Economic Report of the President

In the budget I am now submitting to the Congress, I am proposingthe dramatic steps needed to reduce Federal budget deficits infuture years. My budget proposals are designed to reduce the deficitby dealing directly with the rapid growth of the domestic spendingprograms (apart from interest payments) of the Federal Government.In 1970 these programs accounted for 10 percent of the gross nationalproduct and 48 percent of Federal spending. By 1980 theseprograms had grown to 14 percent of gross national product and 63percent of the budget. I remain committed to the idea that we canreduce budget deficits without increasing the burden on the poor,without weakening our national defense, and without destroying economicincentives by counterproductive tax increases.Rapid congressional enactment of the budget would provide clearand credible evidence that the Federal Government intends not toplace heavy burdens on the capital markets in future years. Such reassuranceshould hasten the decline in interest rates, especially longterminterest rates on bonds and residential mortgages, and improveprospects for the recovery of the housing, automobile, and capital investmentsectors of the economy.I recognize the special importance of protecting the social securityand medicare programs for aged retirees and their dependents.These programs now face very serious financial problems. The bipartisanNational Commission on Social Security Reform has recentlyrecommended a series of measures, which I have endorsed, to eliminatethe cumulative deficiency of $150 billion to $200 billion projectedfor the social security system in the years 1983 through 1989. It iscritically important at this time to make changes in the social securityprograms that will protect their solvency and financial viability forthe years to come.The Remaining Burden of Federal Economic RegulationFor many decades, the Federal Government has regulated the priceand entry conditions affecting several sectors of the American economy.Much of this regulation is no longer appropriate to the conditionsof the contemporary economy. Over time, most of this regulation—byrestraining competition and the development of new servicesand technologies—has not served the interests of either consumersor producers. Since deregulation of some markets began severalyears ago, the experience has been almost uniformly encouraging.My Administration has supported these step-by-step efforts to reducethese regulations in markets that would otherwise be competitive.It is now time to consider broad measures to eliminate many ofthese economic regulations especially as they affect the natural gas,transportation, communications, and financial markets.