Budget Message Message to the Congress Transmitting the Fiscal Year 1979 Budget.

To the Congress of the United States:

The first complete budget of any new administration is its most important. It is the administration's first full statement of its priorities, policies, and proposals for meeting our national needs. Last February, after just one month in office, I submitted a revised budget to the Congress. That revision changed the direction of the prior administration's budget, but was—of necessity—based upon a review of limited scope. I promised then that future budgets would reflect detailed, zero-based reviews of Federal spending programs, reform of the tax system, and reorganization of the Government. This budget is my first major step in meeting that promise. It reflects, I believe, a determination to face and make difficult decisions in a manner that places the common good above that of any particular interest.

This budget represents a careful balancing of several considerations:

—The importance of a fiscal policy that provides for a continuing recovery of the Nation's economy from the 1974-75 recession;

—The obligation of the Government to meet the critical needs of the Nation and its people;

—The fact that resources are limited and that Government must discipline its choices and its scope; and

—The need for careful and prudent management of the taxpayers' resources.

THE BUDGET TOTALS

[In billions of dollars]

1977 actual 1978 estimate 1979 estimate

Budget receipts 357 400 440

Budget outlays 402 462 500

Deficit (—) —45 —62 —61

Budget authority 465. 2 502. 9 568. 2

My budget provides for total outlays of $500 billion, an increase of $38 billion, or 8%, over the 1978 budget, and receipts of $440 billion. This budget total is a restrained one that:

—Meets essential national needs;

—Imposes strict priorities upon Federal expenditures; and

—Decreases the share of the Nation's gross national product taken by the Federal Government from 22.6% to 22.0%.

This budget places us on a path that will permit a balanced budget in the future if the private economy continues its recovery over the coming years.

At the same time, my budget embodies a fiscal policy that will strengthen the economic recovery. I propose a progressive tax reduction of $25 billion to help assure continued economic recovery and reduction in unemployment. An integral part of this tax reduction proposal is a set of recommendations for tax reform that will make the tax system simpler and more equitable. Without the reduction, I would have been able to announce a decline in the deficit of $15 to $20 billion between 1978 and 1979. With the reduction, the budget deficit will still decline slightly, because of careful restraints on expenditures. But I judged that the most important priority this year was to reduce the burdens on taxpayers. Only in this way can we ensure a vigorous economy, a declining unemployment rate, a strong expansion of private investment, and a stable budget balance in future years.

While the expenditures I recommend in this budget are restrained, they are, nevertheless, directed toward overcoming our Nation's crucial problems. I have looked carefully at existing approaches to these problems and improved those approaches where possible. The spending priorities of the past are now being shifted toward long-neglected areas. These new priorities are based on the following judgments:

—An effective national energy plan is essential to reduce our increasingly critical dependence upon diminishing supplies of oil and gas, to encourage conservation of scarce energy resources, to stimulate conversion to more abundant fuels, and to reduce our large trade deficit.

The national energy plan I proposed last spring defined these goals. This budget includes the programs and initiatives designed to meet those objectives. Included are increased emphases on conservation and nonnuclear research and development, energy grants and technical assistance to States and localities, accelerated acquisition of the strategic petroleum reserve, and greater emphases on nuclear waste management. I continue in the unswerving belief that the Nation's leaders have the obligation to plan for the future, and that the national energy plan is essential to the future health and vigor of the American economy. The United States also must take the lead in minimizing the risks of nuclear weapons proliferation as we advance nuclear power technology. Thus, this budget increases research and development funding for systems that present fewer risks than the plutonium-fueled liquid metal fast breeder reactor.

—The essential human needs of our citizens must be given high priority.

In the spring of 1977 I proposed a long-overdue reform of the Nation's welfare system. This reform recognizes that this is a Nation of men and women who do not wish to be wards of the Government but who want to work and to be self-sufficient. It includes a combination of employment opportunities and incentives for those who should work, and a basic income for those who cannot. This budget anticipates that Congress will pass the program for better jobs and income, and begins the process of careful planning for the implementation of an efficient and equitable system.

The budget also recognizes that ensuring the opportunity to compete and excel remains very important to our people. To give all children the healthiest possible start in life, I propose major expansion of medical care and nutritional supplements for low-income expectant mothers and infants. In addition, I propose major increases in educational assistance at all levels. Because of the continued high level of unemployment, particularly among minorities, I believe public employment programs should be continued at high levels for another year. Major increases in programs stressing employment for unemployed youth are recommended. A new effort will be mounted to place more disadvantaged persons in private sector jobs by increasing the involvement of the business community in local employment and training programs.

I view a workable urban strategy as an important link in a well-articulated domestic program and essential to the continuing recovery of the national economy. This budget includes increases for many programs benefiting urban areas and supports several efforts to improve these programs. I anticipate sending to the Congress early in the spring a set of further proposals dealing with the Nation's urban problems.

