My fellow Americans:
There's good news. The Federal deficit for this year is expected to drop by some 30 percent compared to last year. That could be a whopping $65 billion reduction, and it happened without a tax increase. There's also some disappointing news. The Congress, once again, has passed a bill that puts me in the position of accepting legislation with which I fundamentally disagree.
The bill would continue the authority of the United States Government to borrow funds which we must do to avoid the default on our obligations. This legislation also includes a so-called fix of the Gramm-Rudman-Hollings deficit reduction law, but it really is an attempt to force me eventually either to sign a tax bill or to accept massive cuts in national defense, or both. I would have no problem with signing an extension of the debt limit. But the choice is for the United States to default on its debts for the first time in our 200-year history, or to accept a bill that has been cluttered up. This is yet another example of Congress trying to force my hand, and it's one more reason why the President needs the lineitem veto to separate the good from the bad.
Unfortunately, Congress consistently brings the Government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets, and the Federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations. It means we have a well-earned reputation for reliability and credibility—two things that set us apart from much of the world.
Some in Congress will claim that if I reject this bill with its Gramm-Rudman-Hollings fix, then I'm against deficit reduction. But, of course, nothing is farther from the truth. Since 1980 when you first elected me to this office, I have led efforts to control Congress' appetite to spend in deficit. Over a 5-year period, while revenues went up 28 percent, congressional spending went up 46 percent. From 1982 to 1987, for every dollar Congress cut from our national defense, they added $2 for domestic spending. Now, that's not fiscal restraint. Two years ago, Congress took a first step to curb spending with Gramm-Rudman-Hollings, and I agreed. Its purpose was to get on a track to lower deficits and eventually a balanced budget. Well, the ink was not even dry before Congress walked away from its own plan. Instead of facing the tough choices to reduce Federal spending, Congress attempted to shift the burden to our national security and to you, the American taxpayers, in the form of new taxes.
For those who say further responsible spending reductions are not possible, they are wrong. For those who say the only choice is undermining our national security at a time when the United States is close to an agreement with the Soviet Union on reducing nuclear weapons, they are wrong. For those who say more taxes will solve our deficit problem, they are wrong. Every time Congress increases taxes, the deficit does not decrease, spending increases. It's time for a clear and consistent policy to reduce the Federal budget deficit.
In the weeks ahead, Congress will have the opportunity to meet this commitment. So today, let's get some things clear. I will not hesitate to use my veto to hold down excess spending, and I will spell out the impact that defense cuts will have on our long-term security interests. You don't need more taxes to balance the budget. Congress needs the discipline to stop spending more, and that can be done with the passage of a constitutional amendment to balance the budget. Congress needs to reform its budget process, at least by breaking up those massive, catch-all spending bills into individual parts. That way, each part can stand on its own. And to meet the new deficit target in Gramm-Rudman-Hollings, if Congress insists on lowering defense spending, then I will certainly insist on lowering domestic spending as well.
This decision is not easy. I have no choice but to sign this bill to guarantee the United States Government's credit. But I also will not permit Congress to dismantle our national defense, to jeopardize arms reduction, or to increase your taxes. I am determined that will not happen.
Until next week, thank you, and God bless you.