THE PRESIDENT. One of the most gratifying things that has happened since I've been in the White House as President has been the evolution of a good, cooperative partnership arrangement with you. As we've prepared major programs of all kinds, involving health or education, involving transportation, environmental quality, we've tried to work very closely with the officials who represent the cities of our country. This has been especially true as we evolved the urban policy that's now the basis for programs that we are implementing, either through Executive action or through legislative processes. I hope that this can continue, and I certainly expect it to continue.
My feeling is that you are at ease with me and with my own administration, that when we fail to measure up to your expectations, you let us know without delay— [laughter] —and with at least a proper amount of enthusiasm.
And when we are working in harmony, as has almost always been the case, I've appreciated your compliments and the support that you've given our programs. When I've been faced with major questions on international affairs, you've been very supportive. And, of course, our domestic programs, that don't directly affect you as mayors, but affect you in a very comprehensive way through your people-like energy—you've also been extremely helpful. I want to be sure that this is a part of our entire consciousness as a Nation, that not only you and I realize it but also those people who live in your cities, who look to you as elected leaders, and, of course, all of whom I represent as President.
This morning I'll just be here for a few minutes, and then officials of the Office of Management and Budget—Bo Cutter, is Bo Cutter here?—will go into some detail about prospects for the 1980 fiscal year budget. Many of the specific answers can't be given yet. I'm just at this stage getting a briefing from the Office of Management and Budget about some of the issues that will be presented to me later on. I haven't made any decisions at this point. I've not yet met with a single member of my Cabinet nor a single head of another major agency to discuss their own desires for the programs for 1980 fiscal year at all.
But as we go through this process during the next few weeks, it's important to us to know how you feel about the priorities that we will address. And the main purpose of the session this morning is to let Bo Cutter and myself understand your special concerns.
As I pointed out in my speech a few minutes ago, all of us will have to suffer from the restraints on an equitable and fair basis, and that includes domestic and foreign affairs. It includes domestic programs, defense, other issues that have to come before me. I'm going to be incisive, persistent, dedicated, and, I hope, confident in the preparation of the 1980 budget.
All of you have been through budget cycles yourselves. You know what it is to face unlimited demands and limited resources.
As I pointed out earlier, when I ran for President, the budget deficit was more than $66 billion. Since then we've cut taxes about $30 billion on an annual basis. And we've greatly expanded programs and services, many with your guidance and support. On top of that, we've also cut down the budget deficit substantially. And I have no doubt that I will meet the goal of having a budget deficit much less than half what it was when I ran for President—$30 billion or less. We still have some uncertainties remaining. As you well know, with the economic situation as it is, it's almost impossible to predict the rate of revenues to be received next year.
We've been remarkably successful in cutting down the unemployment rate. I think we will have a sustained, moderate growth throughout 1979. I do not anticipate a recession nor a depression, of course. I have no economic advisers who work with me who believe that there will be a recession in 1979. We will have success with the controlling of inflation to the extent that the American people's consciousness is aroused about the need for restraint. And if there is a broad base of support for controlling inflation, the hardship or suffering or sacrifice to be required from any particular group or person will be greatly minimized.
As you know, in the top levels of employment in our Government—those who are appointed by me, the executive level in the Government there will be zero increases in salaries for them this year. They will have to take, in effect, a salary cut equivalent to the inflation rate for 1978 and also for this coming year. Others have a moderate income increase of about 5 1/2 percent.
I've had to place a hiring freeze in the Federal Government at this point. For every two vacancies which occur, we only permit one of those vacancies to be filled.
And as I've pointed out earlier, I've had to veto several very popular programs with different, very fine, beneficent, and politically influential special interest groups in our country, and that will continue. I think to the extent that the Congress sees my determination and the fairness of my proposals, the number of bills passed or the number of proposals made which I do have to veto in the future will be less.
I know that you're either bipartisan, nonpartisan, or divided between Democrats and Republicans. [Laughter] And I think if there's one lesson to have come out of the results of the general election earlier this month, it was that people want government to be competent, I would say frugal to some degree, and to eliminate waste, fraud, and corruption.
As we cut back on unnecessary spending in the Federal Government, using the zero-base budgeting technique which I initiated, it lets us focus the expenditures which are available much more narrowly where the needs are greatest. And I think this, in effect, ensures that our Government will be more efficient and more competent in the future.
The openness of Government is also very crucial. It's good for consumers of all kinds to know what their own Government is doing. There can be no secrecy surrounding how the Federal funds are spent, except when the extreme urgency of national security is involved.
No aspect of the Government will be sacred nor sacrosanct. All of it will be very carefully examined, including the Defense Department, where I will make sure that every dollar spent is very carefully assessed and where we have the greatest return on the money that we spend.
Perhaps you have one or two questions that you could ask me now before I leave. And I'll ask Bo Cutter to take over after I depart, or he might have to help me with some of the questions. But I want to let you know that the budget now is in the formative stage of preparation, and your comments and your advice, either to me directly or through Bo Cutter, will be very helpful to us in establishing our own priorities.
Does anybody have either a comment or a question?
Tom [Mayor Tom Moody of Columbus, Ohio, president, National League of Cities].
