the
debt in this manner would bring our goal of a balanced budget and a reduced
burden on future generations much closer to realization.
Moreover,
adherence to the Agreement, as reflected in this budget, will ensure the
achievement of additional deficit reductions in future years, because in many
cases the savings from a given action this year will generate deficit savings
in subsequent years. Given the good start made in 1987, we have an opportunity
this year to put the worst of the deficit problem behind us.
Meeting National
Priorities
In
formulating this budget, I have endeavored to meet national priorities while
keeping to the terms of the Bipartisan Budget Agreement and the G-R-H Act. In
essence, the Agreement limits the 1988-to-1989 increase in domestic
discretionary program budget authority to 2 percent. To address urgent national
priorities insofar as possible within this overall 2 percent limit, my budget
proposes that some programs -- such as those for education, drug enforcement, and
technology development -- receive larger funding increases, while others are
reduced, reformed, or, in some cases, terminated.
High-priority
programs must be funded adequately. One of our highest priorities is to foster
individual success through greater educational and training opportunities. For
example:
I
propose an increase of $656 million over the $16.2 billion appropriated for
1988 for discretionary programs of the Department of Education. Although State
and local governments fund most education activity, Federal programs provide
crucial aid for the poor, the handicapped, and the educationally disadvantaged.
I
have proposed reform of our over-centralized welfare system through State
experimentation with innovative alternatives. In addition, my initiative would
overhaul current employment and training programs for welfare recipients, and
strengthen our national child support enforcement system.
By
emphasizing housing vouchers, I would provide housing assistance to 135,500 additional
low-income households in 1989 -- 8 percent more than the 125,000 additional
households receiving housing subsidies in 1988.
Ineffective
programs to assist dislocated workers would be replaced by an expanded $1
billion worker readjustment program (WRAP) carefully designed to help those
displaced from their jobs move quickly into new careers.
In
addition, I am proposing funds to strengthen
I
propose a continued increase in federally supported basic research aimed at
longer-term improvements in the Nation's productivity and global
competitiveness. This budget would double National Science Foundation support
for academic basic research, increase support for training future scientists
and engineers, and expedite technology transfer of Government-funded research
to industry.
I
would provide $11.5 billion for space programs, including: essential funding
for continued development of America's first permanently manned Space Station;
increased support for improving the performance and reliability of the space
shuttle; a major new initiative, the Advanced X-ray Astrophysics Facility, for
space science; further support to encourage the commercial development of space;
and a new technology effort, Project Pathfinder, designed to develop
technologies to support future decisions on the expansion of human presence and
activity beyond Earth's orbit, into the solar system.
I
also recommend $363 million in 1989 to initiate construction of the
Superconducting Super Collider (SSC), including $283
million for construction and $60 million for supporting research and
development. The SSC as currently envisaged will be the largest pure science
project ever undertaken. It will help keep this country on the cutting edge of
high energy physics research until well into the next century.
This
budget also reflects my belief that the health of all our citizens must remain
one of our top priorities:
I
continue to urge enactment of an affordable self-financing insurance program
through medicare to protect families from economic
devastation caused by catastrophic illness.
To
attack the scourge of AIDS, I propose $2 billion for additional research,
education, and treatment in 1989 -- a 38 percent increase over the 1988 level
and more than double the Federal Government's effort in 1987. This includes
$1.3 billion in funding for the Public Health Service.
Building
upon the Nation's preeminence in basic biomedical research, I seek a 5.1
percent increase for non-AIDS research at the National Institutes of Health;
Our
fight against drug abuse must continue, as well as our efforts to protect the
individual against crime:
For
expanded law enforcement, including efforts targeted at white collar crime,
organized crime, terrorism and public corruption, I propose $4.5 billion -- an
increase of 6 percent over 1988.
For
drug law enforcement, prevention, and treatment programs, I propose $3.9
billion in 1989, a 13 percent increase over the 1988 level.
To
relieve prison overcrowding and adequately house a growing inmate population, I
would provide $437 million -- more than double the $202 million devoted to
Federal prison construction in 1988.