The Nation's armed forces must always stand sufficiently strong to deter aggression and to assure our security.

My request for defense provides for the steady modernization of our strategic forces, and for substantial improvements in the combat readiness of our tactical forces. To parallel commitments made by our European allies, I am proposing significant increases in our overall defense effort, with special emphasis on those forces and capabilities most directly related to our NATO commitments. The defense budget I recommend also emphasizes modernization and research and development to meet future challenges to our security. But at the same time, I am restraining defense expenditures by introducing important efficiencies and by placing careful priorities upon our defense needs. The 1979 defense budget is prudent and tight, but consists of a real growth in outlays of 3% above the current year's budget. Consistent with campaign pledges to the American people, it is $8 billion below the defense budget projected for 1979 by the previous administration.

—The Federal Government has an obligation to nurture and protect our environment—the common resource, birthright and sustenance of the American people.

This budget provides for substantially increased emphasis on protection of all our environmental resources, for new attention to our common heritage, and for substantial additions to our system of public lands. Planned use of our natural resources has been designed so that the most important of our unspoiled areas can remain forever in the hands of the people.

—The Federal Government must lead the way in investing in the Nation's technological future.

Shortly after taking office, I determined that investment in basic research on the part of the Federal Government had fallen far too low over the past decade. Accordingly, I directed that a careful review be undertaken of appropriate basic research opportunities. As a result of that review, this budget proposes a real rate of growth of almost 5% for basic research in 1979. I believe this emphasis is important to the continued vitality of our economy.

This budget also reflects this administration's commitment to two important approaches to making government work more efficiently and responsively: reorganization and zero-base budgeting.

The reorganization effort I have launched seeks more than just a streamlining of organization structure and the elimination of overlaps and duplication. It seeks to make our Government more responsive, more efficient, and more clearly focused on the most pressing needs of our society. In 1977 I proposed—and the Congress accepted—a Cabinet-level Department of Energy, a streamlined Executive Office of the President, and a consolidation of our international information activities. In 1978 I will propose further reorganizations in such areas as the Federal Government's civil rights activities and the Federal civil service system to make it more responsive and effective.

As I promised during my campaign, zero-base budgeting system have been applied throughout the Federal Government. This budget is the product of a comprehensive zero-base review of all Federal programs, both existing and new. In reviewing each agency's proposals, I have used zero-base budget alternatives and agency rankings to compare and evaluate the many requests competing for resources. As a result of the first year's effort, we have gained a better understanding of Federal programs and have made better, more evenhanded judgments. Because of this system the budget includes dollar savings, and improvements in the way programs are operated. With experience, zero-based budgeting should be even more effective in future years.

Other significant changes in the budget process are reflected in this document. First: I have directed the Office of Management and Budget to establish a multiyear budget planning system using longer range budget projections. This will ensure that budget decisions are made with full awareness of their longer range implications. Second: we are using better techniques for estimating outlays so as to avoid the chronic "shortfalls" of recent years. Third: we have explicitly related the classification of the budget in terms of functions performed by Government programs to the national needs and agency missions served, as called for in the Congressional Budget Act of 1974.

In formulating this budget I have been made acutely aware once more of the overwhelming number of demands upon the budget and of the finite nature of our resources. Public needs are critically important; but private needs are equally valid, and the only resources the Government has are those it collects from the taxpayer. The competition for these resources and my belief and commitment that we must firmly limit what the Government taxes and expends have led me to the premises on which my first budget is based.

—Critical national needs exist—particularly human and social ones—to which resources must be directed.

—Government resources are scarce; their use must be planned with the full awareness that they come from the earnings of workers and profits of business firms.

—The span of government is not infinite. Priorities must be set and some old priorities changed. If we are to meet adequately the most critical needs, some demands must also be deferred. Government action must be limited to those areas where its intervention is more likely to solve problems than to compound them.

—We have an obligation to manage with excellence, and to maintain proper priorities within the $500 billion proposed in this budget. We all know that in a budget of this scale-larger than the gross national product of all but three nations in the world-there are dollars wasted and dollars misspent. These must be minimal.

These premises are unexceptionable in general, but difficult and controversial to apply. They have guided my actions in formulating this budget and they will continue to do so in the future. But to be successful I will need, and will work for, the help and cooperation of the Congress. Both the Congress and the Executive have a clear, joint interest in an approach that helps us to meet the demands of the future. In recent years the Congress has taken important steps—through the establishment of the congressional budget process— to improve its own means of establishing priorities. This administration has worked closely with the congressional appropriations and budget committees and has found them invaluable sources of advice. We will continue in this spirit of cooperation, and I look forward to working with the Congress and its leadership to obtain adoption of my budget for fiscal year 1979.

JIMMY CARTER

January 20, 1978.