 Mr. President, ladies and gentlemen, it's a great honor and privilege to introduce our guest speaker to you. He obviously needs no introduction since he already has a hundred percent name recognition factor and is undoubtedly the best known person in this room with the possible exception of John Recycus as We gather here in our midwinter congressional city conference some 4,000 persons strong Local elected officials representing thousands of cities and towns throughout the United States We cannot help but be impressed by the strength and vitality of the National League of Cities as An important advocate for our concerns and needs here in Washington I'm also very impressed by the sincerity of the commitment all of you show to serving the public and making good government work I truly believe that the cities are the laboratories Where the noble experiment which is American democracy is being carried out? There's no guarantee of success the experiment could fizzle out It could blow up, but we are dedicated to making it work I think that the people of this country ought to be very thankful That all through the federal system from grassroots mayors and council members and town board officials all the way up Through the states to the government in Washington culminating in the president There are dedicated hard-working public servants giving unstintingly of their time and their talent to make the American dream come true and To make the American Republic indeed as well as in word the last best hope of earth Mr.. President we local officials enjoy a story possibly apocryphal about one of your predecessors Whose initials were lbj? It is reported that once at the end of a very long and difficult day in the Oval Office He looked up from the desk to see a group of very glum faces surrounding him and remarked cheer up gentlemen Things could be worse. I could be the mayor of a large city Well, many of us have tough jobs to do Pressure-filled roles to play as we seek to hold budgets together and deliver basic services in the face of rapidly escalating costs and dwindling resources And as we seek to cope with the problems of jobs and unemployment Crime neighborhood deterioration and revitalization urban sprawl mass transit economic development federal mandates and red tape and All the rest of it and yet we recognize that you sir have the toughest job of all the demands on your time and energies are in Ordnance Consequently, we're very very grateful to you for accepting our invitation to speak to us about your economic recovery plan You received a strong mandate from the people last November now with considerable courage You are seeking to implement that plan and that mandate as you believe best for the people of this country and the overwhelming majority Of us support you in that effort We are pleased and honored to have you with us today and extend to you a very sincere and warm welcome Ladies and gentlemen the president of the United States Thank you very much. Thank you very much. It's a pleasure to be with you today for your annual congressional city conference The last time I was in this room not too many weeks ago was for the national prayer breakfast and I hope that What was said then and what I did then has had some lasting Effect I'm especially pleased to have been introduced by my longtime personal friend mayor Bill Hudnut. I Understand and appreciate the parts your organization has played in the Pennsylvania Avenue Development Plan here in Washington the new 12-story building You've constructed overlooking Western Plaza as a fine example of what can be done to revitalize the inner city It should serve to stimulate others to invest in such worthwhile efforts As you're well aware Rejuvenation of the American economy is the number one priority of my administration This I believe was the mandate of the voters Last November it was a mandate that I sought Yet something all elected officials should understand because it's a mandate for all of us The election did not commission me to attempt a electoral or economic reform alone But to work with elected officials federal state and local to put America's economic house in order and That's why I'm here We've got a job to do together and I believe we should open a clean clear line of communication now Our job, of course is to get the economy of the United States moving again It's essential for you as representatives of the cities. It's essential for all of us as Americans One thing is certain the time for business as usual has passed in the last two decades Americans have suffered oppressively increased taxation inflation unemployment and interest rates The middle class the life blood of democracy in the American way of life cannot withstand these pressures indefinitely and the economic tremors rippling through our economy suggests that these people are near the breaking point I Don't know how many of you earlier this morning might have had an opportunity to watch on television as some citizens We're being interviewed who publicly have stated They are simply going to rebel at paying their income tax and they're going to appeal to others to do the same We're suffering the worst inflation in 60 years Almost eight billion of eight million Americans are continuing to be out of work I've been here only a month and I'm beginning to talk in billions when I mean millions Interest rates have climbed to an unprecedented 20 percent with home mortgage rates at 15 percent Destroying for millions the dream of home ownership Investment in industry is lagging behind our major competitors with Too much of the personal savings of our people flowing into non-productive inflation hedges Instead of job creating long-term investment or savings millions of Americans feel that for them the standard of living is actually going down and It is It's shocking and a depressing fact that after being adjusted for the continued cheapening of the dollar By inflation the hourly earnings of American workers have dropped by five percent in the last five years This is a complete reversal of the American experience and will have profound impact on the spirit of our people as something isn't done and Done quickly and while our workers have been experiencing a decline in their standard of living Government has continued to spend money like there's no tomorrow and come to think of it. That could be a self-fulfilling prophecy In those same five years those workers taxes went up by 67 percent Federal spending grew