Ronald Regan On The Air Address to the Nation on the Economy 2/5/81 - a podcast by Radio Nostalgia Network

I'm speaking to you tonight to
give you a report on the state of our Nation's economy. I regret to
say that we're in the worst economic mess since the Great Depression.

A few days ago I was presented
with a report I'd asked for, a comprehensive audit, if you will, of
our economic condition. You won't like it. I didn't like it. But we have
to face the truth and then
go to work to turn things around. And make no mistake about it, we can
turn them around.

I'm not going to subject you to
the jumble of charts, figures, and economic jargon of that audit,
but rather will try to explain where we are, how we got there, and how
we can get back. First,
however, let me just give a few ``attention getters'' from the audit.

The Federal budget is out of
control, and we face runaway deficits of almost $80 billion for this
budget year that ends September 30th. That deficit is larger than the
entire Federal budget in
1957, and so is the almost $80 billion we will pay in interest this year
on the national debt.

Twenty years ago, in 1960, our
Federal Government payroll was less than $13 billion. Today it is
75 billion. During these 20 years our population has only increased by
23.3 percent. The Federal
budget has gone up 528 percent.

Now, we've just had 2 years of
back-to-back double-digit inflation -- 13.3 percent in 1979, 12.4
percent last year. The last time this happened was in World War I.

In 1960 mortgage interest rates
averaged about 6 percent. They're 2\1/2\ times as high now, 15.4
percent.

The percentage of your earnings
the Federal Government took in taxes in 1960 has almost
doubled.

And finally there are 7 million
Americans caught up in the personal indignity and human tragedy
of unemployment. If they stood in a line, allowing 3 feet for each
person, the line would reach
from the coast of Maine to California.

Well, so much for the audit
itself. Let me try to put this in personal terms. Here is a dollar such
as
you earned, spent, or saved in 1960. And here is a quarter, a dime, and a
penny -- 36 cents. That's
what this 1960 dollar is worth today. And if the present world inflation
rate should continue 3
more years, that dollar of 1960 will be worth a quarter. What initiative
is there to save? And if we
don't save we're short of the investment capital needed for business and
industry expansion.
Workers in Japan and West Germany save several times the percentage of
their income than
Americans do.

What's happened to that
American dream of owning a home? Only 10 years ago a family could
buy a home, and the monthly payment averaged little more than a quarter
-- 27 cents out of each
dollar earned. Today, it takes 42 cents out of every dollar of income.
So, fewer than 1 out of 11
families can afford to buy their first new home.

Regulations adopted by
government with the best of intentions have added $666 to the cost of an
automobile. It is estimated that altogether regulations of every kind,
on shopkeepers, farmers, and
major industries, add $100 billion or more to the cost of the goods and
services we buy. And then
another 20 billion is spent by government handling the paperwork created
by those
regulations.

I'm sure you're getting the
idea that the audit presented to me found government policies of the
last few decades responsible for our economic troubles. We forgot or
just overlooked the fact that
government -- any government -- has a built-in tendency to grow. Now, we
all had a hand in
looking to government for benefits as if government had some source of
revenue other than our
earnings. Many if not most of the things we thought of or that
government offered to us seemed
attractive.

In the years following the
Second World War it was easy, for a while at least, to overlook the
price tag. Our income more than doubled in the 25 years after the war.
We increased our
take-home pay in those 25 years by more than we had amassed in all the
preceding 150 years put
together. Yes, there was some inflation, 1 or 1\1/2\ percent a year.
That didn't bother us. But if
we look back at those golden years, we recall that even then voices had
been raised, warning that
inflation, like radioactivity, was cumulative and that once started it
could get out of control.

Some government programs seemed
so worthwhile that borrowing to fund them didn't bother us.
By 1960 our national debt stood at $284 billion. Congress in 1971
decided to put a ceiling of 400
billion on our ability to borrow. Today the debt is 934 billion.
So-called temporary increases or
extensions in the debt ceiling have been allowed 21 times in these 10
years, and now I've been
forced to ask for another increase in the debt ceiling or the government
will be unable to function
past the middle of February -- and I've only been here 16 days. Before
we reach the day when we
can reduce the debt ceiling, we may in spite of our best efforts see a
national debt in excess of a
trillion dollars. Now, this is a figure that's literally beyond our
comprehension.

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