Anti-Inflation Program Remarks at a White House Briefing for State and Local Officials.

I'm glad to notice that in spite of the weather, the room is packed with people who are intensely interested in one of the most significant subjects for our country that I have to face.

Obviously, you as State officials and local officials bear on your own shoulders tremendous responsibilities for serving the public, and so do I. And in this modern, fast-moving, technological age, the issues that in the past were adequately difficult are now much more complex, much more confused, and much more challenging. But when our country was founded, we never anticipated that in a democracy with freedom for everyone, with shared responsibilities—local, State, Federal, President, Congress, the court system—that our task would be easy.

I think the most serious problem that I face as President on the domestic scene is to control inflation and to ensure for our country in the future a sound, stable, strong economy. This will tax the courage of the American people. It will tax the vision and sound judgment of the American people, and it will even tax the idealism of the American people, because in controlling inflation, there is no clear, identifiable victory when an achievement is realized. And in almost every event or decision when progress is made, it's almost always made for the general good at the expense of some individual benefit.

There's an element of unselfishness in it that's not present in all the subjects that we, you and I together, have to address. I'm absolutely determined to bring inflation under control in our country. It's a commitment that I've made on my personal convictions. It's a commitment that I've made jointly with congressional leaders here in our Nation's capital city. It's a conviction and a commitment that I've made in harmony with many of you who helped me evolve the programs that we are now attempting to carry out together.

I presented my 1980 fiscal year budget to the Congress. It's lean and tough. It's not going to be easy to protect the principles described in that budget. But I don't intend to yield its general thrust.

When I was running for President, our Federal deficit was $66 billion. If the budget I presented to the Congress is approved-and I expect it will be in its totality; with some deviations, of course, but its general total thrust will be approved-we will have cut the deficit more than $36 billion, about a 55-percent reduction.

In addition to that, we will have reduced the amount of the American gross national product that is collected and spent by the Federal Government down to about 21 percent, the lowest percentage in more than 7 years. And we've now got the trend going downward instead of upward.

I think it's important to point out that we've had a broad approach to this very difficult question. We've established voluntary wage and price standards. The response from business has been overwhelmingly good. The response from labor is increasingly favorable and supportive. I think it's understandable and predictable that labor support is going to come after an identifiable success in establishing prices and in establishing government policy. But together we have been and are making progress.

There are some limits to what the Federal Government can do. As a businessman myself, as an engineer, in my general philosophy I'm inclined to let the free enterprise system stay free. I don't think the Federal Government ought to try to go in and control business—employers and employees. And that's a self-imposed limit that I don't think is counterproductive.

In addition, obviously, we cannot control the weather. And when there is a difficult crop season, food prices are going to go up. And that's what's occurred in the past. I hope we have a good crop this year. We are trying to stabilize farm income, make it more predictable, put more control of their own future in the hands of farmers, increase exports. But we can't control the weather, and food prices and many others in our domestic scene are not controllable by the Federal Government.

We have no control over the policies of other nations, who quite often determine or affect the price of energy or the price of other commodities. We can use our influence in a beneficial way, in a proper way, and we do so. But we have no control over them.

We do, however, have control over our own actions and our own decisions, and that's where you can be of great help to me. I think it's important to point out that the Congress has some decisions to make.

Real wage insurance is a simple concept, a new concept, an innovative concept that would help make it easier for workers to restrain their wage demands in the face of past history and present experience with very rapid, inflationary increases. But if they agree to comply with our wage guidelines or standards, then if, because of the actions of other employees or other factors, the inflation rate should go up more, then their income tax payments would be lowered to make sure they don't suffer because they are unselfish and others are selfish.

We hope to have this legislation clear the Ways and Means Committee in the near future, and I believe it's accurate to say that the more the Members of Congress have studied the basic principle and the details of our proposal, the more progress has been made and the more support evolves. Many of our key labor unions who were originally cool toward the idea or in opposition have now expressed their support for it.

We are establishing at the Federal Government level prudent purchasing procedures. We intend to make the best and most efficient purchases we can. And one obvious measure of a good place to buy is among those companies that are prudent in establishing price policies. And I would hope that this would be one example that you might emulate at the local and State level.

Waste, fraud, corruption is being rooted out with the utmost of my own personal ability and those who work with me. There's no place for it in government. We have been guilty in the past of some betrayals of public trust. We are now establishing Inspectors General offices in the major agencies of the Federal Government, and they will be dedicated to constantly exhibiting any betrayal of the public trust and setting an example so this might be prevented, not just detected after it happens.

In addition to that, we are trying to reduce the adverse effect of Federal regulations, paperwork, both on local and State governments, and also in the private sector. And over a longer period of time, we are exploring every possibility to increase the productivity of the American working men and women.

Well, I think you can see that none of these efforts that I've described to you will be simple or easy to achieve, and no single one of them, even if successful, could guarantee that we could control inflation. If there was ever an issue on which our system of federalism will be tested and in which our system of federalism can be productive if welded together, this is it.

Everything I've described to you at the Federal level can be almost directly used as a pattern for local and State government decisions. And in addition to that, because of the wide diversity of circumstances that prevail in your own community or State, you can be much more innovative even than we can here in Washington. And I would hope that through your own insight and your probing minds and the special local circumstances, that you might uncover other ways in which we can help to control rampant inflation.

I might say that there have been some allegations made that controlling inflation works against the interests of the poor, the unemployed, the elderly, who are most dependent on government services. This is exactly contrary to the facts. The people who are the worst sufferers when inflation is uncontrolled are those who live on a fixed income or on a very low income or who are not well educated or who can't provide their families with mobility to move from one community to another or shift from one job to another to find better opportunities.

Those very people who are most vulnerable and who need government services are the ones who suffer most when inflation is not controlled. Quite often, they are not organized, they are not articulate, they are 'not politically influential, and they need to be protected.

Let me say in closing that there are going to be a lot of pressures on you and on me from different special interest groups, some benevolent in nature, some selfish in nature. "Take action to control inflation among others. Don't touch us." Those pressures are already building up on the Congress. And it would be much easier for us here in Washington to act forcefully and aggressively and consistently if we felt sure that we were acting in harmony with you, in partnership with you, and that there was a constant support from officials and others at the local and State level for what we are attempting to do here in Washington.

I'm sure there will be temptations for you to take the same position I've just described in critical terms. "Take out the inflationary action on others. Don't touch us." But I think your coming here is indicative of your willingness to join in this worthwhile fight.

We've had excellent relationships with you ever since I've been in the White House. When we evolved our energy policy, most of it was done in concert with you. Our urban policy, the same; civil service reform, the same; the evolution of hospital cost containment legislation, the same; the evolution of our overall approach to controlling inflation, the same. We've consulted closely with municipal, county, State officials from the very beginning. And that's been the basis on which we've enjoyed successes in many of these areas.

I think that it's obvious to you I consider this to be a very important task, a very difficult task. But it's one where I do not intend to fail. And with your help, I feel secure that we will be successful. I'll try to be answerable to you in setting a good example here in Washington.

I'm not going to back down. I'm not going to yield to pressure. I'm willing to fight openly and aggressively and consistently to control inflation in our country. And with your help and support and partnership, I believe we'll be successful in having an even greater United States of America in the future.

Thank you very much.

I want to thank all of you for coming today. It means an awful lot to us. We're glad you're here. I think you have already gotten a taste of the suggestions we're about to hand out to you. They're just examples of what you can do. And if you've got other suggestions or ways that we can improve on these, I know you well enough to realize that you won't be reticent about giving us your opinion.

Thank you very much.