Our major alliances with Japan, Australia and New Zealand are now

stronger than they ever have been, and together with the nations of

western Europe, we have begun to form the basic political structure for

dealing with international crises that affect us all. Japan, Australia

and New Zealand have given us strong support in developing a strategy

for responding to instability in the Persian Gulf.

Normalization of U.S. relations with China has facilitated China’s full

entry into the international community and encouraged a constructive

Chinese role in the Asia-Pacific region. Our relations with China have

been rapidly consolidated over the past year through the conclusion of a

series of bilateral agreements. We have established a pattern of

frequent and frank consultations between our two governments,

exemplified by a series of high-level visits and by regular exchanges at

the working level, through which we have been able to identify

increasingly broad areas of common interest on which we can cooperate.

United States relations with the Association of Southeast Asian Nations

(ASEAN) have also expanded dramatically in the past four years. ASEAN is

now the focus for U.S. policy in Southeast Asia, and its cohesion and

strength are essential to stability in this critical area and beyond.

Soviet-supported Vietnamese aggression in Indo-china has posed a major

challenge to regional stability. In response, we have reiterated our

security commitment to Thailand and have provided emergency security

assistance for Thai forces facing a Vietnamese military threat along the

Thai-Cambodian border. We have worked closely with ASEAN and the U.N. to

press for withdrawal of Vietnamese forces from Cambodia and to encourage

a political settlement in Cambodia which permits that nation to be

governed by leaders of its own choice. We still look forward to the day

when Cambodia peacefully can begin the process of rebuilding its social,

economic and political institutions, after years of devastation and

occupation. And, on humanitarian grounds and in support of our friends

in the region, we have worked vigorously with international

organizations to arrange relief and resettlement for the exodus of

Indo-chinese refugees which threatened to overwhelm these nations.

We have maintained our alliance with Korea and helped assure Korea’s

security during a difficult period of political transition.

We have amended our military base agreement with the Philippines,

ensuring stable access to these bases through 1991. The importance of

our Philippine bases to the strategic flexibility of U.S. forces and our

access to the Indian Ocean is self-evident.

Finally, we are in the process of concluding a long negotiation

establishing Micronesia’s status as a freely associated state.

We enter the 1980’s with a firm strategic footing in East Asia and the

Pacific, based on stable and productive U.S. relations with the majority

of countries of the region. We have established a stable level of U.S.

involvement in the region, appropriate to our own interests and to the

interests of our friends and allies there.

THE MIDDLE EAST AND SOUTHWEST ASIA

The continuing Soviet occupation of Afghanistan and the dislocations

caused by the Iraq-Iran war serve as constant reminders of the critical

importance for us, and our allies, of a third strategic zone stretching

across the Middle East, the Persian Gulf, and much of the Indian

subcontinent. This Southwest Asian region has served as a key strategic

and commercial link between East and West over the centuries. Today it

produces two-thirds of the world’s oil exports, providing most of the

energy needs of our European allies and Japan. It has experienced almost

continuous conflict between nations, internal instabilities in many

countries, and regional rivalries, combined with very rapid economic and

social change. And now the Soviet Union remains in occupation of one of

these nations, ignoring world opinion which has called on it to get out.

We have taken several measures to meet these challenges.

MIDDLE EAST

In the Middle East, our determination to consolidate what has already

been achieved in the peace process--and to buttress that accomplishment

with further progress toward a comprehensive peace settlement--must

remain a central goal of our foreign policy. Pursuant to their peace

treaty, Egypt and Israel have made steady progress in the normalization

of their relations in a variety of fields, bringing the benefits of

peace directly to their people. The new relationship between Egypt and

Israel stands as an example of peaceful cooperation in an increasingly

fragmented and turbulent region.

Both President Sadat and Prime Minister Begin remain committed to the

current negotiations to provide full autonomy to the inhabitants of the

West Bank and Gaza. These negotiations have been complex and difficult,

but they have already made significant progress, and it is vital that

the two sides, with our assistance, see the process through to a

successful conclusion. We also recognize the need to broaden the peace

process to include other parties to the conflict and believe that a

successful autonomy agreement is an essential first step toward this

objective.

We have also taken a number of steps to strengthen our bilateral

relations with both Israel and Egypt. We share important strategic

interests with both of these countries.

We remain committed to Israel’s security and are prepared to take

concrete steps to support Israel whenever that security is threatened.

PERSIAN GULF

The Persian Gulf has been a vital crossroads for trade between Europe

and Asia at many key moments in history. It has become essential in

recent years for its supply of oil to the United States, our allies, and

our friends. We have taken effective measures to control our own

consumption of imported fuel, working in cooperation with the other key

industrial / nations of the world. However, there is little doubt that

the healthy growth of our American and world economies will depend for

many years on continued safe access to the Persian Gulf’s oil

production. The denial of these oil supplies would threaten not only our

own but world security.

The potent new threat from an advancing Soviet Union, against the

background of regional instability of which it can take advantage,

requires that we reinforce our ability to defend our regional friends

and to protect the flow of oil. We are continuing to build on the strong

political, economic, social and humanitarian ties which bind this

government and the American people to friendly governments and peoples

of the Persian Gulf.

We have also embarked on a course to reinforce the trust and confidence

our regional friends have in our ability to come to their assistance

rapidly with American military force if needed. We have increased our

naval presence in the Indian Ocean. We have created a Rapid Deployment

Force which can move quickly to the Gulf--or indeed any other area of

the world where outside aggression threatens. We have concluded several

agreements with countries which are prepared to let us use their

airports and naval facilities in an emergency. We have met requests for

reasonable amounts of American weaponry from regional countries which

are anxious to defend themselves. And we are discussing with a number of

our area friends further ways we can help to improve their security and

ours, both for the short and the longer term.

SOUTH ASIA

We seek a South Asia comprising sovereign and stable states, free of

outside interference, which can strengthen their political institutions

according to their own national genius and can develop their economies

for the betterment of their people.

The Soviet invasion of Afghanistan has posed a new challenge to this

region, and particularly to neighboring Pakistan. We are engaged in a

continuing dialogue with the Pakistan government concerning its

development and security requirements and the economic burden imposed by

Afghan refugees who have fled to Pakistan. We are participating with

other aid consortium members in debt rescheduling and will continue to

cooperate through the UNHCR in providing refugee assistance. We remain

committed to Pakistan’s territorial integrity and independence.

Developments in the broad South/Southwest Asian region have also lent a

new importance to our relations with India, the largest and strongest

power in the area. We share India’s interest in a more constructive

relationship. Indian policies and perceptions at times differ from our

own, and we have established a candid dialogue with this sister

democracy which seeks to avoid the misunderstandings which have

sometimes complicated our ties.

We attach major importance to strong economic assistance programs to the

countries in the area, which include a majority of the poor of the

non-Communist world. We believe that these programs will help achieve

stability in the area, an objective we share with the countries in the

region. Great progress has been achieved by these countries in

increasing food production; international cooperation in harnessing the

great river resources of South Asia would contribute further to this

goal and help to increase energy production.

We continue to give high priority to our non-proliferation goals in the

area in the context of our broad global and regional priorities. The

decision to continue supply of nuclear fuel to the Indian Tarapur

reactors was sensitive to this effort.

AFRICA

The United States has achieved a new level of trust and cooperation with

Africa. Our efforts, together with our allies, to achieve peace in

southern Africa, our increased efforts to help the poorest countries in

Africa to combat poverty, and our expanded efforts to promote trade and

investment have led to growing respect for the U.S. and to cooperation

in areas of vital interest to the United States.

Africa is a continent of poor nations for the most part. It also

contains many of the mineral resources vital for our economy. We have

worked with Africa in a spirit of mutual cooperation to help the African

nations solve their problems of poverty and to develop stronger ties

between our private sector and African economies. Our assistance to

Africa has more than doubled in the last four years. Equally important,

we set in motion new mechanisms for private investment and trade.

Nigeria is the largest country in Black Africa and the second largest

oil supplier to the United States. During this Administration we have

greatly expanded and improved our relationship with Nigeria and other

West African states whose aspirations for a constitutional democratic

order we share and support. This interest was manifested both

symbolically and practically by the visit of Vice President Mondale to

West Africa in July (1980) and the successful visit to Washington of the

President of Nigeria in October.

During Vice President Mondale’s visit, a Joint Agricultural Consultative

Committee was established, with the U.S. represented entirely by the

private sector. This could herald a new role for the American private

sector in helping solve the world’s serious food shortages. I am pleased

to say that our relations with Nigeria are at an all-time high,

providing the foundation for an even stronger relationship in the years

ahead.

Another tenet of this Administration’s approach to African problems has

been encouragement and support for regional solutions to Africa’s

problems. We have supported initiatives by the Organization of African

Unity to solve the protracted conflict in the western Sahara, Chad, and

the Horn. In Chad, the world is watching with dismay as a country torn

by a devastating civil war has become a fertile field for Libya’s

exploitation, thus demonstrating that threats to peace can come from

forces within as well as without Africa.

In southern Africa the United States continues to pursue a policy of

encouraging peaceful development toward majority rule. In 1980, Southern

Rhodesia became independent as Zimbabwe, a multiracial nation under a

system of majority rule. Zimbabwean independence last April was the

culmination of a long struggle within the country and diplomatic efforts

involving Great Britain, African states neighboring Zimbabwe, and the

United States.

The focus of our efforts in pursuit of majority rule in southern Africa

has now turned to Namibia. Negotiations are proceeding among concerned

parties under the leadership of U.N. Secretary General Waldheim. This

should lead to implementation of the U.N. plan for self-determination

and independence for Namibia during 1981. If these negotiations are

successfully concluded, sixty-five years of uncertainty over the status

of the territory, including a seven-year-long war, will be ended.

In response to our active concern with issues of importance to Africans,

African states have cooperated with us on issues of importance to our

national interests. African states voted overwhelmingly in favor of the

U.N. Resolution calling for release of the hostages, and for the U.N.

Resolution condemning the Soviet invasion of Afghanistan. Two countries

of Africa have signed access agreements with the U.S. allowing us use of

naval and air facilities in the Indian Ocean.

Africans have become increasingly vocal on human rights. African leaders

have spoken out on the issue of political prisoners, and the OAU is

drafting its own Charter on Human Rights. Three countries in Africa--

Nigeria, Ghana, and Uganda--have returned to civilian rule during the

past year.

U.S. cooperation with Africa on all these matters represents a strong

base on which we can build in future years.

Liberia is a country of long-standing ties with the U.S. and the site of

considerable U.S. investment and facilities. This past April a coup

replaced the government and a period of political and economic

uncertainty ensued. The U.S. acted swiftly to meet this situation. We,

together with African leaders, urged the release of political prisoners,

and many have been released; we provided emergency economic assistance

to help avoid economic collapse, and helped to involve the IMF and the

banking community to bring about economic stability; and we have worked

closely with the new leaders to maintain Liberia’s strong ties with the

West and to protect America’s vital interests.

NORTH AFRICA

In early 1979, following a Libyan-inspired commando attack on a Tunisian

provincial city, the U.S. responded promptly to Tunisia’s urgent request

for assistance, both by airlifting needed military equipment and by

making clear our longstanding interest in the security and integrity of

this friendly country. The U.S. remains determined to oppose other

irresponsible Libyan aspirations. Despairing of a productive dialogue

with the Libyan authorities, the U.S. closed down its embassy in Libya

and later expelled six Libyan diplomats in Washington in order to deter

an intimidation campaign against Libyan citizens in the U.S.

