I have to say that we all know our Government has been just great at building programs. The time has come to show the American people that we can limit them too; that we can not only start things, that we can actually stop things.
About the defense budget, I raise a hope and a caution. As we restructure our military forces to meet the new threats of the post-cold-war world, it is true that we can responsibly reduce our defense budget. And we may all doubt what that range of reductions is, but let me say that as long as I am President, I will do everything I can to make sure that the men and women who serve under the American flag will remain the best trained, the best prepared, the best equipped fighting force in the world. And every one of you should make that solemn pledge. We still have responsibilities around the world. We are the world’s only superpower. This is still a dangerous and uncertain time, and we owe it to the people in uniform to make sure that we adequately provide for the national defense and for their interests and needs. Backed by an effective national defense and a stronger economy, our Nation will be prepared to lead a world challenged as it is everywhere by ethnic conflict, by the proliferation of weapons of mass destruction, by the global democratic revolution, and by challenges to the health of our global environment.
I know this economic plan is ambitious, but I honestly believe it is necessary for the continued greatness of the United States. And I think it is paid for fairly, first by cutting Government, then by asking the most of those who benefited the most in the past, and by asking more Americans to contribute today so that all of us can prosper tomorrow.
For the wealthiest, those earning more than $180,000 per year, I ask you all who are listening tonight to support a raise in the top rate for Federal income taxes from 31 to 36 percent. We recommend a 10 percent surtax on incomes over $250,000 a year, and we recommend closing some loopholes that let some people get away without paying any tax at all.
For businesses with taxable incomes in excess of $10 million, we recommend a raise in the corporate tax rate, also to 36 percent, as well as a cut in the deduction for business entertainment expenses. Our plan seeks to attack tax subsidies that actually reward companies more for shutting their operations down here and moving them overseas than for staying here and reinvesting in America. I say that as someone who believes that American companies should be free to invest around the world and as a former Governor who actively sought investment of foreign companies in my State. But the Tax Code should not express a preference to American companies for moving somewhere else, and it does in particular cases today.
We will seek to ensure that, through effective tax enforcement, foreign corporations who do make money in America simply pay the same taxes that American companies make on the same income.
To middle class Americans who have paid a great deal for the last 12 years and from whom I ask a contribution tonight, I will say again as I did on Monday night: You’re not going alone any more, you’re certainly not going first, and you’re not going to pay more for less as you have too often in the past. I want to emphasize the facts about this plan: 98.8 percent of America’s families will have no increase in their income tax rates, only 1.2 percent at the top.
Let me be clear: There will also be no new cuts in benefits for Medicare. As we move toward the 4th year, with the explosion in health care costs, as I said, projected to account for 50 percent of the growth of the deficit between now and the year 2000, there must be planned cuts in payments to providers, to doctors, to hospitals, to labs, as a way of controlling health care costs. But I see these only as a stopgap until we can reform the entire health care system. If you’ll help me do that, we can be fair to the providers and to the consumers of health care. Let me repeat this, because I know it matters to a lot of you on both sides of the aisle. This plan does not make a recommendation for new cuts in Medicare benefits for any beneficiary.
Secondly, the only change we are making in Social Security is one that has already been publicized. The plan does ask older Americans with higher incomes, who do not rely solely on Social Security to get by, to contribute more. This plan will not affect the 80 percent of Social Security recipients who do not pay taxes on Social Security now. Those who do not pay tax on Social Security now will not be affected by this plan.
Our plan does include a broad-based tax on energy, and I want to tell you why I selected this and why I think it’s a good idea. I recommend that we adopt a Btu tax on the heat content of energy as the best way to provide us with revenue to lower the deficit because it also combats pollution, promotes energy efficiency, promotes the independence, economically, of this country as well as helping to reduce the debt, and because it does not discriminate against any area. Unlike a carbon tax, that’s not too hard on the coal States; unlike a gas tax, that’s not too tough on people who drive a long way to work; unlike an ad valorem tax, it doesn’t increase just when the price of an energy source goes up. And it is environmentally responsible. It will help us in the future as well as in the present with the deficit.