 But we talked it over upstairs and we thought you'd probably like to hear from somebody else who hangs out around these parts. And so without further ado, I would like to introduce to you your host for lunch this afternoon, the President of the United States. Thank you very much. Thank you. And good afternoon and welcome to the White House. It's always good to see some old friends and have a chance to make new ones. And it's always a pleasure to be joined by two of the most important women in my life, Nancy and Maureen. Well it may be September, but here in Washington it's been plenty warm until just a couple of days ago. We turned this off just for this particular gathering. And these past few weeks I guess we broke the record here for the length of a hot spell just a few days ago before the reduction in temperature and it reminded me when I was a kid of our minister one hot summer Sunday morning and he said that he was going to keep his sermon short and he did just seven words. He said, if you think it's hot now, wait. Well today I'll follow his example. I may slip a few more in than seven, but I'm sure you've heard of our plan to overhaul the federal tax program. This is the most burning issue that's facing the American people I think in this decade. I'm going to be out on the stump all fall bringing our case for tax fairness and economic growth to the American people and rallying their support. I'll be in many of your states, indeed in many of your communities. And I'll be looking for your help because it's the grassroots level that our tax proposal will find the energy, determination, and willpower needed to topple the status quo. Status quo. That's Latin for the mess we're in. And the present system is a mess. As state legislators you don't need to hear about the pleadings of lobbyists, the siren songs of special interests are heard in every legislative hall from Capitol Hill out through all the 50 states. But this time we can work for the special interest of all the American people to create a fair and equitable tax system, one which will be a double boon to the economy because it will both close wasteful loopholes and at the same time cut tax rates. It's time for Americans to take their money out of tax shelters and invest the money in America's future. Every day we live with the present tax score, we're slowing down economic growth, sacrificing jobs that would have been created, unfairly burdening families and perpetuating an unjust system that only breeds cynicism and resentment in the American people. You know, last week I spoke about tax reform at North Carolina State University and talking to those college students brought home to me the urgency of this issue. The room was electrified with their hope and energy and enthusiasm. Having served as a governor during the time of the Vietnam riots and all, when if I went to a campus they burned down a building, to see these young people today has just made me sure and I'm glad to tell you the 21st century is going to be in good hands. One of our proudest accomplishments as Republicans is the way we've been able to draw more and more young people into our ranks. We've swept aside the pessimism and resignation that gripped the elected leadership of this country not too long ago and we've opened our doors to the future. Like the American people themselves, we Republicans believe that America is still young, still vital and still strong. What we've accomplished together goes beyond words. We've backed our words with decisive and dramatic action. Our 25 percent across the board tax reduction gave new life and sustenance to a spirit of optimism and entrepreneurial renaissance is spreading across our land. A powerful economic expansion is lifting America out of the devastation of a decade of high tax policies and enabling us to build on a solid base of non-inflationary growth. Here's a piece of especially good news. The democratically controlled House Select Committee on Children, Youth and Families rated all the different tax plans that are presently floating around up there in the hill and found that ours was by far the most pro-family of all of the tax proposals. By raising the standard deduction to $4,000 for a married couple filing jointly and nearly doubling the personal exemption to $2,000, we'll make it so that a family of four doesn't pay one penny in federal income tax on the first $12,000 of earnings. We're also giving non-wage-earning spouses equal access to IRAs, those tax-deductible savings accounts. Someone's got to be very brave to suggest that a homemaker is not working. But alongside the pension reform passed in the last Congress, this will go a long way toward alleviating poverty by allowing women the means to care for themselves in retirement years. Your report may be of special interest to you as state legislators. Our proposal to eliminate the state and local tax deduction has been getting a lot of flak from some quarters. Well, it turns out that the New York state government has a study by its own comptroller. It found that under our proposal, taxpayers in New York would save $588 million a year. So that's the point. If the individual taxpayers in your state's benefit, your state's and localities as a whole benefit. There's no logic to fighting tax fairness, to fighting a plan that would increase economic growth, create more jobs, give families a much needed break, and take the working poor off the tax rolls completely. Of course, we still have a job to do in Congress getting spending under control. In that regard, on the revenue side, I'd like it known that I could immediately deposit $1.2 billion in cash in the Treasury if Congress will support this administration's decision to sell Conrail back to the private sector where it belongs. I was only a small boy the first time the federal government tried to run the railroads. That was during World War I, and it was a disaster if the war had gone on a little longer. I don't think we'd have had any trains left. So we have an offer