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Title: State of the Union Addresses

Author: Ronald Reagan

Release date: February 1, 2004 [eBook #5046]
                Most recently updated: November 22, 2014

Language: English

Credits: Produced by James Linden.  HTML version by Al Haines.


*** START OF THE PROJECT GUTENBERG EBOOK STATE OF THE UNION ADDRESSES ***




Produced by James Linden.  HTML version by Al Haines.








State of the Union Addresses of Ronald Reagan



The addresses are separated by three asterisks: ***

Dates of addresses by Ronald Reagan in this eBook:

  January 26, 1982
  January 25, 1983
  January 25, 1984
  February 6, 1985
  February 4, 1986
  January 27, 1987
  January 25, 1988



***

State of the Union Address
Ronald Reagan
January 26, 1982

Mr. Speaker, Mr. President, distinguished Members of the Congress, honored
guests, and fellow citizens:

Today marks my first State of the Union address to you, a constitutional
duty as old as our Republic itself.

President Washington began this tradition in 1790 after reminding the
Nation that the destiny of self-government and the "preservation of the
sacred fire of liberty" is "finally staked on the experiment entrusted to
the hands of the American people." For our friends in the press, who place
a high premium on accuracy, let me say: I did not actually hear George
Washington say that. But it is a matter of historic record.

But from this podium, Winston Churchill asked the free world to stand
together against the onslaught of aggression. Franklin Delano Roosevelt
spoke of a day of infamy and summoned a nation to arms. Douglas MacArthur
made an unforgettable farewell to a country he loved and served so well.
Dwight Eisenhower reminded us that peace was purchased only at the price of
strength. And John F. Kennedy spoke of the burden and glory that is
freedom.

When I visited this Chamber last year as a newcomer to Washington, critical
of past policies which I believed had failed, I proposed a new spirit of
partnership between this Congress and this administration and between
Washington and our State and local governments. In forging this new
partnership for America, we could achieve the oldest hopes of our
Republic--prosperity for our nation, peace for the world, and the blessings
of individual liberty for our children and, someday, for all of humanity.

It's my duty to report to you tonight on the progress that we have made in
our relations with other nations, on the foundation we've carefully laid
for our economic recovery, and finally, on a bold and spirited initiative
that I believe can change the face of American government and make it again
the servant of the people.

Seldom have the stakes been higher for America. What we do and say here
will make all the difference to autoworkers in Detroit, lumberjacks in the
Northwest, steelworkers in Steubenville who are in the unemployment lines;
to black teenagers in Newark and Chicago; to hard-pressed farmers and small
businessmen; and to millions of everyday Americans who harbor the simple
wish of a safe and financially secure future for their children. To
understand the state of the Union, we must look not only at where we are
and where we're going but where we've been. The situation at this time last
year was truly ominous.

The last decade has seen a series of recessions. There was a recession in
1970, in 1974, and again in the spring of 1980. Each time, unemployment
increased and inflation soon turned up again. We coined the word
"stagflation" to describe this.

Government's response to these recessions was to pump up the money supply
and increase spending. In the last 6 months of 1980, as an example, the
money supply increased at the fastest rate in postwar history--13 percent.
Inflation remained in double digits, and government spending increased at
an annual rate of 17 percent. Interest rates reached a staggering 21.5
percent. There were 8 million unemployed.

Late in 1981 we sank into the present recession, largely because continued
high interest rates hurt the auto industry and construction. And there was
a drop in productivity, and the already high unemployment increased.

This time, however, things are different. We have an economic program in
place, completely different from the artificial quick fixes of the past. It
calls for a reduction of the rate of increase in government spending, and
already that rate has been cut nearly in half. But reduced spending the
first and smallest phase of a 3-year tax rate reduction designed to
stimulate the economy and create jobs. Already interest rates are down to
15 3/4 percent, but they must still go lower. Inflation is down from 12.4
percent to 8.9, and for the month of December it was running at an
annualized rate of 5.2 percent. If we had not acted as we did, things would
be far worse for all Americans than they are today. Inflation, taxes, and
interest rates would all be higher.

A year ago, Americans' faith in their governmental process was steadily
declining. Six out of 10 Americans were saying they were pessimistic about
their future. A new kind of defeatism was heard. Some said our domestic
problems were uncontrollable, that we had to learn to live with this
seemingly endless cycle of high inflation and high unemployment.

There were also pessimistic predictions about the relationship between our
administration and this Congress. It was said we could never work together.
Well, those predictions were wrong. The record is clear, and I believe that
history will remember this as an era of American renewal, remember this
administration as an administration of change, and remember this Congress
as a Congress of destiny.

Together, we not only cut the increase in government spending nearly in
half, we brought about the largest tax reductions and the most sweeping
changes in our tax structure since the beginning of this century. And
because we indexed future taxes to the rate of inflation, we took away
government's built-in profit on inflation and its hidden incentive to grow
larger at the expense of American workers.

Together, after 50 years of taking power away from the hands of the people
in their States and local communities, we have started returning power and
resources to them.

Together, we have cut the growth of new Federal regulations nearly in half.
In 1981 there were 23,000 fewer pages in the Federal Register, which lists
new regulations, than there were in 1980. By deregulating oil we've come
closer to achieving energy independence and helped bring down the cost of
gasoline and heating fuel.

Together, we have created an effective Federal strike force to combat waste
and fraud in government. In just 6 months it has saved the taxpayers more
than $2 billion, and it's only getting started.

Together we've begun to mobilize the private sector, not to duplicate
wasteful and discredited government programs, but to bring thousands of
Americans into a volunteer effort to help solve many of America's social
problems.

Together we've begun to restore that margin of military safety that ensures
peace. Our country's uniform is being worn once again with pride.

Together we have made a New Beginning, but we have only begun.

No one pretends that the way ahead will be easy. In my Inaugural Address
last year, I warned that the "ills we suffer have come upon us over several
decades. They will not go away in days, weeks, or months, but they will go
away . . . because we as Americans have the capacity now, as we've had it
in the past, to do whatever needs to be done to preserve this last and
greatest bastion of freedom."

The economy will face difficult moments in the months ahead. But the
program for economic recovery that is in place will pull the economy out of
its slump and put us on the road to prosperity and stable growth by the
latter half of this year. And that is why I can report to you tonight that
in the near future the state of the Union and the economy will be
better--much better--if we summon the strength to continue on the course
that we've charted.

And so, the question: If the fundamentals are in place, what now? Well, two
things. First, we must understand what's happening at the moment to the
economy. Our current problems are not the product of the recovery program
that's only just now getting underway, as some would have you believe; they
are the inheritance of decades of tax and tax and spend and spend.

Second, because our economic problems are deeply rooted and will not
respond to quick political fixes, we must stick to our carefully integrated
plan for recovery. That plan is based on four commonsense fundamentals:
continued reduction of the growth in Federal spending; preserving the
individual and business tax reductions that will stimulate saving and
investment; removing unnecessary Federal regulations to spark productivity;
and maintaining a healthy dollar and a stable monetary policy, the latter a
responsibility of the Federal Reserve System.

The only alternative being offered to this economic program is a return to
the policies that gave us a trillion-dollar debt, runaway inflation,
runaway interest rates and unemployment. The doubters would have us turn
back the clock with tax increases that would offset the personal tax rate
reductions already passed by this Congress. Raise present taxes to cut
future deficits, they tell us. Well, I don't believe we should buy that
argument.

There are too many imponderables for anyone to predict deficits or
surpluses several years ahead with any degree of accuracy. The budget in
place, when I took office, had been projected as balanced. It turned out to
have one of the biggest deficits in history. Another example of the
imponderables that can make deficit projections highly questionable--a
change of only one percentage point in unemployment can alter a deficit up
or down by some $25 billion.

As it now stands, our forecast, which we're required by law to make, will
show major deficits starting at less than a hundred billion dollars and
declining, but still too high. More important, we're making progress with
the three keys to reducing deficits: economic growth, lower interest rates,
and spending control. The policies we have in place will reduce the deficit
steadily, surely, and in time, completely.

Higher taxes would not mean lower deficits. If they did, how would we
explain that tax revenues more than doubled just since 1976; yet in that
same 6-year period we ran the largest series of deficits in our history. In
1980 tax revenues increased by $54 billion, and in 1980 we had one of our
all-time biggest deficits. Raising taxes won't balance the budget; it will
encourage more government spending and less private investment. Raising
taxes will slow economic growth, reduce production, and destroy future
jobs, making it more difficult for those without jobs to find them and more
likely that those who now have jobs could lose them. So, I will not ask you
to try to balance the budget on the backs of the American taxpayers.

I will seek no tax increases this year, and I have no intention of
retreating from our basic program of tax relief. I promise to bring the
American people--to bring their tax rates down and to keep them down, to
provide them incentives to rebuild our economy, to save, to invest in
America's future. I will stand by my word. Tonight I'm urging the American
people: Seize these new opportunities to produce, to save, to invest, and
together we'll make this economy a mighty engine of freedom, hope, and
prosperity again.

Now, the budget deficit this year will exceed our earlier expectations. The
recession did that. It lowered revenues and increased costs. To some
extent, we're also victims of our own success. We've brought inflation down
faster than we thought we could, and in doing this, we've deprived
government of those hidden revenues that occur when inflation pushes people
into higher income tax brackets. And the continued high interest rates last
year cost the government about $5 billion more than anticipated.

We must cut out more nonessential government spending and rout out more
waste, and we will continue our efforts to reduce the number of employees
in the Federal work force by 75,000.

The budget plan I submit to you on February 8th will realize major savings
by dismantling the Departments of Energy and Education and by eliminating
ineffective subsidies for business. We'll continue to redirect our
resources to our two highest budget priorities--a strong national defense
to keep America free and at peace and a reliable safety net of social
programs for those who have contributed and those who are in need.

Contrary to some of the wild charges you may have heard, this
administration has not and will not turn its back on America's elderly or
America's poor. Under the new budget, funding for social insurance programs
will be more than double the amount spent only 6 years ago. But it would be
foolish to pretend that these or any programs cannot be made more efficient
and economical.

The entitlement programs that make up our safety net for the truly needy
have worthy goals and many deserving recipients. We will protect them. But
there's only one way to see to it that these programs really help those
whom they were designed to help. And that is to bring their spiraling costs
under control.

Today we face the absurd situation of a Federal budget with three-quarters
of its expenditures routinely referred to as "uncontrollable." And a large
part of this goes to entitlement programs.

Committee after committee of this Congress has heard witness after witness
describe many of these programs as poorly administered and rife with waste
and fraud. Virtually every American who shops in a local supermarket is
aware of the daily abuses that take place in the food stamp program, which
has grown by 16,000 percent in the last 15 years. Another example is
Medicare and Medicaid--programs with worthy goals but whose costs have
increased from 11.2 billion to almost 60 billion, more than 5 times as
much, in just 10 years.

Waste and fraud are serious problems. Back in 1980 Federal investigators
testified before one of your committees that "corruption has permeated
virtually every area of the Medicare and Medicaid health care industry."
One official said many of the people who are cheating the system were "very
confident that nothing was going to happen to them." Well, something is
going to happen. Not only the taxpayers are defrauded; the people with real
dependency on these programs are deprived of what they need, because
available resources are going not to the needy, but to the greedy.

The time has come to control the uncontrollable. In August we made a start.
I signed a bill to reduce the growth of these programs by $44 billion over
the next 3 years while at the same time preserving essential services for
the truly needy. Shortly you will receive from me a message on further
reforms we intend to install--some new, but others long recommended by your
own congressional committees. I ask you to help make these savings for the
American taxpayer.

The savings we propose in entitlement programs will total some $63 billion
over 4 Years and will, without affecting social t security, go a long way
toward bringing Federal spending under control.

But don't be fooled by those who proclaim that spending cuts will deprive
the elderly, the needy, and the helpless. The. Federal Government will
still subsidize 95 million meals every day. That's one out of seven of all
the meals served in America. Head Start, senior nutrition programs, and
child welfare programs will not be cut from the levels we proposed last
year. More than one-half billion dollars has been proposed for minority
business assistance. And research at the National Institute of Health will
be increased by over $100 million. While meeting all these needs, we intend
to plug unwarranted tax loopholes and strengthen the law which requires all
large corporations to pay a minimum tax.

I am confident the economic program we've put into operation will protect
the needy while it triggers a recovery that will benefit all Americans. It
will stimulate the economy, result in increased savings and provide capital
for expansion, mortgages for homebuilding, and jobs for the unemployed.

Now that the essentials of that program are in place, our next major
undertaking must be a program--just as bold, just as innovative--to make
government again accountable to the people, to make our system of
federalism work again.

Our citizens feel they've lost control of even the most basic decisions
made about the essential services of government, such as schools, welfare,
roads, and even garbage collection. And they're right. A maze of
interlocking jurisdictions and levels of government confronts average
citizens in trying to solve even the simplest of problems. They don't know
where to turn for answers, who to hold accountable, who to praise, who to
blame, who to vote for or against. The main reason for this is the
overpowering growth of Federal grants-in-aid programs during the past few
decades.

In 1960 the Federal Government had 132 categorical grant programs, costing
$7 billion. When I took office, there were approximately 500, costing
nearly a hundred billion dollars--13 programs for energy, 36 for pollution
control, 66 for social services, 90 for education. And here in the
Congress, it takes at least 166 committees just to try to keep track of
them.

You know and I know that neither the President nor the Congress can
properly oversee this jungle of grants-in-aid; indeed, the growth of these
grants has led to the distortion in the vital functions of government. As
one Democratic Governor put it recently: The National Government should be
worrying about "arms control, not potholes."

The growth in these Federal programs has--in the words of one
intergovernmental commission--made the Federal Government "more pervasive,
more intrusive, more unmanageable, more ineffective and costly, and above
all, more (un) accountable." Let's solve this problem with a single, bold
stroke: the return of some $47 billion in Federal programs to State and
local government, together with the means to finance them and a transition
period of nearly 10 years to avoid unnecessary disruption.

I will shortly send this Congress a message describing this program. I want
to emphasize, however, that its full details will have been worked out only
after close consultation with congressional, State, and local officials.

Starting in fiscal 1984, the Federal Government will assume full
responsibility for the cost of the rapidly growing Medicaid program to go
along with its existing responsibility for Medicare. As part of a
financially equal swap, the States will simultaneously take full
responsibility for Aid to Families with Dependent Children and food stamps.
This will make welfare less costly and more responsive to genuine need,
because it'll be designed and administered closer to the grass roots and
the people it serves.

In 1984 the Federal Government will apply the full proceeds from certain
excise taxes to a grass roots trust fund that will belong in fair shares to
the 50 States. The total amount flowing into this fund will be $28 billion
a year. Over the next 4 years the States can use this money in either of
two ways. If they want to continue receiving Federal grants in such areas
as transportation, education, and social services, they can use their trust
fund money to pay for the grants. Or to the extent they choose to forgo the
Federal grant programs, they can use their trust fund money on their own
for those or other purposes. There will be a mandatory pass-through of part
of these funds to local governments.

By 1988 the States will be in complete control of over 40 Federal grant
programs. The trust fund will start to phase out, eventually to disappear,
and the excise taxes will be turned over to the States. They can then
preserve, lower, or raise taxes on their own and fund and manage these
programs as they see fit.

In a single stroke we will be accomplishing a realignment that will end
cumbersome administration and spiraling costs at the Federal level while we
ensure these programs will be more responsive to both the people they're
meant to help and the people who pay for them.

Hand in hand with this program to strengthen the discretion and flexibility
of State and local governments, we're proposing legislation for an
experimental effort to improve and develop our depressed urban areas in the
1980's and '90's. This legislation will permit States and localities to
apply to the Federal Government for designation as urban enterprise zones.
A broad range of special economic incentives in the zones will help attract
new business, new jobs, new opportunity to America's inner cities and rural
towns. Some will say our mission is to save free enterprise. Well, I say we
must free enterprise so that together we can save America.

Some will also say our States and local communities are not up to the
challenge of a new and creative partnership. Well, that might have been
true 20 years ago before reforms like reapportionment and the Voting Rights
Act, the 10-year extension of which I strongly support. It's no longer true
today. This administration has faith in State and local governments and the
constitutional balance envisioned by the Founding Fathers. We also believe
in the integrity, decency, and sound, good sense of grass roots Americans.

Our faith in the American people is reflected in another major endeavor.
Our private sector initiatives task force is seeking out successful
community models of school, church, business, union, foundation, and civic
programs that help community needs. Such groups are almost invariably far
more efficient than government in running social programs.

We're not asking them to replace discarded and often discredited government
programs dollar for dollar, service for service. We just want to help them
perform the good works they choose and help others to profit by their
example. Three hundred and eighty-five thousand corporations and private
organizations are already working on social programs ranging from drug
rehabilitation to job training, and thousands more Americans have written
us asking how they can help. The volunteer spirit is still alive and well
in America.

Our nation's long journey towards civil rights for all our citizens--once
a source of discord, now a source of pride--must continue with no
backsliding or slowing down. We must and shall see that those basic laws
that guarantee equal rights are preserved and, when necessary,
strengthened.

Our concern for equal rights for women is firm and unshakable. We launched
a new Task Force on Legal Equity for Women and a Fifty States Project that
will examine State laws for discriminatory language. And for the first time
in our history, a woman sits on the highest court in the land.

So, too, the problem of crime--one as real and deadly serious as any in
America today. It demands that we seek transformation of our legal system,
which overly protects the rights of criminals while it leaves society and
the innocent victims of crime without justice.

We look forward to the enactment of a responsible clean air act to increase
jobs while continuing to improve the quality of our air. We're encouraged
by the bipartisan initiative of the House and are hopeful of further
progress as the Senate continues its deliberations.

So far, I've concentrated largely, now, on domestic matters. To view the
state of the Union in perspective, we must not ignore the rest of the
world. There isn't time tonight for a lengthy treatment of social--or
foreign policy, I should say, a subject I intend to address in detail in
the near future. A few words, however, are in order on the progress we've
made over the past year, reestablishing respect for our nation around the
globe and some of the challenges and goals that we will approach in the
year ahead.

