Economic Report of the President

A critical element in achieving healthy economic growth is maintaininga liberal worldwide trading system. As explained in detail in Chapter 3,the world's economies are now more integrated than ever before. Thissystem has recently experienced severe strains. It is of utmost importancethat these challenges be met in a manner consistent with an open,growing, balanced network of international trade.Just as an open worldwide trading system is crucial for the freeworld economies, a competitive free market system unfettered by unnecessarygovernment regulation is essential for a strong domesticeconomy. As Chapter 5 points out, substantial progress toward reductionof traditional price and entry regulation has been made inrecent years, but further opportunities for deregulation exist.The year 1983 is expected to be the first of many years of sustainedeconomic growth. Continued economic growth is the only wayto sustain progress in reducing unemployment. But macroeconomicpolicies alone cannot reduce structural unemployment and achieve anacceptable level of employment. Chapter 2 describes some of themacroeconomic policies that, along with a sustained recovery, arenecessary to achieve noninflationary full employment. These policies aredesigned". . . to foster and promote free competitive enterprise . . ."as mandated in the Full Employment and Balanced Growth Act.One major remaining threat to a sustainable, balanced recovery isthe danger that large Federal budget deficits would preclude the continuingdeclines in real interest rates that are necessary for healthygrowth in all sectors of the economy. The Administration's 1984budget provides a plan which can lead to a steady decline in budgetdeficits and thus, ultimately, to a balanced Federal budget.145