of that amount already. We can sell if they'll only give the word. As Everett Dirksen might have said, a billion here and a billion there, and pretty soon you're talking real money. Some in Congress seem to think they can proceed as usual, indiscriminately spending taxpayer dollars, and the sooner or later they'll all be bailed out with a tax hike. Well, for at least three and a half years they won't. There will be no tax hike on my watch. We Republicans have always looked for the long-range solutions, and this tax plan is one of those which will be working long after we've left office. As state legislators, you know that programs closer to home are more cost efficient, better planned, and offer more assistance. But the gluttonous federal tax system has robbed you of the base for local programs. We must continue to move this wheel of government in the interest of what's right for America. And this is the time for which all of us have worked. The moment in which we can build a partnership between the levels of government with a growing economy to give America the momentum for the next century. And my friends, I'm convinced that together we can succeed. And now I'm going to, you know, in the business I was always in, you wanted a tagline to get off that would be popular, appreciated. It is that we're going to have dessert now. Would you deliver the envelope, please? All right. Thank you. You keep right on with your dessert. But in this envelope, the winner is, I am supposed to find three names in here, three individuals to call on, which is all the time we have for questions, sort of three questions. And that's because then we're going out there and we're going to have a chance to meet and greet each one of you individually. So I'll hurry. Maxine Kinchlow, Oklahoma. Best wishes for Oklahoma. Tax reform law. But as a tax consultant, I'm very concerned that any tax reform protects those benefits that try to work here, marital reduction, reduction that will not impact the middle income and low income. And I'd just like to ask you to respond to that if you will still try to retain the kind of deductions that have enabled that low middle income to move up into a middle income status because there's two people working now. You're talking about the marriage penalty. Yes. I asked about that myself and found out, and they presented the figures to me, that the doubling of the personal exemption, the nearly doubling of the dependence, and the IRA and all of those put together offset that particular provision to where the family would, even at the lower and middle class, still be better off with this program than they are with the present tax structure. So that's all I can go by are the figures. Now, Maria Perulus, Tennessee. Thank you very much. Basically, I want to ask, I find a little conflict here with the deficit spending and also the new Saturn plant that we have gotten in Tennessee and also Toyota that is looking at us and ASON is there. How are we going to be a compromise there with the economy level and stuff? And this with regard to the deficit. Yes. And I was thinking here in my own remarks when I made them that I guess I've got to emphasize more how important that is that when I say the tax reform is so important, it is. But it goes without question that we have to restructure because the deficit is built in as part of the structure of our government. We have been running them for over 50 years now. And I remember back some years ago when I wasn't in public life but was just touring the mashed potato circuit making speeches. And I've often said in Hollywood, if you don't sing or dance, you wind up as an after dinner speaker. And I was then as so many were and as Republicans certainly were pointing out that the deficits would eventually catch up with us and they have. At that time, if you remember, we were being told that, well, the deficits were necessary to maintain prosperity and that the debt didn't mean anything because we owed it to ourselves. Well, it does mean something. These deficits, springing out of control as they have, are not through anything that was just suddenly done off the cuff increasing of spending. In 1974, well, first of all, back in the middle 60s, we began with the war on poverty, which poverty won. But you will find that from 1965 to 1980, the budgets of the United States increased almost to five times what they were in those 15 years. The deficit in those same years increased to 38 times what it was. At the beginning of the 15 years. But in 74, the Congress, again, our opponents, came up with a plan called the budget reform plan and so forth that was supposed to get some control over the budget. And they took away from the executive branch in that act much of the power that a president had previously had to do something like impound money and not spend it even though it had been appropriate. All those things were taken away from us. And from there on, the budgets just skyrocketed to where they are now. Now, our plan and our hope is this. We mustn't go by the number of dollars in the deficit. That is bad enough without doing that. You go by what is the deficit as a percentage of gross national product? And it has been, it has gone up to a point of like 6.5%. Now, what we have evolved with this plan that we're trying to get of reduced spendings is what we put on a three-year basis of 4, 3, and 2. That next year, it will only be 4% of gross national product. 