At Ottawa and Cancun, I met with leaders of the major industrial powers and
developing nations. Now, some of those I met with were a little surprised
that I didn't apologize for America's wealth. Instead, I spoke of the
strength of the free marketplace system and how that system could help them
realize their aspirations for economic development and political freedom. I
believe lasting friendships were made, and the foundation was laid for
future cooperation.

In the vital region of the Caribbean Basin, we're developing a program of
aid, trade, and investment incentives to promote self-sustaining growth and
a better, more secure life for our neighbors to the south. Toward those who
would export terrorism and subversion in the Caribbean and elsewhere,
especially Cuba and Libya, we will act with firmness.

Our foreign policy is a policy of strength, fairness, and balance. By
restoring America's military credibility, by pursuing peace at the
negotiating table wherever both sides are willing to sit down in good
faith, and by regaining the respect of America's allies and adversaries
alike, we have strengthened our country's position as a force for peace and
progress in the world.

When action is called for, we're taking it. Our sanctions against the
military dictatorship that has attempted to crush human rights in
Poland--and against the Soviet regime behind that military
dictatorship--clearly demonstrated to the world that America will not
conduct "business as usual" with the forces of oppression. If the events in
Poland continue to deteriorate, further measures will follow.

Now, let me also note that private American groups have taken the lead in
making January 30th a day of solidarity with the people of Poland. So, too,
the European Parliament has called for March 21st to be an international
day of support for Afghanistan. Well, I urge all peace-loving peoples to
join together on those days, to raise their voices, to speak and pray for
freedom.

Meanwhile, we're working for reduction of arms and military activities, as
I announced in my address to the Nation last November 18th. We have
proposed to the Soviet Union a far-reaching agenda for mutual reduction of
military forces and have already initiated negotiations with them in Geneva
on intermediate-range nuclear forces. In those talks it is essential that
we negotiate from a position of strength. There must be a real incentive
for the Soviets to take these talks seriously. This requires that we
rebuild our defenses.

In the last decade, while we sought the moderation of Soviet power through
a process of restraint and accommodation, the Soviets engaged in an
unrelenting buildup of their military forces. The protection of our
national security has required that we undertake a substantial program to
enhance our military forces.

We have not neglected to strengthen our traditional alliances in Europe and
Asia, or to develop key relationships with our partners in the Middle East
and other countries. Building a more peaceful world requires a sound
strategy and the national resolve to back it up. When radical forces
threaten our friends, when economic misfortune creates conditions of
instability, when strategically vital parts of the world fall under the
shadow of Soviet power, our response can make the difference between
peaceful change or disorder and violence. That's why we've laid such stress
not only on our own defense but on our vital foreign assistance program.
Your recent passage of the Foreign Assistance Act sent a signal to the
world that America will not shrink from making the investments necessary
for both peace and security. Our foreign policy must be rooted in realism,
not naivete or self-delusion.

A recognition of what the Soviet empire is about is the starting point.
Winston Churchill, in negotiating with the Soviets, observed that they
respect only strength and resolve in their dealings with other nations.
That's why we've moved to reconstruct our national defenses. We intend to
keep the peace. We will also keep our freedom.

We have made pledges of a new frankness in our public statements and
worldwide broadcasts. In the face of a climate of falsehood and
misinformation, we've promised the world a season of truth--the truth of
our great civilized ideas: individual liberty, representative government,
the rule of law under God. We've never needed walls or minefields or barbed
wire to keep our people in. Nor do we declare martial law to keep our
people from voting for the kind of government they want.

Yes, we have our problems; yes, we're in a time of recession. And it's
true, there's no quick fix, as I said, to instantly end the tragic pain of
unemployment. But we will end it. The process has already begun, and we'll
see its effect as the year goes on.

We speak with pride and admiration of that little band of Americans who
overcame insuperable odds to set this nation on course 200 years ago. But
our glory didn't end with them. Americans ever since have emulated their
deeds.

We don't have to turn to our history books for heroes. They're all around
us. One who sits among you here tonight epitomized that heroism at the end
of the longest imprisonment ever inflicted on men of our Armed Forces. Who
will ever forget that night when we waited for television to bring us the
scene of that first plane landing at Clark Field in the Philippines,
bringing our POW's home? The plane door opened and Jeremiah Denton came
slowly down the ramp. He caught sight of our flag, saluted it, said, "God
bless America," and then thanked us for bringing him home.

Just 2 weeks ago, in the midst of a terrible tragedy on the Potomac, we saw
again the spirit of American heroism at its finest--the heroism of
dedicated rescue workers saving crash victims from icy waters. And we saw
the heroism of one of our young government employees, Lenny Skutnik, who,
when he saw a woman lose her grip on the helicopter line, dived into the
water and dragged her to safety.

And then there are countless, quiet, everyday heroes of American who
sacrifice long and hard so their children will know a better life than
they've known; church and civic volunteers who help to feed, clothe, nurse,
and teach the needy; millions who've made our nation and our nation's
destiny so very special--unsung heroes who may not have realized their own
dreams themselves but then who reinvest those dreams in their children.
Don't let anyone tell you that America's best days are behind her, that the
American spirit has been vanquished. We've seen it triumph too often in our
lives to stop believing in it now.

A hundred and twenty years ago, the greatest of all our Presidents
delivered his second State of the Union message in this Chamber. "We cannot
escape history," Abraham Lincoln warned. "We of this Congress and this
administration will be remembered in spite of ourselves." The "trial
through which we pass will light us down, in honor or dishonor, to the
latest (last) generation."

Well, that President and that Congress did not fail the American people.
Together they weathered the storm and preserved the Union. Let it be said
of us that we, too, did not fail; that we, too, worked together to bring
America through difficult times. Let us so conduct ourselves that two
centuries from now, another Congress and another President, meeting in this
Chamber as we are meeting, will speak of us with pride, saying that we met
the test and preserved for them in their day the sacred flame of
liberty--this last, best hope of man on Earth.

God bless you, and thank you.

NOTE: The President spoke at 9 p.m. in the House Chamber at the Capitol.
He was introduced by Thomas P. O'Neill, Jr., Speaker of the House of
Representatives. The address was broadcast live on nationwide radio
and television.

***

State of the Union Address
Ronald Reagan
January 25, 1983

Mr. Speaker, Mr. President, distinguished Members of the Congress, honored
guests, and fellow citizens:

This solemn occasion marks the 196th time that a President of the United
States has reported on the State of the Union since George Washington first
did so in 1790. That's a lot of reports, but there's no shortage of new
things to say about the State of the Union. The very key to our success has
been our ability, foremost among nations, to preserve our lasting values by
making change work for us rather than against us.

I would like to talk with you this evening about what we can do
together--not as Republicans and Democrats, but as Americans--to make
tomorrow's America happy and prosperous at home, strong and respected
abroad, and at peace in the world.

As we gather here tonight, the state of our Union is strong, but our
economy is troubled. For too many of our fellow citizens--farmers, steel and
auto workers, lumbermen, black teenagers, working mothers--this is a painful
period. We must all do everything in our power to bring their ordeal to an
end. It has fallen to us, in our time, to undo damage that was a long time
in the making, and to begin the hard but necessary task of building a
better future for ourselves and our children.

We have a long way to go, but thanks to the courage, patience, and strength
of our people, America is on the mend.

But let me give you just one important reason why I believe this--it
involves many members of this body.

Just 10 days ago, after months of debate and deadlock, the bipartisan
Commission on Social Security accomplished the seemingly impossible. Social
security, as some of us had warned for so long, faced disaster. I, myself,
have been talking about this problem for almost 30 years. As 1983 began,
the system stood on the brink of bankruptcy, a double victim of our
economic ills. First, a decade of rampant inflation drained its reserves as
we tried to protect beneficiaries from the spiraling cost of living. Then
the recession and the sudden end of inflation withered the expanding wage
base and increasing revenues the system needs to support the 36 million
Americans who depend on it.

When the Speaker of the House, the Senate majority leader, and I performed
the bipartisan--or formed the bipartisan Commission on Social Security,
pundits and experts predicted that party divisions and conflicting
interests would prevent the Commission from agreeing on a plan to save
social security. Well, sometimes, even here in Washington, the cynics are
wrong. Through compromise and cooperation, the members of the Commission
overcame their differences and achieved a fair, workable plan. They proved
that, when it comes to the national welfare, Americans can still pull
together for the common good.

Tonight, I'm especially pleased to join with the Speaker and the Senate
majority leader in urging the Congress to enact this plan by Easter.

There are elements in it, of course, that none of us prefers, but taken
together it performs a package that all of us can support. It asks for some
sacrifice by all--the self-employed, beneficiaries, workers, government
employees, and the better-off among the retired--but it imposes an undue
burden on none. And, in supporting it, we keep an important pledge to the
American people: The integrity of the social security system will be
preserved, and no one's payments will be reduced.

The Commission's plan will do the job; indeed, it must do the job. We owe
it to today's older Americans and today's younger workers. So, before we go
any further, I ask you to join with me in saluting the members of the
Commission who are here tonight and Senate Majority Leader Howard Baker and
Speaker Tip O'Neill for a job well done. I hope and pray the bipartisan
spirit that guided you in this endeavor will inspire all of us as we face
the challenges of the year ahead.

Nearly half a century ago, in this Chamber, another American President,
Franklin Delano Roosevelt, in his second State of the Union message, urged
America to look to the future, to meet the challenge of change and the need
for leadership that looks forward, not backward.

"Throughout the world," he said, "change is the order of the day. In every
nation economic problems long in the making have brought crises to (of)
many kinds for which the masters of old practice and theory were
unprepared." He also reminded us that "the future lies with those wise
political leaders who realize that the great public is interested more in
Government than in politics."

So, let us, in these next 2 years--men and women of both parties, every
political shade--concentrate on the long-range, bipartisan responsibilities
of government, not the short-range or short-term temptations of partisan
politics.

The problems we inherited were far worse than most inside and out of
government had expected; the recession was deeper than most inside and out
of government had predicted. Curing those problems has taken more time and
a higher toll than any of us wanted. Unemployment is far too high.
Projected Federal spending--if government refuses to tighten its own
belt--will also be far too high and could weaken and shorten the economic
recovery now underway.

This recovery will bring with it a revival of economic confidence and
spending for consumer items and capital goods--the stimulus we need to
restart our stalled economic engines. The American people have already
stepped up their rate of saving, assuring that the funds needed to
modernize our factories and improve our technology will once again flow to
business and industry.

The inflationary expectations that led to a 21 1/2-percent interest prime
rate and soaring mortgage rates 2 years ago are now reduced by almost half.
Leaders have started to realize that double-digit inflation is no longer a
way of life. I misspoke there. I should have said "lenders."

So, interest rates have tumbled, paving the way for recovery in vital
industries like housing and autos.

The early evidence of that recovery has started coming in. Housing starts
for the fourth quarter of 1982 were up 45 percent from a year ago, and
housing permits, a sure indicator of future growth, were up a whopping 60
percent.

We're witnessing an upsurge of productivity and impressive evidence that
American industry will once again become competitive in markets at home and
abroad, ensuring more jobs and better incomes for the Nation's work force.
But our confidence must also be tempered by realism and patience. Quick
fixes and artificial stimulants repeatedly applied over decades are what
brought us the inflationary disorders that we've now paid such a heavy
price to cure.

The permanent recovery in employment, production, and investment we seek
won't come in a sharp, short spurt. It'll build carefully and steadily in
the months and years ahead. In the meantime, the challenge of government is
to identify the things that we can do now to ease the massive economic
transition for the American people.

The Federal budget is both a symptom and a cause of our economic problems.
Unless we reduce the dangerous growth rate in government spending, we could
face the prospect of sluggish economic growth into the indefinite future.
Failure to cope with this problem now could mean as much as a trillion
dollars more in national debt in the next 4 years alone. That would average
$4,300 in additional debt for every man, woman, child, and baby in our
nation.

To assure a sustained recovery, we must continue getting runaway spending
under control to bring those deficits down. If we don't, the recovery will
be too short, unemployment will remain too high, and we will leave an
unconscionable burden of national debt for our children. That we must not
do.

Let's be clear about where the deficit problem comes from. Contrary to the
drumbeat we've been hearing for the last few months, the deficits we face
are not rooted in defense spending. Taken as a percentage of the gross
national product, our defense spending happens to be only about four-fifths
of what it was in 1970. Nor is the deficit, as some would have it, rooted
in tax cuts. Even with our tax cuts, taxes as a fraction of gross national
product remain about the same as they were in 1970. The fact is, our
deficits come from the uncontrolled growth of the budget for domestic
spending.

During the 1970's, the share of our national income devoted to this
domestic spending increased by more than 60 percent, from 10 cents out of
every dollar produced by the American people to 16 cents. In spite of all
our economies and efficiencies, and without adding any new programs, basic,
necessary domestic spending provided for in this year's budget will grow to
almost a trillion dollars over the next 5 years.

The deficit problem is a clear and present danger to the basic health of
our Republic. We need a plan to overcome this danger--a plan based on these
principles. It must be bipartisan. Conquering the deficits and putting the
Government's house in order will require the best effort of all of us. It
must be fair. Just as all will share in the benefits that will come from
recovery, all would share fairly in the burden of transition. It must be
prudent. The strength of our national defense must be restored so that we
can pursue prosperity and peace and freedom while maintaining our
commitment to the truly needy. And finally, it must be realistic. We can't
rely on hope alone.

With these guiding principles in mind, let me outline a four-part plan to
increase economic growth and reduce deficits.

First, in my budget message, I will recommend a Federal spending freeze. I
know this is strong medicine, but so far, we have only cut the rate of
increase in Federal spending. The Government has continued to spend more
money each year, though not as much more as it did in the past. Taken as a
whole, the budget I'm proposing for the fiscal year will increase no more
than the rate of inflation. In other words, the Federal Government will
hold the line on real spending. Now, that's far less than many American
families have had to do in these difficult times.

I will request that the proposed 6-month freeze in cost-of-living
adjustments recommended by the bipartisan Social Security Commission be
applied to other government-related retirement programs. I will, also,
propose a 1-year freeze on a broad range of domestic spending programs, and
for Federal civilian and military pay and pension programs. And let me say
right here, I'm sorry, with regard to the military, in asking that of them,
because for so many years they have been so far behind and so low in reward
for what the men and women in uniform are doing. But I'm sure they will
understand that this must be across the board and fair.

Second, I will ask the Congress to adopt specific measures to control the
growth of the so-called uncontrollable spending programs. These are the
automatic spending programs, such as food stamps, that cannot be simply
frozen and that have grown by over 400 percent since 1970. They are the
largest single cause of the built-in or structural deficit problem. Our
standard here will be fairness, ensuring that the taxpayers' hard-earned
dollars go only to the truly needy; that none of them are turned away, but
that fraud and waste are stamped out. And I'm sorry to say, there's a lot
of it out there. In the food stamp program alone, last year, we identified
almost $1.1 billion in overpayments. The taxpayers aren't the only victims
of this kind of abuse. The truly needy suffer as funds intended for them
are taken not by the needy, but by the greedy. For everyone's sake, we must
put an end to such waste and corruption.

Third, I will adjust our program to restore America's defenses by proposing
$55 billion in defense savings over the next 5 years. These are savings
recommended to me by the Secretary of Defense, who has assured me they can
be safely achieved and will not diminish our ability to negotiate arms
reductions or endanger America's security. We will not gamble with our
national survival.

And fourth, because we must ensure reduction and eventual elimination of
deficits over the next several years, I will propose a standby tax, limited
to no more than 1 percent of the gross national product, to start in fiscal
1986. It would last no more than 3 years, and it would start only if the
Congress has first approved our spending freeze and budget control program.
And there are several other conditions also that must be met, all of them
in order for this program to be triggered.

Now, you could say that this is an insurance policy for the future, a
remedy that will be at hand if needed but only resorted to if absolutely
necessary. In the meantime, we'll continue to study ways to simplify the
tax code and make it more fair for all Americans. This is a goal that every
American who's ever struggled with a tax form can understand.

At the same time, however, I will oppose any efforts to undo the basic tax
reforms that we've already enacted, including the 10-percent tax break
coming to taxpayers this July and the tax indexing which will protect all
Americans from inflationary bracket creep in the years ahead.

Now, I realize that this four-part plan is easier to describe than it will
be to enact. But the looming deficits that hang over us and over America's
future must be reduced. The path I've outlined is fair, balanced, and
realistic. If enacted, it will ensure a steady decline in deficits, aiming
toward a balanced budget by the end of the decade. It's the only path that
will lead to a strong, sustained recovery. Let us follow that path
together.

No domestic challenge is more crucial than providing stable, permanent jobs
for all Americans who want to work. The recovery program will provide jobs
for most, but others will need special help and training for new skills.
Shortly, I will submit to the Congress the Employment Act of 1983, designed
to get at the special problems of the long-term unemployed, as well as
young people trying to enter the job market. I'll propose extending
unemployment benefits, including special incentives to employers who hire
the long-term unemployed, providing programs for displaced workers, and
helping federally funded and State-administered unemployment insurance
programs provide workers with training and relocation assistance. Finally,
our proposal will include new incentives for summer youth employment to
help young people get a start in the job market.

We must offer both short-term help and long-term hope for our unemployed. I
hope we can work together on this. I hope we can work together as we did
last year in enacting the landmark Job Training Partnership Act. Regulatory
reform legislation, a responsible clean air act, and passage of enterprise
zone legislation will also create new incentives for jobs and opportunity.

One of out of every five jobs in our country depends on trade. So, I will
propose a broader strategy in the field of international trade--one that
increases the openness of our trading system and is fairer to America's
farmers and workers in the world marketplace. We must have adequate export
financing to sell American products overseas. I will ask for new
negotiating authority to remove barriers and to get more of our products
into foreign markets. We must strengthen the organization of our trade
agencies and make changes in our domestic laws and international trade
policy to promote free trade and the increased flow of American goods,
services, and investments.

Our trade position can also be improved by making our port system more
efficient. Better, more active harbors translate into stable jobs in our
coalfields, railroads, trucking industry, and ports. After 2 years of
debate, it's time for us to get together and enact a port modernization
bill.

