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. [Laughter] But it is a matter of historic record. [Laughter] 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 life--parents 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.
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. [Laughter] But it is a matter of historic record. [Laughter] 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 is my duty to report to you tonight on the progress that we have made in our relations with other nations, on the foundation we have 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 are going but where we have 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 have 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 is only getting started. Together we have 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 have 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 have 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 have charted. And so, the question: If the fundamentals are in place, what now? Well, two things. First, we must understand what is happening at the moment to the economy. Our current problems are not the product of the recovery program that is 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 do not 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 are 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 are 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 will not 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 am urging the American people: Seize these new opportunities to produce, to save, to invest, and together we will 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 are also victims of our own success. We have brought inflation down faster than we thought we could, and in doing this, we have 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 will 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 is 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 do not 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 is 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 have 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 have 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 are right. A maze of interlocking jurisdictions and levels of government confronts average citizens in trying to solve even the simplest of problems. They do not 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 us 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 will 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 are 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 are 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 is 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 are 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 are encouraged by the bipartisan initiative of the House and are hopeful of further progress as the Senate continues its deliberations. So far, I have 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 is not 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 have 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 did not 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 are 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 are 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 are 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 is why we have 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 is why we have 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 have 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 have 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 are in a time of recession. And it is true, there is 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 will 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 did not end with them. Americans ever since have emulated their deeds. We do not have to turn to our history books for heroes. They are 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 life--parents who sacrifice long and hard so their children will know a better life than they have known; church and civic volunteers who help to feed, clothe, nurse, and teach the needy; millions who have 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. Do not let anyone tell you that America's best days are behind her, that the American spirit has been vanquished. We have 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.
speaker 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 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 laughter but it is a matter of historic record laughter 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 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 for our nation peace for the world and the blessings of individual liberty for our children and someday for all of humanity it is my duty to report to you tonight on the progress that we have made in our relations with other nations on the foundation we have 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 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 are going but where we have 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 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 percent inflation remained in double digits and government spending increased at an annual rate of 17 percent interest rates reached a staggering 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 tax rate reduction designed to stimulate the economy and create jobs already interest rates are down to 15 percent but they must still go lower inflation is down from percent to and for the month of december it was running at an annualized rate of 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 profit on inflation and its hidden incentive to grow larger at the expense of american 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 fewer pages in the federal register which lists new regulations than there were in 1980 by deregulating oil we have 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 is only getting started together we have 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 social problems together we have begun to restore that margin of military safety that ensures peace our country 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 have 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 we summon the strength to continue on the course that we have charted and so the question if the fundamentals are in place what now well two things first we must understand what is