|there is plenty of money left over
for others. But when the government borrows large amounts, not much is
left over for others.
This year, Americans will borrow an estimated
$470 billion. Of that total, the federal government is expected to borrow
well over $100 billion. Next comes the borrowing of state and local governments.
After them, a lot of businesses will be borrowing to pay for their inventories
and keep operating. A lot of consumers will be borrowing just to pay their
bills. That doesn't leave much to finance new housing, car purchases or
That's why government borrowing, particularly
at today's rates, only aggravates an already serious condition. And when
the government's borrowing pushes up interest rates, it also pushes up
the amount of interest that must be paid on the national debt -- which
in turns increases the deficit. The ripple effect is staggering.
What Can Be Done?
We're facing a $180 billion deficit and economists
tell us that it must be cut by $80 billion. We can shave $10 or $15 billion
from the defense budget. We can close some tax loopholes. We can repeal
or defer the 1983 tax cut. We can make some adjustments in some of the
"entitlement" programs, where increases are tied automatically to a cost-of-living
index. We can continue to trim the federal payroll. We can hold the line
on a lot of other programs. But no single cut or tax increase will do the
job. We are going to have to do a lot of unpopular things, and we all must
expect some sacrifices.
I believe that the President will have to offer
some concessions on his tax cut program. Last year, when the White House
sent a budget to the House of Representatives, I offered an alternative
economic program. It was workable. It did not offer a three-year tax cut,
but it did spell the way to a balanced budget this year.
When the President proposed his tax cut plan,
I saw it as something a bit like a family budget problem. Imagine a family
having financial trouble. Like many Americans, they have difficulty paying
the bills; the mortgage is overdue, the car loan is late, there are unexpected
medical expenses. Then one day, the family's principal wage earner comes
home and say, "We've all been working pretty hard and times have not been
easy. We deserve better, so I went to the bank today and took out a $2,000
loan. I figure with this money we can go out to dinner, take in some movies,
raise the kids' allowances, buy a new color TV and take a vacation."
Sounds great! But you know it can't last. Such
a plan would only get the family deeper into money trouble.
The same applies to Reaganomics. We've all been
working hard and we've all had trouble making ends meet. So we gave ourselves
a tax break. But in the end, will we find ourselves better off? I think
That's why we need to take another look at last
year's tax bill. I don't think we can afford to cut our taxes by 20 percent
over the next 14 months. Some changes will have to be made. Some of that
tax relief will have to be postponed, especially the cut scheduled for
1983. We can't borrow $120 billion to pay for tax cuts next year, and $200
billion a year thereafter.
And we have to cut federal spending. We have no
choice. We've already made some cuts in non-defense spending, more than
$30 billion last year. We'll have to cut more this year.
|The defense budget will not be untouchable.
Sen. Barry Goldwater was interviewed on the CBS
program, "60 Minutes," not long ago. He said he couldn't help but believe
there were "shennanigans" going on, when the United States paid $36,000
for its best fighter plane during World War II, and now must pay millions
of dollars for a single fighter aircraft today. I'm not sure I would word
it that strongly, but clearly, something does seem out of whack. If a mechanic
promised to fix my car for $100 and then charged me $500, he wouldn't be
in business for long. But somewhere, someone has decided that the government
will just accept outrageous cost overruns. That isn't fair or efficient.
At the same time, efficiency in any large institution,
public or private, can be elusive. Any time large numbers of people are
placed in charge of spending large sums of money, there will be some waste,
some abuse, and some things that don't work as they should.
But that isn't to say we have to accept it. I'd
like to see the government go after inefficiency and waste, across the
board -- we can't automatically assume that the government is inefficient
in the Department of Health and Human Services (formerly, Health, Education
and Welfare) but efficient in the Department of Defense.
Who's Getting Hurt?
Some still believe that the only people getting
hurt by all our economic ills are "welfare cheats" -- somebody who is drawing
welfare and driving a Cadillac to pick up food stamps. I've never met anyone
like that and I've certainly never met anyone who enjoyed being on public
Many of the people I have met during my frequent
visits back home have been copper miners who are out of work, elderly people
who were told they could no longer work, young people who just wanted to
borrow enough money to get through college.
One unemployed copper worker recently wrote me,
saying "We are in a life and death situation. . .I myself am 56 years old,
not much of a chance for me to go out and get another job someplace else."
My heart went out to that man. His was a situation
fast approaching desperate. And I was at a loss to know what to say. A
lot of Americans, hard believers in the work ethic, are waking up these
days to find that there just is no work. For many, it is the first time
in their life they have faced such a situation. For an older man or woman,
it can be a humiliating ordeal.
We have to begin to help these people by working
to bring interest rates down. And the best way to bring the interest rates
down is to bring the deficit down. In doing that, we have to be careful
not to make things worse for those already suffering great hardship. We
can't balance the budget on the backs of those least able to withstand
it. The budget cuts must be fair, and the sacrifices must be shared.
In my lifetime, I have lived through a Depression,
seen four wars and served in one of them, watched as our country was ripped
to pieces by riots and witnessed the murders of national leaders.
We persevered. The nation survived.
I'm still optimistic about our future. The situation
is serious, but it is not hopeless. I'm confident that with your help,
your hope and your advice, the answers will be there.