U.S. relations with Algeria have improved, and Algeria has played an

indispensable and effective role as intermediary between Iran and the

U.S. over the hostage issue.

The strengthening of our arms supply relationship with Morocco has

helped to deal with attacks inside its internationally recognized

frontiers and to strengthen its confidence in seeking a political

settlement of the Western Sahara conflict. While not assuming a

mediatory role, the U.S. encouraged all interested parties to turn their

energies to a peaceful and sensible compromise resolution of the war in

the Sahara and supported efforts by the Organization of African Unity

toward that end. As the year drew to a close, the U.S. was encouraged by

evolution in the attitudes of all sides, and is hopeful that their

differences will be peacefully resolved in the year ahead so that the

vast economic potential of North Africa can be developed for the

well-being of the people living there.

LATIN AMERICA AND THE CARIBBEAN

The principles of our policies in this hemisphere have been clear and

constant over the last four years. We support democracy and respect for

human rights. We have struggled with many to help free the region of

both repression and terrorism. We have respected ideological diversity

and opposed outside intervention in purely internal affairs. We will

act, though, in response to a request for assistance by a country

threatened by external aggression. We support social and economic

development within a democratic framework. We support the peaceful

settlement of disputes. We strongly encourage regional cooperation and

shared responsibilities within the hemisphere to all these ends, and we

have eagerly and regularly sought the advice of the leaders of the

region on a wide range of issues.

Last November, I spoke to the General Assembly of the Organization of

American States of a cause that has been closest to my heart--human

rights. It is an issue that has found its time in the hemisphere. The

cause is not mine alone, but an historic movement that will endure.

At Riobamba, Ecuador, last September four Andean Pact countries, Costa

Rica, and Panama broke new ground by adopting a “Code of Conduct,” that

joint action in defense of human rights does not violate the principles

of nonintervention in the internal affairs of states in this hemisphere.

The Organization of American States has twice condemned the coup that

overturned the democratic process in Bolivia and the widespread abuse of

human rights by the regime which seized power. The Inter-American

Commission on Human Rights has gained world acclaim for its

dispassionate reports. It completed two major country studies this year

in addition to its annual report. In a resolution adopted without

opposition, the OAS General Assembly in November strongly supported the

work of the Commission. The American Convention on Human Rights is in

force and an Inter-American Court has been created to judge human rights

violations. This convention has been pending before the Senate for two

years; I hope the United States this year will join the other nations of

the hemisphere in ratifying a convention which embodies principles that

are our tradition.

The trend in favor of democracy has continued. During this past year,

Peru inaugurated a democratically elected government. Brazil continues

its process of liberalization. In Central America, Hondurans voted in

record numbers in their first national elections in over eight years. In

the Caribbean seven elections have returned governments firmly committed

to the democratic traditions of the Commonwealth.

Another major contribution to peace in the hemisphere is Latin America’s

own Treaty for the Prohibition of Nuclear Weapons. On behalf of the

United States, I signed Protocol I of this Treaty in May of 1977 and

sent it to the Senate for ratification. I urge that it be acted upon

promptly by the Senate in order that it be brought into the widest

possible effect in the Latin American region.

Regional cooperation for development is gaining from Central America to

the Andes, and throughout the Caribbean. The Caribbean Group for

Cooperation in Economic Development, which we established with 29 other

nations in 1977, has helped channel $750 million in external support for

growth in the Caribbean. The recent meeting of the Chiefs of State of

the Eastern Caribbean set a new precedent for cooperation in that

region. Mexico and Venezuela jointly and Trinidad and Tobago separately

have established oil facilities that will provide substantial assistance

to their oil importing neighbors. The peace treaty between El Salvador

and Honduras will hopefully stimulate Central America to move forward

again toward economic integration. Formation of Caribbean/ Central

American Action, a private sector organization, has given a major

impetus to improving people-to-people bonds and strengthening the role

of private enterprise in the development of democratic societies.

The Panama treaties have been in force for over a year. A new

partnership has been created with Panama; it is a model for large and

small nations. A longstanding issue that divided us from our neighbors

has been resolved. The security of the canal has been enhanced. The

canal is operating as well as ever, with traffic through it reaching

record levels this year. Canal employees, American and Panamanian alike,

have remained on the job and have found their living and working

conditions virtually unchanged.

In 1980, relations with Mexico continued to improve due in large measure

to the effectiveness of the Coordinator for Mexican Affairs and the

expanded use of the U.S.-Mexico Consultative Mechanism. By holding

periodic meetings of its various working groups, we have been able to

prevent mutual concerns from becoming political issues. The Secretary of

State visited Mexico City in November, and, along with the Mexican

Secretary of Foreign Relations, reviewed the performance of the

Consultative Mechanism. The office of the Coordinator has ensured the

implementation of my directive to all agencies to accord high priority

to Mexican concerns. Trade with Mexico rose by almost 60 percent to

nearly $30 billion, making that country our third largest trading

partner.

These are all encouraging developments. Other problems remain, however.

The impact of large-scale migration is affecting many countries in the

hemisphere. The most serious manifestation was the massive, illegal

exodus from Cuba last summer. The Cuban government unilaterally

encouraged the disorderly and even deadly migration of 125,000 of its

citizens in complete disregard for international law or the immigration

laws of its neighbors. Migrations of this nature clearly require

concerted action, and we have asked the OAS to explore means of dealing

with similar situations which may occur in the future.

We have a long-standing treaty with Colombia on Quita Sueno, Roncador,

and Serrano which remains to be ratified by the Senate.

In Central America, the future of Nicaragua is unclear. Recent tensions,

the restrictions on the press and political activity, an inordinate

Cuban presence in the country and the tragic killing by the security

forces of a businessman well known for his democratic orientation, cause

us considerable concern. These are not encouraging developments. But

those who seek a free society remain in the contest for their nation’s

destiny. They have asked us to help rebuild their country, and by our

assistance, to demonstrate that the democratic nations do not intend to

abandon Nicaragua to the Cubans. As long as those who intend to pursue

their pluralistic goals play important roles in Nicaragua, it deserves

our continuing support.

In El Salvador, we have supported the efforts of the Junta to change the

fundamental basis of an inequitable system and to give a stake in a new

nation to those millions of people, who for so long, lived without hope

or dignity. As the government struggles against those who would restore

an old tyranny or impose a new one, the United States will continue to

stand behind them.

We have increased our aid to the Caribbean, an area vital to our

national security, and we should continue to build close relations based

on mutual respect and understanding, and common interests.

As the nations of this hemisphere prepare to move further into the

1980’s, I am struck by the depth of underlying commitment that there is

to our common principles: non-intervention, peaceful settlement of

disputes, cooperation for development, democracy and defense of basic

human rights. I leave office satisfied that the political, economic,

social and organizational basis for further progress with respect to all

these principles have been substantially strengthened in the past four

years. I am particularly reassured by the leadership by other nations of

the hemisphere in advancing these principles. The success of our common

task of improving the circumstances of all peoples and nations in the

hemisphere can only be assured by the sharing of responsibility. I look

forward to a hemisphere that at the end of this decade has proven itself

anew as a leader in the promotion of both national and human dignity.

THE INTERNATIONAL ECONOMY

A growing defense effort and a vigorous foreign policy rest upon a

strong economy here in the United States. And the strength of our own

economy depends upon our ability to lead and compete in the

international marketplace.

ENERGY

Last year, the war between Iraq and Iran led to the loss of nearly 4

million barrels of oil to world markets, the third major oil market

disruption in the past seven years. This crisis has vividly demonstrated

once again both the value of lessened dependence on oil imports and the

continuing instability of the Persian Gulf area.

Under the leadership of the United States, the 21 members of the

International Energy Agency took collective action to ensure that the

oil shortfall stemming from the Iran-Iraq war would not be aggravated by

competition for scarce spot market supplies. We are also working

together to see that those nations most seriously affected by the oil

disruption-- including our key NATO allies Turkey and Portugal--can get

the oil they need. At the most recent IEA Ministerial meeting we joined

the other members in pledging to take those policy measures necessary to

slice our joint oil imports in the first quarter of 1981 by 2.2 million

barrels.

Our international cooperation efforts in the energy field are not

limited to crisis management. At the Economic Summit meetings in Tokyo

and Venice, the heads of government of the seven major industrial

democracies agreed to a series of tough energy conservation and

production goals. We are working together with all our allies and

friends in this effort.

Construction has begun on a commercial scale coal liquefaction plant in

West Virginia co-financed by the United States, Japan and West Germany.

An interagency task force has just reported to me on a series of

measures we need to take to increase coal production and exports. This

report builds on the work of the International Energy Agency’s Coal

Industry Advisory Board. With the assurances of a reliable United States

steam coal supply at reasonable prices, many of the electric power

plants to be built in the 1980’s and 1990’s can be coal-fired rather

than oil-burning.

We are working cooperatively with other nations to increase energy

security in other areas as well. Joint research and development with our

allies is underway in solar energy, nuclear power, industrial

conservation and other areas. In addition, we are assisting rapidly

industrializing nations to carefully assess their basic energy policy

choices, and our development assistance program helps the developing

countries to increase indigenous energy production to meet the energy

needs of their poorest citizens. We support the proposal for a new World

Bank energy affiliate to these same ends, whose fulfillment will

contribute to a better global balance between energy supply and demand.

INTERNATIONAL MONETARY POLICY

Despite the rapid increase in oil costs, the policy measures we have

taken to improve domestic economic performance have had a continued

powerful effect on our external accounts and on the strength of the

dollar. A strong dollar helps in the fight against inflation.

There has also been considerable forward movement in efforts to improve

the functioning of the international monetary system. The stability of

the international system of payments and trade is important to the

stability and good health of our own economy. We have given strong

support to the innovative steps being taken by the International

Monetary Fund and World Bank to help promote early adjustment to the

difficult international economic problems. Recent agreement to increase

quotas by fifty percent will ensure the IMF has sufficient resources to

perform its central role in promoting adjustment and financing payments

imbalances. The World Bank’s new structural adjustment lending program

will also make an important contribution to international efforts to

help countries achieve a sustainable level of growth and development.

SUGAR

In 1980, Congress passed U.S. implementing legislation for the

International Sugar Agreement, thus fulfilling a major commitment of

this Administration. The agreement is an important element in our

international commodity policy with far-reaching implications for our

relations with developing countries, particularly sugar producers in

Latin America. Producers and consumers alike will benefit from a more

stable market for this essential commodity.

COFFEE

At year’s end, Congress approved implementing legislation permitting the

U.S. to carry out fully its commitments under International Coffee

Agreement Specifically, the legislation enables us to meet our part of

an understanding negotiated last fall among members of the Agreement,

which defends, by use of export quotas, a price range well below coffee

prices of previous years and which commits major coffee producers to

eliminate cartel arrangements that manipulated future markets to raise

prices. The way is now open to a fully-functioning International Coffee

Agreement which can help to stabilize this major world commodity market.

The results will be positive for both consumers--who will be less likely

to suffer from sharp increases in coffee prices--and producers--who can

undertake future investment with assurance of greater protection against

disruptive price fluctuations in their exports.