happening at the moment to the economy our current problems are not the product of the recovery program that is 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 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 do not 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 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 are 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 are 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 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 biggest deficits raising taxes will not 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 bring their tax rates down and to keep them down to provide them incentives to rebuild our economy to save to invest in america future i will stand by my word tonight i am urging the american people seize these new opportunities to produce to save to invest and together we will 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 are also victims of our own success we have brought inflation down faster than we thought we could and in doing this we have 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 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 will continue to redirect our resources to our two highest budget 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 elderly or america 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 can not 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 is 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 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 percent in the last 15 years another example is medicare and with worthy goals but whose costs have increased from 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 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 do not 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 is 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 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 have 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 as bold just as make government again accountable to the people to make our system of federalism work again our citizens feel they have 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 are right a maze of interlocking jurisdictions and levels of government confronts average citizens in trying to solve even the simplest of problems they do not 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 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 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 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 the words of one intergovernmental the federal government more pervasive more intrusive more unmanageable more ineffective and costly and above all more un accountable let us 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 will 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 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 are 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 are proposing legislation for an experimental effort to improve and develop our depressed urban areas in the 1980 and 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 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 extension of which i strongly support it is 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 are 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 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 long journey towards civil rights for all our a source of discord now a source of 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 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 are encouraged by the bipartisan initiative of the house and are hopeful of further progress as the senate continues its deliberations so far i have 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 is not time tonight for a lengthy treatment of 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 have 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 did not apologize for america 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 are developing a program of aid trade and investment incentives to promote 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 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 allies and adversaries alike we have strengthened our country position as a force for peace and progress in the world when action is called for we are taking it our sanctions against the military dictatorship that has attempted to crush human rights in against the soviet regime behind that military 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 peoples to join together on those days to raise their voices to speak and pray for freedom meanwhile we are 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 agenda for mutual reduction of military forces and have already initiated negotiations with them in geneva on 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 is why we have 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 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 is why we have 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 have promised the world a season of truth of our great civilized ideas individual liberty representative government the rule of law under god we have 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 are in a time of recession and it is true there is 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 will 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 did not end with them americans ever since have emulated their deeds we do not have to turn to our history books for heroes they are 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 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 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 life parents who sacrifice long and hard so their children will know a better life than they have known church and civic volunteers who help to feed clothe nurse and teach the needy millions who have made our nation and our nation destiny so very heroes who may not have realized their own dreams themselves but then who reinvest those dreams in their children do not let anyone tell you that america best days are behind her that the american spirit has been vanquished we have 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 can not 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 last best hope of man on earth god bless you and thank you