Education, training, and retraining are fundamental to our success as are
research and development and productivity. Labor, management, and
government at all levels can and must participate in improving these tools
of growth. Tax policy, regulatory practices, and government programs all
need constant reevaluation in terms of our competitiveness. Every American
has a role and a stake in international trade.

We Americans are still the technological leaders in most fields. We must
keep that edge, and to do so we need to begin renewing the basics--starting
with our educational system. While we grew complacent, others have acted.
Japan, with a population only about half the size of ours, graduates from
its universities more engineers than we do. If a child doesn't receive
adequate math and science teaching by the age of 16, he or she has lost the
chance to be a scientist or an engineer. We must join together--parents,
teachers, grass roots groups, organized labor, and the business
community--to revitalize American education by setting a standard of
excellence.

In 1983 we seek four major education goals: a quality education initiative
to encourage a substantial upgrading of math and science instruction
through block grants to the States; establishment of education savings
accounts that will give middle and lower-income families an incentive to
save for their children's college education and, at the same time,
encourage a real increase in savings for economic growth; passage of
tuition tax credits for parents who want to send their children to private
or religiously affiliated schools; a constitutional amendment to permit
voluntary school prayer. God should never have been expelled from America's
classrooms in the first place.

Our commitment to fairness means that we must assure legal and economic
equity for women, and eliminate, once and for all, all traces of unjust
discrimination against women from the United States Code. We will not
tolerate wage discrimination based on sex, and we intend to strengthen
enforcement of child support laws to ensure that single parents, most of
whom are women, do not suffer unfair financial hardship. We will also take
action to remedy inequities in pensions. These initiatives will be joined
by others to continue our efforts to promote equity for women.

Also in the area of fairness and equity, we will ask for extension of the
Civil Rights Commission, which is due to expire this year. The Commission
is an important part of the ongoing struggle for justice in America, and we
strongly support its reauthorization. Effective enforcement of our nation's
fair housing laws is also essential to ensuring equal opportunity. In the
year ahead, we'll work to strengthen enforcement of fair housing laws for
all Americans.

The time has also come for major reform of our criminal justice statutes
and acceleration of the drive against organized crime and drug trafficking.
It's high time that we make our cities safe again. This administration
hereby declares an all-out war on big-time organized crime and the drug
racketeers who are poisoning our young people. We will also implement
recommendations of our Task Force on Victims of Crime, which will report to
me this week.

American agriculture, the envy of the world, has become the victim of its
own successes. With one farmer now producing enough food to feed himself
and 77 other people, America is confronted with record surplus crops and
commodity prices below the cost of production. We must strive, through
innovations like the payment-in-kind crop swap approach and an aggressive
export policy, to restore health and vitality to rural America. Meanwhile,
I have instructed the Department of Agriculture to work individually with
farmers with debt problems to help them through these tough times.

Over the past year, our Task Force on Private Sector Initiatives has
successfully forged a working partnership involving leaders of business,
labor, education, and government to address the training needs of American
workers. Thanks to the Task Force, private sector initiatives are now
underway in all 50 States of the Union, and thousands of working people
have been helped in making the shift from dead-end jobs and low-demand
skills to the growth areas of high technology and the service economy.
Additionally, a major effort will be focused on encouraging the expansion
of private community child care. The new advisory council on private sector
initiatives will carry on and extend this vital work of encouraging private
initiative in 1983.

In the coming year, we will also act to improve the quality of life for
Americans by curbing the skyrocketing cost of health care that is becoming
an unbearable financial burden for so many. And we will submit legislation
to provide catastrophic illness insurance coverage for older Americans.

I will also shortly submit a comprehensive federalism proposal that will
continue our efforts to restore to States and local governments their roles
as dynamic laboratories of change in a creative society.

During the next several weeks, I will send to the Congress a series of
detailed proposals on these and other topics and look forward to working
with you on the development of these initiatives.

So far, now, I've concentrated mainly on the problems posed by the future.
But in almost every home and workplace in America, we're already witnessing
reason for great hope--the first flowering of the manmade miracles of high
technology, a field pioneered and still led by our country.

To many of us now, computers, silicon chips, data processing, cybernetics,
and all the other innovations of the dawning high technology age are as
mystifying as the workings of the combustion engine must have been when
that first Model T rattled down Main Street, U.S.A. But as surely as
America's pioneer spirit made us the industrial giant of the 20th century,
the same pioneer spirit today is opening up on another vast front of
opportunity, the frontier of high technology.

In conquering the frontier we cannot write off our traditional industries,
but we must develop the skills and industries that will make us a pioneer
of tomorrow. This administration is committed to keeping America the
technological leader of the world now and into the 21st century.

But let us turn briefly to the international arena. America's leadership in
the world came to us because of our own strength and because of the values
which guide us as a society: free elections, a free press, freedom of
religious choice, free trade unions, and above all, freedom for the
individual and rejection of the arbitrary power of the state. These values
are the bedrock of our strength. They unite us in a stewardship of peace
and freedom with our allies and friends in NATO, in Asia, in Latin America,
and elsewhere. They are also the values which in the recent past some among
us had begun to doubt and view with a cynical eye.

Fortunately, we and our allies have rediscovered the strength of our common
democratic values, and we're applying them as a cornerstone of a
comprehensive strategy for peace with freedom. In London last year, I
announced the commitment of the United States to developing the
infrastructure of democracy throughout the world. We intend to pursue this
democratic initiative vigorously. The future belongs not to governments and
ideologies which oppress their peoples, but to democratic systems of
self-government which encourage individual initiative and guarantee
personal freedom.

But our strategy for peace with freedom must also be based on
strength--economic strength and military strength. A strong American
economy is essential to the well-being and security of our friends and
allies. The restoration of a strong, healthy American economy has been and
remains one of the central pillars of our foreign policy. The progress I've
been able to report to you tonight will, I know, be as warmly welcomed by
the rest of the world as it is by the American people.

We must also recognize that our own economic well-being is inextricably
linked to the world economy. We export over 20 percent of our industrial
production, and 40 percent of our farmland produces for export. We will
continue to work closely with the industrialized democracies of Europe and
Japan and with the International Monetary Fund to ensure it has adequate
resources to help bring the world economy back to strong, noninflationary
growth.

As the leader of the West and as a country that has become great and rich
because of economic freedom, America must be an unrelenting advocate of
free trade. As some nations are tempted to turn to protectionism, our
strategy cannot be to follow them, but to lead the way toward freer trade.
To this end, in May of this year America will host an economic summit
meeting in Williamsburg, Virginia.

As we begin our third year, we have put in place a defense program that
redeems the neglect of the past decade. We have developed a realistic
military strategy to deter threats to peace and to protect freedom if
deterrence fails. Our Armed Forces are finally properly paid; after years
of neglect are well trained and becoming better equipped and supplied. And
the American uniform is once again worn with pride. Most of the major
systems needed for modernizing our defenses are already underway, and we
will be addressing one key system, the MX missile, in consultation with the
Congress in a few months.

America's foreign policy is once again based on bipartisanship, on realism,
strength, full partnership, in consultation with our allies, and
constructive negotiation with potential adversaries. From the Middle East
to southern Africa to Geneva, American diplomats are taking the initiative
to make peace and lower arms levels. We should be proud of our role as
peacemakers.

In the Middle East last year, the United States played the major role in
ending the tragic fighting in Lebanon and negotiated the withdrawal of the
PLO from Beirut.

Last September, I outlined principles to carry on the peace process begun
so promisingly at Camp David. All the people of the Middle East should know
that in the year ahead we will not flag in our efforts to build on that
foundation to bring them the blessings of peace.

In Central America and the Caribbean Basin, we are likewise engaged in a
partnership for peace, prosperity, and democracy. Final passage of the
remaining portions of our Caribbean Basin Initiative, which passed the
House last year, is one of this administration's top legislative priorities
for 1983.

The security and economic assistance policies of this administration in
Latin America and elsewhere are based on realism and represent a critical
investment in the future of the human race. This undertaking is a joint
responsibility of the executive and legislative branches, and I'm counting
on the cooperation and statesmanship of the Congress to help us meet this
essential foreign policy goal.

At the heart of our strategy for peace is our relationship with the Soviet
Union. The past year saw a change in Soviet leadership. We're prepared for
a positive change in Soviet-American relations. But the Soviet Union must
show by deeds as well as words a sincere commitment to respect the rights
and sovereignty of the family of nations. Responsible members of the world
community do not threaten or invade their neighbors. And they restrain
their allies from aggression.

For our part, we're vigorously pursuing arms reduction negotiations with
the Soviet Union. Supported by our allies, we've put forward draft
agreements proposing significant weapon reductions to equal and verifiable
lower levels. We insist on an equal balance of forces. And given the
overwhelming evidence of Soviet violations of international treaties
concerning chemical and biological weapons, we also insist that any
agreement we sign can and will be verifiable.

In the case of intermediate-range nuclear forces, we have proposed the
complete elimination of the entire class of land-based missiles. We're also
prepared to carefully explore serious Soviet proposals. At the same time,
let me emphasize that allied steadfastness remains a key to achieving arms
reductions.

With firmness and dedication, we'll continue to negotiate. Deep down, the
Soviets must know it's in their interest as well as ours to prevent a
wasteful arms race. And once they recognize our unshakable resolve to
maintain adequate deterrence, they will have every reason to join us in the
search for greater security and major arms reductions. When that moment
comes--and I'm confident that it will--we will have taken an important step
toward a more peaceful future for all the world's people.

A very wise man, Bernard Baruch, once said that America has never forgotten
the nobler things that brought her into being and that light her path. Our
country is a special place, because we Americans have always been
sustained, through good times and bad, by a noble vision--a vision not only
of what the world around us is today but what we as a free people can make
it be tomorrow.

We're realists; we solve our problems instead of ignoring them, no matter
how loud the chorus of despair around us. But we're also idealists, for it
was an ideal that brought our ancestors to these shores from every corner
of the world.

Right now we need both realism and idealism. Millions of our neighbors are
without work. It is up to us to see they aren't without hope. This is a
task for all of us. And may I say, Americans have rallied to this cause,
proving once again that we are the most generous people on Earth.

We who are in government must take the lead in restoring the economy. And
here all that time, I thought you were reading the paper.

The single thing--the single thing that can start the wheels of industry
turning again is further reduction of interest rates. Just another 1 or 2
points can mean tens of thousands of jobs.

Right now, with inflation as low as it is, 3.9 percent, there is room for
interest rates to come down. Only fear prevents their reduction. A lender,
as we know, must charge an interest rate that recovers the depreciated
value of the dollars loaned. And that depreciation is, of course, the
amount of inflation. Today, interest rates are based on fear--fear that
government will resort to measures, as it has in the past, that will send
inflation zooming again.

We who serve here in this Capital must erase that fear by making it
absolutely clear that we will not stop fighting inflation; that, together,
we will do only those things that will lead to lasting economic growth.

Yes, the problems confronting us are large and forbidding. And, certainly,
no one can or should minimize the plight of millions of our friends and
neighbors who are living in the bleak emptiness of unemployment. But we
must and can give them good reason to be hopeful.

Back over the years, citizens like ourselves have gathered within these
walls when our nation was threatened; sometimes when its very existence was
at stake. Always with courage and common sense, they met the crises of
their time and lived to see a stronger, better, and more prosperous
country. The present situation is no worse and, in fact, is not as bad as
some of those they faced. Time and again, they proved that there is nothing
we Americans cannot achieve as free men and women.

Yes, we still have problems--plenty of them. But it's just plain
wrong--unjust to our country and unjust to our people--to let those
problems stand in the way of the most important truth of all: America is on
the mend.

We owe it to the unfortunate to be aware of their plight and to help them
in every way we can. No one can quarrel with that. We must and do have
compassion for all the victims of this economic crisis. But the big story
about America today is the way that millions of confident, caring
people--those extraordinary "ordinary" Americans who never make the
headlines and will never be interviewed--are laying the foundation, not
just for recovery from our present problems but for a better tomorrow for
all our people.

From coast to coast, on the job and in classrooms and laboratories, at new
construction sites and in churches and community groups, neighbors are
helping neighbors. And they've already begun the building, the research,
the work, and the giving that will make our country great again.

I believe this, because I believe in them--in the strength of their hearts
and minds, in the commitment that each one of them brings to their daily
lives, be they high or humble. The challenge for us in government is to be
worthy of them--to make government a help, not a hindrance to our people in
the challenging but promising days ahead.

If we do that, if we care what our children and our children's children
will say of us, if we want them one day to be thankful for what we did here
in these temples of freedom, we will work together to make America better
for our having been here--not just in this year or this decade but in the
next century and beyond.

Thank you, and God bless you.

NOTE: The President spoke at 9:03 p.m. in the House Chamber of the Capitol.
He was introduced by Thomas P. O'Neill, Jr., Speaker of the House of
Representatives. The address was broadcast live on nationwide radio
and television.

***

State of the Union Address
Ronald Reagan
January 25, 1984

Mr. Speaker, Mr. President, distinguished Members of the Congress, honored
guests, and fellow citizens:

Once again, in keeping with time-honored tradition, I have come to report
to you on the state of the Union, and I'm pleased to report that America is
much improved, and there's good reason to believe that improvement will
continue through the days to come.

You and I have had some honest and open differences in the year past. But
they didn't keep us from joining hands in bipartisan cooperation to stop a
long decline that had drained this nation's spirit and eroded its health.
There is renewed energy and optimism throughout the land. America is back,
standing tall, looking to the eighties with courage, confidence, and hope.

The problems we're overcoming are not the heritage of one person, party, or
even one generation. It's just the tendency of government to grow, for
practices and programs to become the nearest thing to eternal life we'll
ever see on this Earth. And there's always that well-intentioned chorus of
voices saying, "With a little more power and a little more money, we could
do so much for the people." For a time we forgot the American dream isn't
one of making government bigger; it's keeping faith with the mighty spirit
of free people under God.

As we came to the decade of the eighties, we faced the worst crisis in our
postwar history. In the seventies were years of rising problems and falling
confidence. There was a feeling government had grown beyond the consent of
the governed. Families felt helpless in the face of mounting inflation and
the indignity of taxes that reduced reward for hard work, thrift, and
risktaking. All this was overlaid by an evergrowing web of rules and
regulations.

On the international scene, we had an uncomfortable feeling that we'd lost
the respect of friend and foe. Some questioned whether we had the will to
defend peace and freedom. But America is too great for small dreams. There
was a hunger in the land for a spiritual revival; if you will, a crusade
for renewal. The American people said: Let us look to the future with
confidence, both at home and abroad. Let us give freedom a chance.

Americans were ready to make a new beginning, and together we have done it.
We're confronting our problems one by one. Hope is alive tonight for
millions of young families and senior citizens set free from unfair tax
increases and crushing inflation. Inflation has been beaten down from 12.4
to 3.2 percent, and that's a great victory for all the people. The prime
rate has been cut almost in half, and we must work together to bring it
down even more.

Together, we passed the first across-the-board tax reduction for everyone
since the Kennedy tax cuts. Next year, tax rates will be indexed so
inflation can't push people into higher brackets when they get
cost-of-living pay raises. Government must never again use inflation to
profit at the people's expense.

Today a working family earning $25,000 has $1,100 more in purchasing power
than if tax and inflation rates were still at the 1980 levels. Real
after-tax income increased 5 percent last year. And economic deregulation
of key industries like transportation has offered more chances--or
choices, I should say, to consumers and new changes--or chances for
entrepreneurs and protecting safety. Tonight, we can report and be proud of
one of the best recoveries in decades. Send away the handwringers and the
doubting Thomases. Hope is reborn for couples dreaming of owning homes and
for risktakers with vision to create tomorrow's opportunities.

The spirit of enterprise is sparked by the sunrise industries of high-tech
and by small business people with big ideas--people like Barbara Proctor,
who rose from a ghetto to build a multimillion-dollar advertising agency in
Chicago; Carlos Perez, a Cuban refugee, who turned $27 and a dream into a
successful importing business in Coral Gables, Florida.

People like these are heroes for the eighties. They helped 4 million
Americans find jobs in 1983. More people are drawing paychecks tonight than
ever before. And Congress helps--or progress helps everyone--well, Congress
does too----everyone. In 1983 women filled 73 percent of all the new jobs
in managerial, professional, and technical fields.

But we know that many of our fellow countrymen are still out of work,
wondering what will come of their hopes and dreams. Can we love America and
not reach out to tell them: You are not forgotten; we will not rest until
each of you can reach as high as your God-given talents will take you.

The heart of America is strong; it's good and true. The cynics were wrong;
America never was a sick society. We're seeing rededication to bedrock
values of faith, family, work, neighborhood, peace, and freedom--values
that help bring us together as one people, from the youngest child to the
most senior citizen.

The Congress deserves America's thanks for helping us restore pride and
credibility to our military. And I hope that you're as proud as I am of the
young men and women in uniform who have volunteered to man the ramparts in
defense of freedom and whose dedication, valor, and skill increases so much
our chance of living in a world at peace.

People everywhere hunger for peace and a better life. The tide of the
future is a freedom tide, and our struggle for democracy cannot and will
not be denied. This nation champions peace that enshrines liberty,
democratic rights, and dignity for every individual. America's new
strength, confidence, and purpose are carrying hope and opportunity far
from our shores. A world economic recovery is underway. It began here.

We've journeyed far, but we have much farther to go. Franklin Roosevelt
told us 50 years ago this month: "Civilization can not go back;
civilization must not stand still. We have undertaken new methods. It is
our task to perfect, to improve, to alter when necessary, but in all cases
to go forward."

It's time to move forward again, time for America to take freedom's next
step. Let us unite tonight behind four great goals to keep America free,
secure, and at peace in the eighties together.

We can ensure steady economic growth. We can develop America's next
frontier. We can strengthen our traditional values. And we can build a
meaningful peace to protect our loved ones and this shining star of faith
that has guided millions from tyranny to the safe harbor of freedom,
progress, and hope.

Doing these things will open wider the gates of opportunity, provide
greater security for all, with no barriers of bigotry or discrimination.

The key to a dynamic decade is vigorous economic growth, our first great
goal. We might well begin with common sense in Federal budgeting:
government spending no more than government takes in.

