Address Before a Joint Session of the Iowa State Legislature in Des Moines

Governor Ray, I thank you very much. We've known each other a long time, and I appreciate more than I can say your warm words of welcome and your warm welcome here this morning.

It's good to be here with you today, but I must tell you that my real mission in Des Moines is at WHO radio. [Laughter] You see, some years back, as you may know, I recreated ball games on the air based on reports that came by telegraph. I would, now that I'm here, like to recreate the Rose Bowl game, and this time around you know who's going to win.

When I knew the Hawkeyes back in the thirties, they were struggling to get out of one of those low spots that come every once in a while to a school and a team. Coach Hayden Fry and quarterback Gordy Bohannon and the rest of that team rode the comeback trail all the way to the Rose Bowl.

Well, our country today is at a turning point. We've lived too long by the maxims of past decades, lost in a jungle of government bureaucracy, tangled in its web of programs and regulations. And almost all of those government initiatives were intended to relieve suffering, enforce justice, or preserve an environment threatened by pollution. But for each ounce of blessing, a pound of freedom was quietly stolen.

An all-intrusive Federal Government with Federal Government's big taxing and big spending doesn't work, never has worked, and never will. Those who cling to the policies of yesterday, who offer us only retreat, would condemn us and our children to decades more of economic decay—decades in which our days of greatness would be just a dim memory.

I've come here to talk about moving forward. It'll take spirit, courage, and strength for the long haul. But we must do it. I'm not here to promise miracles, but I believe we can promise progress.

So I have come to Des Moines to consult with you, to seek your counsel and your support as, together, we take the high road to national recovery and renewal. We share the trust of elected office, you for your State and I for the country and the people who sent me. And I have come to cement again the bond of partnership too many have forgotten.

Together we must go forward to ensure a decent standard of living for all Americans, but we must also protect for the next generation this fragile state of freedom so rare in the world and in the history of man.

I think we've taken the right first steps. We've begun to rebuild America's defenses, which had been left in dangerous decline. We've made clear our commitment to peace and stability in the world and our willingness to participate in strategic arms reduction. But we also have made clear that we will not look the other way as aggressors usurp the rights of independent people or watch idly while they foment revolutions to impose the rule of tyrants. We will not turn our backs on those who seek to gain or secure their liberty, and we will not back down from our duty to keep America strong enough to remain both free and at peace.

At home, we've begun our campaign to return our economy and government to our people.

Our program for economic recovery and our proposal to restore the partnership between State, local, and Federal government are born from the same philosophy. They spring from an abiding faith in the American people and in our ability to govern ourselves.

Forty years of uncontrolled government growth and mismanagement, 40 years of removing the American economy from the hands of the American people, have resulted in the painful recession that grips us today. In 4 short months, our programs have begun to restore incentive, to cut away strangling regulations and, for the first time in decades, make significant gains against the budget monster.

And what do you know? Inflation has dropped to single digits for the first time in 3 years, but it's not low enough. Interest rates are below their once dizzying heights, and yet they're not low enough. Our tax and budget cuts were the largest in history, but they only reduced the rate of increase in taxing and spending. We must hold firm to our tax cuts and reduce the budget even more. We have much to do before we'll see the light, but I think we're at last and at least approaching the bend in the tunnel.

Deficits, it is true, still loom large in our forecasts, but they should not overshadow the incentive and drive that is already building in our people. Our people are beginning to save again. There has been an increase in the savings rate since the fiscal year began and our programs began in October. The private savings pool could grow as much as $250 billion by 1984. This will bring needed growth to our economy and ease the strain on the money supply. In addition, yesterday we submitted to the Congress a budget schedule that will reduce the Federal deficit every year. Our deficits will be trending downward.

I'd like to pause here a moment and clear up a couple of things about the budget proposal we sent to Congress yesterday. So, if the reporters would pick up their pencils and the TV correspondents would turn on the cameras, I have an announcement.

