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Ronald Reagan Presidential Library Digital Library Collections This is a PDF of a folder from our textual collections. Collection: Roberts, John G.: Files Folder Title: JGR/Briefing Materials (1 of 3) Box: 6 To see more digitized collections visit: https://reaganlibrary.gov/archives/digital-library To see all Ronald Reagan Presidential Library inventories visit: https://reaganlibrary.gov/document-collection Contact a reference archivist at: [email protected] Citation Guidelines: https://reaganlibrary.gov/citing National Archives Catalogue: https://catalog.archives.gov/ THE WHITE HOUSE WASHINGTON February 6, 1986 MEMORANDUM FOR EDWARD P. DJEREJIAN SPECIAL ASSISTANT TO THE PRESIDENT AND DEPUTY PRESS SECRETARY FOR FOREIGN AFFAIRS FROM: JOHN G. ROBERTS ASSOCIATE COUNSEL TO THE PRESIDENT SUBJECT: Foreign Policy Briefing Materials Counsel's Office has reviewed the above-referenced briefing materials and finds no objection to them from a legal perspective. I would point out, however, that we expect a decision in the Gramm-Rudman case at noon tomorrow. That decision may necessitate changes in the "Gramm-Rudman-Hollings and Defense" section. CC: David L. Chew ID #. CU WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET 0 OUTGOING H INTERNAL I INCOMING Date Correspondence Received (Y Y/MM/DD) / / Name of Correspondent: Dave Chew MI Mail Report User Codes: (A) (B) (C) Subject: Fareign Policy Briefing materials ROUTE TO: ACTION DISPOSITION Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD cuttail ORIGINATOR 86,02,06 / / Referral Note: cuat 18 R 86,02,06 S 860207 Referral Note: 10 am / / / / Referral Note: / / / / Referral Note: / / / / Referral Note: ACTION CODES: DISPOSITION CODES: A Appropriate Action I Info Copy Only/No Action Necessary A Answered C Completed C Comment/Recommendation R Direct Reply w/Copy B - Non-Special Referral S Suspended D Draft Response S For Signature F Furnish Fact Sheet X Interim Reply to be used as Enclosure FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 VERY CLOSE HOLD Document No. WHITE HOUSE STAFFING MEMORANDUM 2/6/86 DATE: ACTION/CONCURRENCE/COMMENT DUE BY: 10:00 a.m. 2/7/86 FOREIGN POLICY BRIEFING MATERIALS SUBJECT: ACTION FYI ACTION FYI VICE PRESIDENT OGLESBY REGAN POINDEXTER MILLER RYAN BUCHANAN SPEAKES CHAVEZ SPRINKEL CHEW P SS STEELMAN DANIELS SVAHN FIELDING THOMAS HENKEL TUTTLE HICKS DJERIJIAN KINGON LACY REMARKS: Please provide any comments on the attached briefing materials directly to Ed Djerijian by 10:00 a.m. Friday, with an info copy to my office. Thank you. RESPONSE: David L. Chew Staff Secretary Ext. 2702 GRAMM-RUDMAN-HOLLINGS AND DEFENSE Defense absorbs 50 percent of required reductions under the Gramm-Rudman-Hollings sequestration formula. In the current fiscal year (FY 86), just about every program except personnel and SDI was cut by 5 percent to comply with Gramm-Rudman-Hollings. The FY 87 impact of Gramm-Rudman-Hollings sequestration on defense would be very significant if triggered. However, RR's budget proposal shows this will not be necessary as long as the Congress takes responsible action to meet the deficit target of $144 billion NASA SPACE PROGRAM Future of Space Program The shuttle program is temporarily suspended until the Commission report identifies the cause of the recent tragedy and recommends appropriate actions. However, we intend to reactivate the space shuttle in the future and make it operational again as soon as we can. We also intend to move forward on development of the space station. Civilians in Space We have always backed space efforts as a peaceful endeavor for the purpose of furthering science and research as well as using it for defensive purposes and treaty monitoring. As the program serves science, industry, defense and government, reserving places for doctors, scientists and yes, even journalists, is certainly in order. Effect on Defense Programs National security missions will continue to receive the highest priority for availability of launch vehicles. Effect on SDI We intend to press ahead with our research program for SDI. ECONOMIC SUMMIT/ASIA TRIP Bali RR will stop in Bali en route to the Tokyo Economic Summit. RR will meet with President Soeharto and with senior ASEAN officials. Economic Summit At the Tokyo Economic Summit we will want to consider ways to meet the challenges facing industrialized democracies in the future. RR will seek the support of colleagues for US economic initiatives and will discuss: -- problems of international terrorism -- trade in narcotics : prospects for RR's next meeting with General Secretary Gorbachev Japan Since the Economic Summit is in Japan this year, RR expects to spend time with Prime Minister Nakasone. Much has been reported about bilateral trade problems, and RR expects to review our approaches to resolving such issues. THE WHITE HOUSE WASHINGTON February 6, 1986 MEMORANDUM FOR THOMAS F. GIBSON III SPECIAL ASSISTANT TO THE PRESIDENT AND DIRECTOR OF PUBLIC AFFAIRS FROM: ASSOCIATE COUNSEL 872 THE PRESIDENT JOHN G. ROBERTS SUBJECT: Briefing Materials for I & A with Thomas Jefferson High School Students Counsel's Office has reviewed the above-referenced briefing materials. In the third bullet item on the Shuttle Accident, it may be better to delete "12-member." The Executive Order provided for a commission of not more than 20 members, and the actual size may change. cc: David Chew ID # CU WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET o OUTGOING H INTERNAL I INCOMING Date Correspondence Received (YY/MM/DD) / / Name of Correspondent: Dave Chew MI Mail Report User Codes: (A) (B) (C) Subject: Briefing materials far Q:A with Thanks gifferson High school students ROUTE TO: ACTION DISPOSITION Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD CUNTOLL ORIGINATOR 86,02,06 / / Referral Note: crut 18 AC 86,02,06 586,02,06 Referral Note: 3pm / / / / Referral Note: / / / / Referral Note: / / / / Referral Note: ACTION CODES: DISPOSITION CODES: A - Appropriate Action I - Info Copy Only/No Action Necessary A Answered C Completed C Comment/Recommendation R * Direct Reply w/Copy B Non-Special Referral S Suspended D Draft Response S For Signature F Furnish Fact Sheet X Interim Reply to be used as Enclosure FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 Document No. WHITE HOUSE STAFFING MEMORANDUM DATE: 2/6/86 ACTION/CONCURRENCE/COMMENT DUE BY: 3:00 p.m. TODAY SUBJECT: BRIEFING MATERIALS FOR I & A WITH THOMAS JEFFERSON HIGH SCHOOL STUDEN ACTION FYI ACTION FYI VICE PRESIDENT OGLESBY REGAN POINDEXTER MILLER RYAN BUCHANAN SPEAKES CHAVEZ SPRINKEL CHEW P SS STEELMAN DANIELS SVAHN FIELDING THOMAS HENKEL TUTTLE HICKS GIBSON KINGON LACY REMARKS: Please provide any comments on the attached briefing materials directly to Tom Gibson's office by 3:00 p.m. this afternoon, with an information copy to my office. Thanks. RESPONSE: David L. Chew Staff Secretary Ext. 2702 THE WHITE HOUSE WASHINGTON February 6, 1986 MEMORANDUM FOR DAVID CHEW FROM: TOM GIBSON Tb. SUBJECT: Briefing Materials for the Presidents 0 & A With Thomas Jefferson High School Students Attached, for staffing, are briefing materials for the President's February 7, 1986, question and answer session with students from Thomas Jefferson High School. CC: Pat Buchanan Briefing Materials for the President's February 7, 1986 0 and A with students from Thomas Jefferson High School NATIONAL AEROSPACE PLANE Our objective is to demonstrate, by the mid 1990s, an entirely new class of aircraft -- more of a plane than the Shuttle and more of spacecraft than the Concorde. The "Spaceplane" will have Hypersonic Cruising speeds of between 4,000 to 8,000 miles per hour -- 25 times the speed of sound. At that speed you could get from here to Baltimore in about 20 seconds -- that would certainly make seeing an Orioles game a cinch. Imagine this: The Concorde is 9 inches longer at cruising speed than when it's on the ground. It grows because of the heat generated on the outer skin at twice the speed of sound. Think of the engineering challenges the builders of the Spaceplane will face in speeds 10 times faster. We're going to build this plane in the next decade. You can be part of that process. SHUTTLE ACCIDENT We mourn the loss and honor the valor of our seven Challenger heroes. They took the risks and made the ultimate sacrifice because they believed in the space program and were excited by the mysteries and the opportunities of what is beyond the earth. Now we must be ready to do what they would want us to do: Go forward and reach for the stars. RR has appointed a 12-member commission of distinguished Americans to find out why the accident happened, and how we can prevent it from happening again. The Commission will report its findings in June. Commission members include Neil Armstrong, the first man on the moon, and Sally Ride, the first American woman in space. -2- SPACE AND RELATED TECHNOLOGIES What kinds of scientific and technological breakthroughs have come about as a result of the space program? Computer-controlled walking: People who are partially or completely paralyzed are beginning to use their limbs through the aid of computers that send electric impulses to the muscles. Programmable Implantable Medical Systems: Programmed to administer medicine to a patient automatically, in quantities needed, when they are needed. (Note: RR saw this device at Goddard Space Research Center in Maryland.) Implantable heart pacemakers developed in the 1960s came right out of the space program and have given new life to people with heart problems. The entire field of computers, including pocket calculators. 