speaker president distinguished members congress honored guests fellow citizens today marks first state union address constitutional duty old republic president washington began tradition 1790 reminding nation destiny preservation sacred fire liberty finally staked experiment entrusted hands american people friends press place high premium accuracy let say actually hear george washington say laughter matter historic record laughter podium winston churchill asked free world stand together onslaught aggression franklin delano roosevelt spoke day infamy summoned nation arms douglas macarthur made unforgettable farewell country loved served well dwight eisenhower reminded us peace purchased price strength john kennedy spoke burden glory freedom visited chamber last year newcomer washington critical past policies believed failed proposed new spirit partnership congress administration washington state local governments forging new partnership america could achieve oldest hopes nation peace world blessings individual liberty children someday humanity duty report tonight progress made relations nations foundation carefully laid economic recovery finally bold spirited initiative believe change face american government make servant people seldom stakes higher america say make difference autoworkers detroit lumberjacks northwest steelworkers steubenville unemployment lines black teenagers newark chicago farmers small businessmen millions everyday americans harbor simple wish safe financially secure future children understand state union must look going situation time last year truly ominous last decade seen series recessions recession 1970 1974 spring 1980 time unemployment increased inflation soon turned coined word stagflation describe government response recessions pump money supply increase spending last 6 months 1980 example money supply increased fastest rate postwar percent inflation remained double digits government spending increased annual rate 17 percent interest rates reached staggering percent 8 million unemployed late 1981 sank present recession largely continued high interest rates hurt auto industry construction drop productivity already high unemployment increased time however things different economic program place completely different artificial quick fixes past calls reduction rate increase government spending already rate cut nearly half reduced spending first smallest phase tax rate reduction designed stimulate economy create jobs already interest rates 15 percent must still go lower inflation percent month december running annualized rate percent acted things would far worse americans today inflation taxes interest rates would higher year ago americans faith governmental process steadily declining six 10 americans saying pessimistic future new kind defeatism heard said domestic problems uncontrollable learn live seemingly endless cycle high inflation high unemployment also pessimistic predictions relationship administration congress said could never work together well predictions wrong record clear believe history remember era american renewal remember administration administration change remember congress congress destiny together cut increase government spending nearly half brought largest tax reductions sweeping changes tax structure since beginning century indexed future taxes rate inflation took away government profit inflation hidden incentive grow larger expense american together 50 years taking power away hands people states local communities started returning power resources together cut growth new federal regulations nearly half 1981 fewer pages federal register lists new regulations 1980 deregulating oil come closer achieving energy independence helped bring cost gasoline heating fuel together created effective federal strike force combat waste fraud government 6 months saved taxpayers 2 billion getting started together begun mobilize private sector duplicate wasteful discredited government programs bring thousands americans volunteer effort help solve many america social problems together begun restore margin military safety ensures peace country uniform worn pride together made new beginning begun one pretends way ahead easy inaugural address last year warned ills suffer come upon us several decades go away days weeks months go away americans capacity past whatever needs done preserve last greatest bastion freedom economy face difficult moments months ahead program economic recovery place pull economy slump put us road prosperity stable growth latter half year report tonight near future state union economy summon strength continue course charted question fundamentals place well two things first must understand happening moment economy current problems product recovery program getting underway would believe inheritance decades tax tax spend spend second economic problems deeply rooted respond quick political fixes must stick carefully integrated plan recovery plan based four commonsense fundamentals continued reduction growth federal spending preserving individual business tax reductions stimulate saving investment removing unnecessary federal regulations spark productivity maintaining healthy dollar stable monetary policy latter responsibility federal reserve system alternative offered economic program return policies gave us debt runaway inflation runaway interest rates unemployment doubters would us turn back clock tax increases would offset personal tax rate reductions already passed congress raise present taxes cut future deficits tell us well believe buy argument many imponderables anyone predict deficits surpluses several years ahead degree accuracy budget place took office projected balanced turned one biggest deficits history another example imponderables make deficit projections highly change one percentage point unemployment alter deficit 25 billion stands forecast required law make show major deficits starting less hundred billion dollars declining still high important making progress three keys reducing deficits economic growth lower interest rates spending control policies place reduce deficit steadily surely time completely higher taxes would mean lower deficits would explain tax revenues doubled since 1976 yet period ran largest series deficits history 1980 tax revenues increased 54 billion 1980 one biggest deficits raising taxes balance budget encourage government spending less private investment raising taxes slow economic growth reduce production destroy future jobs