to 23 percent of the nation's gross national product the highest peacetime share in our history And the federal government has shown a deficit every year after 1969 in fiscal year 1980 that deficit was 59 point six billion dollars The second largest in history and we face another deficit of similar magnitude in this year of fiscal 1981 Now this kind of irresponsibility can't go on What most federal officials have been afraid to admit is that federal spending has been for some time increasingly out of control If left unchecked the current situation would lead to a redoubling of the federal budget within five years For a time it's appeared that Congress had more solutions than the country had problems Or put another way. I've said before that Cures were developed for which there were no known diseases Just conceiving of a program That might help someone somewhere was itself reason enough to pass along appropriate money Eventually with so many programs safeguarding public funds became an impossible task One government estimate suggested that between one and ten percent of all spending on social programs was and probably still is Being lost to fraud alone at a cost of up to twenty five billion dollars When that cost or the cost of waste is added to that sum for fraud the figures are even more appalling Of course spending isn't the only aspect of government that seems out of control in the last decade American business And yes local government has had to deal with an avalanche of federal regulation between 1970 and 1979 Expenditures for the major regulatory agencies quadrupled the number of pages published annually in the federal register nearly tripled and The number of pages in the code of federal regulation increased by nearly two-thirds The cost of this has been staggering an estimated 100 billion dollars per year and now I can say billion is Added on to the cost of everything we buy just to pay for the cost of federal regulations And then there's the unseen cost which is harder to calculate but nonetheless devastating Regulation tends to smother innovation discourage new investment increase labor costs and reduce competition This federal Goliath Unleashed and uncontrolled brought us to the economic brink that is now confronting this nation Too many officials appeared to feel totally helpless in the face of the monumental task of restoring order to the federal government's economic policies Perhaps no one had the clout to get the job done Whatever the reason we now have much work to do Together we can put our economic house in order again and regain control of this situation We must realize That the economic crisis confronting America is not the result of a natural disaster or a catastrophe beyond our control Inflation unemployment all of it was basically caused by decisions that we as a people made Now the only power needed to restore America's strength is willpower You may have heard a rumor to the effect that I've submitted a program to Congress Four-part program which will get this country moving in the right direction again I believe Increase the standard of living for our people and cut the inflation and unemployment rates First I've asked for a substantial reduction in the growth of federal expenditures Second I've asked for a significant reduction in federal tax rates and third I've asked for the prudent elimination of excessive regulation fourth while recognizing the independence of the institution I Have pledged to work with the Federal Reserve Board to develop a monetary policy, which is consistent with those policies Let me refer back To the second of those points and just add this one fact All of us must accept the fact which has been proven in this century Proven here in our own country several times that a reduction in federal tax rates does not necessarily Result in a reduction in tax revenues the economy expands It reduces the burden for the individual, but the overall share goes up as the base of the economy is broadened Now these four complementary policies form an integrated and comprehensive program The details of which have been examined for the best economic minds in the country people who are working with me on a daily basis However, this program now faces a political gauntlet of interest groups and may I say I know that in many instances There's legitimate concern Concern that some worthwhile program is now going to be unable to meet the purpose for which it was founded and Yet at the same time I'm finding it increasingly difficult not to call some of the interest groups selfish interest groups because We are not Cutting at the at the muscle fiber of these programs and this is where you come in You're not only an important be important because of the power you wield and Capitol Hill But also because you are looking out for the interests of millions of citizens who inhabit the great urban areas of America You and I have shared goals We both want what is best for those who live in our cities Just as I'm sure we both want what is best for the people of this country wherever they reside Now I know that you like all Americans recognize the importance of getting our economic house in order The plague of inflation and stagnation is Brutalizing this country. I don't have to remind you of the effects on local government The cost of every service you provide skyrockets kind of economic upheaval Unless something is done to turn the economy around local governments will suffer right along with many other respected American institutions On principle, we should never forget this. There is no better federal program than an expanding American economy Even as our program for economic recovery awaits action for the Congress We've already started to do what we can within the executive branch to cut back spending and regulation The office of management and budget is now putting together an interagency task force to vigorously attack waste and fraud Highly motivated and expertly trained professionals will be appointed as inspectors general of the cabinet departments We've suspended for two months the flood of last-minute rulemaking done by the previous administration So that we can look closely at it We've eliminated the ineffective and counterproductive wage and price Standards of the council of wage and price stability We accelerated the decontrol of domestic oil We have concentrated our efforts to enhance effectiveness of paperwork reduction act of 1980 We placed a freeze on federal hiring We've