We must bring Federal deficits down. But how we do that makes all the
difference.

We can begin by limiting the size and scope of government. Under the
leadership of Vice President Bush, we have reduced the growth of Federal
regulations by more than 25 percent and cut well over 300 million hours of
government-required paperwork each year. This will save the public more
than $150 billion over the next 10 years.

The Grace commission has given us some 2,500 recommendations for reducing
wasteful spending, and they're being examined throughout the
administration. Federal spending growth has been cut from 17.4 percent in
1980 to less than half of that today, and we have already achieved over
$300 billion in budget savings for the period of 1982 to '86. But that's
only a little more than half of what we sought. Government is still
spending too large a percentage of the total economy.

Now, some insist that any further budget savings must be obtained by
reducing the portion spent on defense. This ignores the fact that national
defense is solely the responsibility of the Federal Government; indeed, it
is its prime responsibility. And yet defense spending is less than a third
of the total budget. During the years of President Kennedy and of the years
before that, defense was almost half the total budget. And then came
several years in which our military capability was allowed to deteriorate
to a very dangerous degree. We are just now restoring, through the
essential modernization of our conventional and strategic forces, our
capability to meet our present and future security needs. We dare not shirk
our responsibility to keep America free, secure, and at peace.

The last decade saw domestic spending surge literally out of control. But
the basis for such spending had been laid in previous years. A pattern of
overspending has been in place for half a century. As the national debt
grew, we were told not to worry, that we owed it to ourselves.

Now we know that deficits are a cause for worry. But there's a difference
of opinion as to whether taxes should be increased, spending cut, or some
of both. Fear is expressed that government borrowing to fund the deficit
could inhibit the economic recovery by taking capital needed for business
and industrial expansion. Well, I think that debate is missing an important
point. Whether government borrows or increases taxes, it will be taking the
same amount of money from the private sector, and, either way, that's too
much. Simple fairness dictates that government must not raise taxes on
families struggling to pay their bills. The root of the problem is that
government's share is more than we can afford if we're to have a sound
economy.

We must bring down the deficits to ensure continued economic growth. In the
budget that I will submit on February 1st, I will recommend measures that
will reduce the deficit over the next 5 years. Many of these will be
unfinished business from last year's budget.

Some could be enacted quickly if we could join in a serious effort to
address this problem. I spoke today with Speaker of the House O'Neill,
Senate Majority Leader Baker, Senate Minority Leader Byrd, and House
Minority Leader Michel. I asked them if they would designate congressional
representatives to meet with representatives of the administration to try
to reach prompt agreement on a bipartisan deficit reduction plan. I know it
would take a long, hard struggle to agree on a full-scale plan. So, what I
have proposed is that we first see if we can agree on a down payment.

Now, I believe there is basis for such an agreement, one that could reduce
the deficits by about a hundred billion dollars over the next 3 years. We
could focus on some of the less contentious spending cuts that are still
pending before the Congress. These could be combined with measures to close
certain tax loopholes, measures that the Treasury Department has previously
said to be worthy of support. In addition, we could examine the possibility
of achieving further outlay savings based on the work of the Grace
commission.

If the congressional leadership is willing, my representatives will be
prepared to meet with theirs at the earliest possible time. I would hope
the leadership might agree on an expedited timetable in which to develop
and enact that down payment.

But a down payment alone is not enough to break us out of the deficit
problem. It could help us start on the right path. Yet, we must do more.
So, I propose that we begin exploring how together we can make structural
reforms to curb the built-in growth of spending.

I also propose improvements in the budgeting process. Some 43 of our 50
States grant their Governors the right to veto individual items in
appropriation bills without having to veto the entire bill. California is
one of those 43 States. As Governor, I found this line-item veto was a
powerful tool against wasteful or extravagant spending. It works in 43
States. Let's put it to work in Washington for all the people.

It would be most effective if done by constitutional amendment. The
majority of Americans approve of such an amendment, just as they and I
approve of an amendment mandating a balanced Federal budget. Many States
also have this protection in their constitutions.

To talk of meeting the present situation by increasing taxes is a Band-Aid
solution which does nothing to cure an illness that's been coming on for
half a century--to say nothing of the fact that it poses a real threat to
economic recovery. Let's remember that a substantial amount of income tax
is presently owed and not paid by people in the underground economy. It
would be immoral to make those who are paying taxes pay more to compensate
for those who aren't paying their share.

There's a better way. Let us go forward with an historic reform for
fairness, simplicity, and incentives for growth. I am asking Secretary Don
Regan for a plan for action to simplify the entire tax code, so all
taxpayers, big and small, are treated more fairly. And I believe such a
plan could result in that underground economy being brought into the
sunlight of honest tax compliance. And it could make the tax base broader,
so personal tax rates could come down, not go up. I've asked that specific
recommendations, consistent with those objectives, be presented to me by
December 1984.

Our second great goal is to build on America's pioneer spirit--I said
something funny? I said America's next frontier--and that's to develop that
frontier. A sparkling economy spurs initiatives, sunrise industries, and
makes older ones more competitive.

Nowhere is this more important than our next frontier: space. Nowhere do we
so effectively demonstrate our technological leadership and ability to make
life better on Earth. The Space Age is barely a quarter of a century old.
But already we've pushed civilization forward with our advances in science
and technology. Opportunities and jobs will multiply as we cross new
thresholds of knowledge and reach deeper into the unknown.

Our progress in space--taking giant steps for all mankind--is a tribute to
American teamwork and excellence. Our finest minds in government, industry,
and academia have all pulled together. And we can be proud to say: We are
first; we are the best; and we are so because we're free.

America has always been greatest when we dared to be great. We can reach
for greatness again. We can follow our dreams to distant stars, living and
working in space for peaceful, economic, and scientific gain. Tonight, I am
directing NASA to develop a permanently manned space station and to do it
within a decade.

A space station will permit quantum leaps in our research in science,
communications, in metals, and in lifesaving medicines which could be
manufactured only in space. We want our friends to help us meet these
challenges and share in their benefits. NASA will invite other countries to
participate so we can strengthen peace, build prosperity, and expand
freedom for all who share our goals.

Just as the oceans opened up a new world for clipper ships and Yankee
traders, space holds enormous potential for commerce today. The market for
space transportation could surpass our capacity to develop it. Companies
interested in putting payloads into space must have ready access to private
sector launch services. The Department of Transportation will help an
expendable launch services industry to get off the ground. We'll soon
implement a number of executive initiatives, develop proposals to ease
regulatory constraints, and, with NASA's help, promote private sector
investment in space.

And as we develop the frontier of space, let us remember our responsibility
to preserve our older resources here on Earth. Preservation of our
environment is not a liberal or conservative challenge, it's common sense.

Though this is a time of budget constraints, I have requested for EPA one
of the largest percentage budget increases of any agency. We will begin the
long, necessary effort to clean up a productive recreational area and a
special national resource--the Chesapeake Bay.

To reduce the threat posed by abandoned hazardous waste dumps, EPA will
spend $410 million. And I will request a supplemental increase of 50
million. And because the Superfund law expires in 1985, I've asked Bill
Ruckelshaus to develop a proposal for its extension so there'll be
additional time to complete this important task.

On the question of acid rain, which concerns people in many areas of the
United States and Canada, I'm proposing a research program that doubles our
current funding. And we'll take additional action to restore our lakes and
develop new technology to reduce pollution that causes acid rain.

We have greatly improved the conditions of our natural resources. We'll ask
the Congress for $157 million beginning in 1985 to acquire new park and
conservation lands. The Department of the Interior will encourage careful,
selective exploration and production on our vital resources in an Exclusive
Economic Zone within the 200-mile limit off our coasts--but with strict
adherence to environmental laws and with fuller State and public
participation.

But our most precious resources, our greatest hope for the future, are the
minds and hearts of our people, especially our children. We can help them
build tomorrow by strengthening our community of shared values. This must
be our third great goal. For us, faith, work, family, neighborhood,
freedom, and peace are not just words; they're expressions of what America
means, definitions of what makes us a good and loving people.

Families stand at the center of our society. And every family has a
personal stake in promoting excellence in education. Excellence does not
begin in Washington. A 600-percent increase in Federal spending on
education between 1960 and 1980 was accompanied by a steady decline in
Scholastic Aptitude Test scores. Excellence must begin in our homes and
neighborhood schools, where it's the responsibility of every parent and
teacher and the right of every child.

Our children come first, and that's why I established a bipartisan National
Commission on Excellence in Education, to help us chart a commonsense
course for better education. And already, communities are implementing the
Commission's recommendations. Schools are reporting progress in math and
reading skills. But we must do more to restore discipline to schools; and
we must encourage the teaching of new basics, reward teachers of merit,
enforce tougher standards, and put our parents back in charge.

I will continue to press for tuition tax credits to expand opportunities
for families and to soften the double payment for those paying public
school taxes and private school tuition. Our proposal would target
assistance to low- and middle-income families. Just as more incentives are
needed within our schools, greater competition is needed among our schools.
Without standards and competition, there can be no champions, no records
broken, no excellence in education or any other walk of life.

And while I'm on this subject, each day your Members observe a 200-year-old
tradition meant to signify America is one nation under God. I must ask: If
you can begin your day with a member of the clergy standing right here
leading you in prayer, then why can't freedom to acknowledge God be enjoyed
again by children in every schoolroom across this land?

America was founded by people who believed that God was their rock of
safety. He is ours. I recognize we must be cautious in claiming that God is
on our side, but I think it's all right to keep asking if we're on His
side.

During our first 3 years, we have joined bipartisan efforts to restore
protection of the law to unborn children. Now, I know this issue is very
controversial. But unless and until it can be proven that an unborn child
is not a living human being, can we justify assuming without proof that it
isn't? No one has yet offered such proof; indeed, all the evidence is to
the contrary. We should rise above bitterness and reproach, and if
Americans could come together in a spirit of understanding and helping,
then we could find positive solutions to the tragedy of abortion.

Economic recovery, better education, rededication to values, all show the
spirit of renewal gaining the upper hand. And all will improve family life
in the eighties. But families need more. They need assurance that they and
their loved ones can walk the streets of America without being afraid.
Parents need to know their children will not be victims of child
pornography and abduction. This year we will intensify our drive against
these and other horrible crimes like sexual abuse and family violence.

Already our efforts to crack down on career criminals, organized crime,
drugpushers, and to enforce tougher sentences and paroles are having
effect. In 1982 the crime rate dropped by 4.3 percent, the biggest decline
since 1972. Protecting victims is just as important as safeguarding the
rights of defendants.

Opportunities for all Americans will increase if we move forward in fair
housing and work to ensure women's rights, provide for equitable treatment
in pension benefits and Individual Retirement Accounts, facilitate child
care, and enforce delinquent parent support payments.

It's not just the home but the workplace and community that sustain our
values and shape our future. So, I ask your help in assisting more
communities to break the bondage of dependency. Help us to free enterprise
by permitting debate and voting "yes" on our proposal for enterprise zones
in America. This has been before you for 2 years. Its passage can help
high-unemployment areas by creating jobs and restoring neighborhoods.

A society bursting with opportunities, reaching for its future with
confidence, sustained by faith, fair play, and a conviction that good and
courageous people will flourish when they're free--these are the secrets of
a strong and prosperous America at peace with itself and the world.

A lasting and meaningful peace is our fourth great goal. It is our highest
aspiration. And our record is clear: Americans resort to force only when we
must. We have never been aggressors. We have always struggled to defend
freedom and democracy.

We have no territorial ambitions. We occupy no countries. We build no walls
to lock people in. Americans build the future. And our vision of a better
life for farmers, merchants, and working people, from the Americas to Asia,
begins with a simple premise: The future is best decided by ballots, not
bullets.

Governments which rest upon the consent of the governed do not wage war on
their neighbors. Only when people are given a personal stake in deciding
their own destiny, benefiting from their own risks, do they create
societies that are prosperous, progressive, and free. Tonight, it is
democracies that offer hope by feeding the hungry, prolonging life, and
eliminating drudgery.

When it comes to keeping America strong, free, and at peace, there should
be no Republicans or Democrats, just patriotic Americans. We can decide the
tough issues not by who is right, but by what is right.

Together, we can continue to advance our agenda for peace. We can establish
a more stable basis for peaceful relations with the Soviet Union;
strengthen allied relations across the board; achieve real and equitable
reductions in the levels of nuclear arms; reinforce our peacemaking efforts
in the Middle East, Central America, and southern Africa; or assist
developing countries, particularly our neighbors in the Western Hemisphere;
and assist in the development of democratic institutions throughout the
world.

The wisdom of our bipartisan cooperation was seen in the work of the
Scowcroft commission, which strengthened our ability to deter war and
protect peace. In that same spirit, I urge you to move forward with the
Henry Jackson plan to implement the recommendations of the Bipartisan
Commission on Central America.

Your joint resolution on the multinational peacekeeping force in Lebanon is
also serving the cause of peace. We are making progress in Lebanon. For
nearly 10 years, the Lebanese have lived from tragedy to tragedy with no
hope for their future. Now the multinational peacekeeping force and our
marines are helping them break their cycle of despair. There is hope for a
free, independent, and sovereign Lebanon. We must have the courage to give
peace a chance. And we must not be driven from our objectives for peace in
Lebanon by state-sponsored terrorism. We have seen this ugly specter in
Beirut, Kuwait, and Rangoon. It demands international attention. I will
forward shortly legislative proposals to help combat terrorism. And I will
be seeking support from our allies for concerted action.

Our NATO alliance is strong. 1983 was a banner year for political courage.
And we have strengthened our partnerships and our friendships in the Far
East. We're committed to dialog, deterrence, and promoting prosperity.
We'll work with our trading partners for a new round of negotiations in
support of freer world trade, greater competition, and more open markets.

A rebirth of bipartisan cooperation, of economic growth, and military
deterrence, and a growing spirit of unity among our people at home and our
allies abroad underline a fundamental and far-reaching change: The United
States is safer, stronger, and more secure in 1984 than before. We can now
move with confidence to seize the opportunities for peace, and we will.

Tonight, I want to speak to the people of the Soviet Union, to tell them
it's true that our governments have had serious differences, but our sons
and daughters have never fought each other in war. And if we Americans have
our way, they never will.

People of the Soviet Union, there is only one sane policy, for your country
and mine, to preserve our civilization in this modern age: A nuclear war
cannot be won and must never be fought. The only value in our two nations
possessing nuclear weapons is to make sure they will never be used. But
then would it not be better to do away with them entirely?

People of the Soviet, President Dwight Eisenhower, who fought by your side
in World War II, said the essential struggle "is not merely man against man
or nation against nation. It is man against war." Americans are people of
peace. If your government wants peace, there will be peace. We can come
together in faith and friendship to build a safer and far better world for
our children and our children's children. And the whole world will rejoice.
That is my message to you.

Some days when life seems hard and we reach out for values to sustain us or
a friend to help us, we find a person who reminds us what it means to be
Americans.

Sergeant Stephen Trujillo, a medic in the 2d Ranger Battalion, 75th
Infantry, was in the first helicopter to land at the compound held by Cuban
forces in Grenada. He saw three other helicopters crash. Despite the
imminent explosion of the burning aircraft, he never hesitated. He ran
across 25 yards of open terrain through enemy fire to rescue wounded
soldiers. He directed two other medics, administered first aid, and
returned again and again to the crash site to carry his wounded friends to
safety.

Sergeant Trujillo, you and your fellow service men and women not only saved
innocent lives; you set a nation free. You inspire us as a force for
freedom, not for despotism; and, yes, for peace, not conquest. God bless
you.

And then there are unsung heroes: single parents, couples, church and civic
volunteers. Their hearts carry without complaint the pains of family and
community problems. They soothe our sorrow, heal our wounds, calm our
fears, and share our joy.

A person like Father Ritter is always there. His Covenant House programs in
New York and Houston provide shelter and help to thousands of frightened
and abused children each year. The same is true of Dr. Charles Carson.
Paralyzed in a plane crash, he still believed nothing is impossible. Today
in Minnesota, he works 80 hours a week without pay, helping pioneer the
field of computer-controlled walking. He has given hope to 500,000
paralyzed Americans that some day they may walk again.

How can we not believe in the greatness of America? How can we not do what
is right and needed to preserve this last best hope of man on Earth? After
all our struggles to restore America, to revive confidence in our country,
hope for our future, after all our hard-won victories earned through the
patience and courage of every citizen, we cannot, must not, and will not
turn back. We will finish our job. How could we do less? We're Americans.

Carl Sandburg said, "I see America not in the setting sun of a black night
of despair... I see America in the crimson light of a rising sun fresh
from the burning, creative hand of God... I see great days ahead for men
and women of will and vision."

I've never felt more strongly that America's best days and democracy's best
days lie ahead. We're a powerful force for good. With faith and courage, we
can perform great deeds and take freedom's next step. And we will. We will
carry on the tradition of a good and worthy people who have brought light
where there was darkness, warmth where there was cold, medicine where there
was disease, food where there was hunger, and peace where there was only
bloodshed.

Let us be sure that those who come after will say of us in our time, that
in our time we did everything that could be done. We finished the race; we
kept them free; we kept the faith.

Thank you very much. God bless you, and God bless America.

NOTE: The President spoke at 9:02 p.m. in the House Chamber of the Capitol.
He was introduced by Thomas P. O'Neill, Jr., Speaker of the House of
Representatives. The address was broadcast live on nationwide radio and
television.

***

State of the Union Address
Ronald Reagan
February 6, 1985

Mr. Speaker, Mr. President, distinguished Members of the Congress, honored
guests, and fellow citizens:

I come before you to report on the state of our Union, and I'm pleased to
report that after 4 years of united effort, the American people have
brought forth a nation renewed, stronger, freer, and more secure than
before.

Four years ago we began to change, forever I hope, our assumptions about
government and its place in our lives. Out of that change has come great
and robust growth--in our confidence, our economy, and our role in the
world.

Tonight America is stronger because of the values that we hold dear. We
believe faith and freedom must be our guiding stars, for they show us
truth, they make us brave, give us hope, and leave us wiser than we were.
Our progress began not in Washington, DC, but in the hearts of our
families, communities, workplaces, and voluntary groups which, together,
are unleashing the invincible spirit of one great nation under God.