making difficult without jobs find likely jobs could lose ask try balance budget backs american taxpayers seek tax increases year intention retreating basic program tax relief promise bring american bring tax rates keep provide incentives rebuild economy save invest america future stand word tonight urging american people seize new opportunities produce save invest together make economy mighty engine freedom hope prosperity budget deficit year exceed earlier expectations recession lowered revenues increased costs extent also victims success brought inflation faster thought could deprived government hidden revenues occur inflation pushes people higher income tax brackets continued high interest rates last year cost government 5 billion anticipated must cut nonessential government spending rout waste continue efforts reduce number employees federal work force budget plan submit february 8th realize major savings dismantling departments energy education eliminating ineffective subsidies business continue redirect resources two highest budget strong national defense keep america free peace reliable safety net social programs contributed need contrary wild charges may heard administration turn back america elderly america poor new budget funding social insurance programs double amount spent 6 years ago would foolish pretend programs made efficient economical entitlement programs make safety net truly needy worthy goals many deserving recipients protect one way see programs really help designed help bring spiraling costs control today face absurd situation federal budget expenditures routinely referred uncontrollable large part goes entitlement programs committee committee congress heard witness witness describe many programs poorly administered rife waste fraud virtually every american shops local supermarket aware daily abuses take place food stamp program grown percent last 15 years another example medicare worthy goals whose costs increased billion almost 60 billion 5 times much 10 years waste fraud serious problems back 1980 federal investigators testified one committees corruption permeated virtually every area medicare medicaid health care industry one official said many people cheating system confident nothing going happen well something going happen taxpayers defrauded people real dependency programs deprived need available resources going needy greedy time come control uncontrollable august made start signed bill reduce growth programs 44 billion next 3 years time preserving essential services truly needy shortly receive message reforms intend new others long recommended congressional committees ask help make savings american taxpayer savings propose entitlement programs total 63 billion 4 years without affecting social security go long way toward bringing federal spending control fooled proclaim spending cuts deprive elderly needy helpless federal government still subsidize 95 million meals every day one seven meals served america head start senior nutrition programs child welfare programs cut levels proposed last year billion dollars proposed minority business assistance research national institute health increased 100 million meeting needs intend plug unwarranted tax loopholes strengthen law requires large corporations pay minimum tax confident economic program put operation protect needy triggers recovery benefit americans stimulate economy result increased savings provide capital expansion mortgages homebuilding jobs unemployed essentials program place next major undertaking must bold make government accountable people make system federalism work citizens feel lost control even basic decisions made essential services government schools welfare roads even garbage collection right maze interlocking jurisdictions levels government confronts average citizens trying solve even simplest problems know turn answers hold accountable praise blame vote main reason overpowering growth federal programs past decades 1960 federal government 132 categorical grant programs costing 7 billion took office approximately 500 costing nearly hundred billion programs energy 36 pollution control 66 social services 90 education congress takes least 166 committees try keep track know know neither president congress properly oversee jungle indeed growth grants led distortion vital functions government one democratic governor put recently national government worrying arms control potholes growth federal programs words one intergovernmental federal government pervasive intrusive unmanageable ineffective costly un accountable let us solve problem single bold stroke return 47 billion federal programs state local government together means finance transition period nearly 10 years avoid unnecessary disruption shortly send congress message describing program want emphasize however full details worked close consultation congressional state local officials starting fiscal 1984 federal government assume full responsibility cost rapidly growing medicaid program go along existing responsibility medicare part financially equal swap states simultaneously take full responsibility aid families dependent children food stamps make welfare less costly responsive genuine need designed administered closer grass roots people serves 1984 federal government apply full proceeds certain excise taxes grass roots trust fund belong fair shares 50 states total amount flowing fund 28 billion year next 4 years states use money either two ways want continue receiving federal grants areas transportation education social services use trust fund money pay grants extent choose forgo federal grant programs use trust fund money purposes mandatory part funds local governments 1988 states complete control 40 federal grant programs trust fund start phase eventually disappear excise taxes turned states preserve lower raise taxes fund manage programs see fit single stroke accomplishing realignment end cumbersome administration spiraling costs federal level ensure programs responsive people meant help people pay hand hand program strengthen discretion flexibility state local governments proposing legislation experimental effort improve develop depressed urban areas 1980 legislation permit states localities apply federal government designation urban enterprise zones broad range special economic incentives zones help attract new business new jobs new opportunity america inner cities rural towns say mission save