White House Briefing for Community Leaders Remarks at the Briefing.

Yesterday I joined Secretary of Defense Harold Brown and a few other dignitaries in going out to meet the U.S.S. Nimitz and the U.S.S. Texas and the U.S.S. California, a task force returning from the Indian Ocean and the Persian Gulf region after 270 days of deployment. They spent almost 150 days at sea without a port call, in our nuclear-powered strike force, designed to maintain stability in the Persian Gulf region of the world, and also to provide a show of force which is legitimate and peaceful in nature, to protect the lives of our hostages.

I spent most of the morning before leaving to go to the Nimitz working on this year's budget considerations, and how the Congress is dealing with them, and being concerned about legislation still not yet passed concerning energy. As I discussed matters of importance to all of us in this room, with Harold Brown and with others, it became vivid in my mind, as I looked into the faces of those young fighting men, willing to give their lives for our country if necessary, that they were dealing not just with stability and with peace in the Indian Ocean region but also were deeply involved in the questions of energy and the economy and economic strength of our Nation.

There is no way in this modern time and age in which we live to separate one consideration from another, because they are so intimately entwined; they're all so complex, complicated, rapidly changing, worldwide in nature. In every nation on Earth there has been felt in the last year and a half the impact of a 150-percent increase in the cost of oil in a period of 16 months. This means that on an annual average the price of oil has increased 10 percent per month. We've felt the impact of it, and we've seen how vulnerable we are to the instability brought about now as a threat by the Soviet invasion of Afghanistan and the instability of the Government of Iran.

As a President working closely with people like you throughout the country, I'm responsible for the accurate assessment of these challenges, and also the assessment of how well we can meet them. There is no doubt in my mind that our Nation is strong enough and resolved enough and unified enough and confident enough and determined enough to meet these challenges.

We are a world leader. Other nations look to us to set an example. We're on the cutting edge of change, and every time in our history we've ever been faced with rapid change that shook the foundations, economically or politically, of the world, we have been able to prevail. God has blessed us in a remarkable way.

We look on the OPEC nations, for instance, with some degree of trepidation and concern. How can they control the energy resources of the world and put us at their mercy? The fact is that all of them put together control about 6 percent of the world's energy reserves, almost entirely oil and natural gas. The United States, our country, controls 20 percent of the world's energy reserves; not just oil and natural gas but almost unlimited supplies of coal, geothermal supplies, deposits of shale, flowing water, richly productive land that can produce energy on a continuing basis for many centuries in the future, from growing crops and from the products derived from them.

Ours is a country that's the strongest on Earth—militarily, economically. We have a superb education system; a free enterprise system that values itself on human initiative, on competition, not only among ourselves but with others. We have never failed. The resiliency that is indicated in the lives of our country, both individuals and as a government, has been demonstrated over and over. And when we faced complicated questions or difficult pressures or serious problems, in the solution of them we've not only provided a guideline or path for the rest of the world, we've come out stronger every time.

There's no doubt in my mind that we'll do the same this time, but we must realize the situation accurately. It's not been easy for the American people to become convinced that for the first time we do have some limits on what we can use or waste.

More than 3 years ago, in April of 1977, I spoke to the American people in the so-called fireside chat and made an address to the Joint Session of the Congress, and referred to the energy crisis as the moral equivalent of war. It was discounted in much of the press, ridiculed by some. I was accused of exaggerating the problem. But as a matter of fact, instead of having world demand and world supply of energy meet in 1985 or so, it actually occurred in 1979, 5 or 6 years earlier than even I had anticipated.

And our country has responded well. Although the Congress delayed for many months in passing the legislation necessary for an energy policy, over a carefully phased period, to deregulate the price of oil and natural gas, to make them competitive, and to force Americans to save and also to force the government and the private enterprise system to search out for new alternative supplies of energy, we have made a lot of progress.

There was inordinate delay, but now we've got on the verge of success a massive, difficult effort to carve out a national energy policy, based on two simple facts. The need is to cut down on oil imports. The solution is, first, to save energy, to stop wasting energy, to conserve energy. And the second is to produce more energy in the United States. It's just that simple: to save energy and to produce more.

The drain on our economy is tremendous. This year, we'll send American money overseas to foreign countries to buy their oil—about $90 billion. That's hard to put in perspective. It's more than the net income of all the Fortune 500 corporations put together, and it amounts to more than $400 for every man, woman, and child in this country.

