The only alternative being offered to this economic program is a return to the policies that gave us a trillion-dollar debt, runaway inflation, runaway interest rates and unemployment.  The doubters would have us turn back the clock with tax increases that would offset the personal tax rate reductions already passed by this Congress.  Raise present taxes to cut future deficits, they tell us.  Well, I don’t believe we should buy that argument.

There are too many imponderables for anyone to predict deficits or surpluses several years ahead with any degree of accuracy.  The budget in place, when I took office, had been projected as balanced.  It turned out to have one of the biggest deficits in history.  Another example of the imponderables that can make deficit projections highly questionable—­a change of only one percentage point in unemployment can alter a deficit up or down by some $25 billion.

As it now stands, our forecast, which we’re required by law to make, will show major deficits starting at less than a hundred billion dollars and declining, but still too high.  More important, we’re making progress with the three keys to reducing deficits:  economic growth, lower interest rates, and spending control.  The policies we have in place will reduce the deficit steadily, surely, and in time, completely.

Higher taxes would not mean lower deficits.  If they did, how would we explain that tax revenues more than doubled just since 1976; yet in that same 6-year period we ran the largest series of deficits in our history.  In 1980 tax revenues increased by $54 billion, and in 1980 we had one of our all-time biggest deficits.  Raising taxes won’t balance the budget; it will encourage more government spending and less private investment.  Raising taxes will slow economic growth, reduce production, and destroy future jobs, making it more difficult for those without jobs to find them and more likely that those who now have jobs could lose them.  So, I will not ask you to try to balance the budget on the backs of the American taxpayers.

I will seek no tax increases this year, and I have no intention of retreating from our basic program of tax relief.  I promise to bring the American people—­to bring their tax rates down and to keep them down, to provide them incentives to rebuild our economy, to save, to invest in America’s future.  I will stand by my word.  Tonight I’m urging the American people:  Seize these new opportunities to produce, to save, to invest, and together we’ll make this economy a mighty engine of freedom, hope, and prosperity again.

Now, the budget deficit this year will exceed our earlier expectations.  The recession did that.  It lowered revenues and increased costs.  To some extent, we’re also victims of our own success.  We’ve brought inflation down faster than we thought we could, and in doing this, we’ve deprived government of those hidden revenues that occur when inflation pushes people into higher income tax brackets.  And the continued high interest rates last year cost the government about $5 billion more than anticipated.