free enterprise well say must free enterprise together save america also say states local communities challenge new creative partnership well might true 20 years ago reforms like reapportionment voting rights act extension strongly support longer true today administration faith state local governments constitutional balance envisioned founding fathers also believe integrity decency sound good sense grass roots americans faith american people reflected another major endeavor private sector initiatives task force seeking successful community models school church business union foundation civic programs help community needs groups almost invariably far efficient government running social programs asking replace discarded often discredited government programs dollar dollar service service want help perform good works choose help others profit example three hundred thousand corporations private organizations already working social programs ranging drug rehabilitation job training thousands americans written us asking help volunteer spirit still alive well america nation long journey towards civil rights source discord source continue backsliding slowing must shall see basic laws guarantee equal rights preserved necessary strengthened concern equal rights women firm unshakable launched new task force legal equity women fifty states project examine state laws discriminatory language first time history woman sits highest court land problem real deadly serious america today demands seek transformation legal system overly protects rights criminals leaves society innocent victims crime without justice look forward enactment responsible clean air act increase jobs continuing improve quality air encouraged bipartisan initiative house hopeful progress senate continues deliberations far concentrated largely domestic matters view state union perspective must ignore rest world time tonight lengthy treatment foreign policy say subject intend address detail near future words however order progress made past year reestablishing respect nation around globe challenges goals approach year ahead ottawa cancun met leaders major industrial powers developing nations met little surprised apologize america wealth instead spoke strength free marketplace system system could help realize aspirations economic development political freedom believe lasting friendships made foundation laid future cooperation vital region caribbean basin developing program aid trade investment incentives promote growth better secure life neighbors south toward would export terrorism subversion caribbean elsewhere especially cuba libya act firmness foreign policy policy strength fairness balance restoring america military credibility pursuing peace negotiating table wherever sides willing sit good faith regaining respect america allies adversaries alike strengthened country position force peace progress world action called taking sanctions military dictatorship attempted crush human rights soviet regime behind military demonstrated world america conduct business usual forces oppression events poland continue deteriorate measures follow let also note private american groups taken lead making january 30th day solidarity people poland european parliament called march 21st international day support afghanistan well urge peoples join together days raise voices speak pray freedom meanwhile working reduction arms military activities announced address nation last november 18th proposed soviet union agenda mutual reduction military forces already initiated negotiations geneva nuclear forces talks essential negotiate position strength must real incentive soviets take talks seriously requires rebuild defenses last decade sought moderation soviet power process restraint accommodation soviets engaged unrelenting buildup military forces protection national security required undertake substantial program enhance military forces neglected strengthen traditional alliances europe asia develop key relationships partners middle east countries building peaceful world requires sound strategy national resolve back radical forces threaten friends economic misfortune creates conditions instability strategically vital parts world fall shadow soviet power response make difference peaceful change disorder violence laid stress defense vital foreign assistance program recent passage foreign assistance act sent signal world america shrink making investments necessary peace security foreign policy must rooted realism naivete recognition soviet empire starting point winston churchill negotiating soviets observed respect strength resolve dealings nations moved reconstruct national defenses intend keep peace also keep freedom made pledges new frankness public statements worldwide broadcasts face climate falsehood misinformation promised world season truth great civilized ideas individual liberty representative government rule law god never needed walls minefields barbed wire keep people declare martial law keep people voting kind government want yes problems yes time recession true quick fix said instantly end tragic pain unemployment end process already begun see effect year goes speak pride admiration little band americans overcame insuperable odds set nation course 200 years ago glory end americans ever since emulated deeds turn history books heroes around us one sits among tonight epitomized heroism end longest imprisonment ever inflicted men armed forces ever forget night waited television bring us scene first plane landing clark field philippines bringing pow home plane door opened jeremiah denton came slowly ramp caught sight flag saluted said god bless america thanked us bringing home 2 weeks ago midst terrible tragedy potomac saw spirit american heroism heroism dedicated rescue workers saving crash victims icy waters saw heroism one young government employees lenny skutnik saw woman lose grip helicopter line dived water dragged safety countless quiet everyday heroes american life parents sacrifice long hard children know better life known church civic volunteers help feed clothe nurse teach needy millions made nation nation destiny heroes may realized dreams reinvest dreams children let anyone tell america best days behind american spirit vanquished seen triumph often lives stop believing hundred twenty years ago greatest presidents delivered second state union message chamber escape history abraham lincoln warned congress administration remembered spite trial pass light us honor dishonor latest last generation well president congress fail american people together weathered storm preserved union let said us fail worked together bring america difficult times let us conduct two centuries another congress another president meeting chamber meeting speak us pride saying met test preserved day sacred flame last best hope man earth god bless thank