There will be no general budget cut this year, and there was no budget cut last year. What we did and what we are doing is reducing the rate of growth in Federal spending. What we're doing is bringing old-fashioned discipline to the budget. Even before the budget came out, you could hear the sound of knees jerking all over Washington. [Laughter] The knee-jerk reactions and instant analyses were as hasty as they were incorrect. Despite all the talk, there is a deafening silence on alternatives.

From these two pronouncements you wouldn't know that under our proposed spending for the elderly we'll set a new record of $210 billion—more than double the amount as recently as 1978. You wouldn't know, to hear them, that 19 million people will still get food stamps, and over 95 million meals a day—one out of every seven—will still be subsidized, that Head Start, the National Institutes of Health, minority business assistance, aid to traditionally black colleges and other major programs will not be reduced from our 1982 request.

And suddenly, people who previously believed the deficit was something you tried to increase were bemoaning the fact that we had one. They didn't tell you that this year's budget marks the lowest annual budget growth in 14 years. They didn't tell you this deficit is actually smaller in proportion to gross national product than in the last recession recovery cycle of 1975-78, or that the deficits will decline in future years.

Yes, the deficit is too big, and I'm not about to use a magic pencil and merely create a balanced budget or a lower deficit on paper as has been done in the past. The budget we've proposed is a line drawn in the dirt. Those who are serious about reducing the deficit will cross it and work with us on our proposals or their alternative. Those who are not sincere in their concern about the deficit will stay on the other side and simply continue their theatrics. The American people are tired of theatrics; they want action. And let me tell you, they know the difference.

Our first commitment was to secure America's freedom. We are, as I said, rebuilding our defenses. Our second commitment was to restore America's economy. We have in place the first installments of a solid program for economic recovery. We turn now to our next commitment: paring the unmanageable size of the Federal bureaucracy, returning government to the governed.

Removing the possibility of solving problems where they occur, forcing Americans to accept the dictates of a swollen bureaucracy in Washington instead of dealing with their neighbors in city hall or the statehouse, has to be one of the most serious mistakes of this century. The Federal Government has become involved in such traditionally local concerns as fire protection, police pensions, welfare, and pothole repair.

In the last 20 years, the volume of grants-in-aid has virtually exploded. For example, in 1960, total Federal involvement in fire pollution—or protection, I should say, amounted to a cooperative agreement between the Forest Service and State agencies. Today every Federal department, except State and Defense, and at least 11 other agencies have their fingers in the firerelated activities of State and local governments. And the taxpayer gets burned.

Divisions of responsibility have blurred beyond recognition. The intentions of big government were good, but the result has been overwhelming inefficiency, waste, and the kind of regulation that ends all hope of finding local answers to local needs. The willingness of the Federal Government to inject itself in matters more properly considered by city or county councils, school boards or State legislatures, has resulted in a confused citizenry unsure of who to turn to, unaware of who to blame when things go wrong.

We have to face facts. As one mayor recently put it, big government has led to an unstable economy, low productivity, and high unemployment. The American people want a change. America needs a change, and we intend to provide it.

We have proposed the broad outlines of a plan to restore the accountability now missing in our bloated government. We want to consult with you and your colleagues around the country to develop the details that will make it work.

Our initial program includes the transfer to the States of more than 40 Federal programs in the areas of education, development, and social services, and we want to send back the tax sources to pay for them, as well. But the centerpiece of the proposal is the almost dollar-for-dollar swap of two of the largest areas of welfare. The Federal Government would take over Medicaid in exchange for State assumption of Aid to Families with Dependent Children and food stamps.

Since Medicaid is growing at a much faster rate than those other programs, the Federal Government would assume the heavier burden. We also have proposed a transition period of 8 years and establishment of a grass roots trust fund to ease the return of programs and tax bases. And these are the areas we want to discuss with you.

Certain law enforcement and civil rights programs dealing with the handicapped and minorities should remain at the Federal level, but we want to reestablish with you a clear and workable philosophy to divide the functions of government.

Let us not confuse the ideals that launched the last 40 years of centralization with the failed realities it has produced. Let us recognize the good that has come from our past efforts, but also understand that we have come into a new day and must change the way we view government and government's role in our rapidly changing society.