87, it will only be 3%. By 88, it will only be 2%. Now, if we can achieve that, we can see where 89 and 90 will bring us to a balanced budget if we can keep that path of decline. What would be wrong with aiming on that plan? There's no way that you can reduce the deficit or eliminate the deficit in one year. Not the way it has been built up now. But what would be wrong if, over those five years, if we get on this track and see that it is going and then we get a constitutional amendment requiring a balanced budget and that would go into effect at that point and then you would have the discipline imposed on the congressman. We were talking about communists at the table. The congressman. They're not communists. There would be a discipline imposed on them to achieve that date with a balanced budget because from then on, we would have it. But it is absolutely essential. And may I say just one other thing? There are some people today, particularly those who want to increase taxes, who are linking the deficit, our deficit spending, to our trade imbalance. You've heard the figure of $150 billion more that we are importing than we are exporting. Well, I won't go into detail about some of the figures that are juggled in declaring how much we're importing and how much we're exporting. I will say that about half of the export is oil, which we must have. We always have to buy outside our own country when our self-sufficient. But the trade imbalance is not all that horrible that people would have us believe. First of all, we're still the biggest exporter in the world today. Our country is. But from 1790 to 1875, when we were becoming the greatest economic power in the world, every year there was a trade imbalance. We had a trade deficit because we had to buy from abroad the things that we had not yet learned to make in our own country. But more significant, the Great Depression came along. And the Great Depression ran for about 10 years. And the only thing that brought us out of the Depression was World War II. And I think that's an expensive way to cure a depression. But all those 10 years with our 25% unemployment, with the destitution that was worldwide, we had a trade surplus. The balance was in our favor, and yet we could have 25% unemployment. Now in the last 33 months with the present great trade imbalance, we have created 8 million new jobs and have the highest percentage of the employee pool in our country employed that we've ever had in our history. Last month, we got 332,000 more people went to work in this country than the months before. So now, has this Donna... Now, Lennawa? Yes, and you were printing. I question to you, Mr. President, and says, I'm from North Dakota, her rural state. I'm going to ask I've kept all the world. We have a coal gasification plant that may be terminated by next spring putting like 3,000 supporters out of the business. Talking about future energies about the country, turning coal into gas is a very important protection for our country using energy. Number two, we have an arisen diversion project. We gave up Missouri River Wires, 310,000 acres for downstream streets to get flood control, irrigation, and navigation. And yet Congress has never fulfilled their obligation to North Dakota to let us use that water for irrigation and municipal and industrial use. And thirdly, we're an agricultural state like many in the Midwest and we're suffering terribly on main streets, the banks, the farmers. Mr. President, would you be willing to come to North Dakota as a representative of rural states to see what we're suffering from and to give us your programs there so that we can relate in a more one-to-one dialogue? We'd like to invite you to North Dakota. Well, thank you very much. And I would enjoy being there. I'm not quite sure I'd be totally welcome with some of the problems that are going on. I think you mentioned the garrison project. We have some very real problems with that. And I'd be happy to discuss those with you. But with regard to the farm problems overall, we believe that the federal government to begin with is responsible for the plight of the farmers today with unwise policies that over the years have put the federal government into, you might say, almost as part of the revenue source for the farmer and the market for the farmer. Now, once you've done that and created such a system, you can't pull the rug out from under people that have gotten used to it immediately. What we're seeking, if we can get through the Congress, is legislation that will help in this emergency situation the farmer, that will also over a period, phased period, show the farmer down the road here where we are going to help them get back out into the marketplace and use the marketplace. There's a large portion of farming that has never been in the government programs. It's not involved at all. And the funny thing is that part of farming has never had any problems. The only ones that seem to have problems are the one that the government is messing around with. They're trying to frame that kind of legislation that will be aimed not at doing this day after tomorrow, but down the line, the farmer can look ahead and say, there I will be out in the market governed by supply and demand and all the things that we've had before. And I hope we can achieve that because I remember once in one of those speeches that I was mentioning a little while ago pointing out that at one time the federal government had six plans, I believe, financial plans helping poultry farmers increase egg production. The seventh federal plan was the one in which the government bought the surplus eggs. So this is the type of thing we want to see if we can't resolve and cure. A farmer is really the backbone of any economy. And we have to keep the kind of technological brilliance that our farmers have achieved. I once saw some figures that if the three-fourths of the world is engaged in agriculture, because so much of the world is just someone with a thatched hut that's out there scraping ground for enough food for himself and his family. And these figures were establishing that if the whole world that is presently or if the world could produce the rate of an American Midwestern farmer, the same ability, we could produce all the food the world needed on one-tenth of the land that is now in production. We talk about high-tech and Silicon Valley and everything. The greatest technological wave of improvement in the world has been by the American farmer. Nancy, I'll meet you at the door and we'll go in there and then you're all coming in there too. All right.