We're not only importing oil, we're importing inflation and also importing unemployment. We're in a transition phase, but the American people have responded well. The first 5 months of this year, as probably has already been pointed out to you, we have imported a million barrels of oil less every day. That's a tremendous saving in oil imports—12 percent less than last year at the same time, same months, same climate conditions. And last year, we used 5 percent less gasoline than the year before that. And this has been in spite of the fact that in previous years, we've been going up, up, up every year in how much oil we used and how much oil we imported.

So, again, we're setting an example for other major oil-consuming countries. We had a long way to go. We were more inefficient than some of them, because their oil prices have been very high for a number of years. Americans are able to accommodate change, however. We have never feared change in a morbid sense or a sense of paranoia. We've been able to say, "I'd rather things not change" if we're sitting on top of the world, "but if they change, I'll be ready." Americans have been remarkably united.

The other problem that I'd like to mention very briefly to you is this. Inflation has been a burden on the shoulders of Americans for a number of years; 10 or 12 years, we have been burdened with excessive inflation. There was one brief period of time right after the '73-'74 OPEC oil embargo when energy prices did not change for a number of months—I think more than a year. With that temporary dip, inflation has been going up by leaps and bounds ever since, and with a 150-percent increase in oil prices, we've had much more inflation earlier this year.

The second week in March, I put forward to the American people and to the Congress and to the Federal Reserve Board a proposal to control inflation, to bring down the enormously increasing interest rates and following that, of course, the inflation rate. Interest rates have dropped precipitously lately. At this time, some interest rates—Government securities and so forth—are lower than they were a year ago. The prime rate is coming down a little bit more slowly, but steadily. And home mortgage interest rates are also dropping now fairly rapidly. I hope they'll drop much more in the future.

And following that, we believe and I predict to you that during these next few months—during the summer months-we'll have a sharp drop in the inflation rate, which will be gratifying to all Americans, particularly those who are poor or who are old or who are living on fixed incomes and who are least able to pay that 15- or 20-percent tax on them caused by inflation.

In this process, we have prepared ourselves much better than in previous decades to deal with a family that is afflicted with the problem of unemployment, either temporary or extended unemployment. Government programs are much more effective, much more carefully designed to alleviate that problem for a family. And, of course, we also have programs that are designed, on a targeted basis—very carefully focused basis—to provide jobs that are either in the public sector or supplemented in some way by the Government and held by an employee in the private sector.

As we go through this phase of controlling inflation with a balanced budget commitment and other measures on restraining consumer spending and building up savings, we must not permit the ravages of recession to damage the progress that we've made in providing jobs for our people and a restoration of the older and more deteriorating urban centers of our country.

This is what I fear about the Congress action recently on the first budget resolution. It hasn't gotten much publicity throughout the country, but it severely restrains some programs carefully designed for those purposes—for jobs, for cities, for training, for education—those very things that will prevent recession getting out of hand. And we cannot afford to slash those too deeply and add money to a budget for defense, for instance, which is more than we actually need. So, there must be a careful balancing of those forces as we go into the months ahead.

The last point I'd like to make to you is this: A government can obviously have a great effect on the course of a nation. We cannot expect to control inflation, for instance, unless the Government is willing to exercise, in a demonstrable way, self-discipline. We've been borrowing too much and our deficits have been too great.

In 1976, when I was running for President, we had a deficit of $66 billion. That was about 4 1/2 percent of our gross national product. In January, when I proposed to the Congress a budget for '81, although it was not quite balanced, we had cut that 4 1/2 percent down to sixtenths of 1 percent. And now the Congress is working on a balanced budget. So, to get the Government out of the deficit spending habit is not easy, but it does indicate that we ourselves, if we're determined here in Washington, can set an example for State and local governments and also for private citizens.

But the strength of our country is derived not from the Government, but from the people who comprise the basic resource of our Nation. And that's why it's so important for you to come here to listen to a discussion by my key advisers and Cabinet officers responsible for economics and for energy and to see how they tie in together with the other decisions that have to be made on national defense, on foreign policy, on training, on education, on jobs, on cities, on transportation, on agriculture, on exports and imports, monetary policy—they're all closely and intimately related.

I'm deeply grateful that you would come here. Each one of you is a leader in your own community. People listen to your voice; they know what you can do for them; you've proven yourselves in a highly competitive system. And I hope that when you leave here this afternoon, you will take with you part of the responsibility that I share with you to recognize the innate and undeviating, unchangeable strength of our country, our ability to accommodate change successfully, the responsibility we have to lead other countries, and the special problems that we do face during a transition time in world life where we can prevail, and make the greatest nation on Earth even greater in the future. That's what I hope you'll do when you leave here.