speaker president distinguish member congress honor guest fellow citizen today mark first state union address constitutional duty old republic president washington begin tradition 1790 remind nation destiny preservation sacred fire liberty finally stake experiment entrust hand american people friend press place high premium accuracy let say actually hear george washington say laughter matter historic record laughter podium winston churchill ask free world stand together onslaught aggression franklin delano roosevelt spoke day infamy summon nation arm douglas macarthur make unforgettable farewell country love serve well dwight eisenhower remind u peace purchase price strength john kennedy speak burden glory freedom visit chamber last year newcomer washington critical past policy believe fail propose new spirit partnership congress administration washington state local government forge new partnership america could achieve old hope nation peace world blessing individual liberty child someday humanity duty report tonight progress make relation nation foundation carefully lay economic recovery finally bold spirit initiative believe change face american government make servant people seldom stake higher america say make difference autoworkers detroit lumberjack northwest steelworker steubenville unemployment line black teenager newark chicago farmer small businessmen million everyday american harbor simple wish safe financially secure future child understand state union must look go situation time last year truly ominous last decade see series recession recession 1970 1974 spring 1980 time unemployment increase inflation soon turn coined word stagflation describe government response recession pump money supply increase spending last 6 month 1980 example money supply increase fast rate postwar percent inflation remain double digits government spending increase annual rate 17 percent interest rate reach staggering percent 8 million unemployed late 1981 sank present recession largely continued high interest rate hurt auto industry construction drop productivity already high unemployment increase time however thing different economic program place completely different artificial quick fix past call reduction rate increase government spend already rate cut nearly half reduced spending first small phase tax rate reduction design stimulate economy create job already interest rate 15 percent must still go low inflation percent month december run annualized rate percent act thing would far bad american today inflation tax interest rate would higher year ago americans faith governmental process steadily decline six 10 american say pessimistic future new kind defeatism heard say domestic problem uncontrollable learn live seemingly endless cycle high inflation high unemployment also pessimistic prediction relationship administration congress say could never work together well prediction wrong record clear believe history remember era american renewal remember administration administration change remember congress congress destiny together cut increase government spend nearly half bring large tax reduction sweeping change tax structure since begin century indexed future tax rate inflation take away government profit inflation hidden incentive grow large expense american together 50 year take power away hand people state local community start return power resource together cut growth new federal regulation nearly half 1981 few page federal register list new regulation 1980 deregulate oil come closer achieve energy independence help bring cost gasoline heat fuel together create effective federal strike force combat waste fraud government 6 month save taxpayer 2 billion get start together begin mobilize private sector duplicate wasteful discredited government program bring thousand american volunteer effort help solve many america social problem together begin restore margin military safety ensures peace country uniform worn pride together make new begin begin one pretend way ahead easy inaugural address last year warn ill suffer come upon u several decade go away day week month go away americans capacity past whatever need do preserve last great bastion freedom economy face difficult moment month ahead program economic recovery place pull economy slump put u road prosperity stable growth latter half year report tonight near future state union economy summon strength continue course chart question fundamental place well two thing first must understand happen moment economy current problem product recovery program get underway would believe inheritance decade tax tax spend spend second economic problem deeply root respond quick political fix must stick carefully integrated plan recovery plan base four commonsense fundamental continue reduction growth federal spending preserve individual business tax reduction stimulate save investment remove unnecessary federal regulation spark productivity maintain healthy dollar stable monetary policy latter responsibility federal reserve system alternative offered economic program return policy give u debt runaway inflation runaway interest rate unemployment doubter would u turn back clock tax increase would offset personal tax rate reduction already pass congress raise present tax cut future deficit tell u well believe buy argument many imponderable anyone predict deficit surplus several year ahead degree accuracy budget place take office project balance turned one big deficit history another example imponderable make deficit projection highly change one percentage point unemployment alter deficit 25 billion stand forecast required law make show major deficit start less hundred billion dollar decline still high important making progress three key reduce deficit economic growth low interest rate spend control policy place reduce deficit steadily surely time completely high tax would mean low deficit would explain tax revenue double since 1976 yet period run large series deficit history 1980 tax revenue increase 