Four years ago we said we would invigorate our economy by giving people
greater freedom and incentives to take risks and letting them keep more of
what they earned. We did what we promised, and a great industrial giant is
reborn.

Tonight we can take pride in 25 straight months of economic growth, the
strongest in 34 years; a 3-year inflation average of 3.9 percent, the
lowest in 17 years; and 7.3 million new jobs in 2 years, with more of our
citizens working than ever before.

New freedom in our lives has planted the rich seeds for future success:

For an America of wisdom that honors the family, knowing that if (as) the
family goes, so goes our civilization;

For an America of vision that sees tomorrow's dreams in the learning and
hard work we do today;

For an America of courage whose service men and women, even as we meet,
proudly stand watch on the frontiers of freedom;

For an America of compassion that opens its heart to those who cry out for
help.

We have begun well. But it's only a beginning. We're not here to
congratulate ourselves on what we have done but to challenge ourselves to
finish what has not yet been done.

We're here to speak for millions in our inner cities who long for real
jobs, safe neighborhoods, and schools that truly teach. We're here to speak
for the American farmer, the entrepreneur, and every worker in industries
fighting to modernize and compete. And, yes, we're here to stand, and
proudly so, for all who struggle to break free from totalitarianism, for
all who know in their hearts that freedom is the one true path to peace and
human happiness.

Proverbs tell us, without a vision the people perish. When asked what great
principle holds our Union together, Abraham Lincoln said: "Something in
(the) Declaration giving liberty, not alone to the people of this country,
but hope to the world for all future time."

We honor the giants of our history not by going back but forward to the
dreams their vision foresaw. My fellow citizens, this nation is poised for
greatness. The time has come to proceed toward a great new challenge--a
second American Revolution of hope and opportunity; a revolution carrying
us to new heights of progress by pushing back frontiers of knowledge and
space; a revolution of spirit that taps the soul of America, enabling us to
summon greater strength than we've ever known; and a revolution that
carries beyond our shores the golden promise of human freedom in a world of
peace.

Let us begin by challenging our conventional wisdom. There are no
constraints on the human mind, no walls around the human spirit, no
barriers to our progress except those we ourselves erect. Already, pushing
down tax rates has freed our economy to vault forward to record growth.

In Europe, they're calling it "the American Miracle." Day by day, we're
shattering accepted notions of what is possible. When I was growing up, we
failed to see how a new thing called radio would transform our marketplace.
Well, today, many have not yet seen how advances in technology are
transforming our lives.

In the late 1950's workers at the AT&T semiconductor plant in Pennsylvania
produced five transistors a day for $7.50 apiece. They now produce over a
million for less than a penny apiece.

New laser techniques could revolutionize heart bypass surgery, cut
diagnosis time for viruses linked to cancer from weeks to minutes, reduce
hospital costs dramatically, and hold out new promise for saving human
lives.

Our automobile industry has overhauled assembly lines, increased worker
productivity, and is competitive once again.

We stand on the threshold of a great ability to produce more, do more, be
more. Our economy is not getting older and weaker; it's getting younger and
stronger. It doesn't need rest and supervision; it needs new challenge,
greater freedom. And that word "freedom" is the key to the second American
revolution that we need to bring about.

Let us move together with an historic reform of tax simplification for
fairness and growth. Last year I asked Treasury Secretary-then-Regan to
develop a plan to simplify the tax code, so all taxpayers would be treated
more fairly and personal tax rates could come further down.

We have cut tax rates by almost 25 percent, yet the tax system remains
unfair and limits our potential for growth. Exclusions and exemptions cause
similar incomes to be taxed at different levels. Low-income families face
steep tax barriers that make hard lives even harder. The Treasury
Department has produced an excellent reform plan, whose principles will
guide the final proposal that we will ask you to enact.

One thing that tax reform will not be is a tax increase in disguise. We
will not jeopardize the mortgage interest deduction that families need. We
will reduce personal tax rates as low as possible by removing many tax
preferences. We will propose a top rate of no more than 35 percent, and
possibly lower. And we will propose reducing corporate rates, while
maintaining incentives for capital formation.

To encourage opportunity and jobs rather than dependency and welfare, we
will propose that individuals living at or near the poverty line be totally
exempt from Federal income tax. To restore fairness to families, we will
propose increasing significantly the personal exemption.

And tonight, I am instructing Treasury Secretary James Baker--I have to get
used to saying that--to begin working with congressional authors and
committees for bipartisan legislation conforming to these principles. We
will call upon the American people for support and upon every man and woman
in this Chamber. Together, we can pass, this year, a tax bill for fairness,
simplicity, and growth, making this economy the engine of our dreams and
America the investment capital of the world. So let us begin.

Tax simplification will be a giant step toward unleashing the tremendous
pent-up power of our economy. But a second American revolution must carry
the promise of opportunity for all. It is time to liberate the spirit of
enterprise in the most distressed areas of our country.

This government will meet its responsibility to help those in need. But
policies that increase dependency, break up families, and destroy
self-respect are not progressive; they're reactionary. Despite our strides
in civil rights, blacks, Hispanics, and all minorities will not have full
and equal power until they have full economic power.

We have repeatedly sought passage of enterprise zones to help those in the
abandoned corners of our land find jobs, learn skills, and build better
lives. This legislation is supported by a majority of you.

Mr. Speaker, I know we agree that there must be no forgotten Americans.
Let us place new dreams in a million hearts and create a new generation of
entrepreneurs by passing enterprise zones this year. And, Tip, you could
make that a birthday present.

Nor must we lose the chance to pass our youth employment opportunity wage
proposal. We can help teenagers, who have the highest unemployment rate,
find summer jobs, so they can know the pride of work and have confidence in
their futures.

We'll continue to support the Job Training Partnership Act, which has a
nearly two-thirds job placement rate. Credits in education and health care
vouchers will help working families shop for services that they need.

Our administration is already encouraging certain low-income public housing
residents to own and manage their own dwellings. It's time that all public
housing residents have that opportunity of ownership.

The Federal Government can help create a new atmosphere of freedom. But
States and localities, many of which enjoy surpluses from the recovery,
must not permit their tax and regulatory policies to stand as barriers to
growth.

Let us resolve that we will stop spreading dependency and start spreading
opportunity; that we will stop spreading bondage and start spreading
freedom.

There are some who say that growth initiatives must await final action on
deficit reductions. Well, the best way to reduce deficits is through
economic growth. More businesses will be started, more investments made,
more jobs created, and more people will be on payrolls paying taxes. The
best way to reduce government spending is to reduce the need for spending
by increasing prosperity. Each added percentage point per year of real GNP
growth will lead to cumulative reduction in deficits of nearly $200 billion
over 5 years.

To move steadily toward a balanced budget, we must also lighten
government's claim on our total economy. We will not do this by raising
taxes. We must make sure that our economy grows faster than the growth in
spending by the Federal Government. In our fiscal year 1986 budget, overall
government program spending will be frozen at the current level. It must
not be one dime higher than fiscal year 1985, and three points are key.

First, the social safety net for the elderly, the needy, the disabled, and
unemployed will be left intact. Growth of our major health care programs,
Medicare and Medicaid, will be slowed, but protections for the elderly and
needy will be preserved.

Second, we must not relax our efforts to restore military strength just as
we near our goal of a fully equipped, trained, and ready professional
corps. National security is government's first responsibility; so in past
years defense spending took about half the Federal budget. Today it takes
less than a third. We've already reduced our planned defense expenditures
by nearly a hundred billion dollars over the past 4 years and reduced
projected spending again this year.

You know, we only have a military-industrial complex until a time of
danger, and then it becomes the arsenal of democracy. Spending for defense
is investing in things that are priceless--peace and freedom.

Third, we must reduce or eliminate costly government subsidies. For
example, deregulation of the airline industry has led to cheaper airfares,
but on Amtrak taxpayers pay about $35 per passenger every time an Amtrak
train leaves the station, It's time we ended this huge Federal subsidy.

Our farm program costs have quadrupled in recent years. Yet I know from
visiting farmers, many in great financial distress, that we need an orderly
transition to a market-oriented farm economy. We can help farmers best not
by expanding Federal payments but by making fundamental reforms, keeping
interest rates heading down, and knocking down foreign trade barriers to
American farm exports.

We're moving ahead with Grace commission reforms to eliminate waste and
improve government's management practices. In the long run, we must protect
the taxpayers from government. And I ask again that you pass, as 32 States
have now called for, an amendment mandating the Federal Government spend no
more than it takes in. And I ask for the authority, used responsibly by 43
Governors, to veto individual items in appropriation bills. Senator
Mattingly has introduced a bill permitting a 2-year trial run of the
line-item veto. I hope you'll pass and send that legislation to my desk.

Nearly 50 years of government living beyond its means has brought us to a
time of reckoning. Ours is but a moment in history. But one moment of
courage, idealism, and bipartisan unity can change American history
forever.

Sound monetary policy is key to long-running economic strength and
stability. We will continue to cooperate with the Federal Reserve Board,
seeking a steady policy that ensures price stability without keeping
interest rates artificially high or needlessly holding down growth.

Reducing unneeded red tape and regulations, and deregulating the energy,
transportation, and financial industries have unleashed new competition,
giving consumers more choices, better services, and lower prices. In just
one set of grant programs we have reduced 905 pages of regulations to 31.
We seek to fully deregulate natural gas to bring on new supplies and bring
us closer to energy independence. Consistent with safety standards, we will
continue removing restraints on the bus and railroad industries, we will
soon end up legislation--or send up legislation, I should say--to return
Conrail to the private sector where it belongs, and we will support further
deregulation of the trucking industry.

Every dollar the Federal Government does not take from us, every decision
it does not make for us will make our economy stronger, our lives more
abundant, our future more free.

Our second American revolution will push on to new possibilities not only
on Earth but in the next frontier of space. Despite budget restraints, we
will seek record funding for research and development.

We've seen the success of the space shuttle. Now we're going to develop a
permanently manned space station and new opportunities for free enterprise,
because in the next decade Americans and our friends around the world will
be living and working together in space.

In the zero gravity of space, we could manufacture in 30 days lifesaving
medicines it would take 30 years to make on Earth. We can make crystals of
exceptional purity to produce super computers, creating jobs, technologies,
and medical breakthroughs beyond anything we ever dreamed possible.

As we do all this, we'll continue to protect our natural resources. We will
seek reauthorization and expanded funding for the Superfund program to
continue cleaning up hazardous waste sites which threaten human health and
the environment.

Now, there's another great heritage to speak of this evening. Of all the
changes that have swept America the past 4 years, none brings greater
promise than our rediscovery of the values of faith, freedom, family, work,
and neighborhood.

We see signs of renewal in increased attendance in places of worship;
renewed optimism and faith in our future; love of country rediscovered by
our young, who are leading the way. We've rediscovered that work is good in
and of itself, that it ennobles us to create and contribute no matter how
seemingly humble our jobs. We've seen a powerful new current from an old
and honorable tradition--American generosity.

From thousands answering Peace Corps appeals to help boost food production
in Africa, to millions volunteering time, corporations adopting schools,
and communities pulling together to help the neediest among us at home, we
have refound our values. Private sector initiatives are crucial to our
future.

I thank the Congress for passing equal access legislation giving religious
groups the same right to use classrooms after school that other groups
enjoy. But no citizen need tremble, nor the world shudder, if a child
stands in a classroom and breathes a prayer. We ask you again, give
children back a right they had for a century and a half or more in this
country.

The question of abortion grips our nation. Abortion is either the taking of
a human life or it isn't. And if it is--and medical technology is
increasingly showing it is--it must be stopped. It is a terrible irony that
while some turn to abortion, so many others who cannot become parents cry
out for children to adopt. We have room for these children. We can fill the
cradles of those who want a child to love. And tonight I ask you in the
Congress to move this year on legislation to protect the unborn.

In the area of education, we're returning to excellence, and again, the
heroes are our people, not government. We're stressing basics of
discipline, rigorous testing, and homework, while helping children become
computer-smart as well. For 20 years scholastic aptitude test scores of our
high school students went down, but now they have gone up 2 of the last 3
years. We must go forward in our commitment to the new basics, giving
parents greater authority and making sure good teachers are rewarded for
hard work and achievement through merit pay.

Of all the changes in the past 20 years, none has more threatened our sense
of national well-being than the explosion of violent crime. One does not
have to be attacked to be a victim. The woman who must run to her car after
shopping at night is a victim. The couple draping their door with locks and
chains are victims; as is the tired, decent cleaning woman who can't ride a
subway home without being afraid.

We do not seek to violate the rights of defendants. But shouldn't we feel
more compassion for the victims of crime than for those who commit crime?
For the first time in 20 years, the crime index has fallen 2 years in a
row. We've convicted over 7,400 drug offenders and put them, as well as
leaders of organized crime, behind bars in record numbers.

But we must do more. I urge the House to follow the Senate and enact
proposals permitting use of all reliable evidence that police officers
acquire in good faith. These proposals would also reform the habeas corpus
laws and allow, in keeping with the will of the overwhelming majority of
Americans, the use of the death penalty where necessary.

There can be no economic revival in ghettos when the most violent among us
are allowed to roam free. It's time we restored domestic tranquility. And
we mean to do just that.

Just as we're positioned as never before to secure justice in our economy,
we're poised as never before to create a safer, freer, more peaceful world.
Our alliances are stronger than ever. Our economy is stronger than ever. We
have resumed our historic role as a leader of the free world. And all of
these together are a great force for peace.

Since 1981 we've been committed to seeking fair and verifiable arms
agreements that would lower the risk of war and reduce the size of nuclear
arsenals. Now our determination to maintain a strong defense has influenced
the Soviet Union to return to the bargaining table. Our negotiators must be
able to go to that table with the united support of the American people.
All of us have no greater dream than to see the day when nuclear weapons
are banned from this Earth forever.

Each Member of the Congress has a role to play in modernizing our defenses,
thus supporting our chances for a meaningful arms agreement. Your vote this
spring on the Peacekeeper missile will be a critical test of our resolve to
maintain the strength we need and move toward mutual and verifiable arms
reductions.

For the past 20 years we've believed that no war will be launched as long
as each side knows it can retaliate with a deadly counterstrike. Well, I
believe there's a better way of eliminating the threat of nuclear war. It
is a Strategic Defense Initiative aimed ultimately at finding a nonnuclear
defense against ballistic missiles. It's the most hopeful possibility of
the nuclear age. But it's not very well understood.

Some say it will bring war to the heavens, but its purpose is to deter war
in the heavens and on Earth. Now, some say the research would be expensive.
Perhaps, but it could save millions of lives, indeed humanity itself. And
some say if we build such a system, the Soviets will build a defense system
of their own. Well, they already have strategic defenses that surpass ours;
a civil defense system, where we have almost none; and a research program
covering roughly the same areas of technology that we're now exploring. And
finally some say the research will take a long time. Well, the answer to
that is: Let's get started.

Harry Truman once said that, ultimately, our security and the world's hopes
for peace and human progress "lie not in measures of defense or in the
control of weapons, but in the growth and expansion of freedom and
self-government."

And tonight, we declare anew to our fellow citizens of the world: Freedom
is not the sole prerogative of a chosen few; it is the universal right of
all God's children. Look to where peace and prosperity flourish today. It
is in homes that freedom built. Victories against poverty are greatest and
peace most secure where people live by laws that ensure free press, free
speech, and freedom to worship, vote, and create wealth.

Our mission is to nourish and defend freedom and democracy, and to
communicate these ideals everywhere we can. America's economic success is
freedom's success; it can be repeated a hundred times in a hundred
different nations. Many countries in east Asia and the Pacific have few
resources other than the enterprise of their own people. But through low
tax rates and free markets they've soared ahead of centralized economies.
And now China is opening up its economy to meet its needs.

We need a stronger and simpler approach to the process of making and
implementing trade policy, and we'll be studying potential changes in that
process in the next few weeks. We've seen the benefits of free trade and
lived through the disasters of protectionism. Tonight I ask all our trading
partners, developed and developing alike, to join us in a new round of
trade negotiations to expand trade and competition and strengthen the
global economy--and to begin it in this next year.

There are more than 3 billion human beings living in Third World countries
with an average per capita income of $650 a year. Many are victims of
dictatorships that impoverished them with taxation and corruption. Let us
ask our allies to join us in a practical program of trade and assistance
that fosters economic development through personal incentives to help these
people climb from poverty on their own.

We cannot play innocents abroad in a world that's not innocent; nor can we
be passive when freedom is under siege. Without resources, diplomacy cannot
succeed. Our security assistance programs help friendly governments defend
themselves and give them confidence to work for peace. And I hope that you
in the Congress will understand that, dollar for dollar, security
assistance contributes as much to global security as our own defense
budget.

We must stand by all our democratic allies. And we must not break faith
with those who are risking their lives--on every continent, from
Afghanistan to Nicaragua--to defy Soviet-supported aggression and secure
rights which have been ours from birth.

The Sandinista dictatorship of Nicaragua, with full Cuban-Soviet bloc
support, not only persecutes its people, the church, and denies a free
press, but arms and provides bases for Communist terrorists attacking
neighboring states. Support for freedom fighters is self-defense and
totally consistent with the OAS and U.N. Charters. It is essential that the
Congress continue all facets of our assistance to Central America. I want
to work with you to support the democratic forces whose struggle is tied to
our own security.

And tonight, I've spoken of great plans and great dreams. They're dreams we
can make come true. Two hundred years of American history should have
taught us that nothing is impossible.

Ten years ago a young girl left Vietnam with her family, part of the exodus
that followed the fall of Saigon. They came to the United States with no
possessions and not knowing a word of English. Ten years ago--the young
girl studied hard, learned English, and finished high school in the top of
her class. And this May, May 22d to be exact, is a big date on her
calendar. Just 10 years from the time she left Vietnam, she will graduate
from the United States Military Academy at West Point. I thought you might
like to meet an American hero named Jean Nguyen.