NATURAL RUBBER

In 1980, the International Natural Rubber Agreement entered into force

provisionally. U.S. membership in this new body was approved

overwhelmingly by the Senate last year. The natural rubber agreement is

a model of its kind and should make a substantial contribution to a

stable world market in this key industrial commodity. It is thus an

excellent example of constructive steps to improve the operation of the

world economy in ways which can benefit the developing and

industrialized countries alike. In particular, the agreement has

improved important U.S. relationships with the major natural

rubber-producing countries of Southeast Asia.

COMMON FUND

The United States joined members of the United Nations Conference on

Trade and Development, both developed and developing nations, in

concluding Articles of Agreement in 1980 for a Common Fund to help

international commodity agreements stabilize the prices of raw

materials.

ECONOMIC COOPERATION WITH DEVELOPING NATIONS

Our relations with the developing nations are of major importance to the

United States. The fabric of our relations with these countries has

strong economic and political dimensions. They constitute the most

rapidly growing markets for our exports, and are important sources of

fuel and raw materials. Their political views are increasingly

important, as demonstrated in their overwhelming condemnation of the

Soviet invasion of Afghanistan. Our ability to work together with

developing nations toward goals we have in common (their political

independence, the resolution of regional tensions, and our growing ties

of trade for example) require us to maintain the policy of active

involvement with the developing world that we have pursued over the past

four years.

The actions we have taken in such areas as energy, trade, commodities,

and international financial institutions are all important to the

welfare of the developing countries. Another important way the United

States can directly assist these countries and demonstrate our concern

for their future is through our multilateral and bilateral foreign

assistance program. The legislation which I will be submitting to you

for FY 82 provides the authority and the funds to carry on this

activity. Prompt Congressional action on this legislation is essential

in order to attack such high priority global problems as food and

energy, meet our treaty and base rights agreements, continue our peace

efforts in the Middle East, provide economic and development support to

countries in need, promote progress on North-South issues, protect

Western interests, and counter Soviet influence.

Our proposed FY 1982 bilateral development aid program is directly

responsive to the agreement reached at the 1980 Venice Economic Summit

that the major industrial nations should increase their aid for food and

energy production and for family planning. We understand that other

Summit countries plan similar responses. It is also important to honor

our international agreements for multilateral assistance by authorizing

and appropriating funds for the International Financial Institutions.

These multilateral programs enhance the efficiency of U.S. contributions

by combining them with those of many other donor countries to promote

development; the proposed new World Bank affiliate to increase energy

output in developing countries offers particular promise. All these

types of aid benefit our long-run economic and political interests.

Progress was made on a number of economic issues in negotiations

throughout the U.N. system. However, in spite of lengthy efforts in the

United Nations, agreement has not been reached on how to launch a

process of Global Negotiations in which nations might collectively work

to solve such important issues as energy, food, protectionism, and

population pressures. The United States continues to believe that

progress can best be made when nations focus on such specific problems,

rather than on procedural and institutional questions. It will continue

to work to move the North-South dialogue into a more constructive phase.

FOOD--THE WAR ON HUNGER

The War on Hunger must be a continuous urgent priority. Major portions

of the world’s population continue to be threatened by the specter of

hunger and malnutrition. During the past year, some 150 million people

in 36 African countries were faced with near disaster as the result of

serious drought, induced food shortages. Our government, working in

concert with the U.N.’s Food and Agricultural Organization (FAO), helped

to respond to that need. But the problems of hunger cannot be solved by

short-term measures. We must continue to support those activities,

bilateral and multilateral, which aim at improving food production

especially in developing countries and assuring global food security.

These measures are necessary to the maintenance of a stable and healthy

world economy.

I am pleased that negotiation of a new Food Aid Convention, which

guarantees a minimum annual level of food assistance, was successfully

concluded in March. The establishment of the International Emergency

Wheat Reserve will enable the U.S. to meet its commitment under the new

Convention to feed hungry people, even in times of short supply.

Of immediate concern is the prospect of millions of Africans threatened

by famine because of drought and civil disturbances. The U.S. plea for

increased food aid resulted in the organization of an international

pledging conference and we are hopeful that widespread starvation will

be avoided.

Good progress has been made since the Venice Economic Summit called for

increased effort on this front. We and other donor countries have begun

to assist poor countries develop long-term strategies to improve their

food production. The World Bank will invest up to $4 billion in the next

few years in improving the grain storage and food-handling capacity of

countries prone to food shortages.

Good progress has been made since the Tokyo Economic Summit called for

increased effort on this front. The World Bank is giving this problem

top priority, as are some other donor countries. The resources of the

consultative Group on International Agricultural Research will be

doubled over a five-year period. The work of our own Institute of

Scientific and Technological Cooperation will further strengthen the

search for relevant new agricultural technologies.

The goal of freeing the world from hunger by the year 2000 should

command the full support of all countries.

The Human Dimension of Foreign Policy

HUMAN RIGHTS

The human rights policy of the United States has been an integral part

of our overall foreign policy for the past several years. This policy

serves the national interest of the United States in several important

ways: by encouraging respect by governments for the basic rights of

human beings, it promotes peaceful, constructive change, reduces the

likelihood of internal pressures for violent change and for the

exploitation of these by our adversaries, and thus directly serves our

long-term interest in peace and stability; by matching espousal of

fundamental American principles of freedom with specific foreign policy

actions, we stand out in vivid contrast to our ideological adversaries;

by our efforts to expand freedom elsewhere, we render our own freedom,

and our own nation, more secure. Countries that respect human rights

make stronger allies and better friends.

Rather than attempt to dictate what system of government or institutions

other countries should have, the U.S. supports, throughout the world,

the internationally recognized human rights which all members of the

United Nations have pledged themselves to respect. There is more than

one model that can satisfy the continuing human reach for freedom and

justice:

1980 has been a year of some disappointments, but has also seen some

positive developments in the ongoing struggle for fulfillment of human

rights throughout the world. In the year we have seen:

--Free elections were held and democratic governments installed in Peru,

Dominica, and Jamaica. Honduras held a free election for installation of

a constituent assembly. An interim government was subsequently named

pointing toward national presidential elections in 1981. Brazil

continues on its course of political liberalization.

--The “Charter of Conduct” signed in Riobamba, Ecuador, by Ecuador,

Colombia, Venezuela, Peru, Costa Rica, Panama and Spain, affirms the

importance of democracy and human rights for the Andean countries.

--The Organization of American States, in its annual General Assembly,

approved a resolution in support of the Inter-American Human Rights

Commission’s work. The resolution took note of the Commission’s annual

report, which described the status of human rights in Chile, El

Salvador, Paraguay and Uruguay; and the special reports on Argentina and

Haiti, which described human rights conditions as investigated during

on-site inspections to these countries.

--The awarding of the Nobel Prize for Peace to Adolfo Perez Esquivel of

Argentina for his non-violent advocacy of human rights.

--The United States was able to rejoin the International Labor

Organization after an absence of two years, as that U.N. body reformed

its procedures to return to its original purpose of strengthening

employer-employee-government relations to insure human rights for the

working people of the world.

The United States, of course, cannot take credit for all these various

developments. But we can take satisfaction in knowing that our policies

encourage and perhaps influence them.

Those who see a contradiction between our security and our humanitarian

interests forget that the basis for a secure and stable society is the

bond of trust between a government and its people. I profoundly believe

that the future of our world is not to be found in authoritarianism:

that wears the mask of order, or totalitarianism that wears the mask of

justice. Instead, let us find our future in the human face of democracy,

the human voice of individual liberty, the human hand of economic

development.

HUMANITARIAN AID

The United States has continued to play its traditional role of

safehaven for those who flee or are forced to flee their homes because

of persecution or war. During 1980, the United States provided

resettlement opportunities for 216,000 refugees from countries around

the globe. In addition, the United States joined with other nations to

provide relief to refugees in country of first asylum in Africa, the

Middle East, and Asia.

The great majority of refugee admissions continued to be from

Indo-china. During 1980, 168,000 Indo-chinese were resettled in the

United States. Although refugee populations persist in camps in

Southeast Asia, and refugees continue to flee Vietnam, Laos and

Kampuchea, the flow is not as great as in the past. One factor in

reducing the flow from Vietnam has been the successful negotiation and

commencement of an Orderly Departure Program which permits us to process

Vietnamese for resettlement in the United States with direct departure

from Ho Chi Minh Ville in an orderly fashion. The first group of 250

departed Vietnam for the United States in December, 1980.

In addition to the refugees admitted last year, the United States

accepted for entry into the United States 125,000 Cubans who were

expelled by Fidel Castro. Federal and state authorities, as well as

private voluntary agencies, responded with unprecedented vigor to coping

with the unexpected influx of Cubans.

Major relief efforts to aid refugees in countries of first asylum

continued in several areas of the world. In December, 1980, thirty-two

nations, meeting in New York City, agreed to contribute $65 million to

the continuing famine relief program in Kampuchea. Due in great part to

the generosity of the American people and the leadership exercised in

the international arena by the United States, we have played the pivotal

role in ameliorating massive suffering in Kampuchea.

The United States has taken the lead among a group of donor countries

who are providing relief to some two million refugees in the Horn of

Africa who have been displaced by fighting in Ethiopia. U.S. assistance,

primarily to Somalia, consists of $35 million worth of food and $18

million in cash and kind. Here again, United States efforts can in large

part be credited with keeping hundreds of thousands of people alive.

Another major international relief effort has been mounted in Pakistan.

The United States is one of 25 countries plus the European Economic

Community who have been helping the Government of Pakistan to cope with

the problem of feeding and sheltering the more than one million refugees

that have been generated by the Soviet invasion of Afghanistan.

In April, 1980, the Congress passed the Refugee Act of 1980 which

brought together, for the first time, in one piece of legislation the

various threads of U.S. policy towards refugees. The law laid down a

new, broader definition of the term refugee, established mechanisms for

arriving at a level of refugee admissions through consultation with

Congress, and established the Office of the United States Coordinator

for Refugees.

It cannot be ignored that the destructive and aggressive policies of the

Soviet Union have added immeasurably to the suffering in these three

tragic situations.

The Control of Nuclear Weapons

Together with our friends and allies, we are striving to build a world

in which peoples with diverse interests can live freely and prosper. But

all that humankind has achieved to date, all that we are seeking to

accomplish, and human existence itself can be undone in an instant--in

the catastrophe of a nuclear war.

Thus one of the central objectives of my Administration has been to

control the proliferation of nuclear weapons to those nations which do

not have them, and their further development by the existing nuclear

powers-- notably the Soviet Union and the United States.

NON-PROLIFERATION

My Administration has been committed to stemming the spread of nuclear

weapons. Nuclear proliferation would raise the spectre of the use of

nuclear explosives in crucial, unstable regions of the world endangering

not only our security and that of our Allies, but that of the whole

world. Non-proliferation is not and can not be a unilateral U.S. policy,

nor should it be an issue of contention between the industrialized and

developing states. The international non-proliferation effort requires

the support of suppliers as well as importers of nuclear technology and

materials.

We have been proceeding on a number of fronts:

--First, we have been seeking to encourage nations to accede to the

Non-Proliferation Treaty. The U.S. is also actively encouraging other

nations to accept full-scope safeguards on all of their nuclear

activities and is asking other nuclear suppliers to adopt a full-scope

safeguards requirement as a condition for future supply.