1986 HEROES How did you pick the "heroes" you introduced at your State of the Union address? RR takes an active interest in the lives of Americans who do more than their share to make this country the best place on Earth. RR is proud to know the four outstanding young Americans introduced Tuesday, Americans not unlike yourselves. -- Richard Cavoli -- young scientist who works with crystals and x-ray technology; -- Tyrone Ford -- a musical prodigy; -- Shelby Butler -- a heroine who saved the life of 7-year-old girl; and -- Trevor Ferrel -- who saw a TV news story about homeless men and women and now directs a huge volunteer effort to help them. RR is proud to know these young people -- and proud to know the students of Thomas Jefferson High School for Science and Technology. There are plenty of heroes right here! -3- SELECTION OF HIGH SCHOOL Why did you decide to come to Thomas Jefferson High School? RR knew that a member of the faculty, Judith Garcia, was one of the ten teacher-in-space finalists. Thomas Jefferson High School is so eager to meet the challenges of tomorrow, "Science and Technology" is part of its name. EDUCATION The real issue is how much students learn, not how much the government spends. The National Commission on Excellence in Education took a hard look at our schools and made some important recommendations. The Nation responded, and we're moving ahead by raising graduation standards and providing incentives to reward good teaching. Scholastic Aptitude scores for 1985 rose 9 points over 1984, registering the biggest annual gain since 1963. Good work! SPENDING ON EDUCATION About 42 percent of all full-time college students received some form of federal student aid last year. More money was loaned last year to students than ever before -- almost $9 billion. States and localities are spending more, too. EDUCATION CHOICE Parents have a fundamental right to educate their children at schools of their own choosing. RR has proposed education vouchers to enable parents of disadvantaged children to choose the school which best suits their child's educational needs. RR also supports tuition tax credits for low and middle income families, to reduce the double burden these families bear by paying private school tuition and taxes which support public schools. -4- The Budget Most of you know that you can't spend more of your allowance or your earnings than you have. You probably have not been granted the privilege and responsibility of credit cards. But the government does that every day. That's why we're stuck with a budget deficit of billions and billions of dollars. That deficit is standing in the way of your getting the best job you can when you graduate from high school or college. We can close that gap between what the government gets in taxes and what it spends. -- All we have to do is spend about 3 cents less on the dollar than we planned to. -- We won't have to raise your parents' taxes to put a dent in the deficit. It wouldn't be fair to put a choke hold on your family's budget just so the government can keep on spending. -- We can continue to spend money on AIDS research and on Social Security. We can see that the needy get the help they need. -- And we can maintain the restoration of our defenses. A strong America is the only reason Mr. Gorbachev met with me last year. If we weaken our defenses, the Soviets will have no reason to bargain with us. And we won't be able to make the world safer for all of us. THE WHITE HOUSE WASHINGTON February 6, 1986 MEMORANDUM FOR THOMAS F. GIBSON III SPECIAL ASSISTANT TO THE PRESIDENT AND DIRECTOR OF PUBLIC AFFAIRS FROM: JOHN G. ROBERTS 0122 ASSOCIATE COUNSEL TO THE PRESIDENT SUBJECT: Domestic Briefing Materials For the President Counsel's Office has reviewed the above-referenced briefing materials and has no objection to them from a legal perspective. CC: David Chew ID #. CU WHITE HOUSE CORRESPONDENCE TRACKING WORKSHEET o OUTGOING H INTERNAL I * INCOMING Date Correspondence Received (YY/MM/DD) / / Name of Correspondent: Dave Chew MI Mail Report User Codes: (A) (B) (C) Subject: Domestic Bruping materials fur the President ROUTE TO: ACTION DISPOSITION Tracking Type Completion Action Date of Date Office/Agency (Staff Name) Code YY/MM/DD Response Code YY/MM/DD CUHOLL ORIGINATOR 86,02,06 / / Referral Note: Crunt 18 R 86,02,06 586,02,06 Referral Note: 5pm / / / / - Referral Note: / / / / Referral Note: / / / / Referral Note: ACTION CODES: DISPOSITION CODES: A * Appropriate Action I Info Copy Only/No Action Necessary A Answered C Completed C Comment/Recommendation R Direct Reply w/Copy B * Non-Special Referral S Suspended D Draft Response S For Signature F Furnish Fact Sheet X Interim Reply to be used as Enclosure FOR OUTGOING CORRESPONDENCE: Type of Response = Initials of Signer Code = "A" Completion Date = Date of Outgoing Comments: Keep this worksheet attached to the original incoming letter. Send all routing updates to Central Reference (Room 75, OEOB). Always return completed correspondence record to Central Files. Refer questions about the correspondence tracking system to Central Reference, ext. 2590. 5/81 Extreme Close Hold Document No. WHITE HOUSE STAFFING MEMORANDUM DATE: 2/6/86 ACTION/CONCURRENCE/COMMENT DUE BY: 5:00 p.m. TODAY SUBJECT: DOMESTIC BRIEFING MATERIALS FOR THE PRESIDENT ACTION FYI ACTION FYI VICE PRESIDENT OGLESBY REGAN POINDEXTER MILLER RYAN BUCHANAN SPEAKES CHAVEZ SPRINKEL CHEW P SS STEELMAN DANIELS SVAHN FIELDING THOMAS HENKEL TUTTLE HICKS GIBSON KINGON LACY REMARKS: Please provide any comments on the attached briefing material directly to Tom Gibson by 5:00 p.m. this afternoon, with an information copy to my office. Thanks. RESPONSE: David L. Chew THE WHITE HOUSE WASHINGTON February 6, 1986 MEMORANDUM FOR DAVID CHEW FROM: TOM GIBSON, is. SUBJECT: Briefing Materials for Presidential Press Conference Attached, for staffing, are draft briefing materials for use by the President in the February 11, 1986, press conference. This package includes materials on NASA/Space Shuttle and trade provided by Rusty Brashear. CC: Pat Buchanan ECONOMIC UPDATE U.S. is in its 38 months of economic expansion: Employment: More than 9 million Americans employed today than in November 1982. RR looks forward to hitting the 10 million mark this year. Output: Real GNP has grown every quarter since the third quarter of 1982. Economic growth of 2.3 percent in 1985 was due to sharp declines in production for inventory and continued slow growth of foreign economies. Inflation: You have to go back to 1966-1968 to find three straight years of lower inflation (measured by CPI). Interest rates: Prime rate now lowest in over 7 years (9.5%) . December housing starts were up in every region. Housing is more affordable: The median American family has sufficient income to assume all the cost of a loan on the median-priced house. Economic Outlook Healthy O Index of Leading Indicators has risen the past 8 months in a row and are now at their highest level in history (December 1985). COMPONENTS OF THE FY '87 BUDGET By submitting this budget, the President abides by the law and keeps his part of the bipartisan compromise reached when Gramm-Rudman-Hollings was approved. Moreover, it does SO: -- without raising taxes, -- without sacrificing our defense preparedness, and -- without cutting into vital programs for the poor and the elderly. Criteria for Spending Priority programs -- national security programs and those that continue to benefit the general health and welfare of all Americans, with particular attention paid to individuals in greatest need. Programs targeted for cuts or reform -- those favoring only a narrow segment of the population, where services can be improved and costs reduced by programs being returned to the private sector or state and local governments. These criteria are met in four components of the FY '87 budget: -- Cost savings through greater efficiency; -- Cost savings and improved service delivery through the privatization of several federal programs; -- Cost savings by broadening federalism initiatives; -- Cost savings by the increased application of user fees. 1986 -- Year of Decision O For the sixth year, the President's budget calls for reduced spending and the restoration of the federal government to its proper and less costly role in the lives of Americans. The President's budget for FY 1987 responds to the first test of fiscal accountability in the Gramm-Rudman- Hollings era. The President met the G-R-H deficit reduction targets agreed to by Congress and did so without raising taxes, cutting Social Security or assistance for the needy, or undermining defense. It is now Congress' turn. If Congress had accepted the President's spending priorities in his first year of office, last year's deficit would have been substantially less, and this year's budget exercise would be easier. The tough decisions that Congress put off in 1981, 1982, 1983, 1984 and 1985 will have to be made in 1986. The Law, code named Gramm-Rudman-Hollings, will see to that. FY 87 BUDGET NUMBERS This budget sets the deficit on a downward path to a balanced budget by 1991. In doing so, it meets or exceeds the deficit reduction targets specified in Gramm-Rudman-Hollings. As RR has long predicted and the Congressional Budget Office have now confirmed -- economic growth is producing increased federal revenues. Revenues are rising faster than outlays for current services. The proposed budget will lower the budget baseline to the G-R-H targets. If baseline is lower through spending cuts this year, no futher significant cuts will be required again. (1987 Baseline Deficit) $182 billion 1987 Proposed Outlays $994 billion 1987 Proposed Receipts $850 billion (1987 Gramm-Rudman-Hollings Deficit Target) $144 billion (Required deficit reduction) $38 billion The $38.2 billion will come from: Increased receipts $6.3 billion Employee contributions to retirement funds, continuation of the cigarette tax, IRS administrative initiatives, and certain fees; Selling various real and financial assets $3.2 billion Elk Hills Naval Petroleum Reserve, surplus real estate, certain loan portfolios; User fees $2.4 billion Payments by special beneficiaries of services provided by the government; Lower interest payments $1.2 billion Program cuts -- only 2½ percent of total budget $25 billion PROPOSED BUDGET CUTS The proposed cuts in the Presidents amount to less than 3 cents on the dollar for total spending. With Social Security, interest on debt, defense and other essential spending off limits -- proposed cuts constitute only 6 percent of remaining budget base. Spending reductions do not necessarily mean reductions in services. Greater efficiencies, through management reforms, can account for reduced spending without cutting services. Example: Job Placement Programs -- Beacause of overlap from old programs, for every $4 spent to help place a potential worker, $3 is spent on administrative overhead. By reducing the overlap and overhead costs, we can apply more to service delivery. Example: Student Loans -- Students who need assistance