I want to thank you. Nancy and I are delighted to be with you, and this marvelous occasion set here in this beautiful hall does bring on some nostalgic memories. This was one of the first formal events that we attended in Washington after the 1980 election. And I remember how happy we were then knowing that the upcoming Senate would have a majority of Republicans. Incidentally, this is the first time that the Republicans have had back-to-back reelection of a majority in the Senate since 1928. So here we are. The Grand Old Party is 54 strong and still the Senate's majority party, and we will remain the majority party.

I would like to take this opportunity to offer our warmest best wishes to three fine men. They each did an outstanding job in the United States Senate, as Howard has told us -- Senators Schmitt and Hayakawa and Brady. Gentlemen, you'll be sorely missed. But just because you'll no longer be on the floor, don't start thinking that you can hang up your shingle and go fishing. You each have much to contribute. And I know I speak for everyone here when I say that I need you and our party needs you and America needs you. We stand ready to tap every bit of talent that you can provide.

Now, I mentioned fishing, and that should remind me of a story. But the funny thing is the story it reminds me of has much more to do with the business we're in today than it does of fishing. It seems that in a small river town there was a young man named Elmer, who was so talented at fishing that he finally aroused the suspicions of the fish and game people because he came in with such a great catch every trip out. And the game warden asked the local sheriff, who was a very close friend of this young man, Elmer, if he would find out what was going on. So, the sheriff one day just casually suggested to Elmer that he join him on the fishing trip.

And they rowed out into the middle of the river together, and, once out there, Elmer took out a stick of dynamite, lighted the fuse, tossed it in the water, and after the explosion, the surface of the water was covered with fish, which he began to pick up. And the sheriff looked at him and said, ``Elmer, do you realize that you have just committed a felony?'' And Elmer reached in the tackle box, pulled out another stick of dynamite, lighted the fuse, handed it to the sheriff, and said, ``Did you come here to talk or fish?'' [Laughter]

As Howard said, we've got some new faces with us tonight -- three men who did much to cheer us on election night -- Senators-elect Trible and Hecht and Wilson. And, fellows, you don't know how happy we are to see you. [Laughter]

The opposition has been saying terrible things about your political ideas, and yet you'll find that they're friendly and cordial, personally. It's like being confronted by a dog who's showing its teeth and snarling, and its tail is wagging at the same time. You don't know just which end to believe. [Laughter] But speaking from my end -- [laughter] -- and I'm talking about my end of Pennsylvania Avenue -- I'll need your help. So, Paul and Chic and Pete, I know you'll play important roles.

Our challenges are greater than ever before. In this country, indeed, the whole world is struggling to work to be free of the longest, deepest recession in postwar history. We've taken many of the basic steps, I think, that are necessary to put us back in the right course, steps we couldn't have taken without a majority in this House, the Senate. It's thanks in no small part to the individuals in this room. But let's not kid ourselves; much more remains to be done before we make America well again and before we can rest assured that our country's security needs have been met.

Now, first and foremost, I don't think any of us should forget that the security of America is our highest responsibility. So, just as our economy needs have been neglected during the last decade, so, too, were our defense requirements. And I wonder if you can guess what I'm going to mention right now. [Laughter] That's especially true in the area of strategic weapons.

Now, I won't take this opportunity at a social gathering like this to twist your arms -- [laughter] -- much. [Laughter] I'll just tell you, now that we can look each other in the eye, the MX system is needed. If we expect the Soviet Union to take our arms control proposal seriously, we must act seriously with the choices that we make.

The defeat of the Peacekeeper -- you know, I was awfully tempted, coming from the West, to name that after a famous old gun -- the Peacemaker. But then I thought I could just see the next picture that would be presented of me and all the cartoons with a six-shooter in my hand. So, it's the Peacekeeper.

The defeat was wrong, and I think it sent the wrong message.

Here at home we're facing up to serious challenges. During the last 2 years, we've reduced the record rate of interest rates, spending, inflation, and taxes that caused the recession and made it so painful. And tonight, I'm here to suggest that we all work together and tackle the remaining obstacle -- unemployment -- but resolve that our party will heed the lessons of history. We dare not try to spend, tax, and borrow our way back to prosperity, because that would push America right back into the swamp where we found ourselves in 1980.

The Republican Party must go forward, not backward. We came to Washington with a confident vision of restoring opportunity and hope to the average citizen. We have creative ideas -- enterprise zones, the CBI, the balanced budget amendment, regulatory reform, and criminal justice reform. All of them still await action. The opposition, even after 2 years of complaining and, in some cases, of obstructionism, has yet to offer anything other than what they've been doing for the last few decades and which got us into the mess we're in. The American people will remember who had a positive program and stood firm when the pressure was on.

So, as you know, I just returned from a trip to Latin America, and I found out one thing that did kind of make me serious on the way back. Over and over again there they expressed to me that they look to us for leadership in the world. And I'm convinced that our country can lead the way to lasting worldwide recovery if we remain true to our principles.

The solution for the unemployed autoworkers and the steelworkers is not a giant public works program financed by higher taxes or increased borrowing. America's challenge for the eighties is to invest more, invest wisely, to make workers and products more competitive in the world market, to unleash our pioneer spirit of innovation, and get this nation back on the cutting edge of growth. That's where Washington failed the American people in the past. Compared to other major industrialized countries our rate of net private investment has been pathetically low. We've been eating our seedcorn for more than a year, and unless we break the habit, we won't keep pace with the emerging competitive forces throughout the world.

The new taxing and spending increases that are proposed by the opposition won't stimulate the economy. They won't reduce the deficits, and yet that's all they have to offer.

By working together as we have since our first meeting 2 years ago, by remaining true to our ideals, we can bring America back to health, if we have the camaraderie of spirit.

Victor Hugo once said, ``It is through fraternity that liberty is saved.'' That was never more true than right now and never more applicable than to those of us who are in this room.

Let me add how deeply grateful I am for all your guidance and cooperation over the last difficult year, especially from Howard Baker. Sometimes we don't always agree, but I remain appreciative, because I trust Howard implicitly. And I can assure you -- and I think Howard will attest to this -- I'm listening, and I'm willing to go that extra mile to make certain we strengthen our partnership.

Now, we can leave a stronger America and a more peaceful world for the children, the Americans of the 21st century. All we need is faith, the courage of our convictions, and the common sense to work together. I have confidence in America's future, because I have confidence in each of you.

And with that, the best get-off line I can think of right now is, God bless you, and thank you for having us with you here tonight.

Note: The President spoke at 10:26 p.m. in the Great Hall of the Library of Congress. He was introduced by Senate Majority Leader Howard H. Baker, Jr.