--Second, the International Nuclear Fuel Cycle Evaluation (INFCE), which

was completed in 1980, demonstrated that suppliers and recipients can

work together on these technically complex and sensitive issues. While

differences remain, the INFCE effort provides a broader international

basis for national decisions which must balance energy needs with

non-proliferation concerns.

--Finally, we are working to encourage regional cooperation and

restraint. Protocol I of the Treaty of Tlatelolco which will contribute

to the lessening of nuclear dangers for our Latin American neighbors

ought now to be ratified by the United States Senate.

LIMITATIONS ON STRATEGIC ARMS

I remain convinced that the SALT II Treaty is in our Nation’s security

interest and that it would add significantly to the control of nuclear

weapons. I strongly support continuation of the SALT process and the

negotiation of more far-reaching mutual restraints on nuclear weaponry.

CONCLUSION

We have new support in the world for our purposes of national

independence and individual human dignity. We have a new will at home to

do what is required to keep us the strongest nation on earth.

We must move together into this decade with the strength which comes

from realization of the dangers before us and from the confidence that

together we can overcome them. The White House, January 16, 1981.

***

State of the Union Address

Ronald Reagan

January 26, 1982

Mr. Speaker, Mr. President, distinguished Members of the Congress,

honored guests, and fellow citizens:

Today marks my first State of the Union address to you, a constitutional

duty as old as our Republic itself.

President Washington began this tradition in 1790 after reminding the

Nation that the destiny of self-government and the “preservation of the

sacred fire of liberty” is “finally staked on the experiment entrusted

to the hands of the American people.” For our friends in the press, who

place a high premium on accuracy, let me say: I did not actually hear

George Washington say that. But it is a matter of historic record.

But from this podium, Winston Churchill asked the free world to stand

together against the onslaught of aggression. Franklin Delano Roosevelt

spoke of a day of infamy and summoned a nation to arms. Douglas

MacArthur made an unforgettable farewell to a country he loved and

served so well. Dwight Eisenhower reminded us that peace was purchased

only at the price of strength. And John F. Kennedy spoke of the burden

and glory that is freedom.

When I visited this Chamber last year as a newcomer to Washington,

critical of past policies which I believed had failed, I proposed a new

spirit of partnership between this Congress and this administration and

between Washington and our State and local governments. In forging this

new partnership for America, we could achieve the oldest hopes of our

Republic--prosperity for our nation, peace for the world, and the

blessings of individual liberty for our children and, someday, for all

of humanity.

It’s my duty to report to you tonight on the progress that we have made

in our relations with other nations, on the foundation we’ve carefully

laid for our economic recovery, and finally, on a bold and spirited

initiative that I believe can change the face of American government and

make it again the servant of the people.

Seldom have the stakes been higher for America. What we do and say here

will make all the difference to autoworkers in Detroit, lumberjacks in

the Northwest, steelworkers in Steubenville who are in the unemployment

lines; to black teenagers in Newark and Chicago; to hard-pressed farmers

and small businessmen; and to millions of everyday Americans who harbor

the simple wish of a safe and financially secure future for their

children. To understand the state of the Union, we must look not only at

where we are and where we’re going but where we’ve been. The situation

at this time last year was truly ominous.

The last decade has seen a series of recessions. There was a recession

in 1970, in 1974, and again in the spring of 1980. Each time,

unemployment increased and inflation soon turned up again. We coined the

word “stagflation” to describe this.

Government’s response to these recessions was to pump up the money

supply and increase spending. In the last 6 months of 1980, as an

example, the money supply increased at the fastest rate in postwar

history--13 percent. Inflation remained in double digits, and government

spending increased at an annual rate of 17 percent. Interest rates

reached a staggering 21.5 percent. There were 8 million unemployed.

Late in 1981 we sank into the present recession, largely because

continued high interest rates hurt the auto industry and construction.

And there was a drop in productivity, and the already high unemployment

increased.

This time, however, things are different. We have an economic program in

place, completely different from the artificial quick fixes of the past.

It calls for a reduction of the rate of increase in government spending,

and already that rate has been cut nearly in half. But reduced spending

the first and smallest phase of a 3-year tax rate reduction designed to

stimulate the economy and create jobs. Already interest rates are down

to 15 3/4 percent, but they must still go lower. Inflation is down from

12.4 percent to 8.9, and for the month of December it was running at an

annualized rate of 5.2 percent. If we had not acted as we did, things

would be far worse for all Americans than they are today. Inflation,

taxes, and interest rates would all be higher.

A year ago, Americans’ faith in their governmental process was steadily

declining. Six out of 10 Americans were saying they were pessimistic

about their future. A new kind of defeatism was heard. Some said our

domestic problems were uncontrollable, that we had to learn to live with

this seemingly endless cycle of high inflation and high unemployment.

There were also pessimistic predictions about the relationship between

our administration and this Congress. It was said we could never work

together. Well, those predictions were wrong. The record is clear, and I

believe that history will remember this as an era of American renewal,

remember this administration as an administration of change, and

remember this Congress as a Congress of destiny.

Together, we not only cut the increase in government spending nearly in

half, we brought about the largest tax reductions and the most sweeping

changes in our tax structure since the beginning of this century. And

because we indexed future taxes to the rate of inflation, we took away

government’s built-in profit on inflation and its hidden incentive to

grow larger at the expense of American workers.

Together, after 50 years of taking power away from the hands of the

people in their States and local communities, we have started returning

power and resources to them.

Together, we have cut the growth of new Federal regulations nearly in

half. In 1981 there were 23,000 fewer pages in the Federal Register,

which lists new regulations, than there were in 1980. By deregulating

oil we’ve come closer to achieving energy independence and helped bring

down the cost of gasoline and heating fuel.

Together, we have created an effective Federal strike force to combat

waste and fraud in government. In just 6 months it has saved the

taxpayers more than $2 billion, and it’s only getting started.

Together we’ve begun to mobilize the private sector, not to duplicate

wasteful and discredited government programs, but to bring thousands of

Americans into a volunteer effort to help solve many of America’s social

problems.

Together we’ve begun to restore that margin of military safety that

ensures peace. Our country’s uniform is being worn once again with

pride.

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

No one pretends that the way ahead will be easy. In my Inaugural Address

last year, I warned that the “ills we suffer have come upon us over

several decades. They will not go away in days, weeks, or months, but

they will go away . . . because we as Americans have the capacity now,

as we’ve had it in the past, to do whatever needs to be done to preserve

this last and greatest bastion of freedom.”

The economy will face difficult moments in the months ahead. But the

program for economic recovery that is in place will pull the economy out

of its slump and put us on the road to prosperity and stable growth by

the latter half of this year. And that is why I can report to you

tonight that in the near future the state of the Union and the economy

will be better--much better--if we summon the strength to continue on

the course that we’ve charted.

And so, the question: If the fundamentals are in place, what now? Well,

two things. First, we must understand what’s happening at the moment to

the economy. Our current problems are not the product of the recovery

program that’s only just now getting underway, as some would have you

believe; they are the inheritance of decades of tax and tax and spend

and spend.

Second, because our economic problems are deeply rooted and will not

respond to quick political fixes, we must stick to our carefully

integrated plan for recovery. That plan is based on four commonsense

fundamentals: continued reduction of the growth in Federal spending;

preserving the individual and business tax reductions that will

stimulate saving and investment; removing unnecessary Federal

regulations to spark productivity; and maintaining a healthy dollar and

a stable monetary policy, the latter a responsibility of the Federal

Reserve System.

The only alternative being offered to this economic program is a return

to the policies that gave us a trillion-dollar debt, runaway inflation,

runaway interest rates and unemployment. The doubters would have us turn

back the clock with tax increases that would offset the personal tax

rate reductions already passed by this Congress. Raise present taxes to

cut future deficits, they tell us. Well, I don’t believe we should buy

that argument.

There are too many imponderables for anyone to predict deficits or

surpluses several years ahead with any degree of accuracy. The budget in

place, when I took office, had been projected as balanced. It turned out

to have one of the biggest deficits in history. Another example of the

imponderables that can make deficit projections highly questionable--a

change of only one percentage point in unemployment can alter a deficit

up or down by some $25 billion.

As it now stands, our forecast, which we’re required by law to make,

will show major deficits starting at less than a hundred billion dollars

and declining, but still too high. More important, we’re making progress

with the three keys to reducing deficits: economic growth, lower

interest rates, and spending control. The policies we have in place will

reduce the deficit steadily, surely, and in time, completely.

Higher taxes would not mean lower deficits. If they did, how would we

explain that tax revenues more than doubled just since 1976; yet in that

same 6-year period we ran the largest series of deficits in our history.

In 1980 tax revenues increased by $54 billion, and in 1980 we had one of

our all-time biggest deficits. Raising taxes won’t balance the budget;

it will encourage more government spending and less private investment.

Raising taxes will slow economic growth, reduce production, and destroy

future jobs, making it more difficult for those without jobs to find

them and more likely that those who now have jobs could lose them. So, I

will not ask you to try to balance the budget on the backs of the

American taxpayers.

I will seek no tax increases this year, and I have no intention of

retreating from our basic program of tax relief. I promise to bring the

American people--to bring their tax rates down and to keep them down, to

provide them incentives to rebuild our economy, to save, to invest in

America’s future. I will stand by my word. Tonight I’m urging the

American people: Seize these new opportunities to produce, to save, to

invest, and together we’ll make this economy a mighty engine of freedom,

hope, and prosperity again.

Now, the budget deficit this year will exceed our earlier expectations.

The recession did that. It lowered revenues and increased costs. To some

extent, we’re also victims of our own success. We’ve brought inflation

down faster than we thought we could, and in doing this, we’ve deprived

government of those hidden revenues that occur when inflation pushes

people into higher income tax brackets. And the continued high interest

rates last year cost the government about $5 billion more than

anticipated.

We must cut out more nonessential government spending and rout out more

waste, and we will continue our efforts to reduce the number of

employees in the Federal work force by 75,000.

The budget plan I submit to you on February 8th will realize major

savings by dismantling the Departments of Energy and Education and by

eliminating ineffective subsidies for business. We’ll continue to

redirect our resources to our two highest budget priorities--a strong

national defense to keep America free and at peace and a reliable safety

net of social programs for those who have contributed and those who are

in need.

Contrary to some of the wild charges you may have heard, this

administration has not and will not turn its back on America’s elderly

or America’s poor. Under the new budget, funding for social insurance

programs will be more than double the amount spent only 6 years ago. But

it would be foolish to pretend that these or any programs cannot be made

more efficient and economical.

The entitlement programs that make up our safety net for the truly needy

have worthy goals and many deserving recipients. We will protect them.

But there’s only one way to see to it that these programs really help

those whom they were designed to help. And that is to bring their

spiraling costs under control.

Today we face the absurd situation of a Federal budget with

three-quarters of its expenditures routinely referred to as

“uncontrollable.” And a large part of this goes to entitlement programs.

Committee after committee of this Congress has heard witness after

witness describe many of these programs as poorly administered and rife

with waste and fraud. Virtually every American who shops in a local

supermarket is aware of the daily abuses that take place in the food

stamp program, which has grown by 16,000 percent in the last 15 years.