will get assistance. A shift from making direct loans to guaranteeing private loans will result in major savings without reducing services. Cuts -- $25 Billion Doable Congress has just agreed to an $11.7 billion dollars in cuts, with barely a wimper. It can be done. $2.7 billion of the $25 B comes from reductions in defense activities. $22.4 billion must be obtained from nondefense programs. DEFENSE SPENDING Real Increases as Promised by Congress Some are saying your defense budget actually proposes increased spending of 8 percent? RR compromised with Congress last year and agreed to accept zero growth in FY 86 and 3% growth, after inflation, in the following years. But Congress provided less than zero real growth for defense in FY 86, and G-R-H deductions for FY 86 means defense budget authority declines more than 5% in real terms. RR's FY '87 budget proposes funding authority that would provide the same real program growth levels agreed to in the 1986 Congressional budget resolution compromise. It's important to distinguish between proposed Budget Authority and real outlays -- dollars being spent. Proposed spending, in actual dollar outlays, will increase only 3%. Real Increases in Defenses are Important Even with the proposed increases, defense still constitutes a smaller share of the budget and of GNP than in any Kennedy-Johnson peacetime year. During the 1970s, the United States seriously underfunded defense programs. : From 1972 to 1981, U.S. defense spending declined nearly 20 percent in real terms. -- As a percentage of the GNP, defense spending declined to 5% by 1977, down from 7.5% of GNP in 1971. : During the 1970s, the Soviet Union outpaced our defense spending effort by about 50 percent. In the past five years of the RR has reversed this alarming decline in defense and have made significant progress in strengthening our military capabilities. We have laid the foundation for the most effective American military we have ever had in peacetime. With all of the talk about defense spending growth, the defense budget, as a percent of GNP, is still low by post-war standards. It is now about 6% -- well below the 9.5% of 1960, and smaller than in any year of the Kennedy-Johnson administration. (defense continued) Why Not Cut Defense? Providing for America's security is the unique obligation of the federal government. No other level of government or private institution can fund national defense. In contrast, many domestic programs can be effectively performed by state or local governments -- which are better able to afford them, having in aggregate a multi-billion dollar budget surplus in 1985. The choice presented in the President's budget is clear: preserve defense, or turn back the clock to the late 1970s, when many of our planes couldn't fly and our ships couldn't sail for lack of parts and trained personnel. Moreover, Soviet military expansion continues -- the current defense budget of the Soviet Union consumes an estimated 15% of their GNP. An abrupt turnaround in Congressional support for essential defense spending would simply result in false economies -- and jeopardize national security interests: -- Stop-and-go procurement and stretch-outs are extremely expensive. We end up with less equipment at much higher costs per item; : In many cases trained personnel might not be available to run military equipment already approved by Congress; -- Maintenance would suffer, training would deteriorate, and crew proficiency would be undermined; and -- The reduced quality of life for service personnel would hurt morale and increase turnover. Higher turnover means higher training costs for less experienced forces. BUDGET PROCESS REFORM The facts are plain enough. Congress' own Budget Process is not working. The Budget Act of 1974 established a set of procedures and timetables that called upon the President to submit an annual budget for the coming fiscal year and for Congress to produce final appropriation (spending) bills in time for the President's action prior to October 1 of each year to keep the government running. The Administration's budget has arrived on time, and has clearly articulated the Administration's spending priorities. The Congress has not been so punctual or concise: -- In every year but one since 1974, Congress has failed to enact the entire range of federal appropriations bills within the statutory deadline. : During the last several years the many offices of the federal government have been forced to close down temporarily because Congress was not able to pass spending bills to keep them operating. : In 1984, when such a shut down occurred, federal employees were not allowed to report for work, but nevertheless were paid -- $800 million in lost productivity. -- In 1985, Congress failed to meet every deadline required by the 1974 Budget Act, to keep the government running. Congress three times was forced to pass stop-gap measures to keep the government operating. In the end, Congress panicked and threw the entire appropriations process out the window. They lumped seven major appropriations bills together a $499 billion package and sent it to me for approval. That is no way to run a railroad and it's certainly not the way to run a $982 billion dollar a year federal government. We need to fix the system, and we'll begin looking in earnest for ways to approach the problem. o In the meantime, as a first step and since you asked, the President of the United States should be granted the line item-veto in the same way as 43 other state governors do. The line-item veto is the best backstop to cutting spending in a system that is currently broken. 1986 INITIATIVES Domestic Policy Council Report on Welfare There has been new attention in the media about the plight of poor families -- particularly those headed by single women. We have spent billions of dollars on welfare over the past several decades, but problems remain. Besides the human costs of despair, there are the dollar costs. We are beginning to see second and, in some cases, third generations who have known nothing but a welfare existence. Our patchwork of programs, though well meaning, aren't working. The entire welfare system is in need of review and overhaul. RR directed Domestic Policy Council to present by the end of the year, an evaluation of federal programs, and a strategy for immediate action to meet the financial, educational, social, and safety concerns of poor families. It is our duty as a nation to shink the ranks of the poor by providing the tools and incentives for families and family members to be economically secure and independent. The best test of welfare is how many people are able to escape welfare and achieve "real and lasting emancipation." Bowen Report on Catastrophic Health Care RR directed Secretary of Health and Human Services, Dr. Otis Bowen, to report by year-end with recommendations on how the private sector and government can work together to address the problems of affordable insurance for those whose life savings would otherwise be threatened when a catastrophic illness strikes. There are no preconceived notions about what the right answers will be. However, both RR and Secretary Bowen reviewed issue when each was governor. Only about two-tenths of one percent (.2%) of non-elderly, non-poor families incur health costs of $30,000 or more in a single year. Review is to determine if there is a mechanism where we could save these relatively few persons from financial ruin when a very low probability, high cost illness strikes. (1986 initiatives continued) Baker Report on Currency Reform Conference RR directed Treasury Secretary Jim Baker to determine if an international conference should be convened to discuss the role and relationship of world currencies. RR's directive responds to questions raised here and abroad on whether the current world exchange rate system can operate with greater reliability. A more predictable system of currency exchange may promote international trade and commerce by eliminating confusion and permitting a more orderly adjustments by businesses throughout the world. Secretary Baker will report back to the President before the end of the year. DECLINING OIL PRICES Good news for the economy Crude oil prices peaked in March 1981, after RR ordered immediate decontrol, and have fallen steadily ever since. Adjusted for inflation, a gallon of regular leaded gasoline now costs about the same as it did in the 1950s. The spot market price for crude oil has fallen sharply in recent weeks. Spot prices for key U.S. crudes have fallen below $18 per barrel for the first time in more than a decade. Overall, this is very good news. The Council of Economic Advisers estimates that a $5 per barrel drop in the price of oil will add about 1.5 percent to real GNP growth. However, these price declines affect different areas of the country differently. RR is examining very closely the effect of changing oil prices on oil-producing states. Oil Import Fee Some members of the Senate have suggested a number of ways to move toward the $2,000 personal exemption, the 35 percent top individual income tax rate, and changes that will preserve incentives for businesses to create jobs. Some in the Senate have suggested an oil import fee as one way of making these important changes in the House bill, while still keeping the package revenue neutral. Drawbacks to an oil import tax: Increases costs to U.S. consumers and businesses; Could harm relations with some U.S. allies; -- Poses enforcement problems or require new bureaucracy; and -- Has disproportionate impact on poorer Americans and residents of the Northeast. RR still opposed to a tax increase and believes there are a variety of other ways to meet objectives for tax reform while preserving revenue neutrality. Many ideas from RR's original tax bill deserve additional consideration. URBAN POVERTY/BLACK AMERICANS Recovery has helped Black Americans During the economic recovery, blacks have gained an average of 40,000 new jobs every month. More blacks are employed in the U. S. today than ever before -- 10.7 million; About 400,000 black Americans moved up and out of poverty from 1983 to 1984. The decline in the black poverty rate was the largest decline in over a decade. Black Teenage Pregnancy -- "Vanishing Family" After at least a decade of trying to treat the problem one way, we