Other
areas of Federal responsibility receive priority funding in this budget:
For
the Federal Aviation Administration to continue its multi-year program to
modernize the Nation's air traffic control systems, I would provide $1.6
billion -- a 44 percent increase over the level of 1988.
To
improve coordination of Federal rural development programs and to redirect
funding toward needy rural areas and program recipients, I propose a rural
development initiative to be coordinated by the Secretary of Agriculture.
To
carry out the joint recommendations of the
I
also recommend an expansion of hazardous waste cleanup efforts, with an
increase in Superfund outlays of some $430 million in 1989.
To
continue filling the Strategic Petroleum Reserve (SPR) at the current rate of
50,000 barrels per day, I would provide $334 million in 1989. Contingent upon
the enactment of legislation authorizing the sale of the Naval Petroleum
Reserves (NPR), I would provide an additional $477 million to bring the fill
rate up to 100,000 barrels per day, and an additional $208 million to establish
a separate 10 million barrel defense petroleum inventory to offset the
disposition of the NPR.
To
improve the speed and accuracy of tax processing and expand information
services provided to taxpayers, I would provide a $241 million increase for the
Internal Revenue Service. These funds are designed to assure smooth
implementation of the 1986 tax reforms.
Maintaining
peace in a troubled world is the most important responsibility of government.
Fortunately, during the past 7 years, our defense capabilities have been
restored toward levels more consistent with meeting our responsibility to
provide an environment safe and secure from aggression. Specifically, combat
readiness has been improved, and our forces have been modernized.
The
proposals for national security contained in this budget represent an essential
minimum program for keeping
As
called for in the Bipartisan Budget Agreement, my budget requests defense
funding of $299.5 billion in budget authority and $294.0 billion in outlays for
1989. It also provides for about 2 percent real growth in these programs in
future years. Also, as called for in the Agreement, my budget requests $18.1
billion in budget authority for discretionary spending for international
affairs. This includes $8.3 billion in security assistance to allied and
friendly countries where the
Needed Programmatic
Reforms
Incentives. -- It is essential to continue to change
the incentive structure for many domestic Federal programs to promote greater
efficiency and cost-effectiveness. This budget proposes to create such needed
incentives.
Many
Federal programs offer payments without sufficient regard for how well
taxpayers' money is being spent. For example, farm price support programs,
under the Food Security Act of 1985, are much too costly. I plan to continue
pushing for the elimination of artificially high price supports, thereby
reducing the need for export subsidies. In particular, I plan to propose
amendments to the Act to modify the counterproductive sugar price support
program that currently poses significant problems in the areas of trade policy,
foreign policy, and agricultural policy. The importance of agricultural trade
to the economic health of the farm sector and the Nation as a whole mandates
increased reliance on free markets, not government largess.
The
budget proposes certain reforms in the medicare
program in order to achieve the savings agreed to in the Bipartisan Budget
Agreement. First, as justified by the results of several independent studies, I
propose to reduce the add-on payment for teaching hospitals under the
prospective payment system (PPS) for indirect medical education from 7.70
percent to 4.05 percent, the best estimate of the added costs incurred
historically by teaching hospitals. Second, I propose to limit medicare overhead payments for graduate medical education
and make consistent varying secondary payor
enforcement mechanisms. To reduce escalating supplementary medical insurance
costs and help slow future increases in beneficiary premiums, I propose to
limit payments for certain overpriced physician procedures, limit payments for
durable medical equipment and supplies, and eliminate a loophole in the payment
process for kidney dialysis. In total, these reforms would reduce spending for medicare by $1.2 billion from the level that would occur if
current law were continued. Spending for the medicare
program would still increase by 7 percent from 1988 to 1989.
Although
the provision of needed legal services for those who cannot afford them is an
important goal in our society, the current system earmarks a large portion of
the funding to ``National and
The
Government often continues programs at the Federal level that are no longer
needed. This is the case with rural housing programs, the Economic Development
Administration, urban mass transit discretionary grants, urban development
action grants, sewage treatment, Small Business Administration direct loans,
housing development action grants, the housing rehabilitation loan program, and
economic development programs of the Tennessee Valley Authority. Efforts to
reverse this situation have been undertaken by prior administrations as well as
my own, but the limited results to date indicate the difficulty of curbing
excessive government involvement in these areas.