also begun taking action on particularly controversial rules For example rules mandating extensive bilingual education programs passive restraints in Large cars the unnecessary labeling of chemicals in the workplace Controls on garbage truck noise and increased overtime payments for executives have been withdrawn or postponed These actions alone are expected to save the American public and industry almost one billion dollars annually The administration will be reviewing a host of other regulations in the near future Vice president Bush who will be meeting with your executive committee this afternoon is heading a special presidential task force to clear away Many regulatory roadblocks as many as possible His role in our regulatory reform efforts should suggest the importance that we place on this issue I'm aware that Bill Hudnut is circulating a questionnaire regarding regulatory relief Which will be presented to the vice president and the task force on regulatory relief this afternoon Now all of this is being done to start us on the road toward recovery What is important is that we begin? I'm sure we'll get there if we work together Now there are those who oppose almost everything in the economic program They oppose the program, but for the most part they offer no alternative Well hoping things will get better won't make it so I've been told that some members of Congress disagree with my tax cut proposal You know, it's been said that Taxation is the art of plucking the feathers without killing the bird It's time they realized the bird just doesn't have any feathers left Menors Maybe some of you've heard me put it a different way in several occasions when I've said that robbing Peter to pay Paul won't work Anymore because Peter's been bankrupt for some time now Nevertheless the real threat to recovery comes from those who will oppose only a small part of the overall program While supporting the overall effort Needless to say the small portion these parochial groups oppose always deals with the cuts that affect them directly Those cuts they oppose They favor cutting Everybody else's subsidy is an important step in ending inflation and getting the country moving again The accumulative effect of this short-sightedness can be damaging We're all in the same boat and we have to get the engine started before the boat goes over the falls Now we've tried to be as fair and even-handed in developing our package as was humanly possible It's important to remember when someone says that the administration is planning to cut the budget What we really means is we're planning to cut the growth in the fiscal year 82 budget From 16 percent to 7 percent and even with our cuts that 7 percent means that spending in fiscal year 82 will go up over Fiscal year 1981 by about 40 billion dollars Within this restructuring that we've proposed Some programs are eliminated, but others are strengthened and we did nothing to weaken the social safety net Which protects the truly needy in this society It's a matter of fact when we reformed welfare in California We discovered that the really truly deserving people that we were trying to help Weren't helped as much as they should be helped simply because of Excesses administratively Duplication and people who were not truly needy we had spread ourselves so thin that we didn't have the resources available To really take care of those with great need Full retirement benefits for more than 31 million social security recipients will be continued along with an annual cost of living increase The Medicare program will not be cut nor will veterans pensions nurse supplemental income for the blind aged and disabled The school lunch and breakfast programs will continue for the children of low-income families as Will nutrition and other special services for the aging and yes There will be no cut in project head start or summer youth jobs When considering these essential programs When considering these essential programs, please remember the very best thing that can be done to strengthen things like social security Is to get the American economy going and put people back to work so they will be paying into the trust fund once again Now I know there will be those will charge that we're requiring Sacrifices from the rest of the government, but not from the Defense Department They'll suggest this proves were not even handed as we promised Well, I would remind those of you who wish to get beyond the slogans to examine my appointment to the job of Secretary of Defense Cap Weinberger is anything but a big spender and was once given a nickname here in government to confirm that fact So although the international situation dictates more spending for defense It does not mean the defense department will be free from the cut and trim philosophy of this administration I can assure you that cap is going to do a lot of trimming over there in defense to make sure The American taxpayer is getting more bang for every buck that is spent I've even heard that there was a sigh of relief in several other departments when it was learned that Cap the knife was going to defense And not to those other departments In our attempt to be even-handed we tried whenever possible to cushion The budget blows in the case of money going to the cities Yes, undeniably We're cutting the amount of money the cities could have expected had we continued Through the economic crisis with a business as usual attitude But while we're reducing some of these subsidies We are at the same time converting many categorical grants into block grants Thus reducing wasteful federal administrative overhead and giving local governments more flexibility and control Now corresponding to that we're working to end duplication of federal programs and reforming those that are not cost effective Take for example the urban development action grants program udag I want to let you all know that we've decided to preserve the udag function in the presidential programs But here's what we are doing the udag function and the community development grant program Will be combined into a community development support program And we will be sending legislation up to the hill in the near future to enable the udag function to continue As I said, we will be funding this new community support function at a slightly smaller amount than before But we will be providing greater flexibility and autonomy to localities Which show the ability to run these programs effectively We believe the reduction