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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.