Regulatory Relief. -- For 7 years I have
worked to reduce the excess burdens of government regulation for all Americans
-- working men and women, consumers, businesses, and State and local
governments. As a result, various departments and agencies have reduced the
scope and costs of Federal regulation. Federal approval of experimental drugs
has been expedited, making them available to treat serious or life-threatening
diseases when other treatments do not work. Excessive burdens on State and
local governments are being lifted. Access to goods and services has been made
easier, and at less cost. Federal reporting requirements on individuals and
businesses have been eased, as well as the paperwork burden on those who wish
to compete for contracts with the Federal Government. Under the leadership of
the Presidential Task Force on Regulatory Relief, headed by the Vice President,
the Administration will continue these and other efforts to lessen the burden
of excessive government regulation.
As
a case in point, my budget proposes termination of the Interstate Commerce
Commission, contingent upon enactment of legislation that completes
deregulation of the motor carrier industry. There is no justification for
continued economic (as opposed to safety) regulation of surface transportation,
and there is a substantial argument against it. As a result of economic
deregulation of trucking and railroads, consumers save tens of billions of
dollars each year, and the industry is healthier, more innovative, and better
able to adapt to changing economic circumstances. This is no time to turn back
the clock.
Privatization. -- The government and
the private sector should do what each does best. The Federal Government should
not be involved in providing goods and services where private enterprise can do
the jobs cheaper and/or better. In some cases, the fact that no private
provider exists is a reflection of government policy to prohibit competition --
as with first class mail service. In other cases, an absence of private
providers reflects a government policy of providing large subsidies -- as with
uranium enrichment. Invariably, the taxpayer ends up paying more for less.
Accordingly,
my budget proposes that a number of Federal enterprises be transferred back to
the private sector, through public offerings or outright sales. Following our
successful sale of Conrail and auctioning of $5 billion in selected loan
portfolios, I am proposing the sale not only of the Naval Petroleum Reserves,
but also of the Alaska Power Administration, the Federal Government's helium
program, excess real property, and a further $12 billion in loan portfolios. In
addition, I have proposed legislation to authorize a study of possible
divestiture of the Southeastern Power Administration, and plan to study
possible privatization of our uranium enrichment facilities, as well as ways of
making the U.S. Postal Service more efficient through greater reliance on the
private sector. Such ``privatization'' efforts continue to be a high priority
of this Administration, and I look forward to acting on the final
recommendations of the Privatization Commission, which I established last
September.
Privatization
does not necessarily imply abrogation of government responsibility for these
services. Rather, it recognizes that what matters is the service provided, not
who provides it. Government has an inherent tendency to become too big,
unwieldy, and inefficient; and to enter into unfair competition with the
private sector.
The
Federal Government should also depend more on the private sector to provide
ancillary and support services for activities that remain in Federal hands.
Therefore, I am proposing the development of a private mediating institution to
reduce the backlog of cases before the U.S. Tax Court. I propose that the
private sector be relied upon for booking functions for concessional
food programs. I also encourage the complete privatization of wastewater
treatment plants, certain mass transit projects, the Department of
Agriculture's
In
addition, our Administration plans to initiate privatization and
commercialization efforts involving Federal prison industries, relying on a
private space facility for micro-gravity research opportunities in the early
1990's, commercial cargo inspection, military commissaries, Coast Guard buoy
maintenance, and the management of undeveloped Federal land. Moreover, my
budget proposes that the work associated with certain Federal employment
positions be reviewed for the feasibility of contracting their responsibilities
out to the private sector as yet another way to increase productivity, reduce
costs, and improve services.
One
of the best ways to test the worth of a governmental program or a particular
project is to shift some of the cost of that program or project to the direct
beneficiaries. We have done that, for example, with water resources development
projects. As a result, local sponsors and users choose to proceed only on the
projects that are most important and most cost effective.