54 billion 1980 one big deficit raise tax balance budget encourage government spending less private investment raise tax slow economic growth reduce production destroy future job make difficult without job find likely job could lose ask try balance budget back american taxpayer seek tax increase year intention retreat basic program tax relief promise bring american bring tax rate keep provide incentive rebuild economy save invest america future stand word tonight urge american people seize new opportunity produce save invest together make economy mighty engine freedom hope prosperity budget deficit year exceed early expectation recession lower revenue increase cost extent also victim success bring inflation faster thought could deprive government hidden revenue occur inflation push people high income tax bracket continue high interest rate last year cost government 5 billion anticipate must cut nonessential government spending rout waste continue effort reduce number employee federal work force budget plan submit february 8th realize major saving dismantle department energy education eliminate ineffective subsidy business continue redirect resource two high budget strong national defense keep america free peace reliable safety net social program contribute need contrary wild charge may hear administration turn back america elderly america poor new budget funding social insurance program double amount spend 6 year ago would foolish pretend program make efficient economical entitlement program make safety net truly needy worthy goal many deserve recipient protect one way see program really help design help bring spiral cost control today face absurd situation federal budget expenditures routinely refer uncontrollable large part go entitlement program committee committee congress heard witness witness describe many program poorly administer rife waste fraud virtually every american shop local supermarket aware daily abuse take place food stamp program grow percent last 15 year another example medicare worthy goal whose cost increase billion almost 60 billion 5 time much 10 year waste fraud serious problem back 1980 federal investigator testify one committee corruption permeate virtually every area medicare medicaid health care industry one official say many people cheat system confident nothing go happen well something go happen taxpayer defraud people real dependency program deprive need available resource go needy greedy time come control uncontrollable august make start sign bill reduce growth program 44 billion next 3 year time preserve essential service truly needy shortly receive message reform intend new others long recommend congressional committee ask help make saving american taxpayer saving propose entitlement program total 63 billion 4 year without affect social security go long way toward bring federal spending control fool proclaim spending cut deprive elderly needy helpless federal government still subsidize 95 million meal every day one seven meal serve america head start senior nutrition program child welfare program cut level propose last year billion dollar propose minority business assistance research national institute health increase 100 million meeting need intend plug unwarranted tax loophole strengthen law require large corporation pay minimum tax confident economic program put operation protect needy trigger recovery benefit american stimulate economy result increase saving provide capital expansion mortgage homebuilding job unemployed essential program place next major undertaking must bold make government accountable people make system federalism work citizen feel lose control even basic decision make essential service government school welfare road even garbage collection right maze interlock jurisdiction level government confronts average citizen try solve even simple problem know turn answer hold accountable praise blame vote main reason overpower growth federal program past decade 1960 federal government 132 categorical grant program cost 7 billion take office approximately 500 cost nearly hundred billion program energy 36 pollution control 66 social service 90 education congress take least 166 committee try keep track know know neither president congress properly oversee jungle indeed growth grant lead distortion vital function government one democratic governor put recently national government worry arm control potholes growth federal program word one intergovernmental federal government pervasive intrusive unmanageable ineffective costly un accountable let u solve problem single bold stroke return 47 billion federal program state local government together mean finance transition period nearly 10 year avoid unnecessary disruption shortly send congress message describe program want emphasize however full detail work close consultation congressional state local official start fiscal 1984 federal government assume full responsibility cost rapidly grow medicaid program go along exist responsibility medicare part financially equal swap state simultaneously take full responsibility aid family dependent child food stamp make welfare less costly responsive genuine need design administer closer grass root people serf 1984 federal government apply full proceeds certain excise tax grass root trust fund belong fair share 50 state total amount flow fund 28 billion year next 4 year state use money either two way want continue receive federal grant area transportation education social service use trust fund money pay grant extent choose forgo federal grant program use trust fund money purpose mandatory part fund local government 1988 state complete control 40 federal grant program trust fund start phase eventually disappear excise tax turn state preserve low raise tax fund manage program see fit single stroke accomplish realignment end cumbersome administration spiral cost federal level ensure program responsive people mean help people pay hand hand program strengthen discretion flexibility state local government propose legislation experimental effort improve develop depressed urban area 1980 legislation permit state locality apply federal government designation urban enterprise zone broad range special economic incentive zone help attract new business new job new opportunity america inner city rural town say mission save free enterprise well say must free enterprise together save america also say state local community