Now, there's someone else here tonight, born 79 years ago. She lives in the
inner city, where she cares for infants born of mothers who are heroin
addicts. The children, born in withdrawal, are sometimes even dropped on
her doorstep. She helps them with love. Go to her house some night, and
maybe you'll see her silhouette against the window as she walks the floor
talking softly, soothing a child in her arms--Mother Hale of Harlem, and
she, too, is an American hero.

Jean, Mother Hale, your lives tell us that the oldest American saying is
new again: Anything is possible in America if we have the faith, the will,
and the heart. History is asking us once again to be a force for good in
the world. Let us begin in unity, with justice, and love.

Thank you, and God bless you.

NOTE: The President spoke at 9:05 p.m. in the House Chamber of the Capitol.
He was introduced by Thomas P. O'Neill, Jr., Speaker of the House of
Representatives. The address was broadcast live on nationwide radio
and television.

***

State of the Union Address
Ronald Reagan
February 4, 1986

Mr. Speaker, Mr. President, distinguished Members of the Congress, honored
guests, and fellow citizens:

Thank you for allowing me to delay my address until this evening. We paused
together to mourn and honor the valor of our seven Challenger heroes. And I
hope that we are now ready to do what they would want us to do: Go forward,
America, and reach for the stars. We will never forget those brave seven,
but we shall go forward.

Mr. Speaker, before I begin my prepared remarks, may I point out that
tonight marks the 10th and last State of the Union Message that you've
presided over. And on behalf of the American people, I want to salute you
for your service to Congress and country. Here's to you!

I have come to review with you the progress of our nation, to speak of
unfinished work, and to set our sights on the future. I am pleased to
report the state of our Union is stronger than a year ago and growing
stronger each day. Tonight we look out on a rising America, firm of heart,
united in spirit, powerful in pride and patriotism. America is on the move!
But it wasn't long ago that we looked out on a different land: locked
factory gates, long gasoline lines, intolerable prices, and interest rates
turning the greatest country on Earth into a land of broken dreams.
Government growing beyond our consent had become a lumbering giant,
slamming shut the gates of opportunity, threatening to crush the very roots
of our freedom. What brought America back? The American people brought us
back with quiet courage and common sense, with undying faith that in this
nation under God the future will be ours; for the future belongs to the
free.

Tonight the American people deserve our thanks for 37 straight months of
economic growth, for sunrise firms and modernized industries creating 9
million new jobs in 3 years, interest rates cut in half, inflation falling
over from 12 percent in 1980 to under 4 today, and a mighty river of good
works--a record $74 billion in voluntary giving just last year alone. And
despite the pressures of our modern world, family and community remain the
moral core of our society, guardians of our values and hopes for the
future. Family and community are the costars of this great American
comeback. They are why we say tonight: Private values must be at the heart
of public policies.

What is true for families in America is true for America in the family of
free nations. History is no captive of some inevitable force. History is
made by men and women of vision and courage. Tonight freedom is on the
march. The United States is the economic miracle, the model to which the
world once again turns. We stand for an idea whose time is now: Only by
lifting the weights from the shoulders of all can people truly prosper and
can peace among all nations be secure. Teddy Roosevelt said that a nation
that does great work lives forever. We have done well, but we cannot stop
at the foothills when Everest beckons. It's time for America to be all that
we can be.

We speak tonight of an agenda for the future, an agenda for a safer, more
secure world. And we speak about the necessity for actions to steel us for
the challenges of growth, trade, and security in the next decade and the
year 2000. And we will do it--not by breaking faith with bedrock principles
but by breaking free from failed policies. Let us begin where storm clouds
loom darkest--right here in Washington, DC. This week I will send you our
detailed proposals; tonight let us speak of our responsibility to redefine
government's role: not to control, not to demand or command, not to contain
us, but to help in times of need and, above all, to create a ladder of
opportunity to full employment so that all Americans can climb toward
economic power and justice on their own.

But we cannot win the race to the future shackled to a system that can't
even pass a Federal budget. We cannot win that race held back by
horse-and-buggy programs that waste tax dollars and squander human
potential. We cannot win that race if we're swamped in a sea of red ink.
Now, Mr. Speaker, you know, I know, and the American people know the
Federal budget system is broken. It doesn't work. Before we leave this
city, let's you and I work together to fix it, and then we can finally give
the American people a balanced budget.

Members of Congress, passage of Gramm-Rudman-Hollings gives us an historic
opportunity to achieve what has eluded our national leadership for decades:
forcing the Federal Government to live within its means. Your schedule now
requires that the budget resolution be passed by April 15th, the very day
America's families have to foot the bill for the budgets that you produce.
How often we read of a husband and wife both working, struggling from
paycheck to paycheck to raise a family, meet a mortgage, pay their taxes
and bills. And yet some in Congress say taxes must be raised. Well, I'm
sorry; they're asking the wrong people to tighten their belts. It's time we
reduce the Federal budget and left the family budget alone. We do not face
large deficits because American families are undertaxed; we face those
deficits because the Federal Government overspends.

The detailed budget that we will submit will meet the Gramm-Rudman-Hollings
target for deficit reductions, meet our commitment to ensure a strong
national defense, meet our commitment to protect Social Security and the
truly less fortunate, and, yes, meet our commitment to not raise taxes. How
should we accomplish this? Well, not by taking from those in need. As
families take care of their own, government must provide shelter and
nourishment for those who cannot provide for themselves. But we must revise
or replace programs enacted in the name of compassion that degrade the
moral worth of work, encourage family breakups, and drive entire
communities into a bleak and heartless dependency. Gramm-Rudman-Hollings
can mark a dramatic improvement. But experience shows that simply setting
deficit targets does not assure they'll be met. We must proceed with Grace
commission reforms against waste.

And tonight I ask you to give me what 43 Governors have: Give me a
line-item veto this year. Give me the authority to veto waste, and I'll
take the responsibility, I'll make the cuts, I'll take the heat. This
authority would not give me any monopoly power, but simply prevent spending
measures from sneaking through that could not pass on their own merit. And
you can sustain or override my veto; that's the way the system should work.
Once we've made the hard choices, we should lock in our gains with a
balanced budget amendment to the Constitution.

I mentioned that we will meet our commitment to national defense. We must
meet it. Defense is not just another budget expense. Keeping America
strong, free, and at peace is solely the responsibility of the Federal
Government; it is government's prime responsibility. We have devoted 5
years trying to narrow a dangerous gap born of illusion and neglect, and
we've made important gains. Yet the threat from Soviet forces, conventional
and strategic, from the Soviet drive for domination, from the increase in
espionage and state terror remains great. This is reality. Closing our eyes
will not make reality disappear. We pledged together to hold real growth in
defense spending to the bare minimum. My budget honors that pledge, and I'm
now asking you, the Congress, to keep its end of the bargain. The Soviets
must know that if America reduces her defenses, it will be because of a
reduced threat, not a reduced resolve.

Keeping America strong is as vital to the national security as controlling
Federal spending is to our economic security. But, as I have said before,
the most powerful force we can enlist against the Federal deficit is an
ever-expanding American economy, unfettered and free. The magic of
opportunity--unreserved, unfailing, unrestrained--isn't this the calling
that unites us? I believe our tax rate cuts for the people have done more
to spur a spirit of risk-taking and help America's economy break free than
any program since John Kennedy's tax cut almost a quarter century ago.

Now history calls us to press on, to complete efforts for an historic tax
reform providing new opportunity for all and ensuring that all pay their
fair share, but no more. We've come this far. Will you join me now, and
we'll walk this last mile together? You know my views on this. We cannot
and we will not accept tax reform that is a tax increase in disguise. True
reform must be an engine of productivity and growth, and that means a top
personal rate no higher than 35 percent. True reform must be truly fair,
and that means raising personal exemptions to $2,000. True reform means a
tax system that at long last is profamily, projobs, profuture, and
pro-America.

As we knock down the barriers to growth, we must redouble our efforts for
freer and fairer trade. We have already taken actions to counter unfair
trading practices and to pry open closed foreign markets. We will continue
to do so. We will also oppose legislation touted as providing protection
that in reality pits one American worker against another, one industry
against another, one community against another, and that raises prices for
us all. If the United States can trade with other nations on a level
playing field, we can outproduce, outcompete, and outsell anybody, anywhere
in the world.

The constant expansion of our economy and exports requires a sound and
stable dollar at home and reliable exchange rates around the world. We must
never again permit wild currency swings to cripple our farmers and other
exporters. Farmers, in particular, have suffered from past unwise
government policies. They must not be abandoned with problems they did not
create and cannot control. We've begun coordinating economic and monetary
policy among our major trading partners. But there's more to do, and
tonight I am directing Treasury Secretary Jim Baker to determine if the
nations of the world should convene to discuss the role and relationship of
our currencies.

Confident in our future and secure in our values, Americans are striving
forward to embrace the future. We see it not only in our recovery but in 3
straight years of falling crime rates, as families and communities band
together to fight pornography, drugs, and lawlessness and to give back to
their children the safe and, yes, innocent childhood they deserve. We see
it in the renaissance in education, the rising SAT scores for 3 years--last
year's increase, the greatest since 1963. It wasn't government and
Washington lobbies that turned education around; it was the American people
who, in reaching for excellence, knew to reach back to basics. We must
continue the advance by supporting discipline in our schools, vouchers that
give parents freedom of choice; and we must give back to our children their
lost right to acknowledge God in their classrooms.

We are a nation of idealists, yet today there is a wound in our national
conscience. America will never be whole as long as the right to life
granted by our Creator is denied to the unborn. For the rest of my time, I
shall do what I can to see that this wound is one day healed.

As we work to make the American dream real for all, we must also look to
the condition of America's families. Struggling parents today worry how
they will provide their children the advantages that their parents gave
them. In the welfare culture, the breakdown of the family, the most basic
support system, has reached crisis proportions--in female and child
poverty, child abandonment, horrible crimes, and deteriorating schools.
After hundreds of billions of dollars in poverty programs, the plight of
the poor grows more painful. But the waste in dollars and cents pales
before the most tragic loss: the sinful waste of human spirit and
potential. We can ignore this terrible truth no longer. As Franklin
Roosevelt warned 51 years ago, standing before this Chamber, he said,
"Welfare is a narcotic, a subtle destroyer of the human spirit." And we
must now escape the spider's web of dependency.

Tonight I am charging the White House Domestic Council to present me by
December 1, 1986, an evaluation of programs and a strategy for immediate
action to meet the financial, educational, social, and safety concerns of
poor families. I'm talking about real and lasting emancipation, because the
success of welfare should be judged by how many of its recipients become
independent of welfare. Further, after seeing how devastating illness can
destroy the financial security of the family, I am directing the Secretary
of Health and Human Services, Dr. Otis Bowen, to report to me by year end
with recommendations on how the private sector and government can work
together to address the problems of affordable insurance for those whose
life savings would otherwise be threatened when catastrophic illness
strikes.

And tonight I want to speak directly to America's younger generation,
because you hold the destiny of our nation in your hands. With all the
temptations young people face, it sometimes seems the allure of the
permissive society requires superhuman feats of self-control. But the call
of the future is too strong, the challenge too great to get lost in the
blind alleyways of dissolution, drugs, and despair. Never has there been a
more exciting time to be alive, a time of rousing wonder and heroic
achievement. As they said in the film "Back to the Future," "Where we're
going, we don't need roads."

Well, today physicists peering into the infinitely small realms of
subatomic particles find reaffirmations of religious faith. Astronomers
build a space telescope that can see to the edge of the universe and
possibly back to the moment of creation. So, yes, this nation remains fully
committed to America's space program. We're going forward with our shuttle
flights. We're going forward to build our space station. And we are going
forward with research on a new Orient Express that could, by the end of the
next decade, take off from Dulles Airport, accelerate up to 25 times the
speed of sound, attaining low Earth orbit or flying to Tokyo within 2
hours. And the same technology transforming our lives can solve the
greatest problem of the 20th century. A security shield can one day render
nuclear weapons obsolete and free mankind from the prison of nuclear
terror. America met one historic challenge and went to the Moon. Now
America must meet another: to make our strategic defense real for all the
citizens of planet Earth.

Let us speak of our deepest longing for the future: to leave our children a
land that is free and just and a world at peace. It is my hope that our
fireside summit in Geneva and Mr. Gorbachev's upcoming visit to America can
lead to a more stable relationship. Surely no people on Earth hate war or
love peace more than we Americans. But we cannot stroll into the future
with childlike faith. Our differences with a system that openly proclaims
and practices an alleged right to command people's lives and to export its
ideology by force are deep and abiding. Logic and history compel us to
accept that our relationship be guided by realism--rock-hard, cleareyed,
steady, and sure. Our negotiators in Geneva have proposed a radical cut in
offensive forces by each side with no cheating. They have made clear that
Soviet compliance with the letter and spirit of agreements is essential. If
the Soviet Government wants an agreement that truly reduces nuclear arms,
there will be such an agreement.

But arms control is no substitute for peace. We know that peace follows in
freedom's path and conflicts erupt when the will of the people is denied.
So, we must prepare for peace not only by reducing weapons but by
bolstering prosperity, liberty, and democracy however and wherever we can.
We advance the promise of opportunity every time we speak out on behalf of
lower tax rates, freer markets, sound currencies around the world. We
strengthen the family of freedom every time we work with allies and come to
the aid of friends under siege. And we can enlarge the family of free
nations if we will defend the unalienable rights of all God's children to
follow their dreams.

To those imprisoned in regimes held captive, to those beaten for daring to
fight for freedom and democracy--for their right to worship, to speak, to
live, and to prosper in the family of free nations--we say to you tonight:
You are not alone, freedom fighters. America will support with moral and
material assistance your right not just to fight and die for freedom but to
fight and win freedom--to win freedom in Afghanistan, in Angola, in
Cambodia, and in Nicaragua. This is a great moral challenge for the entire
free world.

Surely no issue is more important for peace in our own hemisphere, for the
security of our frontiers, for the protection of our vital interests, than
to achieve democracy in Nicaragua and to protect Nicaragua's democratic
neighbors. This year I will be asking Congress for the means to do what
must be done for that great and good cause. As (former Senator Henry
M.)Scoop Jackson, the inspiration for our Bipartisan Commission on Central
America, once said, "In matters of national security, the best politics is
no politics."

What we accomplish this year, in each challenge we face, will set our
course for the balance of the decade, indeed, for the remainder of the
century. After all we've done so far, let no one say that this nation
cannot reach the destiny of our dreams. America believes, America is ready,
America can win the race to the future--and we shall. The American dream is
a song of hope that rings through night winter air; vivid, tender music
that warms our hearts when the least among us aspire to the greatest
things: to venture a daring enterprise; to unearth new beauty in music,
literature, and art; to discover a new universe inside a tiny silicon chip
or a single human cell.

We see the dream coming true in the spirit of discovery of Richard Cavoli.
All his life he's been enthralled by the mysteries of medicine. And,
Richard, we know that the experiment that you began in high school was
launched and lost last week, yet your dream lives. And as long as it's
real, work of noble note will yet be done, work that could reduce the
harmful effects of x rays on patients and enable astronomers to view the
golden gateways of the farthest stars.

We see the dream glow in the towering talent of a 12-year-old, Tyrone Ford.
A child prodigy of gospel music, he has surmounted personal adversity to
become an accomplished pianist and singer. He also directs the choirs of
three churches and has performed at the Kennedy Center. With God as your
composer, Tyrone, your music will be the music of angels.

We see the dream being saved by the courage of the 13-year-old Shelby
Butler, honor student and member of her school's safety patrol. Seeing
another girl freeze in terror before an out-of-control school bus, she
risked her life and pulled her to safety. With bravery like yours, Shelby,
America need never fear for our future.

And we see the dream born again in the joyful compassion of a 13 year old,
Trevor Ferrell. Two years ago, age 11, watching men and women bedding down
in abandoned doorways--on television he was watching--Trevor left his
suburban Philadelphia home to bring blankets and food to the helpless and
homeless. And now 250 people help him fulfill his nightly vigil. Trevor,
yours is the living spirit of brotherly love.

Would you four stand up for a moment? Thank you, thank you. You are heroes
of our hearts. We look at you and know it's true: In this land of dreams
fulfilled, where greater dreams may be imagined, nothing is impossible, no
victory is beyond our reach, no glory will ever be too great.

So, now it's up to us, all of us, to prepare America for that day when our
work will pale before the greatness of America's champions in the 21st
century. The world's hopes rest with America's future; America's hopes rest
with us. So, let us go forward to create our world of tomorrow in faith, in
unity, and in love.

God bless you, and God bless America.

NOTE: The President spoke at 8:04 p.m. in the House Chamber of the Capitol.
He was introduced by Thomas P. O'Neill, Jr., Speaker of the House of
Representatives. The address was broadcast live on nationwide radio
and television.

***

State of the Union Address
Ronald Reagan
January 27, 1987

Mr. Speaker, Mr. President, distinguished Members of Congress, honored
guests, and fellow citizens:

May I congratulate all of you who are Members of this historic 100th
Congress of the United States of America. In this 200th anniversary year of
our Constitution, you and I stand on the shoulders of giants--men whose
words and deeds put wind in the sails of freedom. However, we must always
remember that our Constitution is to be celebrated not for being old, but
for being young--young with the same energy, spirit, and promise that
filled each eventful day in Philadelphia's statehouse. We will be guided
tonight by their acts, and we will be guided forever by their words.

Now, forgive me, but I can't resist sharing a story from those historic
days. Philadelphia was bursting with civic pride in the spring of 1787, and
its newspapers began embellishing the arrival of the Convention delegates
with elaborate social classifications. Governors of States were called
Excellency. Justices and Chancellors had reserved for them honorable with a
capital "H." For Congressmen, it was honorable with a small "h." And all
others were referred to as "the following respectable characters." Well,
for this 100th Congress, I invoke special executive powers to declare that
each of you must never be titled less than honorable with a capital "H."
Incidentally, I'm delighted you are celebrating the 100th birthday of the
Congress. It's always a pleasure to congratulate someone with more
birthdays than I've had.