Another example is Medicare and Medicaid--programs with worthy goals but

whose costs have increased from 11.2 billion to almost 60 billion, more

than 5 times as much, in just 10 years.

Waste and fraud are serious problems. Back in 1980 Federal investigators

testified before one of your committees that “corruption has permeated

virtually every area of the Medicare and Medicaid health care industry.”

One official said many of the people who are cheating the system were

“very confident that nothing was going to happen to them.” Well,

something is going to happen. Not only the taxpayers are defrauded; the

people with real dependency on these programs are deprived of what they

need, because available resources are going not to the needy, but to the

greedy.

The time has come to control the uncontrollable. In August we made a

start. I signed a bill to reduce the growth of these programs by $44

billion over the next 3 years while at the same time preserving

essential services for the truly needy. Shortly you will receive from me

a message on further reforms we intend to install--some new, but others

long recommended by your own congressional committees. I ask you to help

make these savings for the American taxpayer.

The savings we propose in entitlement programs will total some $63

billion over 4 Years and will, without affecting social t security, go a

long way toward bringing Federal spending under control.

But don’t be fooled by those who proclaim that spending cuts will

deprive the elderly, the needy, and the helpless. The. Federal

Government will still subsidize 95 million meals every day. That’s one

out of seven of all the meals served in America. Head Start, senior

nutrition programs, and child welfare programs will not be cut from the

levels we proposed last year. More than one-half billion dollars has

been proposed for minority business assistance. And research at the

National Institute of Health will be increased by over $100 million.

While meeting all these needs, we intend to plug unwarranted tax

loopholes and strengthen the law which requires all large corporations

to pay a minimum tax.

I am confident the economic program we’ve put into operation will

protect the needy while it triggers a recovery that will benefit all

Americans. It will stimulate the economy, result in increased savings

and provide capital for expansion, mortgages for homebuilding, and jobs

for the unemployed.

Now that the essentials of that program are in place, our next major

undertaking must be a program--just as bold, just as innovative--to make

government again accountable to the people, to make our system of

federalism work again.

Our citizens feel they’ve lost control of even the most basic decisions

made about the essential services of government, such as schools,

welfare, roads, and even garbage collection. And they’re right. A maze

of interlocking jurisdictions and levels of government confronts average

citizens in trying to solve even the simplest of problems. They don’t

know where to turn for answers, who to hold accountable, who to praise,

who to blame, who to vote for or against. The main reason for this is

the overpowering growth of Federal grants-in-aid programs during the

past few decades.

In 1960 the Federal Government had 132 categorical grant programs,

costing $7 billion. When I took office, there were approximately 500,

costing nearly a hundred billion dollars--13 programs for energy, 36 for

pollution control, 66 for social services, 90 for education. And here in

the Congress, it takes at least 166 committees just to try to keep track

of them.

You know and I know that neither the President nor the Congress can

properly oversee this jungle of grants-in-aid; indeed, the growth of

these grants has led to the distortion in the vital functions of

government. As one Democratic Governor put it recently: The National

Government should be worrying about “arms control, not potholes.”

The growth in these Federal programs has--in the words of one

intergovernmental commission--made the Federal Government “more

pervasive, more intrusive, more unmanageable, more ineffective and

costly, and above all, more (un) accountable.” Let’s solve this problem

with a single, bold stroke: the return of some $47 billion in Federal

programs to State and local government, together with the means to

finance them and a transition period of nearly 10 years to avoid

unnecessary disruption.

I will shortly send this Congress a message describing this program. I

want to emphasize, however, that its full details will have been worked

out only after close consultation with congressional, State, and local

officials.

Starting in fiscal 1984, the Federal Government will assume full

responsibility for the cost of the rapidly growing Medicaid program to

go along with its existing responsibility for Medicare. As part of a

financially equal swap, the States will simultaneously take full

responsibility for Aid to Families with Dependent Children and food

stamps. This will make welfare less costly and more responsive to

genuine need, because it’ll be designed and administered closer to the

grass roots and the people it serves.

In 1984 the Federal Government will apply the full proceeds from certain

excise taxes to a grass roots trust fund that will belong in fair shares

to the 50 States. The total amount flowing into this fund will be $28

billion a year. Over the next 4 years the States can use this money in

either of two ways. If they want to continue receiving Federal grants in

such areas as transportation, education, and social services, they can

use their trust fund money to pay for the grants. Or to the extent they

choose to forgo the Federal grant programs, they can use their trust

fund money on their own for those or other purposes. There will be a

mandatory pass-through of part of these funds to local governments.

By 1988 the States will be in complete control of over 40 Federal grant

programs. The trust fund will start to phase out, eventually to

disappear, and the excise taxes will be turned over to the States. They

can then preserve, lower, or raise taxes on their own and fund and

manage these programs as they see fit.

In a single stroke we will be accomplishing a realignment that will end

cumbersome administration and spiraling costs at the Federal level while

we ensure these programs will be more responsive to both the people

they’re meant to help and the people who pay for them.

Hand in hand with this program to strengthen the discretion and

flexibility of State and local governments, we’re proposing legislation

for an experimental effort to improve and develop our depressed urban

areas in the 1980’s and ’90’s. This legislation will permit States and

localities to apply to the Federal Government for designation as urban

enterprise zones. A broad range of special economic incentives in the

zones will help attract new business, new jobs, new opportunity to

America’s inner cities and rural towns. Some will say our mission is to

save free enterprise. Well, I say we must free enterprise so that

together we can save America.

Some will also say our States and local communities are not up to the

challenge of a new and creative partnership. Well, that might have been

true 20 years ago before reforms like reapportionment and the Voting

Rights Act, the 10-year extension of which I strongly support. It’s no

longer true today. This administration has faith in State and local

governments and the constitutional balance envisioned by the Founding

Fathers. We also believe in the integrity, decency, and sound, good

sense of grass roots Americans.

Our faith in the American people is reflected in another major endeavor.

Our private sector initiatives task force is seeking out successful

community models of school, church, business, union, foundation, and

civic programs that help community needs. Such groups are almost

invariably far more efficient than government in running social

programs.

We’re not asking them to replace discarded and often discredited

government programs dollar for dollar, service for service. We just want

to help them perform the good works they choose and help others to

profit by their example. Three hundred and eighty-five thousand

corporations and private organizations are already working on social

programs ranging from drug rehabilitation to job training, and thousands

more Americans have written us asking how they can help. The volunteer

spirit is still alive and well in America.

Our nation’s long journey towards civil rights for all our

citizens--once a source of discord, now a source of pride--must continue

with no backsliding or slowing down. We must and shall see that those

basic laws that guarantee equal rights are preserved and, when

necessary, strengthened.

Our concern for equal rights for women is firm and unshakable. We

launched a new Task Force on Legal Equity for Women and a Fifty States

Project that will examine State laws for discriminatory language. And

for the first time in our history, a woman sits on the highest court in

the land.

So, too, the problem of crime--one as real and deadly serious as any in

America today. It demands that we seek transformation of our legal

system, which overly protects the rights of criminals while it leaves

society and the innocent victims of crime without justice.

We look forward to the enactment of a responsible clean air act to

increase jobs while continuing to improve the quality of our air. We’re

encouraged by the bipartisan initiative of the House and are hopeful of

further progress as the Senate continues its deliberations.

So far, I’ve concentrated largely, now, on domestic matters. To view the

state of the Union in perspective, we must not ignore the rest of the

world. There isn’t time tonight for a lengthy treatment of social--or

foreign policy, I should say, a subject I intend to address in detail in

the near future. A few words, however, are in order on the progress

we’ve made over the past year, reestablishing respect for our nation

around the globe and some of the challenges and goals that we will

approach in the year ahead.

At Ottawa and Cancun, I met with leaders of the major industrial powers

and developing nations. Now, some of those I met with were a little

surprised that I didn’t apologize for America’s wealth. Instead, I spoke

of the strength of the free marketplace system and how that system could

help them realize their aspirations for economic development and

political freedom. I believe lasting friendships were made, and the

foundation was laid for future cooperation.

In the vital region of the Caribbean Basin, we’re developing a program

of aid, trade, and investment incentives to promote self-sustaining

growth and a better, more secure life for our neighbors to the south.

Toward those who would export terrorism and subversion in the Caribbean

and elsewhere, especially Cuba and Libya, we will act with firmness.

Our foreign policy is a policy of strength, fairness, and balance. By

restoring America’s military credibility, by pursuing peace at the

negotiating table wherever both sides are willing to sit down in good

faith, and by regaining the respect of America’s allies and adversaries

alike, we have strengthened our country’s position as a force for peace

and progress in the world.

When action is called for, we’re taking it. Our sanctions against the

military dictatorship that has attempted to crush human rights in

Poland--and against the Soviet regime behind that military

dictatorship--clearly demonstrated to the world that America will not

conduct “business as usual” with the forces of oppression. If the events

in Poland continue to deteriorate, further measures will follow.

Now, let me also note that private American groups have taken the lead

in making January 30th a day of solidarity with the people of Poland.

So, too, the European Parliament has called for March 21st to be an

international day of support for Afghanistan. Well, I urge all

peace-loving peoples to join together on those days, to raise their

voices, to speak and pray for freedom.

Meanwhile, we’re working for reduction of arms and military activities,

as I announced in my address to the Nation last November 18th. We have

proposed to the Soviet Union a far-reaching agenda for mutual reduction

of military forces and have already initiated negotiations with them in

Geneva on intermediate-range nuclear forces. In those talks it is

essential that we negotiate from a position of strength. There must be a

real incentive for the Soviets to take these talks seriously. This

requires that we rebuild our defenses.

In the last decade, while we sought the moderation of Soviet power

through a process of restraint and accommodation, the Soviets engaged in

an unrelenting buildup of their military forces. The protection of our

national security has required that we undertake a substantial program

to enhance our military forces.

We have not neglected to strengthen our traditional alliances in Europe

and Asia, or to develop key relationships with our partners in the

Middle East and other countries. Building a more peaceful world requires

a sound strategy and the national resolve to back it up. When radical

forces threaten our friends, when economic misfortune creates conditions

of instability, when strategically vital parts of the world fall under

the shadow of Soviet power, our response can make the difference between

peaceful change or disorder and violence. That’s why we’ve laid such

stress not only on our own defense but on our vital foreign assistance

program. Your recent passage of the Foreign Assistance Act sent a signal

to the world that America will not shrink from making the investments

necessary for both peace and security. Our foreign policy must be rooted

in realism, not naivete or self-delusion.

A recognition of what the Soviet empire is about is the starting point.

Winston Churchill, in negotiating with the Soviets, observed that they

respect only strength and resolve in their dealings with other nations.

That’s why we’ve moved to reconstruct our national defenses. We intend

to keep the peace. We will also keep our freedom.

We have made pledges of a new frankness in our public statements and

worldwide broadcasts. In the face of a climate of falsehood and

misinformation, we’ve promised the world a season of truth--the truth of

our great civilized ideas: individual liberty, representative

government, the rule of law under God. We’ve never needed walls or

minefields or barbed wire to keep our people in. Nor do we declare

martial law to keep our people from voting for the kind of government

they want.

Yes, we have our problems; yes, we’re in a time of recession. And it’s

true, there’s no quick fix, as I said, to instantly end the tragic pain

of unemployment. But we will end it. The process has already begun, and

we’ll see its effect as the year goes on.