challenge new creative partnership well might true 20 year ago reform like reapportionment voting right act extension strongly support long true today administration faith state local government constitutional balance envision found father also believe integrity decency sound good sense grass root americans faith american people reflect another major endeavor private sector initiative task force seek successful community model school church business union foundation civic program help community need group almost invariably far efficient government run social program ask replace discarded often discredited government program dollar dollar service service want help perform good work choose help others profit example three hundred thousand corporation private organization already work social program range drug rehabilitation job train thousand american write u ask help volunteer spirit still alive well america nation long journey towards civil right source discord source continue backslide slowing must shall see basic law guarantee equal right preserve necessary strengthen concern equal right woman firm unshakable launch new task force legal equity woman fifty state project examine state law discriminatory language first time history woman sit high court land problem real deadly serious america today demand seek transformation legal system overly protect right criminal leaf society innocent victim crime without justice look forward enactment responsible clean air act increase job continue improve quality air encourage bipartisan initiative house hopeful progress senate continue deliberation far concentrate largely domestic matter view state union perspective must ignore rest world time tonight lengthy treatment foreign policy say subject intend address detail near future word however order progress make past year reestablish respect nation around globe challenge goal approach year ahead ottawa cancun meet leader major industrial power develop nation meet little surprised apologize america wealth instead speak strength free marketplace system system could help realize aspiration economic development political freedom believe last friendship make foundation laid future cooperation vital region caribbean basin develop program aid trade investment incentive promote growth well secure life neighbor south toward would export terrorism subversion caribbean elsewhere especially cuba libya act firmness foreign policy policy strength fairness balance restore america military credibility pursue peace negotiate table wherever side willing sit good faith regain respect america ally adversary alike strengthen country position force peace progress world action call take sanction military dictatorship attempt crush human right soviet regime behind military demonstrate world america conduct business usual force oppression event poland continue deteriorate measure follow let also note private american group take lead make january 30th day solidarity people poland european parliament call march 21st international day support afghanistan well urge people join together day raise voice speak pray freedom meanwhile work reduction arm military activity announce address nation last november 18th propose soviet union agenda mutual reduction military force already initiate negotiation geneva nuclear force talk essential negotiate position strength must real incentive soviet take talk seriously require rebuild defense last decade seek moderation soviet power process restraint accommodation soviet engage unrelenting buildup military force protection national security require undertake substantial program enhance military force neglect strengthen traditional alliance europe asia develop key relationship partner middle east country build peaceful world require sound strategy national resolve back radical force threaten friend economic misfortune creates condition instability strategically vital part world fall shadow soviet power response make difference peaceful change disorder violence lay stress defense vital foreign assistance program recent passage foreign assistance act send signal world america shrink make investment necessary peace security foreign policy must root realism naivete recognition soviet empire start point winston churchill negotiate soviet observe respect strength resolve dealing nation move reconstruct national defense intend keep peace also keep freedom make pledge new frankness public statement worldwide broadcast face climate falsehood misinformation promise world season truth great civilized idea individual liberty representative government rule law god never need wall minefield barb wire keep people declare martial law keep people vote kind government want yes problem yes time recession true quick fix say instantly end tragic pain unemployment end process already begin see effect year go speak pride admiration little band american overcome insuperable odds set nation course 200 year ago glory end americans ever since emulate deed turn history book heroes around u one sit among tonight epitomize heroism end long imprisonment ever inflict men arm force ever forget night wait television bring u scene first plane land clark field philippine bring pow home plane door open jeremiah denton come slowly ramp caught sight flag salute say god bless america thank u bring home 2 week ago midst terrible tragedy potomac saw spirit american heroism heroism dedicate rescue worker save crash victim icy water saw heroism one young government employee lenny skutnik saw woman lose grip helicopter line dive water drag safety countless quiet everyday hero american life parent sacrifice long hard child know good life know church civic volunteer help fee clothe nurse teach needy million make nation nation destiny hero may realize dream reinvest dream child let anyone tell america best day behind american spirit vanquish see triumph often live stop believing hundred twenty year ago great president deliver second state union message chamber escape history abraham lincoln warn congress administration remember spite trial pas light u honor dishonor late last generation well president congress fail american people together weather storm preserve union let say u fail work together bring america difficult time let u conduct two century another congress another president meet chamber meeting speak u pride say meet test preserve day sacred flame last best hope man earth god bless thank