The Grace commission has given us some 2,500 recommendations for reducing wasteful spending, and they’re being examined throughout the administration.  Federal spending growth has been cut from 17.4 percent in 1980 to less than half of that today, and we have already achieved over $300 billion in budget savings for the period of 1982 to ’86.  But that’s only a little more than half of what we sought.  Government is still spending too large a percentage of the total economy.

Now, some insist that any further budget savings must be obtained by reducing the portion spent on defense.  This ignores the fact that national defense is solely the responsibility of the Federal Government; indeed, it is its prime responsibility.  And yet defense spending is less than a third of the total budget.  During the years of President Kennedy and of the years before that, defense was almost half the total budget.  And then came several years in which our military capability was allowed to deteriorate to a very dangerous degree.  We are just now restoring, through the essential modernization of our conventional and strategic forces, our capability to meet our present and future security needs.  We dare not shirk our responsibility to keep America free, secure, and at peace.

The last decade saw domestic spending surge literally out of control.  But the basis for such spending had been laid in previous years.  A pattern of overspending has been in place for half a century.  As the national debt grew, we were told not to worry, that we owed it to ourselves.

Now we know that deficits are a cause for worry.  But there’s a difference of opinion as to whether taxes should be increased, spending cut, or some of both.  Fear is expressed that government borrowing to fund the deficit could inhibit the economic recovery by taking capital needed for business and industrial expansion.  Well, I think that debate is missing an important point.  Whether government borrows or increases taxes, it will be taking the same amount of money from the private sector, and, either way, that’s too much.  Simple fairness dictates that government must not raise taxes on families struggling to pay their bills.  The root of the problem is that government’s share is more than we can afford if we’re to have a sound economy.

We must bring down the deficits to ensure continued economic growth.  In the budget that I will submit on February 1st, I will recommend measures that will reduce the deficit over the next 5 years.  Many of these will be unfinished business from last year’s budget.

Some could be enacted quickly if we could join in a serious effort to address this problem.  I spoke today with Speaker of the House O’Neill, Senate Majority Leader Baker, Senate Minority Leader Byrd, and House Minority Leader Michel.  I asked them if they would designate congressional representatives to meet with representatives of the administration to try to reach prompt agreement on a bipartisan deficit reduction plan.  I know it would take a long, hard struggle to agree on a full-scale plan.  So, what I have proposed is that we first see if we can agree on a down payment.