haven't made a dent in the problem of teenage pregnancy -- and all sides of the argument admit it. In Minnesota, the teenage pregnancy rate fell when the state enacted a law requiring parental notification before a minor could purchase or receive contraceptives. It is time to reassess the path we have taken. That is just one reason why RR directed the Domestic Policy Council to study the range of federal programs and their effects on poor families. Civil Rights Enforcement RR is deeply committed to the expansion of a colorblind society where all American men and women have equal opportunities to progress through hard work and initiative, in a climate of economic growth and expanding opportunity. Under the Reagan Administration, more civil rights cases have been brought in more parts of the country than at any time in history. TAX REFORM House bill is a good start, not a final product. More must be done to broaden the tax base, reduce tax rates further, and lower the cost of capital. It was apparent from the beginning that it would take bipartisan support to get tax reform through the House. There were some understandable differences of opinion on the content of the tax reform bill as this bipartisan effort was being assembled. RR will now work for improvements with the Senate, but will oppose any final legislation which does not meet RR's standards of true tax reform or which threatens economic growth. Senate Highlights Senate Finance Committee has made a good first start in deciding that tax reform can pass. Committee is finishing two weeks of hearings and expects to send a bill to the floor this June. Committee will take House bill and RR original tax reform proposal as a base. The spade work has been done. Just change the architecture. State and Local Deduction RR is encouraged by reports that the Senate is considering at least a partial repeal of the deduction for state and local taxes. Full repeal was part of original RR proposal. Deduction provides unfair benefit -- disproportionately benefits the rich. The cost of retaining this benefit is high -- it means we can't get rates down for other Americans, particularly non-itemizers. February 5, 1986 SPACE SHUTTLE CHALLENGER ACCIDENT The President has appointed Blue Ribbon Commission, headed by former Secretary of State Bill Rogers, which will review the circumstances surrounding the accident, determine its probable causes and develop recommendations for corrective action. This panel will report to the President within 120 days. The Commission the President has appointed will look only into the Challenger accident. The National Commission on Space, a separate commission, recommends long-term (50 years hence) goals for space exploration. The President has created an independent Presidential Commission to review this accident because the American people deserve the most thorough and balanced investigation that is possible. This in no way diminishes his respect for the men and women of NASA who epitomize professionalism in government. The President looks for the Commission to work closely with NASA and all others to determine the causes of this tragedy. The President has full confidence in the manned space program which has completed so many successful missions. The crew of Challenger paid the ultimate price because they believed in the space program and we Americans owe it to them to go forward in our efforts. We will fly no Shuttles until the causes of the Challenger tragedy are discovered and corrected. And, before we can even consider building another Space Shuttle to replace Challenger, we must first determine the causes of this accident before assessing budget realities. As I have said: [We] must forge ahead with a space program that is effective, safe, and efficient, but bold and committed. Man will continue his conquest of space. To reach out for new goals and ever greater achievements -- that is the way we shall commemorate our seven Challenger heroes. We'll continue our quest in space. There will be more shuttle flights and more shuttle crews and, yes, more volunteers, more civilians, more teachers in space. Nothing ends here. Our hopes and our journeys continue. The future doesn't belong to the faint-hearted The Challenger crew was pulling us into the future, and we'll continue to follow them. February 5, 1986 TRADE The President seeks freer and fairer trade. We will counter unfair trading practices abroad and oppose protectionism at home. In a fair and open world market, America can out- produce, out-compete and out-sell anybody in the world. Trade Deficit It's high largely because our economic performance has been better than our trading partners'. We must reduce the U.S. budget deficit. Gramm-Rudman will help reduce the trade deficit as well as the budget deficit. Our trading partners need to improve their economic performance. We've begun coordinating economic and monetary policies among our major trading partners, but it will take time before there is a major trade impact. Because there's more to do, RR asked Secretary Baker to determine whether we need to convene nations to discuss currency relationships. Also taking aggressive steps to fight unfair trade practices in other countries. Cases filed against Japan and European Community have brought results. Must keep the problem in perspective. Our free and fair trade policies have helped create nine million new jobs in the last three years. We are doing better than most countries that have protectionist trade policies. Trade Deficit -- Japan The U.S. trade deficit with Japan was almost $50 billion in 1985, the largest deficit ever for one trading partner. We insist on fair trade with Japan. We have brought unfair trade practice cases against Japan and have conducted market- -opening talks in selected sectors. Trade Legislation Happy to work with Congress as it seeks to restore a level playing field for American business. But will not approve protectionist legislation. Would oppose any legislation to transfer President's discretionary authority on trade to unelected officials. COMPONENTS OF SPENDING REDUCTION Efficiency RR's budget contracts out certain government services to the private sector and projects 20% increase in productivity. The savings: $4.5 billion for every 5% increase in federal productivity. -- Urban Development Action Grants that handed out billions in subsidies, including $768 million to build 262 hotels. -- Interstate Commerce Commission regulated transportation for nearly 100 years, but has little for its 900 employees to do now after deregulation of buses, trucks and trains. User Fees O Fairness demands that government charge for special services for special interests. Example: -- Weekend sailors and yachtsmen alike benefit from Coast Guard services, including $400 million spent on search and rescue operations. But 80% of its calls are not emergencies at all. Charging for routine services will save taxpayers $714 million in two years. Privatization O Government must stop running businesses and stick to the business of government. Examples: -- In 1912, government got into the oil business, when it established the Naval Petroleum Reserve, and is still selling oil and gas by the barrel. Selling the business will save $3.6 billion. -- Amtrak will waste $7 billion in subsides by the 1990s. Even buying bus and plane tickets would be cheaper than a special subsidy for 2% of intercity passengers. Federalism O Government decisions must be made closer to the people. That makes government more responsive and more accountable. Turning some federal programs over to the states and localities prevents runaway government growth and lets the federal government focus on national problems. POLITICS OF THE BUDGET The politics of the federal budget has heretofore been additive and addictive -- "I'll vote for yours if you vote for mine. " The budget process has been the domain of the special interests. The FY 1987 budget and the reality of Gramm-Rudman-Hollings call for politics of responsibility: a final call for the establishment of priorities -- where the federal government can and cannot afford to spend. Why the President's Budget? Jobs -- Cutting spending to reduce the deficit will require less federal borrowing -- private businesses will find borrowing for expansion easier and consumers will find lower interest rates for big ticket items and housing. Net result: More jobs for all Americans. Fiscal Fitness -- A nation that looks to the future must make an accounting of the impediments to getting there. Having to drag along the extra baggage of archaic, inefficient programs such as the ICC will make the going that much tougher. Defense of the Family Budget -- No Tax Increases The President is determined not to allow another raid on the family budget, while the federal budget can be cut instead. Higher taxes, like the effects of continued borrowing, will choke off the record investment and job creation that have put 9 million more Americans to work in the last 38 months. Why not just allow the automatic cuts to take effect? RR's budget was developed thoughtfully and followed a careful process that takes literally months. Automatic cuts of Gramm-Rudman-Hollings sequestering process will slash important priority programs -- such as air safety, AIDS research and drug enforcement -- and programs that are already being well managed. This is not an intelligent way to pass a budget. Sequestering would be an admission by the Congress that it cannot fulfill its responsibility to pass a budget. Why not close the gap with a tax increase? It makes no sense to strangle the family budget to fix the federal budget. Tax increase would choke off economic growth of the past 38 months that has put 9 million more Americans back to work.