We speak with pride and admiration of that little band of Americans who

overcame insuperable odds to set this nation on course 200 years ago.

But our glory didn’t end with them. Americans ever since have emulated

their deeds.

We don’t have to turn to our history books for heroes. They’re all

around us. One who sits among you here tonight epitomized that heroism

at the end of the longest imprisonment ever inflicted on men of our

Armed Forces. Who will ever forget that night when we waited for

television to bring us the scene of that first plane landing at Clark

Field in the Philippines, bringing our POW’s home? The plane door opened

and Jeremiah Denton came slowly down the ramp. He caught sight of our

flag, saluted it, said, “God bless America,” and then thanked us for

bringing him home.

Just 2 weeks ago, in the midst of a terrible tragedy on the Potomac, we

saw again the spirit of American heroism at its finest--the heroism of

dedicated rescue workers saving crash victims from icy waters. And we

saw the heroism of one of our young government employees, Lenny Skutnik,

who, when he saw a woman lose her grip on the helicopter line, dived

into the water and dragged her to safety.

And then there are countless, quiet, everyday heroes of American who

sacrifice long and hard so their children will know a better life than

they’ve known; church and civic volunteers who help to feed, clothe,

nurse, and teach the needy; millions who’ve made our nation and our

nation’s destiny so very special--unsung heroes who may not have

realized their own dreams themselves but then who reinvest those dreams

in their children. Don’t let anyone tell you that America’s best days

are behind her, that the American spirit has been vanquished. We’ve seen

it triumph too often in our lives to stop believing in it now.

A hundred and twenty years ago, the greatest of all our Presidents

delivered his second State of the Union message in this Chamber. “We

cannot escape history,” Abraham Lincoln warned. “We of this Congress and

this administration will be remembered in spite of ourselves.” The

“trial through which we pass will light us down, in honor or dishonor,

to the latest (last) generation.”

Well, that President and that Congress did not fail the American people.

Together they weathered the storm and preserved the Union. Let it be

said of us that we, too, did not fail; that we, too, worked together to

bring America through difficult times. Let us so conduct ourselves that

two centuries from now, another Congress and another President, meeting

in this Chamber as we are meeting, will speak of us with pride, saying

that we met the test and preserved for them in their day the sacred

flame of liberty--this last, best hope of man on Earth.

God bless you, and thank you.

NOTE: The President spoke at 9 p.m. in the House Chamber at the Capitol.

He was introduced by Thomas P. O’Neill, Jr., Speaker of the House of

Representatives. The address was broadcast live on nationwide radio and

television.

***

State of the Union Address

Ronald Reagan

January 25, 1983

Mr. Speaker, Mr. President, distinguished Members of the Congress,

honored guests, and fellow citizens:

This solemn occasion marks the 196th time that a President of the United

States has reported on the State of the Union since George Washington

first did so in 1790. That’s a lot of reports, but there’s no shortage

of new things to say about the State of the Union. The very key to our

success has been our ability, foremost among nations, to preserve our

lasting values by making change work for us rather than against us.

I would like to talk with you this evening about what we can do

together--not as Republicans and Democrats, but as Americans--to make

tomorrow’s America happy and prosperous at home, strong and respected

abroad, and at peace in the world.

As we gather here tonight, the state of our Union is strong, but our

economy is troubled. For too many of our fellow citizens--farmers, steel

and auto workers, lumbermen, black teenagers, working mothers--this is a

painful period. We must all do everything in our power to bring their

ordeal to an end. It has fallen to us, in our time, to undo damage that

was a long time in the making, and to begin the hard but necessary task

of building a better future for ourselves and our children.

We have a long way to go, but thanks to the courage, patience, and

strength of our people, America is on the mend.

But let me give you just one important reason why I believe this--it

involves many members of this body.

Just 10 days ago, after months of debate and deadlock, the bipartisan

Commission on Social Security accomplished the seemingly impossible.

Social security, as some of us had warned for so long, faced disaster.

I, myself, have been talking about this problem for almost 30 years. As

1983 began, the system stood on the brink of bankruptcy, a double victim

of our economic ills. First, a decade of rampant inflation drained its

reserves as we tried to protect beneficiaries from the spiraling cost of

living. Then the recession and the sudden end of inflation withered the

expanding wage base and increasing revenues the system needs to support

the 36 million Americans who depend on it.

When the Speaker of the House, the Senate majority leader, and I

performed the bipartisan--or formed the bipartisan Commission on Social

Security, pundits and experts predicted that party divisions and

conflicting interests would prevent the Commission from agreeing on a

plan to save social security. Well, sometimes, even here in Washington,

the cynics are wrong. Through compromise and cooperation, the members of

the Commission overcame their differences and achieved a fair, workable

plan. They proved that, when it comes to the national welfare, Americans

can still pull together for the common good.

Tonight, I’m especially pleased to join with the Speaker and the Senate

majority leader in urging the Congress to enact this plan by Easter.

There are elements in it, of course, that none of us prefers, but taken

together it performs a package that all of us can support. It asks for

some sacrifice by all--the self-employed, beneficiaries, workers,

government employees, and the better-off among the retired--but it

imposes an undue burden on none. And, in supporting it, we keep an

important pledge to the American people: The integrity of the social

security system will be preserved, and no one’s payments will be

reduced.

The Commission’s plan will do the job; indeed, it must do the job. We

owe it to today’s older Americans and today’s younger workers. So,

before we go any further, I ask you to join with me in saluting the

members of the Commission who are here tonight and Senate Majority

Leader Howard Baker and Speaker Tip O’Neill for a job well done. I hope

and pray the bipartisan spirit that guided you in this endeavor will

inspire all of us as we face the challenges of the year ahead.

Nearly half a century ago, in this Chamber, another American President,

Franklin Delano Roosevelt, in his second State of the Union message,

urged America to look to the future, to meet the challenge of change and

the need for leadership that looks forward, not backward.

“Throughout the world,” he said, “change is the order of the day. In

every nation economic problems long in the making have brought crises to

(of) many kinds for which the masters of old practice and theory were

unprepared.” He also reminded us that “the future lies with those wise

political leaders who realize that the great public is interested more

in Government than in politics.”

So, let us, in these next 2 years--men and women of both parties, every

political shade--concentrate on the long-range, bipartisan

responsibilities of government, not the short-range or short-term

temptations of partisan politics.

The problems we inherited were far worse than most inside and out of

government had expected; the recession was deeper than most inside and

out of government had predicted. Curing those problems has taken more

time and a higher toll than any of us wanted. Unemployment is far too

high. Projected Federal spending--if government refuses to tighten its

own belt--will also be far too high and could weaken and shorten the

economic recovery now underway.

This recovery will bring with it a revival of economic confidence and

spending for consumer items and capital goods--the stimulus we need to

restart our stalled economic engines. The American people have already

stepped up their rate of saving, assuring that the funds needed to

modernize our factories and improve our technology will once again flow

to business and industry.

The inflationary expectations that led to a 21 1/2-percent interest

prime rate and soaring mortgage rates 2 years ago are now reduced by

almost half. Leaders have started to realize that double-digit inflation

is no longer a way of life. I misspoke there. I should have said

“lenders.”

So, interest rates have tumbled, paving the way for recovery in vital

industries like housing and autos.

The early evidence of that recovery has started coming in. Housing

starts for the fourth quarter of 1982 were up 45 percent from a year

ago, and housing permits, a sure indicator of future growth, were up a

whopping 60 percent.

We’re witnessing an upsurge of productivity and impressive evidence that

American industry will once again become competitive in markets at home

and abroad, ensuring more jobs and better incomes for the Nation’s work

force. But our confidence must also be tempered by realism and patience.

Quick fixes and artificial stimulants repeatedly applied over decades

are what brought us the inflationary disorders that we’ve now paid such

a heavy price to cure.

The permanent recovery in employment, production, and investment we seek

won’t come in a sharp, short spurt. It’ll build carefully and steadily

in the months and years ahead. In the meantime, the challenge of

government is to identify the things that we can do now to ease the

massive economic transition for the American people.

The Federal budget is both a symptom and a cause of our economic

problems. Unless we reduce the dangerous growth rate in government

spending, we could face the prospect of sluggish economic growth into

the indefinite future. Failure to cope with this problem now could mean

as much as a trillion dollars more in national debt in the next 4 years

alone. That would average $4,300 in additional debt for every man,

woman, child, and baby in our nation.

To assure a sustained recovery, we must continue getting runaway

spending under control to bring those deficits down. If we don’t, the

recovery will be too short, unemployment will remain too high, and we

will leave an unconscionable burden of national debt for our children.

That we must not do.

Let’s be clear about where the deficit problem comes from. Contrary to

the drumbeat we’ve been hearing for the last few months, the deficits we

face are not rooted in defense spending. Taken as a percentage of the

gross national product, our defense spending happens to be only about

four-fifths of what it was in 1970. Nor is the deficit, as some would

have it, rooted in tax cuts. Even with our tax cuts, taxes as a fraction

of gross national product remain about the same as they were in 1970.

The fact is, our deficits come from the uncontrolled growth of the

budget for domestic spending.

During the 1970’s, the share of our national income devoted to this

domestic spending increased by more than 60 percent, from 10 cents out

of every dollar produced by the American people to 16 cents. In spite of

all our economies and efficiencies, and without adding any new programs,

basic, necessary domestic spending provided for in this year’s budget

will grow to almost a trillion dollars over the next 5 years.

The deficit problem is a clear and present danger to the basic health of

our Republic. We need a plan to overcome this danger--a plan based on

these principles. It must be bipartisan. Conquering the deficits and

putting the Government’s house in order will require the best effort of

all of us. It must be fair. Just as all will share in the benefits that

will come from recovery, all would share fairly in the burden of

transition. It must be prudent. The strength of our national defense

must be restored so that we can pursue prosperity and peace and freedom

while maintaining our commitment to the truly needy. And finally, it

must be realistic. We can’t rely on hope alone.

With these guiding principles in mind, let me outline a four-part plan

to increase economic growth and reduce deficits.

First, in my budget message, I will recommend a Federal spending freeze.

I know this is strong medicine, but so far, we have only cut the rate of

increase in Federal spending. The Government has continued to spend more

money each year, though not as much more as it did in the past. Taken as

a whole, the budget I’m proposing for the fiscal year will increase no

more than the rate of inflation. In other words, the Federal Government

will hold the line on real spending. Now, that’s far less than many

American families have had to do in these difficult times.

I will request that the proposed 6-month freeze in cost-of-living

adjustments recommended by the bipartisan Social Security Commission be

applied to other government-related retirement programs. I will, also,

propose a 1-year freeze on a broad range of domestic spending programs,

and for Federal civilian and military pay and pension programs. And let

me say right here, I’m sorry, with regard to the military, in asking

that of them, because for so many years they have been so far behind and

so low in reward for what the men and women in uniform are doing. But

I’m sure they will understand that this must be across the board and

fair.

Second, I will ask the Congress to adopt specific measures to control

the growth of the so-called uncontrollable spending programs. These are

the automatic spending programs, such as food stamps, that cannot be

simply frozen and that have grown by over 400 percent since 1970. They

are the largest single cause of the built-in or structural deficit

problem. Our standard here will be fairness, ensuring that the

taxpayers’ hard-earned dollars go only to the truly needy; that none of

them are turned away, but that fraud and waste are stamped out. And I’m

sorry to say, there’s a lot of it out there. In the food stamp program

alone, last year, we identified almost $1.1 billion in overpayments. The

taxpayers aren’t the only victims of this kind of abuse. The truly needy

suffer as funds intended for them are taken not by the needy, but by the

greedy. For everyone’s sake, we must put an end to such waste and

corruption.