Now, there's a new face at this place of honor tonight. And please join me
in warm congratulations to the Speaker of the House, Jim Wright. Mr.
Speaker, you might recall a similar situation in your very first session of
Congress 32 years ago. Then, as now, the speakership had changed hands and
another great son of Texas, Sam Rayburn--"Mr. Sam"--sat in your chair. I
cannot find better words than those used by President Eisenhower that
evening. He said, "We shall have much to do together; I am sure that we
will get it done and that we shall do it in harmony and good will." Tonight
I renew that pledge. To you, Mr. Speaker, and to Senate Majority Leader
Robert Byrd, who brings 34 years of distinguished service to the Congress,
may I say: Though there are changes in the Congress, America's interests
remain the same. And I am confident that, along with Republican leaders Bob
Michel and Bob Dole, this Congress can make history.

Six years ago I was here to ask the Congress to join me in America's new
beginning. Well, the results are something of which we can all be proud.
Our inflation rate is now the lowest in a quarter of a century. The prime
interest rate has fallen from the 21 1/2 percent the month before we took
office to 7 1/2 percent today. And those rates have triggered the most
housing starts in 8 years. The unemployment rate--still too high--is the
lowest in nearly 7 years, and our people have created nearly 13 million new
jobs. Over 61 percent of everyone over the age of 16, male and female, is
employed--the highest percentage on record. Let's roll up our sleeves and
go to work and put America's economic engine at full throttle. We can also
be heartened by our progress across the world. Most important, America is
at peace tonight, and freedom is on the march. And we've done much these
past years to restore our defenses, our alliances, and our leadership in
the world. Our sons and daughters in the services once again wear their
uniforms with pride.

But though we've made much progress, I have one major regret: I took a risk
with regard to our action in Iran. It did not work, and for that I assume
full responsibility. The goals were worthy. I do not believe it was wrong
to try to establish contacts with a country of strategic importance or to
try to save lives. And certainly it was not wrong to try to secure freedom
for our citizens held in barbaric captivity. But we did not achieve what we
wished, and serious mistakes were made in trying to do so. We will get to
the bottom of this, and I will take whatever action is called for. But in
debating the past, we must not deny ourselves the successes of the future.
Let it never be said of this generation of Americans that we became so
obsessed with failure that we refused to take risks that could further the
cause of peace and freedom in the world. Much is at stake here, and the
Nation and the world are watching to see if we go forward together in the
national interest or if we let partisanship weaken us. And let there be no
mistake about American policy: We will not sit idly by if our interests or
our friends in the Middle East are threatened, nor will we yield to
terrorist blackmail.

And now, ladies and gentlemen of the Congress, why don't we get to work? I
am pleased to report that because of our efforts to rebuild the strength of
America, the world is a safer place. Earlier this month I submitted a
budget to defend America and maintain our momentum to make up for neglect
in the last decade. Well, I ask you to vote out a defense and foreign
affairs budget that says yes to protecting our country. While the world is
safer, it is not safe.

Since 1970 the Soviets have invested $500 billion more on their military
forces than we have. Even today, though nearly 1 in 3 Soviet families is
without running hot water and the average family spends 2 hours a day
shopping for the basic necessities of life, their government still found
the resources to transfer $75 billion in weapons to client states in the
past 5 years--clients like Syria, Vietnam, Cuba, Libya, Angola, Ethiopia,
Afghanistan, and Nicaragua. With 120,000 Soviet combat and military
personnel and 15,000 military advisers in Asia, Africa, and Latin America,
can anyone still doubt their single-minded determination to expand their
power? Despite this, the Congress cut my request for critical U.S. security
assistance to free nations by 21 percent this year, and cut defense
requests by $85 billion in the last 3 years.

These assistance programs serve our national interests as well as mutual
interests. And when the programs are devastated, American interests are
harmed. My friends, it's my duty as President to say to you again tonight
that there is no surer way to lose freedom than to lose our resolve. Today
the brave people of Afghanistan are showing that resolve. The Soviet Union
says it wants a peaceful settlement in Afghanistan, yet it continues a
brutal war and props up a regime whose days are clearly numbered. We are
ready to support a political solution that guarantees the rapid withdrawal
of all Soviet troops and genuine self-determination for the Afghan people.

In Central America, too, the cause of freedom is being tested. And our
resolve is being tested there as well. Here, especially, the world is
watching to see how this nation responds. Today over 90 percent of the
people of Latin America live in democracy. Democracy is on the march in
Central and South America. Communist Nicaragua is the odd man
out--suppressing the church, the press, and democratic dissent and
promoting subversion in the region. We support diplomatic efforts, but
these efforts can never succeed if the Sandinistas win their war against
the Nicaraguan people.

Our commitment to a Western Hemisphere safe from aggression did not occur
by spontaneous generation on the day that we took office. It began with the
Monroe Doctrine in 1823 and continues our historic bipartisan American
policy. Franklin Roosevelt said we "are determined to do everything
possible to maintain peace on this hemisphere." President Truman was very
blunt: "International communism seeks to crush and undermine and destroy
the independence of the Americas. We cannot let that happen here." And John
F. Kennedy made clear that "Communist domination in this hemisphere can
never be negotiated." Some in this Congress may choose to depart from this
historic commitment, but I will not.

This year we celebrate the second century of our Constitution. The
Sandinistas just signed theirs 2 weeks ago, and then suspended it. We won't
know how my words tonight will be reported there for one simple reason:
There is no free press in Nicaragua. Nicaraguan freedom fighters have never
asked us to wage their battle, but I will fight any effort to shut off
their lifeblood and consign them to death, defeat, or a life without
freedom. There must be no Soviet beachhead in Central America.

You know, we Americans have always preferred dialog to conflict, and so, we
always remain open to more constructive relations with the Soviet Union.
But more responsible Soviet conduct around the world is a key element of
the U.S.-Soviet agenda. Progress is also required on the other items of our
agenda as well--real respect for human rights and more open contacts
between our societies and, of course, arms reduction.

In Iceland, last October, we had one moment of opportunity that the Soviets
dashed because they sought to cripple our Strategic Defense Initiative,
SDI. I wouldn't let them do it then; I won't let them do it now or in the
future. This is the most positive and promising defense program we have
undertaken. It's the path, for both sides, to a safer future--a system that
defends human life instead of threatening it. SDI will go forward. The
United States has made serious, fair, and far-reaching proposals to the
Soviet Union, and this is a moment of rare opportunity for arms reduction.
But I will need, and American negotiators in Geneva will need, Congress'
support. Enacting the Soviet negotiating position into American law would
not be the way to win a good agreement. So, I must tell you in this
Congress I will veto any effort that undercuts our national security and
our negotiating leverage.

Now, today, we also find ourselves engaged in expanding peaceful commerce
across the world. We will work to expand our opportunities in international
markets through the Uruguay round of trade negotiations and to complete an
historic free trade arrangement between the world's two largest trading
partners, Canada and the United States. Our basic trade policy remains the
same: We remain opposed as ever to protectionism, because America's growth
and future depend on trade. But we would insist on trade that is fair and
free. We are always willing to be trade partners but never trade patsies.

Now, from foreign borders let us return to our own, because America in the
world is only as strong as America at home. This 100th Congress has high
responsibilities. I begin with a gentle reminder that many of these are
simply the incomplete obligations of the past. The American people deserve
to be impatient, because we do not yet have the public house in order.
We've had great success in restoring our economic integrity, and we've
rescued our nation from the worst economic mess since the Depression. But
there's more to do. For starters, the Federal deficit is outrageous. For
years I've asked that we stop pushing onto our children the excesses of our
government. And what the Congress finally needs to do is pass a
constitutional amendment that mandates a balanced budget and forces
government to live within its means. States, cities, and the families of
America balance their budgets. Why can't we?

Next, the budget process is a sorry spectacle. The missing of deadlines and
the nightmare of monstrous continuing resolutions packing hundreds of
billions of dollars of spending into one bill must be stopped. We ask the
Congress once again: Give us the same tool that 43 Governors have--a
lineitem veto so we can carve out the boondoggles and pork, those items
that would never survive on their own. I will send the Congress broad
recommendations on the budget, but first I'd like to see yours. Let's go to
work and get this done together.

But now let's talk about this year's budget. Even though I have submitted
it within the Gramm-Rudman-Hollings deficit reduction target, I have seen
suggestions that we might postpone that timetable. Well, I think the
American people are tired of hearing the same old excuses. Together we made
a commitment to balance the budget. Now let's keep it. As for those
suggestions that the answer is higher taxes, the American people have
repeatedly rejected that shop-worn advice. They know that we don't have
deficits because people are taxed too little. We have deficits because big
government spends too much.

Now, next month I'll place two additional reforms before the Congress.
We've created a welfare monster that is a shocking indictment of our sense
of priorities. Our national welfare system consists of some 59 major
programs and over 6,000 pages of Federal laws and regulations on which more
than $132 billion was spent in 1985. I will propose a new national welfare
strategy, a program of welfare reform through State-sponsored,
community-based demonstration projects. This is the time to reform this
outmoded social dinosaur and finally break the poverty trap. Now, we will
never abandon those who, through no fault of their own, must have our help.
But let us work to see how many can be freed from the dependency of welfare
and made self-supporting, which the great majority of welfare recipients
want more than anything else. Next, let us remove a financial specter
facing our older Americans: the fear of an illness so expensive that it can
result in having to make an intolerable choice between bankruptcy and
death. I will submit legislation shortly to help free the elderly from the
fear of catastrophic illness.

Now let's turn to the future. It's widely said that America is losing her
competitive edge. Well, that won't happen if we act now. How well prepared
are we to enter the 21st century? In my lifetime, America set the standard
for the world. It is now time to determine that we should enter the next
century having achieved a level of excellence unsurpassed in history. We
will achieve this, first, by guaranteeing that government does everything
possible to promote America's ability to compete. Second, we must act as
individuals in a quest for excellence that will not be measured by new
proposals or billions in new funding. Rather, it involves an expenditure of
American spirit and just plain American grit. The Congress will soon
receive my comprehensive proposals to enhance our competitiveness,
including new science and technology centers and strong new funding for
basic research. The bill will include legal and regulatory reforms and
weapons to fight unfair trade practices. Competitiveness also means giving
our farmers a shot at participating fairly and fully in a changing world
market.

Preparing for the future must begin, as always, with our children. We need
to set for them new and more rigorous goals. We must demand more of
ourselves and our children by raising literacy levels dramatically by the
year 2000. Our children should master the basic concepts of math and
science, and let's insist that students not leave high school until they
have studied and understood the basic documents of our national heritage.
There's one more thing we can't let up on: Let's redouble our personal
efforts to provide for every child a safe and drug-free learning
environment. If our crusade against drugs succeeds with our children, we
will defeat that scourge all over the country.

Finally, let's stop suppressing the spiritual core of our national being.
Our nation could not have been conceived without divine help. Why is it
that we can build a nation with our prayers, but we can't use a schoolroom
for voluntary prayer? The 100th Congress of the United States should be
remembered as the one that ended the expulsion of God from America's
classrooms.

The quest for excellence into the 21st century begins in the schoolroom but
must go next to the workplace. More than 20 million new jobs will be
created before the new century unfolds, and by then, our economy should be
able to provide a job for everyone who wants to work. We must also enable
our workers to adapt to the rapidly changing nature of the workplace. And I
will propose substantial, new Federal commitments keyed to retraining and
job mobility.

Over the next few weeks, I'll be sending the Congress a complete series of
these special messages--on budget reform, welfare reform, competitiveness,
including education, trade, worker training and assistance, agriculture,
and other subjects. The Congress can give us these tools, but to make these
tools work, it really comes down to just being our best. And that is the
core of American greatness. The responsibility of freedom presses us
towards higher knowledge and, I believe, moral and spiritual greatness.
Through lower taxes and smaller government, government has its ways of
freeing people's spirits. But only we, each of us, can let the spirit soar
against our own individual standards. Excellence is what makes freedom
ring. And isn't that what we do best?

We're entering our third century now, but it's wrong to judge our nation by
its years. The calendar can't measure America because we were meant to be
an endless experiment in freedom--with no limit to our reaches, no
boundaries to what we can do, no end point to our hopes. The United States
Constitution is the impassioned and inspired vehicle by which we travel
through history. It grew out of the most fundamental inspiration of our
existence: that we are here to serve Him by living free--that living free
releases in us the noblest of impulses and the best of our abilities; that
we would use these gifts for good and generous purposes and would secure
them not just for ourselves and for our children but for all mankind.

Over the years--I won't count if you don't--nothing has been so
heartwarming to me as speaking to America's young, and the little ones
especially, so fresh-faced and so eager to know. Well, from time to time
I've been with them--they will ask about our Constitution. And I hope you
Members of Congress will not deem this a breach of protocol if you'll
permit me to share these thoughts again with the young people who might be
listening or watching this evening. I've read the constitutions of a number
of countries, including the Soviet Union's. Now, some people are surprised
to hear that they have a constitution, and it even supposedly grants a
number of freedoms to its people. Many countries have written into their
constitution provisions for freedom of speech and freedom of assembly.
Well, if this is true, why is the Constitution of the United States so
exceptional?

Well, the difference is so small that it almost escapes you, but it's so
great it tells you the whole story in just three words: We the people. In
those other constitutions, the Government tells the people of those
countries what they're allowed to do. In our Constitution, we the people
tell the Government what it can do, and it can do only those things listed
in that document and no others. Virtually every other revolution in history
has just exchanged one set of rulers for another set of rulers. Our
revolution is the first to say the people are the masters and government is
their servant. And you young people out there, don't ever forget that.
Someday you could be in this room, but wherever you are, America is
depending on you to reach your highest and be your best--because here in
America, we the people are in charge.

Just three words: We the people--those are the kids on Christmas Day
looking out from a frozen sentry post on the 38th parallel in Korea or
aboard an aircraft carrier in the Mediterranean. A million miles from home,
but doing their duty.

We the people--those are the warmhearted whose numbers we can't begin to
count, who'll begin the day with a little prayer for hostages they will
never know and MIA families they will never meet. Why? Because that's the
way we are, this unique breed we call Americans.

We the people--they're farmers on tough times, but who never stop feeding a
hungry world. They're the volunteers at the hospital choking back their
tears for the hundredth time, caring for a baby struggling for life because
of a mother who used drugs. And you'll forgive me a special memory--it's a
million mothers like Nelle Reagan who never knew a stranger or turned a
hungry person away from her kitchen door.

We the people--they refute last week's television commentary downgrading
our optimism and our idealism. They are the entrepreneurs, the builders,
the pioneers, and a lot of regular folks--the true heroes of our land who
make up the most uncommon nation of doers in history. You know they're
Americans because their spirit is as big as the universe and their hearts
are bigger than their spirits.

We the people--starting the third century of a dream and standing up to
some cynic who's trying to tell us we're not going to get any better. Are
we at the end? Well, I can't tell it any better than the real thing--a
story recorded by James Madison from the final moments of the
Constitutional Convention, September 17th, 1787. As the last few members
signed the document, Benjamin Franklin--the oldest delegate at 81 years and
in frail health--looked over toward the chair where George Washington daily
presided. At the back of the chair was painted the picture of a Sun on the
horizon. And turning to those sitting next to him, Franklin observed that
artists found it difficult in their painting to distinguish between a
rising and a setting Sun.

Well, I know if we were there, we could see those delegates sitting around
Franklin--leaning in to listen more closely to him. And then Dr. Franklin
began to share his deepest hopes and fears about the outcome of their
efforts, and this is what he said: "I have often looked at that picture
behind the President without being able to tell whether it was a rising or
setting Sun: But now at length I have the happiness to know that it is a
rising and not a setting Sun." Well, you can bet it's rising because, my
fellow citizens, America isn't finished. Her best days have just begun.

Thank you, God bless you, and God bless America.

NOTE: The President spoke at 9:03 p.m. in the House Chamber of the Capitol.
He was introduced by Jim Wright, Speaker of the House of Representatives.
The address was broadcast live on nationwide radio and television.

***

State of the Union Address
Ronald Reagan
January 25, 1988

Mr. Speaker, Mr. President, and distinguished Members of the House and
Senate: When we first met here 7 years ago--many of us for the first
time--it was with the hope of beginning something new for America. We meet
here tonight in this historic Chamber to continue that work. If anyone
expects just a proud recitation of the accomplishments of my
administration, I say let's leave that to history; we're not finished yet.
So, my message to you tonight is put on your work shoes; we're still on the
job.

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.

All of this was made possible by an idea I spoke of when Mr. Gorbachev was
here--the belief that the most exciting revolution ever known to humankind
began with three simple words: "We the People," the revolutionary notion
that the people grant government its rights, and not the other way around.
And there's one lesson that has come home powerfully to me, which I would
offer to you now. Just as those who created this Republic pledged to each
other their lives, their fortunes, and their sacred honor, so, too,
America's leaders today must pledge to each other that we will keep
foremost in our hearts and minds not what is best for ourselves or for our
party but what is best for America.

In the spirit of Jefferson, let us affirm that in this Chamber tonight
there are no Republicans, no Democrats--just Americans. Yes, we will have
our differences, but let us always remember what unites us far outweighs
whatever divides us. Those who sent us here to serve them--the millions of
Americans watching and listening tonight--expect this of us. Let's prove to
them and to ourselves that democracy works even in an election year. We've
done this before. And as we have worked together to bring down spending,
tax rates, and inflation, employment has climbed to record heights; America
has created more jobs and better, higher paying jobs; family income has
risen for 4 straight years, and America's poor climbed out of poverty at
the fastest rate in more than 10 years.

Our record is not just the longest peacetime expansion in history but an
economic and social revolution of hope based on work, incentives, growth,
and opportunity; a revolution of compassion that led to private sector
initiatives and a 77-percent increase in charitable giving; a revolution
that at a critical moment in world history reclaimed and restored the
American dream.

In international relations, too, there's only one description for what,
together, we have achieved: a complete turnabout, a revolution. Seven years
ago, America was weak, and freedom everywhere was under siege. Today
America is strong, and democracy is everywhere on the move. From Central
America to East Asia, ideas like free markets and democratic reforms and
human rights are taking hold. We've replaced "Blame America" with "Look up
to America." We've rebuilt our defenses. And of all our accomplishments,
none can give us more satisfaction than knowing that our young people are
again proud to wear our country's uniform.