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    "ocrText": "Ronald Reagan Presidential Library\nDigital Library Collections\nThis is a PDF of a folder from our textual collections.\nCollection: Roberts, John G.: Files\nFolder Title: JGR/Briefing Materials (1 of 3)\nBox: 6\nTo see more digitized collections visit:\nhttps://reaganlibrary.gov/archives/digital-library\nTo see all Ronald Reagan Presidential Library inventories visit:\nhttps://reaganlibrary.gov/document-collection\nContact a reference archivist at: [email protected]\nCitation Guidelines: https://reaganlibrary.gov/citing\nNational Archives Catalogue: https://catalog.archives.gov/\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 6, 1986\nMEMORANDUM FOR EDWARD P. DJEREJIAN\nSPECIAL ASSISTANT TO THE PRESIDENT AND\nDEPUTY PRESS SECRETARY FOR FOREIGN AFFAIRS\nFROM:\nJOHN G. ROBERTS\nASSOCIATE COUNSEL TO THE PRESIDENT\nSUBJECT:\nForeign Policy Briefing Materials\nCounsel's Office has reviewed the above-referenced briefing\nmaterials and finds no objection to them from a legal\nperspective. I would point out, however, that we expect a\ndecision in the Gramm-Rudman case at noon tomorrow. That\ndecision may necessitate changes in the \"Gramm-Rudman-Hollings\nand Defense\" section.\nCC: David L. Chew\nID #.\nCU\nWHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\n0 OUTGOING\nH INTERNAL\nI INCOMING\nDate Correspondence\nReceived (Y Y/MM/DD)\n/\n/\nName of Correspondent:\nDave Chew\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: Fareign Policy Briefing materials\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\ncuttail\nORIGINATOR 86,02,06\n/ /\nReferral Note:\ncuat 18\nR 86,02,06\nS 860207\nReferral Note:\n10 am\n/ /\n/ /\nReferral Note:\n/ /\n/ /\nReferral Note:\n/ /\n/ /\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA Appropriate Action\nI Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC Comment/Recommendation\nR Direct Reply w/Copy\nB - Non-Special Referral\nS Suspended\nD Draft Response\nS For Signature\nF Furnish Fact Sheet\nX Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference, ext. 2590.\n5/81\nVERY CLOSE HOLD\nDocument No.\nWHITE HOUSE STAFFING MEMORANDUM\n2/6/86\nDATE:\nACTION/CONCURRENCE/COMMENT DUE BY: 10:00 a.m. 2/7/86\nFOREIGN POLICY BRIEFING MATERIALS\nSUBJECT:\nACTION FYI\nACTION FYI\nVICE PRESIDENT\nOGLESBY\nREGAN\nPOINDEXTER\nMILLER\nRYAN\nBUCHANAN\nSPEAKES\nCHAVEZ\nSPRINKEL\nCHEW\nP\nSS STEELMAN\nDANIELS\nSVAHN\nFIELDING\nTHOMAS\nHENKEL\nTUTTLE\nHICKS\nDJERIJIAN\nKINGON\nLACY\nREMARKS:\nPlease provide any comments on the attached briefing materials\ndirectly to Ed Djerijian by 10:00 a.m. Friday, with an info\ncopy to my office. Thank you.\nRESPONSE:\nDavid L. Chew\nStaff Secretary\nExt. 2702\nGRAMM-RUDMAN-HOLLINGS AND DEFENSE\nDefense absorbs 50 percent of required reductions under\nthe Gramm-Rudman-Hollings sequestration formula.\nIn the current fiscal year (FY 86), just about every\nprogram except personnel and SDI was cut by 5 percent\nto comply with Gramm-Rudman-Hollings.\nThe FY 87 impact of Gramm-Rudman-Hollings sequestration\non defense would be very significant if triggered.\nHowever, RR's budget proposal shows this will not be\nnecessary as long as the Congress takes responsible\naction to meet the deficit target of $144 billion\nNASA SPACE PROGRAM\nFuture of Space Program\nThe shuttle program is temporarily suspended until the\nCommission report identifies the cause of the recent\ntragedy and recommends appropriate actions.\nHowever, we intend to reactivate the space shuttle in\nthe future and make it operational again as soon as we\ncan.\nWe also intend to move forward on development of the\nspace station.\nCivilians in Space\nWe have always backed space efforts as a peaceful\nendeavor for the purpose of furthering science and\nresearch as well as using it for defensive purposes and\ntreaty monitoring.\nAs the program serves science, industry, defense and\ngovernment, reserving places for doctors, scientists\nand yes, even journalists, is certainly in order.\nEffect on Defense Programs\nNational security missions will continue to receive the\nhighest priority for availability of launch vehicles.\nEffect on SDI\nWe intend to press ahead with our research program for\nSDI.\nECONOMIC SUMMIT/ASIA TRIP\nBali\nRR will stop in Bali en route to the Tokyo Economic\nSummit.\nRR will meet with President Soeharto and with senior\nASEAN officials.\nEconomic Summit\nAt the Tokyo Economic Summit we will want to consider\nways to meet the challenges facing industrialized\ndemocracies in the future.\nRR will seek the support of colleagues for US economic\ninitiatives and will discuss:\n-- problems of international terrorism\n--\ntrade in narcotics\n:\nprospects for RR's next meeting with General\nSecretary Gorbachev\nJapan\nSince the Economic Summit is in Japan this year, RR\nexpects to spend time with Prime Minister Nakasone.\nMuch has been reported about bilateral trade problems,\nand RR expects to review our approaches to resolving\nsuch issues.\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 6, 1986\nMEMORANDUM FOR THOMAS F. GIBSON III\nSPECIAL ASSISTANT TO THE PRESIDENT AND\nDIRECTOR OF PUBLIC AFFAIRS\nFROM:\nASSOCIATE COUNSEL 872 THE PRESIDENT\nJOHN G. ROBERTS\nSUBJECT:\nBriefing Materials for I & A with\nThomas Jefferson High School Students\nCounsel's Office has reviewed the above-referenced briefing\nmaterials. In the third bullet item on the Shuttle Accident, it\nmay be better to delete \"12-member.\" The Executive Order\nprovided for a commission of not more than 20 members, and the\nactual size may change.\ncc: David Chew\nID #\nCU\nWHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\no OUTGOING\nH INTERNAL\nI INCOMING\nDate Correspondence\nReceived (YY/MM/DD)\n/\n/\nName of Correspondent:\nDave Chew\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: Briefing materials far Q:A with\nThanks gifferson High school students\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\nCUNTOLL\nORIGINATOR 86,02,06\n/\n/\nReferral Note:\ncrut 18\nAC\n86,02,06\n586,02,06\nReferral Note:\n3pm\n/ /\n/\n/\nReferral Note:\n/\n/\n/ /\nReferral Note:\n/ /\n/ /\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA - Appropriate Action\nI - Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC Comment/Recommendation\nR * Direct Reply w/Copy\nB Non-Special Referral\nS Suspended\nD Draft Response\nS For Signature\nF Furnish Fact Sheet\nX Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference, ext. 2590.\n5/81\nDocument No.\nWHITE HOUSE STAFFING MEMORANDUM\nDATE: 2/6/86\nACTION/CONCURRENCE/COMMENT DUE BY: 3:00 p.m. TODAY\nSUBJECT: BRIEFING MATERIALS FOR I & A WITH THOMAS JEFFERSON HIGH SCHOOL STUDEN\nACTION FYI\nACTION FYI\nVICE PRESIDENT\nOGLESBY\nREGAN\nPOINDEXTER\nMILLER\nRYAN\nBUCHANAN\nSPEAKES\nCHAVEZ\nSPRINKEL\nCHEW\nP\nSS STEELMAN\nDANIELS\nSVAHN\nFIELDING\nTHOMAS\nHENKEL\nTUTTLE\nHICKS\nGIBSON\nKINGON\nLACY\nREMARKS: Please provide any comments on the attached briefing materials\ndirectly to Tom Gibson's office by 3:00 p.m. this afternoon,\nwith an information copy to my office. Thanks.\nRESPONSE:\nDavid L. Chew\nStaff Secretary\nExt. 2702\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 6, 1986\nMEMORANDUM FOR DAVID CHEW\nFROM:\nTOM GIBSON Tb.\nSUBJECT:\nBriefing Materials for the Presidents 0 & A\nWith Thomas Jefferson High School Students\nAttached, for staffing, are briefing materials for the\nPresident's February 7, 1986, question and answer session with\nstudents from Thomas Jefferson High School.\nCC: Pat Buchanan\nBriefing Materials for the President's February 7, 1986\n0 and A with students from Thomas Jefferson High School\nNATIONAL AEROSPACE PLANE\nOur objective is to demonstrate, by the mid 1990s, an\nentirely new class of aircraft -- more of a plane than the\nShuttle and more of spacecraft than the Concorde.\nThe \"Spaceplane\" will have Hypersonic Cruising speeds of\nbetween 4,000 to 8,000 miles per hour -- 25 times the speed\nof sound.\nAt that speed you could get from here to Baltimore in about\n20 seconds -- that would certainly make seeing an Orioles\ngame a cinch.\nImagine this: The Concorde is 9 inches longer at cruising\nspeed than when it's on the ground. It grows because of the\nheat generated on the outer skin at twice the speed of\nsound. Think of the engineering challenges the builders of\nthe Spaceplane will face in speeds 10 times faster.\nWe're going to build this plane in the next decade. You\ncan be part of that process.\nSHUTTLE ACCIDENT\nWe mourn the loss and honor the valor of our seven Challenger\nheroes. They took the risks and made the ultimate sacrifice\nbecause they believed in the space program and were excited\nby the mysteries and the opportunities of what is beyond the\nearth.\nNow we must be ready to do what they would want us to do: Go\nforward and reach for the stars.\nRR has appointed a 12-member commission of distinguished\nAmericans to find out why the accident happened, and how we\ncan prevent it from happening again. The Commission will\nreport its findings in June.\nCommission members include Neil Armstrong, the first man on\nthe moon, and Sally Ride, the first American woman in space.\n-2-\nSPACE AND RELATED TECHNOLOGIES\nWhat kinds of scientific and technological breakthroughs have\ncome about as a result of the space program?\nComputer-controlled walking: People who are partially or\ncompletely paralyzed are beginning to use their limbs\nthrough the aid of computers that send electric impulses to\nthe muscles.\nProgrammable Implantable Medical Systems: Programmed to\nadminister medicine to a patient automatically, in\nquantities needed, when they are needed. (Note: RR saw this\ndevice at Goddard Space Research Center in Maryland.)\nImplantable heart pacemakers developed in the 1960s came\nright out of the space program and have given new life to\npeople with heart problems.\nThe entire field of computers, including pocket calculators.\n1986 HEROES\nHow did you pick the \"heroes\" you introduced at your State of the\nUnion address?\nRR takes an active interest in the lives of Americans who\ndo more than their share to make this country the best place\non Earth.\nRR is proud to know the four outstanding young Americans\nintroduced Tuesday, Americans not unlike yourselves.\n--\nRichard Cavoli -- young scientist who works with\ncrystals and x-ray technology;\n--\nTyrone Ford -- a musical prodigy;\n--\nShelby Butler -- a heroine who saved the life of\n7-year-old girl; and\n--\nTrevor Ferrel -- who saw a TV news story about homeless\nmen and women and now directs a huge volunteer effort\nto help them.\nRR is proud to know these young people -- and proud to know\nthe students of Thomas Jefferson High School for Science and\nTechnology. There are plenty of heroes right here!\n-3-\nSELECTION OF HIGH SCHOOL\nWhy did you decide to come to Thomas Jefferson High School?\nRR knew that a member of the faculty, Judith Garcia, was one\nof the ten teacher-in-space finalists.