Management Improvements. -- As we all know, the
Federal Government has a major effect upon our daily lives through the direct
delivery of services, the payment of financial assistance through various
entitlement programs, the collection of taxes and fees, and the regulation of
commercial enterprises. As the 21st century approaches, the Federal Government
must adapt its role in our society to meet changing demands arising from
changing needs and requirements. At the turn of the century, the
I
have asked the Office of Domestic Affairs and the Office of Management and
Budget to work with the President's Council on Management Improvement to
conduct an in-depth review and recommend to me by this August what further
adjustments in the Federal role should be made to prepare for the challenge of
government in the 21st century. This summer I will receive their report,
``Government of the Future.'' I also intend to complete the ``Reform '88''
management improvement program I started 6 years ago to overhaul the
administrative, financial, and credit systems in our Federal Government; to
implement productivity and quality plans in each agency; and to examine the
needs of the Federal work force of the future. I want to leave a legacy of good
management of today's programs, with plans in place to handle tomorrow's
challenges.
Efforts
to improve the management of the Federal Government must be continued. We have
all heard stories of the horrible waste that occurs in the Federal Government.
Some of it is obvious -- like the billions of dollars in unneeded projects that
were included in the thousand-page 1988 spending bill that was dropped on my
desk last December. Some are not obvious -- like the billion dollars in
unnecessary interest expense the government paid, year after year, because it
lacked a cash management system, or the billions of dollars lost annually for lack
of a credit management process to ensure collection of the trillion dollars in
loans owed the Federal Government.
In
July 1980, I promised the American people: ``I will not accept the excuse that
the Federal Government has grown . . .
beyond the control of any President, Administration or Congress . . . we are
going to put an end to the notion that the American taxpayer exists to fund the
Federal Government. The Federal Government exists to serve the American people
. . . I pledge my Administration will do that.'' I have delivered on that
promise.
The
first step was taken within months after my inauguration when I formed the
President's Council on Integrity and Efficiency, composed of the agency
Inspectors General. By the time I leave office, they will have delivered
savings of over $110 billion in reduced waste, fraud, and abuse to the American
people.
Then,
in March 1982, I initiated the world's largest management improvement program
with these words: ``With Reform '88 we're going to streamline and reorganize
the processes that control the money, information, personnel and property of
the Federal bureaucracy.'' I told my Cabinet at that time that ``we have six
years to change what it took twenty or thirty to create -- and we came to
Washington to make changes!'' I have followed up on that commitment. The
President's Council on Management Improvement has overseen this effort, and is
generating significant results.
These
efforts are described in greater detail in my Management Report, which is being
submitted concurrently. They can succeed only if all Federal managers and
employees work together. Therefore, I propose in this budget a new approach to
paying Federal employees who increase their productivity. I ask the Congress to
modify the current system of virtually automatic ``within-grade'' pay increases
for the roughly 40 percent of employees eligible each year to one that is based
on employee performance. This will give Federal employees stronger incentives
to improve service delivery and reduce costs to the taxpayer.
The Budget Process
As
I have stressed on numerous occasions, the current budget process is clearly
unworkable and desperately needs a drastic overhaul. Last year, as in the year
before, the Congress did not complete action on a budget until well past the
beginning of the fiscal year. The Congress missed every deadline it had set for
itself just 9 months earlier. In the end, the Congress passed a year-long,
1,057-page omnibus $605 billion appropriations bill with an accompanying
conference report of 1,053 pages and a reconciliation bill 1,186 pages long.
Members of Congress had only 3 hours to consider all three items. Congress
should not pass another massive continuing resolution -- and as I said in the
State of the Union address, if they do I will not sign it.
I
am asking for a constitutional amendment that mandates a balanced budget and
forces the Federal Government to live within its means. A constitutional
amendment to balance the Federal budget -- and a provision requiring a
super-majority vote in the Congress to increase taxes -- would impose some
much-needed discipline on the congressional budget process. Ninety-nine percent
of Americans live in States that require a balanced State budget, and a total
of 32 States already have passed resolutions calling for a convention for the
purpose of proposing a balanced budget amendment to the U.S. Constitution.
