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State
of the Union Address
Ronald
Reagan
January
26, 1982
Thank you. Mr.
Speaker thank you. Thank you very much. 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: l
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. And
Douglas MacArthur made an unforgettable farewell to
a country he had 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
believe 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’s
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
auto workers in Detroit, lumberjacks in the
Northwest, steelworkers in Steubenville who are in
the unemployment lines, to black teen-agers in
Newark a nd 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 six 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 s taggering 21 1/2 percent. There were eight
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 n early
in half. But reduced spending alone isn’t enough.
We’ve just implemented the first and smallest
phase of a three-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 inflation, taxes and interest rates would
all be higher.
A year ago, Americans’ faith in their governmental
process was steadily declining. Six out of ten
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 the-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
r ate 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 i independence and help bring down the costs
of gasoline and heating fuel.
Together, we have created an effective Federal
strike force to combat waste and fraud in
Government. In just six 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 insures 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.
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?
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 under way, as some
would have you believe; they are the inheritance of
decades of tax and tax, and spend and
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. And that plan is based on four
common-sense fundamentals: continued reduction of
the growth h in Federal spending, preserving the
individual and business tax deductions 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 forecasts, which we’re
required by law to make, will show major deficits,
starting at less than $100 billion and declining,
but still too high.
More important, we are making progress with the
three keys to reducing deficits: economic growth,
lower interest rates and spending control. The
policies we have in place will reduce the deficit
steadily, surely and, in time, completely.
Higher taxes would not mean lower deficits. If they
did, how would we explain tax revenues more than
doubled just since 1976, yet in that same six-year
period we ran the largest series of deficits in our
history. In 1980 tax revenues increased by $54 bil
lion, 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 th em
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 promised the American people to bring their taxes
x rates down and 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 t 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 an d 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 root out more waste, and we will
continue our efforts to reduce the number of
employees in the Federal work force by 75,000.
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 simultane
ously take full responsibility for Aid to Families
With Dependent Children and food stamps. This will
make welfare less costly and more responsive to
genuine need because it will be designed and
administered closer to the grass roots and the
people it ser ves.
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 four 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 real
realignment that will end cumbersome administration
and spiraling costs at the Federal level while we
insure 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 1990’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
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 back sliding
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 50-states project that will examine
state laws for discriminatory language. And for the
first time in our history a woman sits on the
highest court in the land.
So, too, the problem of crime one as real and deadly
serious as any in America today it demands that we
seek transformation of our legal system, which
overly protects the rights of criminals while it
leaves society and the innocent victims of crime
without justice.
We look forward to the enactment of a responsible
Clean Air Act to increase jobs while continuing to
improve the quality of our air. We are encouraged by
the bipartisan initiative of the House and are
hopeful of further progress as the Senate continues
i deliberations.
So far I have concentrated largely now on domestic
matters. To view the State of the Union in
perspective, we must not ignore the rest of the
world. There isn’t time tonight for a lengthy
treatment of social or of foreign policy, I should
say a subject I intend to address in detail in the
near future. A few words, however, are in order on
the progress we’ve made over the past year
re-establishing respect for our nation around the
globe and some of the challenges and goals that we
will approach in the yea r 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 I
didn’t apologize for America’s wealth. Instead I
spoke of the strength of the free marketplace system
a nd 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 the 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.
The budget plan I submit to you on Feb. 8 will
realize major savings by dismantling the Departments
of Energy and Education, and by eliminating
ineffective subsidies for business. We will continue
to redirect our resources to our two highest budget
priorities: a strong national defense to keep
America free and at peace and a reliable safety net
of social programs for those who have contributed
and those who are in need.
Contrary to some of the wild charges you may have
heard, this Administration has not and will not turn
its back on America’s elderly or America’s poor.
Under the new budget, funding for social insurance
programs will be more than double the amount spent
only six 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, a nd 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
five times a s 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 three years, while at the same time preserving
essential services for the truly needy. Shortly you
will receive from me a message on further re forms
we intend to install some new, but others long
recommended by our 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 four years and will,
without affecting Social 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 St art, 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 Institutes
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
home building 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
$100 billion 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
had led to the distortion in the vital functions of
Government. As one Democratic Governor put it recent ly: “The national Government should be worrying
about “arms control not potholes.” The growth
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 accountable.”
Well, 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.
Now let me also note that private American groups
have taken the lead in making Jan. 30 a day of
solidarity with the people of Poland so, too, the
European Parliament has called for March 21 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 Nov. 18, 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 naiveté 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 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 mine fields or
barbwire 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 en we waited for television to bring us the
scene of that first plane landing at Clark Field in
the Philippines bringing our P.O.W.’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 just two weeks ago, in the midst of a terrible
tragedy on the Potomac, we saw again the spirit of
American heroism at its finest the heroism of
dedicated rescue workers saving crash victims from
icy waters.
And we saw the heroism of one of our young
Government employees, Lenny Skutnik, who, when he
saw a woman lose her grip on the helicopter line,
dived into the water and dragged her to safety.
And then there are countless quiet, everyday heroes
of American life parents who sacrifice long and hard
so their children will know a better life than
they’ve known; church and civic volunteers who
help to feed, clothe, nurse and teach the needy;
millions who’ve made our nation, and our
nation’s destiny, so very special unsung heroes
who may not have realized their own dreams
themselves but then who reinvest those dreams in
their children.
Don’t let anyone tell 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 one 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 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’re meet ,
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..
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