\nThomas Jefferson High School is so eager to meet the\nchallenges of tomorrow, \"Science and Technology\" is part of\nits name.\nEDUCATION\nThe real issue is how much students learn, not how much the\ngovernment spends.\nThe National Commission on Excellence in Education took a\nhard look at our schools and made some important\nrecommendations. The Nation responded, and we're moving\nahead by raising graduation standards and providing\nincentives to reward good teaching.\nScholastic Aptitude scores for 1985 rose 9 points over 1984,\nregistering the biggest annual gain since 1963. Good work!\nSPENDING ON EDUCATION\nAbout 42 percent of all full-time college students received\nsome form of federal student aid last year.\nMore money was loaned last year to students than ever before\n-- almost $9 billion.\nStates and localities are spending more, too.\nEDUCATION CHOICE\nParents have a fundamental right to educate their children\nat schools of their own choosing.\nRR has proposed education vouchers to enable parents of\ndisadvantaged children to choose the school which best suits\ntheir child's educational needs.\nRR also supports tuition tax credits for low and middle\nincome families, to reduce the double burden these families\nbear by paying private school tuition and taxes which\nsupport public schools.\n-4-\nThe Budget\nMost of you know that you can't spend more of your allowance\nor your earnings than you have. You probably have not been\ngranted the privilege and responsibility of credit cards.\nBut the government does that every day. That's why we're\nstuck with a budget deficit of billions and billions of\ndollars.\nThat deficit is standing in the way of your getting the best\njob you can when you graduate from high school or college.\nWe can close that gap between what the government gets in\ntaxes and what it spends.\n--\nAll we have to do is spend about 3 cents less on the\ndollar than we planned to.\n--\nWe won't have to raise your parents' taxes to put a\ndent in the deficit. It wouldn't be fair to put a\nchoke hold on your family's budget just so the\ngovernment can keep on spending.\n-- We can continue to spend money on AIDS research and on\nSocial Security. We can see that the needy get the\nhelp they need.\n--\nAnd we can maintain the restoration of our defenses. A\nstrong America is the only reason Mr. Gorbachev met\nwith me last year. If we weaken our defenses, the\nSoviets will have no reason to bargain with us. And we\nwon't be able to make the world safer for all of us.\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 6, 1986\nMEMORANDUM FOR THOMAS F. GIBSON III\nSPECIAL ASSISTANT TO THE PRESIDENT AND\nDIRECTOR OF PUBLIC AFFAIRS\nFROM:\nJOHN G. ROBERTS 0122\nASSOCIATE COUNSEL TO THE PRESIDENT\nSUBJECT:\nDomestic Briefing Materials\nFor the President\nCounsel's Office has reviewed the above-referenced briefing\nmaterials and has no objection to them from a legal perspective.\nCC: David Chew\nID #.\nCU\nWHITE HOUSE\nCORRESPONDENCE TRACKING WORKSHEET\no OUTGOING\nH INTERNAL\nI * INCOMING\nDate Correspondence\nReceived (YY/MM/DD)\n/\n/\nName of Correspondent:\nDave Chew\nMI Mail Report\nUser Codes: (A)\n(B)\n(C)\nSubject: Domestic Bruping materials fur\nthe President\nROUTE TO:\nACTION\nDISPOSITION\nTracking\nType\nCompletion\nAction\nDate\nof\nDate\nOffice/Agency\n(Staff Name)\nCode\nYY/MM/DD\nResponse\nCode\nYY/MM/DD\nCUHOLL\nORIGINATOR 86,02,06\n/ /\nReferral Note:\nCrunt 18\nR 86,02,06\n586,02,06\nReferral Note:\n5pm\n/ /\n/ /\n-\nReferral Note:\n/ /\n/ /\nReferral Note:\n/\n/\n/ /\nReferral Note:\nACTION CODES:\nDISPOSITION CODES:\nA * Appropriate Action\nI Info Copy Only/No Action Necessary\nA Answered\nC Completed\nC Comment/Recommendation\nR Direct Reply w/Copy\nB * Non-Special Referral\nS Suspended\nD Draft Response\nS For Signature\nF Furnish Fact Sheet\nX Interim Reply\nto be used as Enclosure\nFOR OUTGOING CORRESPONDENCE:\nType of Response = Initials of Signer\nCode = \"A\"\nCompletion Date = Date of Outgoing\nComments:\nKeep this worksheet attached to the original incoming letter.\nSend all routing updates to Central Reference (Room 75, OEOB).\nAlways return completed correspondence record to Central Files.\nRefer questions about the correspondence tracking system to Central Reference, ext. 2590.\n5/81\nExtreme Close Hold\nDocument No.\nWHITE HOUSE STAFFING MEMORANDUM\nDATE: 2/6/86\nACTION/CONCURRENCE/COMMENT DUE BY: 5:00 p.m. TODAY\nSUBJECT: DOMESTIC BRIEFING MATERIALS FOR THE PRESIDENT\nACTION FYI\nACTION FYI\nVICE PRESIDENT\nOGLESBY\nREGAN\nPOINDEXTER\nMILLER\nRYAN\nBUCHANAN\nSPEAKES\nCHAVEZ\nSPRINKEL\nCHEW\nP\nSS STEELMAN\nDANIELS\nSVAHN\nFIELDING\nTHOMAS\nHENKEL\nTUTTLE\nHICKS\nGIBSON\nKINGON\nLACY\nREMARKS:\nPlease provide any comments on the attached briefing material\ndirectly to Tom Gibson by 5:00 p.m. this afternoon, with an\ninformation copy to my office. Thanks.\nRESPONSE:\nDavid L. Chew\nTHE WHITE HOUSE\nWASHINGTON\nFebruary 6, 1986\nMEMORANDUM FOR DAVID CHEW\nFROM:\nTOM GIBSON, is.\nSUBJECT:\nBriefing Materials for Presidential Press\nConference\nAttached, for staffing, are draft briefing materials for use by\nthe President in the February 11, 1986, press conference. This\npackage includes materials on NASA/Space Shuttle and trade\nprovided by Rusty Brashear.\nCC: Pat Buchanan\nECONOMIC UPDATE\nU.S. is in its 38 months of economic expansion:\nEmployment: More than 9 million Americans employed today\nthan in November 1982. RR looks forward to hitting the 10\nmillion mark this year.\nOutput: Real GNP has grown every quarter since the third\nquarter of 1982. Economic growth of 2.3 percent in 1985 was\ndue to sharp declines in production for inventory and\ncontinued slow growth of foreign economies.\nInflation: You have to go back to 1966-1968 to find three\nstraight years of lower inflation (measured by CPI).\nInterest rates: Prime rate now lowest in over 7 years\n(9.5%) .\nDecember housing starts were up in every region.\nHousing is more affordable: The median American family has\nsufficient income to assume all the cost of a loan on the\nmedian-priced house.\nEconomic Outlook Healthy\nO\nIndex of Leading Indicators has risen the past 8 months in a\nrow and are now at their highest level in history (December\n1985).\nCOMPONENTS OF THE FY '87 BUDGET\nBy submitting this budget, the President abides by the law and\nkeeps his part of the bipartisan compromise reached when\nGramm-Rudman-Hollings was approved. Moreover, it does SO:\n-- without raising taxes,\n-- without sacrificing our defense preparedness, and\n-- without cutting into vital programs for the poor and\nthe elderly.\nCriteria for Spending\nPriority programs -- national security programs and those\nthat continue to benefit the general health and welfare of\nall Americans, with particular attention paid to individuals\nin greatest need.\nPrograms targeted for cuts or reform -- those favoring only\na narrow segment of the population, where services can be\nimproved and costs reduced by programs being returned to the\nprivate sector or state and local governments.\nThese criteria are met in four components of the FY '87 budget:\n-- Cost savings through greater efficiency;\n-- Cost savings and improved service delivery through the\nprivatization of several federal programs;\n-- Cost savings by broadening federalism initiatives;\n-- Cost savings by the increased application of user fees.\n1986 -- Year of Decision\nO\nFor the sixth year, the President's budget calls for reduced\nspending and the restoration of the federal government to\nits proper and less costly role in the lives of Americans.\nThe President's budget for FY 1987 responds to the\nfirst test of fiscal accountability in the Gramm-Rudman-\nHollings era. The President met the G-R-H deficit reduction\ntargets agreed to by Congress and did so without raising\ntaxes, cutting Social Security or assistance for the needy,\nor undermining defense. It is now Congress' turn.\nIf Congress had accepted the President's spending priorities\nin his first year of office, last year's deficit would have\nbeen substantially less, and this year's budget exercise\nwould be easier.\nThe tough decisions that Congress put off in 1981, 1982,\n1983, 1984 and 1985 will have to be made in 1986. The Law,\ncode named Gramm-Rudman-Hollings, will see to that.\nFY 87 BUDGET NUMBERS\nThis budget sets the deficit on a downward path to a\nbalanced budget by 1991. In doing so, it meets or exceeds\nthe deficit reduction targets specified in\nGramm-Rudman-Hollings.\nAs RR has long predicted and the Congressional Budget Office\nhave now confirmed -- economic growth is producing increased\nfederal revenues. Revenues are rising faster than outlays\nfor current services.\nThe proposed budget will lower the budget baseline to the\nG-R-H targets. If baseline is lower through spending cuts\nthis year, no futher significant cuts will be required\nagain.\n(1987 Baseline Deficit)\n$182 billion\n1987 Proposed Outlays\n$994 billion\n1987 Proposed Receipts\n$850 billion\n(1987 Gramm-Rudman-Hollings Deficit Target)\n$144 billion\n(Required deficit reduction)\n$38 billion\nThe $38.2 billion will come from:\nIncreased receipts\n$6.3 billion\nEmployee contributions to retirement\nfunds, continuation of the cigarette tax,\nIRS administrative initiatives, and\ncertain fees;\nSelling various real and financial assets\n$3.2 billion\nElk Hills Naval Petroleum Reserve,\nsurplus real estate, certain loan portfolios;\nUser fees\n$2.4 billion\nPayments by special beneficiaries of\nservices provided by the government;\nLower interest payments\n$1.2 billion\nProgram cuts -- only 2½ percent of total budget\n$25 billion\nPROPOSED BUDGET CUTS\nThe proposed cuts in the Presidents amount to less than\n3 cents on the dollar for total spending.\nWith Social Security, interest on debt, defense and other\nessential spending off limits -- proposed cuts constitute\nonly 6 percent of remaining budget base.\nSpending reductions do not necessarily mean reductions in\nservices. Greater efficiencies, through management reforms,\ncan account for reduced spending without cutting services.\nExample: Job Placement Programs -- Beacause of overlap from\nold programs, for every $4 spent to help place a\npotential worker, $3 is spent on administrative\noverhead. By reducing the overlap and overhead\ncosts, we can apply more to service delivery.