Governor Thomas Kean of New Jersey, in his inaugural address last month said: "We must turn to ourselves, to draw upon the diversity of our people and tap the strength inherent in that diversity. We cannot view this need to change with resignation; rather, it must be viewed as a challenge to our ingenuity, our dedication, and our imagination."

Well, here in Iowa you have a strong two-party system. Your Governor, Bob Ray, has provided strong leadership, and your congressional delegation, led by Senators Roger Jepsen and Chuck Grassley, serve you and our country well. Innovation and reform have been the hallmarks of this legislature. Your reapportionment plan has been called a model for the country. You've made significant advances against waste and fraud and have a tradition of top-quality public education.

Yet there are pundits in Washington who consider the statehouse to be the backwater of American politics. They don't trust you to run your own affairs. They don't trust you to show compassion to your needy nor justice to your disadvantaged.

Just a few weeks ago, someone in a key leadership position in the U.S. House of Representatives, one of the people who for decades has presided over the dissolution of our national economy and system of government, said he would be in no hurry to transfer the authority and resources that belong to you back to your control. He said he knew of a dozen States right now that would shirk their responsibilities. He didn't happen to name those dozen States. It makes you wonder which States are not American enough for him. Well, I'm sure the people in the statehouses around this country would like to know.

First the elitists fought the tax cuts, saying the American people could not be trusted with an increased share of their own earnings. Now they say the people we elect to State and local office can't be trusted to run State and local affairs. Well then, who can we trust? A handful of individuals with a strong case of Potomac fever, the very individuals who got us into this mess to begin with?

A recent Gallup poll says today Americans by nearly 2 to 1 trust State governments more than the Federal Government to remain free of corruption and administer programs efficiently. Washington, D.C., has no corner on compassion or wisdom or morality. If we do nothing else in this administration, we're going to convince that city that the power, the money, and the responsibility of this country begin and end with the people and not in some puzzle palace on the Potomac.

Some would have us believe that today's world is too complex and our needs too large to be managed by self-rule. But if no one among us is capable of governing himself, then who among us has the capacity to govern the rest of us?

It's been said that if we lose this way of ours, this thing we call freedom, history will record with the greatest astonishment that those who had the most to lose did the least to prevent its happening. That must not be said of us.

I've told you I'm confident our economic recovery program will succeed. That isn't wishful thinking. Our plan is based on simple logic. We have deficits because government spends more than it takes in. We've had only one balanced budget in the last 20 years. Today's interest on the trillion dollar debt is greater than the total budget in Eisenhower's day. So we're reducing the size and cost of government to bring the annual increase in cost to less than the increase in tax revenues.

Now, increasing taxes is not an answer. We doubled taxes between 1976 and 1981 and had the biggest string of deficits in our history. Besides that, taxes reduced our ability as individuals to save. Today we're the last of the seven top industrial nations in savings and investment. Our industrial plant and machinery averages 17 years in age. In Japan, the average is just 10 years. So we're reducing the tax rate.

Government regulations have cost the American economy an estimated $100 billion a year; we're reducing the number of regulations.

The Federal Government has, at great cost, been attempting to perform tasks that are not its proper function. So we're restoring the 10th amendment to the Constitution which says the Federal Government will do only those things called for in the Constitution and all others shall remain with the States or with the people.

I don't believe that our destiny is to watch this unique experiment in government slip from disrepair into decay. But if we remember that freedom rests, and always will, on the individual—on individual integrity, on individual effort, on individual courage, and in an individual faith in God-then we will have met the challenge of our generation and brought our great nation safely through our turning point in history.

I look to you today and in the coming weeks for guidance as we fashion a new framework for partnership in government. I ask you to join me as we move forward into a new and more prosperous era for America and for all of our people.

I promise you there will be no winners and no losers among the States. I promise you that it will be a fair trade and that the Federal Government will continue to maintain its responsibility for those things that the Constitution has imposed upon it. But we will, in turn, have faith in your compassion and in your good judgment and in your sense of responsibility to those people that you represent here in this great State.

Thank you very much. God bless you.