Declaring that the United States is in "the worst economic mess since the Depression," President Reagan told a nationwide television audience last night that he will propose cuts in nearly every federal program.
"It is time to recognize that we have come to a turning point," Reagan said in a prime-time speech from the Oval Office. "We are threatened with an economic calamity of tremendous proportions and the old business-as-usual treatment can't save us."
The president promised that his economies will be evenhanded but said they will not be "timid" in nature.
"Our spending cuts will be at the expense of the truly needy," Reagan said. "We will, however, seek to eliminate benefits to those who are not truly qualified by reason of need."
Except for reiterating his determination to go forward with a 10 percent annual reduction in income tax rates for each of the next three years, the president deliberately gave no details of his proposed spending cuts. Last night's speech was intended as a political message to mobilize support for the administration program when it is submitted to Congress Feb. 18.
Reagan repeatedly has told his intimates that he intends to use the presidency as a "bully pulpit," a term coined by Theodore Roosevelt to describe the exhortive quality of presidential leadership. Reagan is at his best as a communicator, and this was the role he undertook last night in his first televised presidential report to the people.
Sen. Paul Laxalt (R-Nev.), Reagan's national chairman in the presidential campaign, called last night's message "the opening kickoff of a more intensified campaign than he just finished in an effort to sell his program to the American people."
Reagan, with help from several advisers, rewrote an early draft of the speech to underline in simple terms what he considers to be the economic plight of the nation. Reciting the kind of economic statistics he often used on the campaign stump, Reagan said:
"Twenty years ago in 1960 our federal government payroll was less than $13 billion. Today it is $75 billion. During these 20 years, our population has only increased by 23.3 percent. The federal budget has gone up 528 percent."
Reagan went on to cite other "intention-getters" he said he had received in a "comprehensive audit" of the nation's economy that he had requested. He spoke of mortgage rates increasing from 6 percent to 15.4 percent in 20 years, of the high cost of monthly home payments and of declines in the nation's investment capital.
Reagan said that federal regulations added $100 billion a year to the cost of goods and services. And he said that these regulations have had a deadening effect on American productivity.
Attempts to shift the tax burden to business and industry had been harmful to all Americans, Reagan said.
"Only people pay taxes -- all the taxes," he said, using a phrase from speeches he made for general electric a generation ago. "Government just uses business in a kind of sneaky way to help collect the taxes."
Much of Reagan's speech was a catalogue of economic woes he said had been presented to him by his economic audit.
"I'm sure you are getting the idea that the audit presented to me found government policies of the last few decades responsible for our economic troubles," Reagan said. "We forgot or just overlooked the fact that government -- any government -- has a built-in tendency to grow."
This growth has been so great, said Reagan, that the government will still expand even if his proposed budget cuts are enacted.
"Budget cuts can sound as if we are going to reduce total government spending to a lower level than was spent the year before," Reagan said. "Well, this is not the case. The budgets will increase as our population increases and each year we'll see spending increases to match that growth. Government revenues will increase as the economy grows, but the burden will be lighter for each individual because the economic base will have been expanded by reason of the reduced rates."
Reagan briefly recounted the economic measures he has taken since coming into office: a federal hiring freeze, a 60-day freeze on some pending regulatons, restrictions on government travel, decontrol of oil and elimination of the wage-price program of the Council on Wage and Price Stability.
"But it will take more, much more," he acknowledged, "and we must realize there is no quick fix."
Reagan promised to present his economic program in detail to Congress on Feb. 18 in what his aides have said will be a nationally televised address similar to a State of the Union message. Reagan said the budget cuts he will propose then will be only part of the actual savings to be realized by his administration because his Cabinet secretaries "will search out areas of waste, extravagance and costly adminstrative overhead which could yield additional and substantial reductions."
There are those in Congress and even in the administration who hoped that Reagan would stress the importance of budget cuts as a precondition for the tax relief Reagan repeatedly promised during the campaign. While most of last night's speech focused on the need for economy in government, the president gave no sign that he is backing away from his call for tax relief.
Reagan said he would seek both the 10 percent personal income tax reduction and accelerated depreciation allowances for businesses.
Reagan's speech was accompanied by colorful charts used to illustrate the state of the economy. One showed mounting deficits and another the beneficial effects that the president contended would flow from congressional acceptance of his economic program.
The speech was similar in many respects to a campaign address on the economy that Reagan made Oct. 24 -- with one significant difference.
Last October, Reagan did what he has been doing for most of the last 20 years: blame the Democrats for the economic calamities he said have befallen the nation.
Last night, he was carefully conciliatory toward the opposition party, which still controls the U.S. House, as he has been most of the time since taking office.
"To the Congress of the United States, I extend my hand in cooperation, and I believe we can go forward in a bipartisan manner," Reagan said. "I have found a real willingness to cooperate on the part of Democrats and members of my own party."
A late insert to the speech thanked the House for "responsible bipartisanship" in its vote yesterday to increase the federal debt ceiling.
"I hope the Senate will take the same actions tomorrow so that the government can honor its obligation," Reagan said.
While the president was generally optimistic about the ability of his administration and the American people to reverse the current downward economic trend, a note of stark pessimism crept into the concluding passages of his speech.
"Over the years we have let negative economics forces run out of control," he said. "We have stalled the judgment day. We no longer have that luxury. We are out of time."
The president concluded with this exhortation, similar to those he has been making since a celebrated speech for GOP presidential nominee Barry Goldwater on Oct. 27, 1964.
"We can leave our children with an unrepayable massive debt and a shattered economy or we can leave them liberty in a land where every individual has the opportunity to be whatever God intended us to be," the president said. "All it takes is a little common sense and recognition of our own ability. Together we can forge a new beginning for America."