And in a few moments, I'm going to talk about three developments--arms
reduction, the Strategic Defense Initiative, and the global democratic
revolution--that, when taken together, offer a chance none of us would have
dared imagine 7 years ago, a chance to rid the world of the two great
nightmares of the postwar era. I speak of the startling hope of giving our
children a future free of both totalitarianism and nuclear terror.

Tonight, then, we're strong, prosperous, at peace, and we are free. This is
the state of our Union. And if we will work together this year, I believe
we can give a future President and a future Congress the chance to make
that prosperity, that peace, that freedom not just the state of our Union
but the state of our world.

Toward this end, we have four basic objectives tonight. First, steps we can
take this year to keep our economy strong and growing, to give our children
a future of low inflation and full employment. Second, let's check our
progress in attacking social problems, where important gains have been
made, but which still need critical attention. I mean schools that work,
economic independence for the poor, restoring respect for family life and
family values. Our third objective tonight is global: continuing the
exciting economic and democratic revolutions we've seen around the world.
Fourth and finally, our nation has remained at peace for nearly a decade
and a half, as we move toward our goals of world prosperity and world
freedom. We must protect that peace and deter war by making sure the next
President inherits what you and I have a moral obligation to give that
President: a national security that is unassailable and a national defense
that takes full advantage of new technology and is fully funded.

This is a full agenda. It's meant to be. You see, my thinking on the next
year is quite simple: Let's make this the best of 8. And that means it's
all out--right to the finish line. I don't buy the idea that this is the
last year of anything, because we're not talking here tonight about
registering temporary gains but ways of making permanent our successes. And
that's why our focus is the values, the principles, and ideas that made
America great. Let's be clear on this point. We're for limited government,
because we understand, as the Founding Fathers did, that it is the best way
of ensuring personal liberty and empowering the individual so that every
American of every race and region shares fully in the flowering of American
prosperity and freedom.

One other thing we Americans like--the future--like the sound of it, the
idea of it, the hope of it. Where others fear trade and economic growth, we
see opportunities for creating new wealth and undreamed-of opportunities
for millions in our own land and beyond. Where others seek to throw up
barriers, we seek to bring them down. Where others take counsel of their
fears, we follow our hopes. Yes, we Americans like the future and like
making the most of it. Let's do that now.

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. 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 2 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. I can assure you, the bipartisan
leadership of Congress, of my help in fighting off any attempt to bust our
budget agreement. And this includes the swift and certain use of the veto
power.

Now, it's also time for some plain talk about the most immediate obstacle
to controlling Federal deficits. The simple but frustrating problem of
making expenses match revenues--something American families do and the
Federal Government can't--has caused crisis after crisis in this city. Mr.
Speaker, Mr. President, I will say to you tonight what I have said before
and will continue to say: The budget process has broken down; it needs a
drastic overhaul. With each ensuing year, the spectacle before the American
people is the same as it was this Christmas: budget deadlines delayed or
missed completely, monstrous continuing resolutions that pack hundreds of
billions of dollars worth of spending into one bill, and a Federal
Government on the brink of default.

I know I'm echoing what you here in the Congress have said, because you
suffered so directly. But let's recall that in 7 years, of 91
appropriations bills scheduled to arrive on my desk by a certain date, only
10 made it on time. Last year, of the 13 appropriations bills due by
October 1st, none of them made it. Instead, we had four continuing
resolutions lasting 41 days, then 36 days, and 2 days, and 3 days,
respectively.

And then, along came these behemoths. This is the conference report--1,053
pages, report weighing 14 pounds. Then this--a reconciliation bill 6 months
late that was 1,186 pages long, weighing 15 pounds. And the long-term
continuing resolution--this one was 2 months late, and it's 1,057 pages
long, weighing 14 pounds. That was a total of 43 pounds of paper and ink.
You had 3 hours--yes, 3 hours--to consider each, and it took 300 people at
my Office of Management and Budget just to read the bill so the Government
wouldn't shut down. Congress shouldn't send another one of these. No, and
if you do, I will not sign it.

Let's change all this. Instead of a Presidential budget that gets discarded
and a congressional budget resolution that is not enforced, why not a
simple partnership, a joint agreement that sets out the spending priorities
within the available revenues? And let's remember our deadline is October
1st, not Christmas. Let's get the people's work done in time to avoid a
footrace with Santa Claus. And, yes, this year--to coin a phrase--a new
beginning: 13 individual bills, on time and fully reviewed by Congress.

I'm also certain you join me in saying: Let's help ensure our future of
prosperity by giving the President a tool that, though I will not get to
use it, is one I know future Presidents of either party must have. Give the
President the same authority that 43 Governors use in their States: the
right to reach into massive appropriation bills, pare away the waste, and
enforce budget discipline. Let's approve the line-item veto.

And let's take a partial step in this direction. Most of you in this
Chamber didn't know what was in this catchall bill and report. Over the
past few weeks, we've all learned what was tucked away behind a little
comma here and there. For example, there's millions for items such as
cranberry research, blueberry research, the study of crawfish, and the
commercialization of wildflowers. And that's not to mention the five or so
million ($.5 million) that--so that people from developing nations could
come here to watch Congress at work. I won't even touch that. So, tonight I
offer you this challenge. In 30 days I will send back to you those items as
rescissions, which if I had the authority to line them out I would do so.

Now, review this multibillion-dollar package that will not undercut our
bipartisan budget agreement. As a matter of fact, if adopted, it will
improve our deficit reduction goals. And what an example we can set, that
we're serious about getting our financial accounts in order. By acting and
approving this plan, you have the opportunity to override a congressional
process that is out of control.

There is another vital reform. Yes, Gramm-Rudman-Hollings has been
profoundly helpful, but let us take its goal of a balanced budget and make
it permanent. Let us do now what so many States do to hold down spending
and what 32 State legislatures have asked us to do. Let us heed the wishes
of an overwhelming plurality of Americans and pass a constitutional
amendment that mandates a balanced budget and forces the Federal Government
to live within its means. Reform of the budget process--including the
line-item veto and balanced budget amendment--will, together with real
restraint on government spending, prevent the Federal budget from ever
again ravaging the family budget.

Let's ensure that the Federal Government never again legislates against the
family and the home. Last September 1 signed an Executive order on the
family requiring that every department and agency review its activities in
light of seven standards designed to promote and not harm the family. But
let us make certain that the family is always at the center of the public
policy process not just in this administration but in all future
administrations. It's time for Congress to consider, at the beginning, a
statement of the impact that legislation will have on the basic unit of
American society, the family.

And speaking of the family, let's turn to a matter on the mind of every
American parent tonight: education. We all know the sorry story of the
sixties and seventies--soaring spending, plummeting test scores--and that
hopeful trend of the eighties, when we replaced an obsession with dollars
with a commitment to quality, and test scores started back up. There's a
lesson here that we all should write on the blackboard a hundred times: In
a child's education, money can never take the place of basics like
discipline, hard work, and, yes, homework.

As a nation we do, of course, spend heavily on education--more than we
spend on defense. Yet across our country, Governors like New Jersey's Tom
Kean are giving classroom demonstrations that how we spend is as important
as how much we spend. Opening up the teaching profession to all qualified
candidates, merit pay--so that good teachers get A's as well as apples--and
stronger curriculum, as Secretary Bennett has proposed for high
schools--these imaginative reforms are making common sense the most popular
new kid in America's schools. How can we help? Well, we can talk about and
push for these reforms. But the most important thing we can do is to
reaffirm that control of our schools belongs to the States, local
communities and, most of all, to the parents and teachers.

My friends, some years ago, the Federal Government declared war on poverty,
and poverty won. Today the Federal Government has 59 major welfare programs
and spends more than $100 billion a year on them. What has all this money
done? Well, too often it has only made poverty harder to escape. Federal
welfare programs have created a massive social problem. With the best of
intentions, government created a poverty trap that wreaks havoc on the very
support system the poor need most to lift themselves out of poverty: the
family. Dependency has become the one enduring heirloom, passed from one
generation to the next, of too many fragmented families.

It is time--this may be the most radical thing I've said in 7 years in this
office--it's time for Washington to show a little humility. There are a
thousand sparks of genius in 50 States and a thousand communities around
the Nation. It is time to nurture them and see which ones can catch fire
and become guiding lights. States have begun to show us the way. They've
demonstrated that successful welfare programs can be built around more
effective child support enforcement practices and innovative programs
requiring welfare recipients to work or prepare for work. Let us give the
States more flexibility and encourage more reforms. Let's start making our
welfare system the first rung on America's ladder of opportunity, a boost
up from dependency, not a graveyard but a birthplace of hope.

And now let me turn to three other matters vital to family values and the
quality of family life. The first is an untold American success story.
Recently, we released our annual survey of what graduating high school
seniors have to say about drugs. Cocaine use is declining, and marijuana
use was the lowest since surveying began. We can be proud that our students
are just saying no to drugs. But let us remember what this menace requires:
commitment from every part of America and every single American, a
commitment to a drugfree America. The war against drugs is a war of
individual battles, a crusade with many heroes, including America's young
people and also someone very special to me. She has helped so many of our
young people to say no to drugs. Nancy, much credit belongs to you, and I
want to express to you your husband's pride and your country's thanks.'.
Surprised you, didn't I?

Well, now we come to a family issue that we must have the courage to
confront. Tonight, I call America--a good nation, a moral people--to
charitable but realistic consideration of the terrible cost of abortion on
demand. To those who say this violates a woman's right to control of her
own body: Can they deny that now medical evidence confirms the unborn child
is a living human being entitled to life, liberty, and the pursuit of
happiness? Let us unite as a nation and protect the unborn with legislation
that would stop all Federal funding for abortion and with a human life
amendment making, of course, an exception where the unborn child threatens
the life of the mother. Our Judeo-Christian tradition recognizes the right
of taking a life in self-defense. But with that one exception, let us look
to those others in our land who cry out for children to adopt. I pledge to
you tonight I will work to remove barriers to adoption and extend full
sharing in family life to millions of Americans so that children who need
homes can be welcomed to families who want them and love them.

And let me add here: So many of our greatest statesmen have reminded us
that spiritual values alone are essential to our nation's health and vigor.
The Congress opens its proceedings each day, as does the Supreme Court,
with an acknowledgment of the Supreme Being. Yet we are denied the right to
set aside in our schools a moment each day for those who wish to pray. I
believe Congress should pass our school prayer amendment.

Now, to make sure there is a full nine member Supreme Court to interpret
the law, to protect the rights of all Americans, I urge the Senate to move
quickly and decisively in confirming Judge Anthony Kennedy to the highest
Court in the land and to also confirm 27 nominees now waiting to fill
vacancies in the Federal judiciary.

Here then are our domestic priorities. Yet if the Congress and the
administration work together, even greater opportunities lie ahead to
expand a growing world economy, to continue to reduce the threat of nuclear
arms, and to extend the frontiers of freedom and the growth of democratic
institutions.

Our policies consistently received the strongest support of the late
Congressman Dan Daniel of Virginia. I'm sure all of you join me in
expressing heartfelt condolences on his passing.

One of the greatest contributions the United States can make to the world
is to promote freedom as the key to economic growth. A creative,
competitive America is the answer to a changing world, not trade wars that
would close doors, create greater barriers, and destroy millions of jobs.
We should always remember: Protectionism is destructionism. America's jobs,
America's growth, America's future depend on trade--trade that is free,
open, and fair.

This year, we have it within our power to take a major step toward a
growing global economy and an expanding cycle of prosperity that reaches to
all the free nations of this Earth. I'm speaking of the historic free trade
agreement negotiated between our country and Canada. And I can also tell
you that we're determined to expand this concept, south as well as north.
Next month I will be traveling to Mexico, where trade matters will be of
foremost concern. And over the next several months, our Congress and the
Canadian Parliament can make the start of such a North American accord a
reality. Our goal must be a day when the free flow of trade, from the tip
of Tierra del Fuego to the Arctic Circle, unites the people of the Western
Hemisphere in a bond of mutually beneficial exchange, when all borders
become what the U.S.-Canadian border so long has been: a meeting place
rather than a dividing line.

This movement we see in so many places toward economic freedom is
indivisible from the worldwide movement toward political freedom and
against totalitarian rule. This global democratic revolution has removed
the specter, so frightening a decade ago, of democracy doomed to permanent
minority status in the world. In South and Central America, only a third of
the people enjoyed democratic rule in 1976. Today over 90 percent of Latin
Americans live in nations committed to democratic principles. And the
resurgence of democracy is owed to these courageous people on almost every
continent who have struggled to take control of their own destiny.

In Nicaragua the struggle has extra meaning, because that nation is so near
our own borders. The recent revelations of a former high-level Sandinista
major, Roger Miranda, show us that, even as they talk peace, the Communist
Sandinista government of Nicaragua has established plans for a large
600,000-man army. Yet even as these plans are made, the Sandinista regime
knows the tide is turning, and the cause of Nicaraguan freedom is riding at
its crest. Because of the freedom fighters, who are resisting Communist
rule, the Sandinistas have been forced to extend some democratic rights,
negotiate with church authorities, and release a few political prisoners.

The focus is on the Sandinistas, their promises and their actions. There is
a consensus among the four Central American democratic Presidents that the
Sandinistas have not complied with the plan to bring peace and democracy to
all of Central America. The Sandinistas again have promised reforms. Their
challenge is to take irreversible steps toward democracy. On Wednesday my
request to sustain the freedom fighters will be submitted, which reflects
our mutual desire for peace, freedom, and democracy in Nicaragua. I ask
Congress to pass this request. Let us be for the people of Nicaragua what
Lafayette, Pulaski, and Von Steuben were for our forefathers and the cause
of American independence.

So, too, in Afghanistan, the freedom fighters are the key to peace. We
support the Mujahidin. There can be no settlement unless all Soviet troops
are removed and the Afghan people are allowed genuine self-determination. I
have made my views on this matter known to Mr. Gorbachev. But not just
Nicaragua or Afghanistan--yes, everywhere we see a swelling freedom tide
across the world: freedom fighters rising up in Cambodia and Angola,
fighting and dying for the same democratic liberties we hold sacred. Their
cause is our cause: freedom.

Yet even as we work to expand world freedom, we must build a safer peace
and reduce the danger of nuclear war. But let's have no illusions. Three
years of steady decline in the value of our annual defense investment have
increased the risk of our most basic security interests, jeopardizing
earlier hard-won goals. We must face squarely the implications of this
negative trend and make adequate, stable defense spending a top goal both
this year and in the future.

This same concern applies to economic and security assistance programs as
well. But the resolve of America and its NATO allies has opened the way for
unprecedented achievement in arms reduction. Our recently signed INF treaty
is historic, because it reduces nuclear arms and establishes the most
stringent verification regime in arms control history, including several
forms of short-notice, on-site inspection. I submitted the treaty today,
and I urge the Senate to give its advice and consent to ratification of
this landmark agreement. Thank you very much.

In addition to the INF treaty, we're within reach of an even more
significant START agreement that will reduce U.S. and Soviet long-range
missile--or strategic arsenals by half. But let me be clear. Our approach
is not to seek agreement for agreement's sake but to settle only for
agreements that truly enhance our national security and that of our allies.
We will never put our security at risk--or that of our allies--just to reach
an agreement with the Soviets. No agreement is better than a bad
agreement.

As I mentioned earlier, our efforts are to give future generations what we
never had--a future free of nuclear terror. Reduction of strategic
offensive arms is one step, SDI another. Our funding request for our
Strategic Defense Initiative is less than 2 percent of the total defense
budget. SDI funding is money wisely appropriated and money well spent. SDI
has the same purpose and supports the same goals of arms reduction. It
reduces the risk of war and the threat of nuclear weapons to all mankind.
Strategic defenses that threaten no one could offer the world a safer, more
stable basis for deterrence. We must also remember that SDI is our
insurance policy against a nuclear accident, a Chernobyl of the sky, or an
accidental launch or some madman who might come along.

We've seen such changes in the world in 7 years. As totalitarianism
struggles to avoid being overwhelmed by the forces of economic advance and
the aspiration for human freedom, it is the free nations that are resilient
and resurgent. As the global democratic revolution has put totalitarianism
on the defensive, we have left behind the days of retreat. America is again
a vigorous leader of the free world, a nation that acts decisively and
firmly in the furtherance of her principles and vital interests. No legacy
would make me more proud than leaving in place a bipartisan consensus for
the cause of world freedom, a consensus that prevents a paralysis of
American power from ever occurring again.

But my thoughts tonight go beyond this, and I hope you'll let me end this
evening with a personal reflection. You know, the world could never be
quite the same again after Jacob Shallus, a trustworthy and dependable
clerk of the Pennsylvania General Assembly, took his pen and engrossed
those words about representative government in the preamble of our
Constitution. And in a quiet but final way, the course of human events was
forever altered when, on a ridge overlooking the Emmitsburg Pike in an
obscure Pennsylvania town called Gettysburg, Lincoln spoke of our duty to
government of and by the people and never letting it perish from the
Earth.

At the start of this decade, I suggested that we live in equally momentous
times, that it is up to us now to decide whether our form of government
would endure and whether history still had a place of greatness for a
quiet, pleasant, greening land called America. Not everything has been made
perfect in 7 years, nor will it be made perfect in seven times 70 years,
but before us, this year and beyond, are great prospects for the cause of
peace and world freedom.

It means, too, that the young Americans I spoke of 7 years ago, as well as
those who might be coming along the Virginia or Maryland shores this night
and seeing for the first time the lights of this Capital City--the lights
that cast their glow on our great halls of government and the monuments to
the memory of our great men--it means those young Americans will find a
city of hope in a land that is free.

We can be proud that for them and for us, as those lights along the Potomac
are still seen this night signaling as they have for nearly two centuries
and as we pray God they always will, that another generation of Americans
has protected and passed on lovingly this place called America, this
shining city on a hill, this government of, by, and for the people.

Thank you, and God bless you.

NOTE: The President spoke at 9:07 p.m. in the House Chamber of the Capitol.
He was introduced by Jim Wright, Speaker of the House of Representatives.
The address was broadcast live on nationwide radio and television.













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