Now, I believe there is basis for such an agreement, one that could reduce the deficits by about a hundred billion dollars over the next 3 years.  We could focus on some of the less contentious spending cuts that are still pending before the Congress.  These could be combined with measures to close certain tax loopholes, measures that the Treasury Department has previously said to be worthy of support.  In addition, we could examine the possibility of achieving further outlay savings based on the work of the Grace commission.

If the congressional leadership is willing, my representatives will be prepared to meet with theirs at the earliest possible time.  I would hope the leadership might agree on an expedited timetable in which to develop and enact that down payment.

But a down payment alone is not enough to break us out of the deficit problem.  It could help us start on the right path.  Yet, we must do more.  So, I propose that we begin exploring how together we can make structural reforms to curb the built-in growth of spending.

I also propose improvements in the budgeting process.  Some 43 of our 50 States grant their Governors the right to veto individual items in appropriation bills without having to veto the entire bill.  California is one of those 43 States.  As Governor, I found this line-item veto was a powerful tool against wasteful or extravagant spending.  It works in 43 States.  Let’s put it to work in Washington for all the people.

It would be most effective if done by constitutional amendment.  The majority of Americans approve of such an amendment, just as they and I approve of an amendment mandating a balanced Federal budget.  Many States also have this protection in their constitutions.

To talk of meeting the present situation by increasing taxes is a Band-Aid solution which does nothing to cure an illness that’s been coming on for half a century—­to say nothing of the fact that it poses a real threat to economic recovery.  Let’s remember that a substantial amount of income tax is presently owed and not paid by people in the underground economy.  It would be immoral to make those who are paying taxes pay more to compensate for those who aren’t paying their share.

There’s a better way.  Let us go forward with an historic reform for fairness, simplicity, and incentives for growth.  I am asking Secretary Don Regan for a plan for action to simplify the entire tax code, so all taxpayers, big and small, are treated more fairly.  And I believe such a plan could result in that underground economy being brought into the sunlight of honest tax compliance.  And it could make the tax base broader, so personal tax rates could come down, not go up.  I’ve asked that specific recommendations, consistent with those objectives, be presented to me by December 1984.

Our second great goal is to build on America’s pioneer spirit—­I said something funny?  I said America’s next frontier—­and that’s to develop that frontier.  A sparkling economy spurs initiatives, sunrise industries, and makes older ones more competitive.