Third, I will adjust our program to restore America’s defenses by

proposing $55 billion in defense savings over the next 5 years. These

are savings recommended to me by the Secretary of Defense, who has

assured me they can be safely achieved and will not diminish our ability

to negotiate arms reductions or endanger America’s security. We will not

gamble with our national survival.

And fourth, because we must ensure reduction and eventual elimination of

deficits over the next several years, I will propose a standby tax,

limited to no more than 1 percent of the gross national product, to

start in fiscal 1986. It would last no more than 3 years, and it would

start only if the Congress has first approved our spending freeze and

budget control program. And there are several other conditions also that

must be met, all of them in order for this program to be triggered.

Now, you could say that this is an insurance policy for the future, a

remedy that will be at hand if needed but only resorted to if absolutely

necessary. In the meantime, we’ll continue to study ways to simplify the

tax code and make it more fair for all Americans. This is a goal that

every American who’s ever struggled with a tax form can understand.

At the same time, however, I will oppose any efforts to undo the basic

tax reforms that we’ve already enacted, including the 10-percent tax

break coming to taxpayers this July and the tax indexing which will

protect all Americans from inflationary bracket creep in the years

ahead.

Now, I realize that this four-part plan is easier to describe than it

will be to enact. But the looming deficits that hang over us and over

America’s future must be reduced. The path I’ve outlined is fair,

balanced, and realistic. If enacted, it will ensure a steady decline in

deficits, aiming toward a balanced budget by the end of the decade. It’s

the only path that will lead to a strong, sustained recovery. Let us

follow that path together.

No domestic challenge is more crucial than providing stable, permanent

jobs for all Americans who want to work. The recovery program will

provide jobs for most, but others will need special help and training

for new skills. Shortly, I will submit to the Congress the Employment

Act of 1983, designed to get at the special problems of the long-term

unemployed, as well as young people trying to enter the job market. I’ll

propose extending unemployment benefits, including special incentives to

employers who hire the long-term unemployed, providing programs for

displaced workers, and helping federally funded and State-administered

unemployment insurance programs provide workers with training and

relocation assistance. Finally, our proposal will include new incentives

for summer youth employment to help young people get a start in the job

market.

We must offer both short-term help and long-term hope for our

unemployed. I hope we can work together on this. I hope we can work

together as we did last year in enacting the landmark Job Training

Partnership Act. Regulatory reform legislation, a responsible clean air

act, and passage of enterprise zone legislation will also create new

incentives for jobs and opportunity.

One of out of every five jobs in our country depends on trade. So, I

will propose a broader strategy in the field of international trade--one

that increases the openness of our trading system and is fairer to

America’s farmers and workers in the world marketplace. We must have

adequate export financing to sell American products overseas. I will ask

for new negotiating authority to remove barriers and to get more of our

products into foreign markets. We must strengthen the organization of

our trade agencies and make changes in our domestic laws and

international trade policy to promote free trade and the increased flow

of American goods, services, and investments.

Our trade position can also be improved by making our port system more

efficient. Better, more active harbors translate into stable jobs in our

coalfields, railroads, trucking industry, and ports. After 2 years of

debate, it’s time for us to get together and enact a port modernization

bill.

Education, training, and retraining are fundamental to our success as

are research and development and productivity. Labor, management, and

government at all levels can and must participate in improving these

tools of growth. Tax policy, regulatory practices, and government

programs all need constant reevaluation in terms of our competitiveness.

Every American has a role and a stake in international trade.

We Americans are still the technological leaders in most fields. We must

keep that edge, and to do so we need to begin renewing the

basics--starting with our educational system. While we grew complacent,

others have acted. Japan, with a population only about half the size of

ours, graduates from its universities more engineers than we do. If a

child doesn’t receive adequate math and science teaching by the age of

16, he or she has lost the chance to be a scientist or an engineer. We

must join together--parents, teachers, grass roots groups, organized

labor, and the business community--to revitalize American education by

setting a standard of excellence.

In 1983 we seek four major education goals: a quality education

initiative to encourage a substantial upgrading of math and science

instruction through block grants to the States; establishment of

education savings accounts that will give middle and lower-income

families an incentive to save for their children’s college education

and, at the same time, encourage a real increase in savings for economic

growth; passage of tuition tax credits for parents who want to send

their children to private or religiously affiliated schools; a

constitutional amendment to permit voluntary school prayer. God should

never have been expelled from America’s classrooms in the first place.

Our commitment to fairness means that we must assure legal and economic

equity for women, and eliminate, once and for all, all traces of unjust

discrimination against women from the United States Code. We will not

tolerate wage discrimination based on sex, and we intend to strengthen

enforcement of child support laws to ensure that single parents, most of

whom are women, do not suffer unfair financial hardship. We will also

take action to remedy inequities in pensions. These initiatives will be

joined by others to continue our efforts to promote equity for women.

Also in the area of fairness and equity, we will ask for extension of

the Civil Rights Commission, which is due to expire this year. The

Commission is an important part of the ongoing struggle for justice in

America, and we strongly support its reauthorization. Effective

enforcement of our nation’s fair housing laws is also essential to

ensuring equal opportunity. In the year ahead, we’ll work to strengthen

enforcement of fair housing laws for all Americans.

The time has also come for major reform of our criminal justice statutes

and acceleration of the drive against organized crime and drug

trafficking. It’s high time that we make our cities safe again. This

administration hereby declares an all-out war on big-time organized

crime and the drug racketeers who are poisoning our young people. We

will also implement recommendations of our Task Force on Victims of

Crime, which will report to me this week.

American agriculture, the envy of the world, has become the victim of

its own successes. With one farmer now producing enough food to feed

himself and 77 other people, America is confronted with record surplus

crops and commodity prices below the cost of production. We must strive,

through innovations like the payment-in-kind crop swap approach and an

aggressive export policy, to restore health and vitality to rural

America. Meanwhile, I have instructed the Department of Agriculture to

work individually with farmers with debt problems to help them through

these tough times.

Over the past year, our Task Force on Private Sector Initiatives has

successfully forged a working partnership involving leaders of business,

labor, education, and government to address the training needs of

American workers. Thanks to the Task Force, private sector initiatives

are now underway in all 50 States of the Union, and thousands of working

people have been helped in making the shift from dead-end jobs and

low-demand skills to the growth areas of high technology and the service

economy. Additionally, a major effort will be focused on encouraging the

expansion of private community child care. The new advisory council on

private sector initiatives will carry on and extend this vital work of

encouraging private initiative in 1983.

In the coming year, we will also act to improve the quality of life for

Americans by curbing the skyrocketing cost of health care that is

becoming an unbearable financial burden for so many. And we will submit

legislation to provide catastrophic illness insurance coverage for older

Americans.

I will also shortly submit a comprehensive federalism proposal that will

continue our efforts to restore to States and local governments their

roles as dynamic laboratories of change in a creative society.

During the next several weeks, I will send to the Congress a series of

detailed proposals on these and other topics and look forward to working

with you on the development of these initiatives.

So far, now, I’ve concentrated mainly on the problems posed by the

future. But in almost every home and workplace in America, we’re already

witnessing reason for great hope--the first flowering of the manmade

miracles of high technology, a field pioneered and still led by our

country.

To many of us now, computers, silicon chips, data processing,

cybernetics, and all the other innovations of the dawning high

technology age are as mystifying as the workings of the combustion

engine must have been when that first Model T rattled down Main Street,

U.S.A. But as surely as America’s pioneer spirit made us the industrial

giant of the 20th century, the same pioneer spirit today is opening up

on another vast front of opportunity, the frontier of high technology.

In conquering the frontier we cannot write off our traditional

industries, but we must develop the skills and industries that will make

us a pioneer of tomorrow. This administration is committed to keeping

America the technological leader of the world now and into the 21st

century.

But let us turn briefly to the international arena. America’s leadership

in the world came to us because of our own strength and because of the

values which guide us as a society: free elections, a free press,

freedom of religious choice, free trade unions, and above all, freedom

for the individual and rejection of the arbitrary power of the state.

These values are the bedrock of our strength. They unite us in a

stewardship of peace and freedom with our allies and friends in NATO, in

Asia, in Latin America, and elsewhere. They are also the values which in

the recent past some among us had begun to doubt and view with a cynical

eye.

Fortunately, we and our allies have rediscovered the strength of our

common democratic values, and we’re applying them as a cornerstone of a

comprehensive strategy for peace with freedom. In London last year, I

announced the commitment of the United States to developing the

infrastructure of democracy throughout the world. We intend to pursue

this democratic initiative vigorously. The future belongs not to

governments and ideologies which oppress their peoples, but to

democratic systems of self-government which encourage individual

initiative and guarantee personal freedom.

But our strategy for peace with freedom must also be based on

strength--economic strength and military strength. A strong American

economy is essential to the well-being and security of our friends and

allies. The restoration of a strong, healthy American economy has been

and remains one of the central pillars of our foreign policy. The

progress I’ve been able to report to you tonight will, I know, be as

warmly welcomed by the rest of the world as it is by the American

people.

We must also recognize that our own economic well-being is inextricably

linked to the world economy. We export over 20 percent of our industrial

production, and 40 percent of our farmland produces for export. We will

continue to work closely with the industrialized democracies of Europe

and Japan and with the International Monetary Fund to ensure it has

adequate resources to help bring the world economy back to strong,

noninflationary growth.

As the leader of the West and as a country that has become great and

rich because of economic freedom, America must be an unrelenting

advocate of free trade. As some nations are tempted to turn to

protectionism, our strategy cannot be to follow them, but to lead the

way toward freer trade. To this end, in May of this year America will

host an economic summit meeting in Williamsburg, Virginia.

As we begin our third year, we have put in place a defense program that

redeems the neglect of the past decade. We have developed a realistic

military strategy to deter threats to peace and to protect freedom if

deterrence fails. Our Armed Forces are finally properly paid; after

years of neglect are well trained and becoming better equipped and

supplied. And the American uniform is once again worn with pride. Most

of the major systems needed for modernizing our defenses are already

underway, and we will be addressing one key system, the MX missile, in

consultation with the Congress in a few months.

America’s foreign policy is once again based on bipartisanship, on

realism, strength, full partnership, in consultation with our allies,

and constructive negotiation with potential adversaries. From the Middle

East to southern Africa to Geneva, American diplomats are taking the

initiative to make peace and lower arms levels. We should be proud of

our role as peacemakers.

In the Middle East last year, the United States played the major role in

ending the tragic fighting in Lebanon and negotiated the withdrawal of

the PLO from Beirut.

Last September, I outlined principles to carry on the peace process

begun so promisingly at Camp David. All the people of the Middle East

should know that in the year ahead we will not flag in our efforts to

build on that foundation to bring them the blessings of peace.

In Central America and the Caribbean Basin, we are likewise engaged in a

partnership for peace, prosperity, and democracy. Final passage of the

remaining portions of our Caribbean Basin Initiative, which passed the

House last year, is one of this administration’s top legislative

priorities for 1983.