\nExample: Student Loans -- Students who need assistance will\nget assistance. A shift from making direct loans\nto guaranteeing private loans will result in major\nsavings without reducing services.\nCuts -- $25 Billion Doable\nCongress has just agreed to an $11.7 billion dollars in\ncuts, with barely a wimper. It can be done.\n$2.7 billion of the $25 B comes from reductions in defense\nactivities.\n$22.4 billion must be obtained from nondefense programs.\nDEFENSE SPENDING\nReal Increases as Promised by Congress\nSome are saying your defense budget actually proposes increased\nspending of 8 percent?\nRR compromised with Congress last year and agreed to accept\nzero growth in FY 86 and 3% growth, after inflation, in the\nfollowing years.\nBut Congress provided less than zero real growth for defense\nin FY 86, and G-R-H deductions for FY 86 means defense\nbudget authority declines more than 5% in real terms.\nRR's FY '87 budget proposes funding authority that would\nprovide the same real program growth levels agreed to in the\n1986 Congressional budget resolution compromise.\nIt's important to distinguish between proposed Budget\nAuthority and real outlays -- dollars being spent. Proposed\nspending, in actual dollar outlays, will increase only 3%.\nReal Increases in Defenses are Important\nEven with the proposed increases, defense still constitutes\na smaller share of the budget and of GNP than in any\nKennedy-Johnson peacetime year.\nDuring the 1970s, the United States seriously underfunded\ndefense programs.\n:\nFrom 1972 to 1981, U.S. defense spending declined\nnearly 20 percent in real terms.\n--\nAs a percentage of the GNP, defense spending declined\nto 5% by 1977, down from 7.5% of GNP in 1971.\n:\nDuring the 1970s, the Soviet Union outpaced our defense\nspending effort by about 50 percent.\nIn the past five years of the RR has reversed this alarming\ndecline in defense and have made significant progress in\nstrengthening our military capabilities. We have laid the\nfoundation for the most effective American military we have\never had in peacetime.\nWith all of the talk about defense spending growth, the\ndefense budget, as a percent of GNP, is still low by\npost-war standards. It is now about 6% -- well below the\n9.5% of 1960, and smaller than in any year of the\nKennedy-Johnson administration.\n(defense continued)\nWhy Not Cut Defense?\nProviding for America's security is the unique obligation of\nthe federal government. No other level of government or private\ninstitution can fund national defense.\nIn contrast, many domestic programs can be effectively\nperformed by state or local governments -- which are better\nable to afford them, having in aggregate a multi-billion\ndollar budget surplus in 1985.\nThe choice presented in the President's budget is clear:\npreserve defense, or turn back the clock to the late\n1970s, when many of our planes couldn't fly and our ships\ncouldn't sail for lack of parts and trained personnel.\nMoreover, Soviet military expansion continues -- the current\ndefense budget of the Soviet Union consumes an estimated 15%\nof their GNP.\nAn abrupt turnaround in Congressional support for essential\ndefense spending would simply result in false economies --\nand jeopardize national security interests:\n--\nStop-and-go procurement and stretch-outs are extremely\nexpensive. We end up with less equipment at much\nhigher costs per item;\n:\nIn many cases trained personnel might not be available\nto run military equipment already approved by Congress;\n-- Maintenance would suffer, training would deteriorate,\nand crew proficiency would be undermined; and\n-- The reduced quality of life for service personnel would\nhurt morale and increase turnover. Higher turnover\nmeans higher training costs for less experienced\nforces.\nBUDGET PROCESS REFORM\nThe facts are plain enough. Congress' own Budget Process is\nnot working.\nThe Budget Act of 1974 established a set of procedures and\ntimetables that called upon the President to submit an\nannual budget for the coming fiscal year and for Congress to\nproduce final appropriation (spending) bills in time for the\nPresident's action prior to October 1 of each year to keep\nthe government running.\nThe Administration's budget has arrived on time, and has\nclearly articulated the Administration's spending\npriorities.\nThe Congress has not been so punctual or concise:\n-- In every year but one since 1974, Congress has failed\nto enact the entire range of federal appropriations\nbills within the statutory deadline.\n:\nDuring the last several years the many offices of the\nfederal government have been forced to close down\ntemporarily because Congress was not able to pass\nspending bills to keep them operating.\n:\nIn 1984, when such a shut down occurred, federal\nemployees were not allowed to report for work, but\nnevertheless were paid -- $800 million in lost productivity.\n--\nIn 1985, Congress failed to meet every deadline\nrequired by the 1974 Budget Act, to keep the government\nrunning. Congress three times was forced to pass\nstop-gap measures to keep the government operating.\nIn the end, Congress panicked and threw the entire\nappropriations process out the window. They lumped\nseven major appropriations bills together a $499\nbillion package and sent it to me for approval.\nThat is no way to run a railroad and it's certainly not the\nway to run a $982 billion dollar a year federal government.\nWe need to fix the system, and we'll begin looking in\nearnest for ways to approach the problem.\no\nIn the meantime, as a first step and since you asked, the\nPresident of the United States should be granted the line\nitem-veto in the same way as 43 other state governors do.\nThe line-item veto is the best backstop to cutting spending\nin a system that is currently broken.\n1986 INITIATIVES\nDomestic Policy Council Report on Welfare\nThere has been new attention in the media about the plight\nof poor families -- particularly those headed by single\nwomen.\nWe have spent billions of dollars on welfare over the past\nseveral decades, but problems remain. Besides the human\ncosts of despair, there are the dollar costs. We are\nbeginning to see second and, in some cases, third\ngenerations who have known nothing but a welfare existence.\nOur patchwork of programs, though well meaning, aren't\nworking. The entire welfare system is in need of review and\noverhaul.\nRR directed Domestic Policy Council to present by the end of\nthe year, an evaluation of federal programs, and a strategy\nfor immediate action to meet the financial, educational,\nsocial, and safety concerns of poor families.\nIt is our duty as a nation to shink the ranks of the poor by\nproviding the tools and incentives for families and family\nmembers to be economically secure and independent.\nThe best test of welfare is how many people are able to\nescape welfare and achieve \"real and lasting emancipation.\"\nBowen Report on Catastrophic Health Care\nRR directed Secretary of Health and Human Services, Dr. Otis\nBowen, to report by year-end with recommendations on how the\nprivate sector and government can work together to address\nthe problems of affordable insurance for those whose life\nsavings would otherwise be threatened when a catastrophic\nillness strikes.\nThere are no preconceived notions about what the right\nanswers will be. However, both RR and Secretary Bowen\nreviewed issue when each was governor.\nOnly about two-tenths of one percent (.2%) of non-elderly,\nnon-poor families incur health costs of $30,000 or more in a\nsingle year.\nReview is to determine if there is a mechanism where we\ncould save these relatively few persons from financial ruin\nwhen a very low probability, high cost illness strikes.\n(1986 initiatives continued)\nBaker Report on Currency Reform Conference\nRR directed Treasury Secretary Jim Baker to determine if an\ninternational conference should be convened to discuss the\nrole and relationship of world currencies.\nRR's directive responds to questions raised here and abroad\non whether the current world exchange rate system can\noperate with greater reliability.\nA more predictable system of currency exchange may promote\ninternational trade and commerce by eliminating confusion\nand permitting a more orderly adjustments by businesses\nthroughout the world.\nSecretary Baker will report back to the President before the\nend of the year.\nDECLINING OIL PRICES\nGood news for the economy\nCrude oil prices peaked in March 1981, after RR ordered\nimmediate decontrol, and have fallen steadily ever since.\nAdjusted for inflation, a gallon of regular leaded gasoline\nnow costs about the same as it did in the 1950s.\nThe spot market price for crude oil has fallen sharply in\nrecent weeks. Spot prices for key U.S. crudes have fallen\nbelow $18 per barrel for the first time in more than a\ndecade.\nOverall, this is very good news. The Council of Economic\nAdvisers estimates that a $5 per barrel drop in the price of\noil will add about 1.5 percent to real GNP growth.\nHowever, these price declines affect different areas of the\ncountry differently. RR is examining very closely the\neffect of changing oil prices on oil-producing states.\nOil Import Fee\nSome members of the Senate have suggested a number of ways\nto move toward the $2,000 personal exemption, the 35 percent\ntop individual income tax rate, and changes that will\npreserve incentives for businesses to create jobs.\nSome in the Senate have suggested an oil import fee as one\nway of making these important changes in the House bill,\nwhile still keeping the package revenue neutral.\nDrawbacks to an oil import tax:\nIncreases costs to U.S. consumers and businesses;\nCould harm relations with some U.S. allies;\n--\nPoses enforcement problems or require new bureaucracy;\nand\n--\nHas disproportionate impact on poorer Americans and\nresidents of the Northeast.\nRR still opposed to a tax increase and believes there are a\nvariety of other ways to meet objectives for tax reform\nwhile preserving revenue neutrality. Many ideas from RR's\noriginal tax bill deserve additional consideration.\nURBAN POVERTY/BLACK AMERICANS\nRecovery has helped Black Americans\nDuring the economic recovery, blacks have gained an average\nof 40,000 new jobs every month.