Also,
I am asking the Congress for a line-item veto, so that my successors could
reach into massive appropriation bills such as the last one, cut out the waste,
and enforce budget discipline. Forty-three State Governors have a line-item
veto; the President should have this power as well. As Governor of the State of
In
addition, I propose the following further reforms to the budget process:
(1)
Joint budget resolution. The budget process has so degenerated in recent years
that the presidential budget is routinely discarded and the congressional
budget resolution is regularly disregarded. As a remedy, I propose that
henceforth the Congress and the Executive collaborate on a joint resolution
that sets out spending priorities within the receipts available. The
requirement of a Presidential signature would force both branches of government
to resolve policy differences before appropriations measures must be
formulated. The budget process could be further improved by including in the
budget law allocations by committee as well as by budget function.
(2)
Individual transmittal of appropriation bills. The current practice of
transmitting full-year continuing resolutions skirts appropriations
committee-subcommittee jurisdictions. More importantly, it does not permit the
Legislative and Executive branches to exercise proper scrutiny of Federal
spending. Therefore, I propose a requirement that appropriations bills be
transmitted individually to the President.
(3)
Strict observance of allocations. During the 1980s, an unacceptable budget
practice evolved within the Congress of disregarding congressionally approved
function allocations. Funds regularly were shifted from defense or international
affairs to domestic spending. I strongly urge that each fiscal year separate
national security and domestic allocations be made and enforced through a point
of order provision in the Budget Act.
(4)
Enhanced rescission authority. Under current law, the President may propose
rescissions of budget authority, but both Houses of Congress must act
``favorably'' for the rescission to take effect. In 1987, not a single
rescission was enacted, or even voted on, before expiration of the 45-day
deadline. I propose a change of law that would require the Congress to vote
``up or down'' on any presidentially proposed
rescission, thereby preventing the Congress from ducking the issue by simply
ignoring the proposed rescission and avoiding a recorded vote.
(5)
Biennial budgeting. The current budget process consumes too much time and
energy. A 2-year budget cycle offers several advantages -- among them, a
reduction in repetitive annual budget tasks, more time for consideration of key
spending decisions in reconciliation, and less scope for gimmicks such as
shifting spending from one year to the next. I call on the Congress to adopt
biennial budgeting.
(6)
Truth in Federal spending. -- As part of my Economic Bill of Rights, I will
shortly transmit legislation that will require any future legislation creating
new Federal programs to be deficit-neutral. In addition to requiring the
concurrent enactment of equal amounts of program reductions or revenue
increases, my proposal would require that all future legislation and
regulations be accompanied by financial impact statements, including the effect
on State and local governments.
Adoption
of these reforms should enable the Federal Government to make informed
decisions in a deliberate fashion that fosters rational priorities. The
American people deserve no less from their elected representatives.
Conclusion
Looking
back over the past 7 years we can feel a sense of pride in our accomplishments.
Important tasks remain, however. The large and stubbornly persistent budget
deficit has been a major source of frustration. It threatens our prosperity and
our hopes for lessening the burden on future generations.
Two
years ago, the Legislative and Executive branches of government responded to
this threat by enacting the G-R-H Act, which mandated gradual, orderly progress
toward a balanced budget over the next several years. My budget achieves the
1989 target of the amended Act while preserving legitimate programs for the
aged and needy, providing for adequate national security, devoting more
resources to other high-priority activities, and doing so without raising
taxes.
My
budget also embodies the Bipartisan Budget Agreement reached last November. In
presenting this budget, I am keeping my end of the bargain. I call upon the
Congress to uphold its end -- by ensuring that appropriations and other
legislation are in full accord with the Agreement. By exercising this measure
of restraint and self-discipline, we can secure great benefits for the Nation:
a lower budget deficit, reduced demand on credit markets, more stable financial
markets, a steadily declining trade deficit, and continued prosperity with
non-inflationary growth. And, by reforming the budget process, the Congress can
improve its decisionmaking and garner the thanks of a
grateful public. Surely, these are small prices for what is at stake.
Ronald
Reagan
Note: The message was
not issued as a White House press release.