The security and economic assistance policies of this administration in

Latin America and elsewhere are based on realism and represent a

critical investment in the future of the human race. This undertaking is

a joint responsibility of the executive and legislative branches, and

I’m counting on the cooperation and statesmanship of the Congress to

help us meet this essential foreign policy goal.

At the heart of our strategy for peace is our relationship with the

Soviet Union. The past year saw a change in Soviet leadership. We’re

prepared for a positive change in Soviet-American relations. But the

Soviet Union must show by deeds as well as words a sincere commitment to

respect the rights and sovereignty of the family of nations. Responsible

members of the world community do not threaten or invade their

neighbors. And they restrain their allies from aggression.

For our part, we’re vigorously pursuing arms reduction negotiations with

the Soviet Union. Supported by our allies, we’ve put forward draft

agreements proposing significant weapon reductions to equal and

verifiable lower levels. We insist on an equal balance of forces. And

given the overwhelming evidence of Soviet violations of international

treaties concerning chemical and biological weapons, we also insist that

any agreement we sign can and will be verifiable.

In the case of intermediate-range nuclear forces, we have proposed the

complete elimination of the entire class of land-based missiles. We’re

also prepared to carefully explore serious Soviet proposals. At the same

time, let me emphasize that allied steadfastness remains a key to

achieving arms reductions.

With firmness and dedication, we’ll continue to negotiate. Deep down,

the Soviets must know it’s in their interest as well as ours to prevent

a wasteful arms race. And once they recognize our unshakable resolve to

maintain adequate deterrence, they will have every reason to join us in

the search for greater security and major arms reductions. When that

moment comes--and I’m confident that it will--we will have taken an

important step toward a more peaceful future for all the world’s people.

A very wise man, Bernard Baruch, once said that America has never

forgotten the nobler things that brought her into being and that light

her path. Our country is a special place, because we Americans have

always been sustained, through good times and bad, by a noble vision--a

vision not only of what the world around us is today but what we as a

free people can make it be tomorrow.

We’re realists; we solve our problems instead of ignoring them, no

matter how loud the chorus of despair around us. But we’re also

idealists, for it was an ideal that brought our ancestors to these

shores from every corner of the world.

Right now we need both realism and idealism. Millions of our neighbors

are without work. It is up to us to see they aren’t without hope. This

is a task for all of us. And may I say, Americans have rallied to this

cause, proving once again that we are the most generous people on Earth.

We who are in government must take the lead in restoring the economy.

And here all that time, I thought you were reading the paper.

The single thing--the single thing that can start the wheels of industry

turning again is further reduction of interest rates. Just another 1 or

2 points can mean tens of thousands of jobs.

Right now, with inflation as low as it is, 3.9 percent, there is room

for interest rates to come down. Only fear prevents their reduction. A

lender, as we know, must charge an interest rate that recovers the

depreciated value of the dollars loaned. And that depreciation is, of

course, the amount of inflation. Today, interest rates are based on

fear--fear that government will resort to measures, as it has in the

past, that will send inflation zooming again.

We who serve here in this Capital must erase that fear by making it

absolutely clear that we will not stop fighting inflation; that,

together, we will do only those things that will lead to lasting

economic growth.

Yes, the problems confronting us are large and forbidding. And,

certainly, no one can or should minimize the plight of millions of our

friends and neighbors who are living in the bleak emptiness of

unemployment. But we must and can give them good reason to be hopeful.

Back over the years, citizens like ourselves have gathered within these

walls when our nation was threatened; sometimes when its very existence

was at stake. Always with courage and common sense, they met the crises

of their time and lived to see a stronger, better, and more prosperous

country. The present situation is no worse and, in fact, is not as bad

as some of those they faced. Time and again, they proved that there is

nothing we Americans cannot achieve as free men and women.

Yes, we still have problems--plenty of them. But it’s just plain

wrong--unjust to our country and unjust to our people--to let those

problems stand in the way of the most important truth of all: America is

on the mend.

We owe it to the unfortunate to be aware of their plight and to help

them in every way we can. No one can quarrel with that. We must and do

have compassion for all the victims of this economic crisis. But the big

story about America today is the way that millions of confident, caring

people--those extraordinary “ordinary” Americans who never make the

headlines and will never be interviewed--are laying the foundation, not

just for recovery from our present problems but for a better tomorrow

for all our people.

From coast to coast, on the job and in classrooms and laboratories, at

new construction sites and in churches and community groups, neighbors

are helping neighbors. And they’ve already begun the building, the

research, the work, and the giving that will make our country great

again.

I believe this, because I believe in them--in the strength of their

hearts and minds, in the commitment that each one of them brings to

their daily lives, be they high or humble. The challenge for us in

government is to be worthy of them--to make government a help, not a

hindrance to our people in the challenging but promising days ahead.

If we do that, if we care what our children and our children’s children

will say of us, if we want them one day to be thankful for what we did

here in these temples of freedom, we will work together to make America

better for our having been here--not just in this year or this decade

but in the next century and beyond.

Thank you, and God bless you.

NOTE: The President spoke at 9:03 p.m. in the House Chamber of the

Capitol. He was introduced by Thomas P. O’Neill, Jr., Speaker of the

House of Representatives. The address was broadcast live on nationwide

radio and television.

***

State of the Union Address

Ronald Reagan

January 25, 1984

Mr. Speaker, Mr. President, distinguished Members of the Congress,

honored guests, and fellow citizens:

Once again, in keeping with time-honored tradition, I have come to

report to you on the state of the Union, and I’m pleased to report that

America is much improved, and there’s good reason to believe that

improvement will continue through the days to come.

You and I have had some honest and open differences in the year past.

But they didn’t keep us from joining hands in bipartisan cooperation to

stop a long decline that had drained this nation’s spirit and eroded its

health. There is renewed energy and optimism throughout the land.

America is back, standing tall, looking to the eighties with courage,

confidence, and hope.

The problems we’re overcoming are not the heritage of one person, party,

or even one generation. It’s just the tendency of government to grow,

for practices and programs to become the nearest thing to eternal life

we’ll ever see on this Earth. And there’s always that well-intentioned

chorus of voices saying, “With a little more power and a little more

money, we could do so much for the people.” For a time we forgot the

American dream isn’t one of making government bigger; it’s keeping faith

with the mighty spirit of free people under God.

As we came to the decade of the eighties, we faced the worst crisis in

our postwar history. In the seventies were years of rising problems and

falling confidence. There was a feeling government had grown beyond the

consent of the governed. Families felt helpless in the face of mounting

inflation and the indignity of taxes that reduced reward for hard work,

thrift, and risktaking. All this was overlaid by an evergrowing web of

rules and regulations.

On the international scene, we had an uncomfortable feeling that we’d

lost the respect of friend and foe. Some questioned whether we had the

will to defend peace and freedom. But America is too great for small

dreams. There was a hunger in the land for a spiritual revival; if you

will, a crusade for renewal. The American people said: Let us look to

the future with confidence, both at home and abroad. Let us give freedom

a chance.

Americans were ready to make a new beginning, and together we have done

it. We’re confronting our problems one by one. Hope is alive tonight for

millions of young families and senior citizens set free from unfair tax

increases and crushing inflation. Inflation has been beaten down from

12.4 to 3.2 percent, and that’s a great victory for all the people. The

prime rate has been cut almost in half, and we must work together to

bring it down even more.

Together, we passed the first across-the-board tax reduction for

everyone since the Kennedy tax cuts. Next year, tax rates will be

indexed so inflation can’t push people into higher brackets when they

get cost-of-living pay raises. Government must never again use inflation

to profit at the people’s expense.

Today a working family earning $25,000 has $1,100 more in purchasing

power than if tax and inflation rates were still at the 1980 levels.

Real after-tax income increased 5 percent last year. And economic

deregulation of key industries like transportation has offered more

chances--or choices, I should say, to consumers and new changes--or

chances for entrepreneurs and protecting safety. Tonight, we can report

and be proud of one of the best recoveries in decades. Send away the

handwringers and the doubting Thomases. Hope is reborn for couples

dreaming of owning homes and for risktakers with vision to create

tomorrow’s opportunities.

The spirit of enterprise is sparked by the sunrise industries of

high-tech and by small business people with big ideas--people like

Barbara Proctor, who rose from a ghetto to build a multimillion-dollar

advertising agency in Chicago; Carlos Perez, a Cuban refugee, who turned

$27 and a dream into a successful importing business in Coral Gables,

Florida.

People like these are heroes for the eighties. They helped 4 million

Americans find jobs in 1983. More people are drawing paychecks tonight

than ever before. And Congress helps--or progress helps everyone--well,

Congress does too----everyone. In 1983 women filled 73 percent of all

the new jobs in managerial, professional, and technical fields.

But we know that many of our fellow countrymen are still out of work,

wondering what will come of their hopes and dreams. Can we love America

and not reach out to tell them: You are not forgotten; we will not rest

until each of you can reach as high as your God-given talents will take

you.

The heart of America is strong; it’s good and true. The cynics were

wrong; America never was a sick society. We’re seeing rededication to

bedrock values of faith, family, work, neighborhood, peace, and

freedom--values that help bring us together as one people, from the

youngest child to the most senior citizen.

The Congress deserves America’s thanks for helping us restore pride and

credibility to our military. And I hope that you’re as proud as I am of

the young men and women in uniform who have volunteered to man the

ramparts in defense of freedom and whose dedication, valor, and skill

increases so much our chance of living in a world at peace.

People everywhere hunger for peace and a better life. The tide of the

future is a freedom tide, and our struggle for democracy cannot and will

not be denied. This nation champions peace that enshrines liberty,

democratic rights, and dignity for every individual. America’s new

strength, confidence, and purpose are carrying hope and opportunity far

from our shores. A world economic recovery is underway. It began here.

We’ve journeyed far, but we have much farther to go. Franklin Roosevelt

told us 50 years ago this month: “Civilization can not go back;

civilization must not stand still. We have undertaken new methods. It is

our task to perfect, to improve, to alter when necessary, but in all

cases to go forward.”

It’s time to move forward again, time for America to take freedom’s next

step. Let us unite tonight behind four great goals to keep America free,

secure, and at peace in the eighties together.

We can ensure steady economic growth. We can develop America’s next

frontier. We can strengthen our traditional values. And we can build a

meaningful peace to protect our loved ones and this shining star of

faith that has guided millions from tyranny to the safe harbor of

freedom, progress, and hope.

Doing these things will open wider the gates of opportunity, provide

greater security for all, with no barriers of bigotry or discrimination.

The key to a dynamic decade is vigorous economic growth, our first great

goal. We might well begin with common sense in Federal budgeting:

government spending no more than government takes in.

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

difference.

We can begin by limiting the size and scope of government. Under the

leadership of Vice President Bush, we have reduced the growth of Federal

regulations by more than 25 percent and cut well over 300 million hours

of government-required paperwork each year. This will save the public

more than $150 billion over the next 10 years.

The Grace commission has given us some 2,500 recommendations for

reducing wasteful spending, and they’re being examined throughout the

administration. Federal spending growth has been cut from 17.4 percent

in 1980 to less than half of that today, and we have already achieved

over $300 billion in budget savings for the period of 1982 to ’86. But

that’s only a little more than half of what we sought. Government is

still spending too large a percentage of the total economy.