The rate of growth in Federal spending has been held to a minimum.  Nevertheless, outlays are still rising more rapidly than many had anticipated, the result of many powerful forces in our society: 

We face a threat to our security, as events in Afghanistan, the Middle East, and Eastern Europe make clear.  We have a steadily aging population and, as a result, the biggest single increase in the Federal budget is the rising cost of retirement programs, particularly social security.  We face other important domestic needs:  to continue responsibility for the disadvantaged; to provide the capital needed by our cities and our transportation systems; to protect our environment; to revitalize American industry; and to increase the export of American goods and services so essential to the creation of jobs and a trade surplus.

Yet the Federal Government itself may not always be the proper source of such assistance.  For example, it must not usurp functions if they can be more appropriately decided upon, managed, and financed by the private sector or by State and local governments.  My Administration has always sought to consider the proper focus of responsibility for the most efficient resolution of problems.

We have also recognized the need to simplify the system of grants to State and local governments.  I have again proposed several grant consolidations in the 1982 budget, including a new proposal that would consolidate several highway programs.

The pressures for growth in Federal use of national resources are great.  My Administration has initiated many new approaches to cope with these pressures.  We started a multi-year budget system, and we began a system for controlling Federal credit programs.  Yet in spite of increasing needs to limit spending growth, we have consistently adhered to these strong budget principles: 

Our Nation’s armed forces must always stand sufficiently strong to deter aggression and to assure our security.  An effective national energy plan is essential to increase domestic production of oil and gas, to encourage conservation of our scarce energy resources, to stimulate conversion to more abundant fuels, and to reduce our trade deficit.  The essential human needs for our citizens must be given the highest priority.  The Federal Government must lead the way in investment in the Nation’s technological future.  The Federal Government has an obligation to nurture and protect our environment—­the common resource, birthright, and sustenance of the American people.

My 1982 budget continues to support these principles.  It also proposes responsible tax reductions to encourage a more productive economy, and adequate funding of our highest priority programs within an overall policy of constraint.

Fiscal restraint must be continued in the years ahead.  Budgets must be tight enough to convince those who set wages and prices that the Federal Government is serious about fighting inflation but not so tight as to choke off all growth.