\nMore blacks are employed in the U. S. today than ever before\n-- 10.7 million;\nAbout 400,000 black Americans moved up and out of poverty\nfrom 1983 to 1984. The decline in the black poverty rate\nwas the largest decline in over a decade.\nBlack Teenage Pregnancy -- \"Vanishing Family\"\nAfter at least a decade of trying to treat the problem one\nway, we haven't made a dent in the problem of teenage\npregnancy -- and all sides of the argument admit it.\nIn Minnesota, the teenage pregnancy rate fell when the state\nenacted a law requiring parental notification before a minor\ncould purchase or receive contraceptives.\nIt is time to reassess the path we have taken. That is just\none reason why RR directed the Domestic Policy Council to\nstudy the range of federal programs and their effects on\npoor families.\nCivil Rights Enforcement\nRR is deeply committed to the expansion of a colorblind\nsociety where all American men and women have equal\nopportunities to progress through hard work and initiative,\nin a climate of economic growth and expanding opportunity.\nUnder the Reagan Administration, more civil rights cases\nhave been brought in more parts of the country than at any\ntime in history.\nTAX REFORM\nHouse bill is a good start, not a final product. More must\nbe done to broaden the tax base, reduce tax rates further,\nand lower the cost of capital.\nIt was apparent from the beginning that it would take\nbipartisan support to get tax reform through the House.\nThere were some understandable differences of opinion on the\ncontent of the tax reform bill as this bipartisan effort was\nbeing assembled.\nRR will now work for improvements with the Senate, but will\noppose any final legislation which does not meet RR's\nstandards of true tax reform or which threatens economic\ngrowth.\nSenate Highlights\nSenate Finance Committee has made a good first start in\ndeciding that tax reform can pass. Committee is finishing\ntwo weeks of hearings and expects to send a bill to the\nfloor this June.\nCommittee will take House bill and RR original tax reform\nproposal as a base. The spade work has been done. Just\nchange the architecture.\nState and Local Deduction\nRR is encouraged by reports that the Senate is considering\nat least a partial repeal of the deduction for state and\nlocal taxes. Full repeal was part of original RR proposal.\nDeduction provides unfair benefit -- disproportionately\nbenefits the rich.\nThe cost of retaining this benefit is high -- it means we\ncan't get rates down for other Americans, particularly\nnon-itemizers.\nFebruary 5, 1986\nSPACE SHUTTLE CHALLENGER ACCIDENT\nThe President has appointed Blue Ribbon Commission, headed\nby former Secretary of State Bill Rogers, which will review\nthe circumstances surrounding the accident, determine its\nprobable causes and develop recommendations for corrective\naction. This panel will report to the President within 120\ndays.\nThe Commission the President has appointed will look only\ninto the Challenger accident. The National Commission on\nSpace, a separate commission, recommends long-term (50 years\nhence) goals for space exploration.\nThe President has created an independent Presidential\nCommission to review this accident because the American\npeople deserve the most thorough and balanced investigation\nthat is possible. This in no way diminishes his respect for\nthe men and women of NASA who epitomize professionalism in\ngovernment. The President looks for the Commission to work\nclosely with NASA and all others to determine the causes of\nthis tragedy.\nThe President has full confidence in the manned space\nprogram which has completed so many successful missions.\nThe crew of Challenger paid the ultimate price because they\nbelieved in the space program and we Americans owe it to\nthem to go forward in our efforts.\nWe will fly no Shuttles until the causes of the Challenger\ntragedy are discovered and corrected. And, before we can\neven consider building another Space Shuttle to replace\nChallenger, we must first determine the causes of this\naccident before assessing budget realities.\nAs I have said:\n[We] must forge ahead with a space program that is\neffective, safe, and efficient, but bold and committed.\nMan will continue his conquest of space. To reach out\nfor new goals and ever greater achievements -- that is\nthe way we shall commemorate our seven Challenger\nheroes.\nWe'll continue our quest in space. There will be more\nshuttle flights and more shuttle crews and, yes, more\nvolunteers, more civilians, more teachers in space.\nNothing ends here. Our hopes and our journeys\ncontinue.\nThe future doesn't belong to the faint-hearted\nThe\nChallenger crew was pulling us into the future, and\nwe'll continue to follow them.\nFebruary 5, 1986\nTRADE\nThe President seeks freer and fairer trade. We will counter\nunfair trading practices abroad and oppose protectionism at\nhome. In a fair and open world market, America can out-\nproduce, out-compete and out-sell anybody in the world.\nTrade Deficit\nIt's high largely because our economic performance has been\nbetter than our trading partners'.\nWe must reduce the U.S. budget deficit. Gramm-Rudman will\nhelp reduce the trade deficit as well as the budget deficit.\nOur trading partners need to improve their economic\nperformance. We've begun coordinating economic and monetary\npolicies among our major trading partners, but it will take\ntime before there is a major trade impact.\nBecause there's more to do, RR asked Secretary Baker to\ndetermine whether we need to convene nations to discuss\ncurrency relationships.\nAlso taking aggressive steps to fight unfair trade practices\nin other countries. Cases filed against Japan and European\nCommunity have brought results.\nMust keep the problem in perspective. Our free and fair\ntrade policies have helped create nine million new jobs in the\nlast three years. We are doing better than most countries\nthat have protectionist trade policies.\nTrade Deficit -- Japan\nThe U.S. trade deficit with Japan was almost $50 billion in\n1985, the largest deficit ever for one trading partner.\nWe insist on fair trade with Japan. We have brought unfair\ntrade practice cases against Japan and have conducted market-\n-opening talks in selected sectors.\nTrade Legislation\nHappy to work with Congress as it seeks to restore a level\nplaying field for American business.\nBut will not approve protectionist legislation.\nWould oppose any legislation to transfer President's\ndiscretionary authority on trade to unelected officials.\nCOMPONENTS OF SPENDING REDUCTION\nEfficiency\nRR's budget contracts out certain government services to the\nprivate sector and projects 20% increase in productivity.\nThe savings: $4.5 billion for every 5% increase in federal\nproductivity.\n--\nUrban Development Action Grants that handed out\nbillions in subsidies, including $768 million to build\n262 hotels.\n--\nInterstate Commerce Commission regulated transportation\nfor nearly 100 years, but has little for its 900\nemployees to do now after deregulation of buses, trucks\nand trains.\nUser Fees\nO\nFairness demands that government charge for special services\nfor special interests. Example:\n-- Weekend sailors and yachtsmen alike benefit from Coast\nGuard services, including $400 million spent on search\nand rescue operations. But 80% of its calls are not\nemergencies at all. Charging for routine services\nwill save taxpayers $714 million in two years.\nPrivatization\nO\nGovernment must stop running businesses and stick to the\nbusiness of government. Examples:\n-- In 1912, government got into the oil business, when it\nestablished the Naval Petroleum Reserve, and is still\nselling oil and gas by the barrel. Selling the\nbusiness will save $3.6 billion.\n-- Amtrak will waste $7 billion in subsides by the 1990s.\nEven buying bus and plane tickets would be cheaper than\na special subsidy for 2% of intercity passengers.\nFederalism\nO\nGovernment decisions must be made closer to the people.\nThat makes government more responsive and more accountable.\nTurning some federal programs over to the states and\nlocalities prevents runaway government growth and lets the\nfederal government focus on national problems.\nPOLITICS OF THE BUDGET\nThe politics of the federal budget has heretofore been\nadditive and addictive -- \"I'll vote for yours if you vote\nfor mine. \" The budget process has been the domain of the\nspecial interests.\nThe FY 1987 budget and the reality of Gramm-Rudman-Hollings\ncall for politics of responsibility: a final call for the\nestablishment of priorities -- where the federal government\ncan and cannot afford to spend.\nWhy the President's Budget?\nJobs -- Cutting spending to reduce the deficit will require\nless federal borrowing -- private businesses will find\nborrowing for expansion easier and consumers will find lower\ninterest rates for big ticket items and housing. Net\nresult: More jobs for all Americans.\nFiscal Fitness -- A nation that looks to the future must\nmake an accounting of the impediments to getting there.\nHaving to drag along the extra baggage of archaic,\ninefficient programs such as the ICC will make the going\nthat much tougher.\nDefense of the Family Budget -- No Tax Increases The\nPresident is determined not to allow another raid on the\nfamily budget, while the federal budget can be cut instead.\nHigher taxes, like the effects of continued borrowing, will\nchoke off the record investment and job creation that have\nput 9 million more Americans to work in the last 38 months.\nWhy not just allow the automatic cuts to take effect?\nRR's budget was developed thoughtfully and followed a\ncareful process that takes literally months. Automatic cuts\nof Gramm-Rudman-Hollings sequestering process will slash\nimportant priority programs -- such as air safety, AIDS\nresearch and drug enforcement -- and programs that are\nalready being well managed. This is not an intelligent way\nto pass a budget.\nSequestering would be an admission by the Congress that it\ncannot fulfill its responsibility to pass a budget.\nWhy not close the gap with a tax increase?\nIt makes no sense to strangle the family budget to fix the\nfederal budget.\nTax increase would choke off economic growth of the past 38\nmonths that has put 9 million more Americans back to work."
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