Q. Mr. President, you have answered in )-our remarks today many of the questions which members of the board brought up about the Defense Establishment, about whether the cities would have to bear the whole load. I can pledge to you renewed assurance—we made up our minds before you came—but we will support you in your inflation fight.
THE PRESIDENT. That's great to know. I think whatever you do, as you prepare your own budgets or as you make decisions about purchasing practices, the writing of your own regulations for your cities, or the issuing of licenses or the assessment of fees, when you do this in compliance with the spirit of controlling inflation, I hope that you'll make every effort to get maximum publicity for it, to let the people know that this is a nationwide effort. It would be a mistake for the people of our country to think that I, as President, or the 'business establishment or labor unions are the only ones who are responsible and the only ones who can act effectively to control inflation.
Yes, Johnny [Mayor John Rousakis of Savannah, Ga., incoming president, National League of Cities]. Where you from? [Laughter]
Q. Your favorite city, Savannah. [Laughter]
[At this point, the President attached to his jacket a campaign button for Mayor Rousakis' National League of Cities presidential campaign.]
THE PRESIDENT. I was going to wait till Wednesday to put it on, but I'll [laughter] —
Q. You will be here to second my nomination? [Laughter]
The strength of your commitment towards this partnership in trying to solve the problem of urban America is starting to spill over in some States, but not all. And you don't have that strength of a commitment from the States. Do you propose some new incentives or programs where they can truly become part of this effort? Because they're not.
THE PRESIDENT. Well, in February I'll be meeting again with all the Governors when they come to Washington for their annual meeting with me. And between now and then, Johnny, if you would work with Jack Watson and be specific, not only about the programs where you need better cooperation with the Governors and their administrations 'but also with us, and even in a confidential way to let us know which States have a great deal to learn or a long way to go, I would be glad to consult individually or collectively with the Governors to assure that the partnership does include all the States.
Jack Watson is in daily contact with the Governors of our Nation. And I'm sure that most of them, all of them—as are you and I and everyone here—really want to do a good job. And there might be at times a lack of communication or a lack of cooperation that's inadvertent. And sometimes a Governor and the mayors in a State can have a very fine and mutually constructive working relationship, because they use a certain technique or a certain attitude, and another Governor may not be aware of this.
So, if you would work through Jack Watson and directly with me before February, I'll put that at the top of my priority-near the top of my priority at least—and work with the Governors to ensure that there is a full partnership including the State governments. I'd be glad to do this.
Q. Mr. President, we've always appreciated your willingness to permit us to have input into programs that are being developed. I think this year's going to be very critical, because we have pledged to you that we will support the efforts against inflation, and we'll work with you in taking our fair share of cuts. My question is, do you have some mechanism by which we can offer input, with which we can determine our own priorities as to which programs we think ought to be cut?
THE PRESIDENT. Well, one of the mechanisms, obviously, is this session this morning. Bo Cutter is the primary one in OMB, Office of Management and Budget, that works with me as I make every decision about what will be in the budget. In fact, I would guess that between now and the time the budget goes to the printers, that I will never have a budget session without Bo Cutter being present. And also, of course, Jack Watson is available to work directly with you, and he attends all those sessions as well. Stu Eizenstat is the same. You know all these people very, very well.
I think you are right, Tom. In a time of budget restraint, as we face clearly now, cooperation is much more advantageous than even in normal times. And I think that as we evolved the national urban policy this past year, there was a surprising degree of approval of it, after it was concluded, out of all proportion to the new Federal programs or even the new money spent, because everybody felt that it was evolved in cooperation and that we recognized fiscal restraint. And the onerous things about existing Federal programs were identified to be eliminated, and how they could be made efficient was also clearly described.
So, as I make decisions on domestic affairs, not only including direct aid and programs to cities but also the more general ones involving welfare, health, education, transportation, nothing could benefit me more than to have your direct input. So, I would say, through my domestic staff, Stu Eizenstat, Jack Watson, more particularly, and the Office of Management and Budget, and directly With me—through all those mechanisms—we are very eager to have your input.
Maybe one more question or comment, then I'll have to go.
Q. Mr. President, the urban impact analysis potentially, I think, is one of the most powerful friends that the cities could have. At what time will we be able to see those analyses, since they come from the different agencies, and will they extend not only to new programs but to major changes in existing programs, since probably there won't be too many new programs, according to your own words?
THE PRESIDENT. Well, they apply both to new programs and also to changes in existing programs.
Jack, you might answer the question as far as the time.
MR. WATSON. There are two Executive orders that you know about, that the President mentioned this morning. One of them is the urban impact analysis, with which you're familiar and which you're speaking about now. The other one is this new Interagency Coordinating Council, which I chair for the President and which consists of all the major operating program managers of the Government.
As you see urban lint)acts, prospective or otherwise, flowing out of changes or out of possible new programs, communication with us about those impacts that you see would be the thing to do, either through the Interagency Coordinating Council or through the urban impact analysis process. Both of those work hand in glove, and the two processes, though one of them is handled principally through the Domestic Policy Staff, with Stu, and the other through me, they are, in effect, a single process.
THE PRESIDENT. Also, when you see Federal programs that are excessively financed, I hope you'll let me know about that as well. [Laughter]
Thank you very much.