The Power of the Individual and Limited Government

History records the power of the ideas that brought us here those 7 years ago-ideas like the individual’s right to reach as far and as high as his or her talents will permit; the free market as an engine of economic progress. And as an ancient Chinese philosopher, Lao-tzu, said: “Govern a great nation as you would cook a small fish; do not overdo it.

 

 

Well, these ideas were part of a larger notion, a vision, if you will, of America herself—an America not only rich in opportunity for the individual but an America, too, of strong families and vibrant neighborhoods; an America whose divergent but harmonizing communities were a reflection of a deeper community of values: the value of work, of family, of religion, and of the love of freedom that God places in each of us and whose defense He has entrusted in a special way to this nation.”

 

We Can’t Spend Ourselves Rich

And let’s begin by discussing how to maintain economic growth by controlling and eventually eliminating the problem of federal deficits. We have had a balanced budget only eight times in the last 57 years. For the first time in 14 years, the federal government spent less in real terms last year than the year before.

We took $73 billion off last year’s deficit compared to the year before. The deficit itself has moved from 6.3 percent of the Gross National Product to only 3.4 percent. And perhaps the most important sign of progress has been the change in our view of deficits.

 

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You know, a few of us can remember when, not too many years ago, those who created the deficits said they would make us prosperous and not to worry about the debt because “we owe it to ourselves.” Well, at last there is agreement that we can’t spend ourselves rich.

Our recent budget agreement, designed to reduce federal deficits by $76 billion over the next two years, builds on this consensus. But this agreement must be adhered to without slipping into the errors of the past — more broken promises and more unchecked spending.

As I indicated in my first State of the Union, what ails us can be simply put: The federal government is too big and it spends too much money.

Ronald Reagan on The Misery Index

 

When he was a candidate in 1976, President Carter, invented a thing he called the Misery Index. He added the rate of unemployment and the rate of inflation. And it came at that point to 12.5%, under President Ford. And he said that no man, with that size Misery Index had a right to seek reelection to the presidency . Today, by his own decision, the Misery Index is in excess of 20%

 

Reagan 1984 coffee cup

Reagan 1984 coffee cup

Government is Living Too Well

 

Since then, he has blamed to the people for inflation, OPEC, he has blamed the Federal Reserve system, he has blamed the lack of productivity of the American people, he has then accused the people of living too well and that we must share in scarcity, we must sacrifice and get used to doing with less. We don’t have inflation because the people are living too well. We have inflation because the government is living too well.

 


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As Government Expands, Liberty Contracts

Ours was the first revolution in the history of mankind that truly reversed the course of government, and with three little words: ‘We the People.’ ‘We the People’ tell the government what to do; it doesn’t tell us.

 

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‘We the People’ are the driver; the government is the car. And we decide where it should go, and by what route, and how fast. Almost all the world’s constitutions are documents in which governments tell the people what their privileges are. Our Constitution is a document in which ‘We the People’ tell the government what it is allowed to do. ‘We the People’ are free. This belief has been the underlying basis for everything I’ve tried to do these past 8 years.

But back in the 1960’s, when I began, it seemed to me that we’d begun reversing the order of things — that through more and more rules and regulations and confiscatory taxes, the government was taking more of our money, more of our options, and more of our freedom. I went into politics in part to put up my hand and say, ‘Stop.’ I was a citizen politician, and it seemed the right thing for a citizen to do.

I think we have stopped a lot of what needed stopping. And I hope we have once again reminded people that man is not free unless government is limited. There’s a clear cause and effect here that is as neat and predictable as a law of physics: As government expands, liberty contracts.

 

Reagan on Taxes and the Age of the Entrepreneur

 

In 1981 our critics charged that letting you keep more of your earnings would trigger an inflationary explosion, send interest rates soaring, and destroy our economy. Well, we cut your tax rates anyway by nearly 25 percent. And what that helped trigger was falling inflation, falling interest rates, and the strongest economic expansion in 30 years.

 

 

 

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Over the course of this century, our tax system has been modified dozens of times and in hundreds of ways, yet most of those changes didn’t improve the system. They made it more like Washington itself—complicated, unfair, cluttered with gobbledygook and loopholes designed for those with the power and influence to hire high-priced legal and tax advisers.

But there’s more to it than that. Some years ago an historian, I believe, said that every time in the past when a government began taxing above a certain level of the people’s earnings, trust in government began to erode. He said it would begin with efforts to avoid paying the full tax. This would become outright cheating and, eventually, a distrust and contempt of government itself until there would be a breakdown in law and order.

Well, how many times have we heard people brag about clever schemes to avoid paying taxes or watched luxuries casually written off to be paid for by somebody else—that somebody being you. I believe that, in both spirit and substance, our tax system has come to be un-American.

How would the proposal work? The present tax system has 14 different brackets of tax rates ranging from 11 to 50 percent. We would take a giant step toward an ideal system by replacing all that with a simple three-bracket system—with tax rates of 15, 25, and 35 percent.

By lowering everyone’s tax rates all the way up the income scale, each of us will have a greater incentive to climb higher, to excel, to help America grow.

The power of these incentives would send one simple, straightforward message to an entire nation: America, go for it!

To young Americans wondering tonight, where will I go, what will I do with my future, I have a suggestion: Why not set out with your friends on the path of adventure and try to start up your own business? Follow in the footsteps of those two college students who launched one of America’s great computer firms from the garage behind their house. You, too, can help us unlock the doors to a golden future. You, too, can become leaders in this great new era of progress—the age of the entrepreneur.