will be largely covered by the elimination of administrative overhead We're cutting fat not muscle We're giving local government the power to decide what will be done with the money Handled efficiently the level of benefits may not suffer as might be suggested at first glance However, there could well be something in local government that can and should be cut back during these times of economic hardship If so You will set your own priorities You not some washington bureaucrat will decide where the cuts will be made if cuts are necessary I know that Accepting responsibility, especially for cutbacks is not easy But this package should be looked at by state and local governments as a great step toward not only getting america moving again Both toward restructuring the power system, which led to the economic stagnation and urban deterioration But for many of this country's major cities economic stagnation is not a recent phenomenon Interestingly while power centralized in washington dc Many great urban areas declined I've always thought that washington didn't have the same problems other cities did with a certain extent because They grabbed hold of the fastest growing industry in america Many cities cannot even remember a time when they were economically healthy But they were not always blighted With seemingly unsolvable problems in the last century american cities were shining examples of enterprise They were places of optimism where free men and women working together didn't know the meaning of the word impossible alexis detochville Noted the vitality of american cities when touring this country in the 1830s. He observed Towns are like great meeting houses with all the inhabitants as members In them the people wheeled immense influence over their magistrates and often carry their desires into execution Without intermediaries He described a land and a people which seem a vare cry from those of today But why we're the same people If we're not what is different Well, the answer that is the increased intervention by federal authority Only 50 years ago american still felt they could accomplish anything and they did Today the descendants of these pathfinders peer through a maze of government regulations and often give up even before they've tried Local officials who once saw the local voters as boss now look to washington dc before considering a move And what once was a federal helping hand is quickly turning into a mailed fist Instead of assistance the federal government is giving orders. They call them mandates More often than not the command comes from washington, but few funds to implement the order can be found in the envelope Mayor kotch of new york has detailed the problem of mandates better than anyone Last year he said his city was driven by 47 federal and state mandates With a total cost of 711 million dollars in capital expenditures Six and a quarter billion in expense budget dollars And 1.66 billion dollars in lost revenue And people wonder why new york sings the blues Not only are the funds not available to meet all these mandates often the mandates themselves are impossible to fulfill In fairfax county virginia, for example Students come from 50 different language backgrounds 15 of which are spoken by more than 20 students Were able to follow the former hhs guidelines The county would incur the expense of sponsoring bilingual programs in 15 different languages Including urdu hindi and lai ocean now bilingual education There is a need, but there is also a purpose that has been distorted again at the federal level Where there are predominantly students speaking a foreign language at home coming to school and being taught in english And they fall behind or are unable to keep up in some subjects because of the lack of knowledge of the language I think it is proper that we have teachers equipped who cannot get at them in their own language and understand Why it is they don't get the answer to the problem and help them in that way But it is absolutely wrong and against american concept To have a bilingual education program that is now openly admittedly Dedicated to preserving their native language and never getting them adequate in english So they can go out into the job market and participate Today i renew a pledge i made to your conference in atlanta in december I will examine the mandates issued by the federal government And take action to remove any undue burden placed upon local governments throughout this country Centralization of power in the hands of the federal government didn't happen by accident Over the years local officials helped create this power flow by turning to the federal government For solutions to local problems. It appeared to be an easy way out But now you're becoming more aware that to get a job done the very last thing you should ask for is federal money first First there are so many strings attached that federal projects take a lot longer to complete And second local money pays the bill anyway Once the federal vacuum cleaner gets through with the pockets of the local taxpayers There isn't enough spare change left run to run local government What we must do is strive to recapture the bounty of vigor and optimism detochville found in american cities We can start by re-establishing the proper relationship between the federal state and local governments The block grant program in our package is the first step It cuts considerable red tape And returns power and decisions to the cities for money taken by the federal government It is something that we in the years ahead can build upon Shortly my administration will announce the creation of a federalism task force to find out specifically what can be done To re-establish the balance between the levels of government Your input and participation will be important in this process Working together We can establish a dialogue about the proper functions of the respective levels of government And go about restructuring the federal system to maximize efficiency and freedom That is as i've said just a start But it is a step the first step in the right direction I hope in the years to come we'll be in direct communication It'll take teamwork to get this country back in the right track and it won't happen overnight You can count on my cooperation To make the cities of america once again The thriving areas of commerce culture and freedom That once attracted the attention of people The world over If we don't start now Who will and when? Thank you