But anyway, I just want to thank you all for all that you've done. And your very presence here and your willingness to be in the overflow room is an indication of why we're going to keep on going until these things we've believed in so many years and fought for from the outside -- we're going to make sure we're on the inside, and we're going to get them, and we're going to accomplish them.

I know we have to go in there so that dinner can continue and we can keep on schedule, but you know, I can't help but be a little -- well, it's a little ironic and I'm a little amused that suddenly our opponents have developed a real conscience about political action committees. [Laughter] I don't remember them being that aroused when the only ones that you knew about were on their side. Now they're on our side; they want to do away with them. Well, they're not going to do away with you.

And God bless you all, and thanks.

[The President spoke at approximately 8:15 p.m. to conference members in the East Room at the Mayflower Hotel. He then proceeded to the Grand Ballroom at the hotel, where he addressed the major portion of the conference at approximately 9:30 p.m.]

Well, Nancy and I, Mr. Toastmaster, [Representative] Mickey Edwards, thank you very much for those very generous words -- reverend clergy, ladies and gentlemen, we're delighted to be here at the ninth annual Conservative Political Action Conference.

Anyone looking at the exciting program you've scheduled over these 4 days, and the size of this gathering here tonight, can't help but be impressed with the energy and vitality of the conservative movement in America. We owe a special debt of gratitude to the staffs of the American Conservative Union, Young Americans for Freedom, Human Events, National Review, for making this year's conference the most successful in the brief but impressive history of this event.

Now, you may remember that when I spoke to you last year, I said the election victory we enjoyed in November of 1980 was not a victory of politics so much as it was a victory of ideas; not a victory for any one man or party, but a victory for a set of principles, principles that had been protected and nourished during years of grim and heartbreaking defeats by a few dedicated Americans. Well, you are those Americans, and I salute you.

I've also come here tonight to remind you of how much remains to be done, and to ask your help in turning into reality even more of our hopes for America and the world. The agenda for this conference is victory, victory in this year's crucial congressional, State, and local elections.

The media coverage that you've received this week, the attention paid to you by so many distinguished Americans in and out of government -- conservative and not so conservative -- are testimony to the sea-change that you've already brought about in American politics. But, despite the glitter of nights like this and the excitement we all still feel at the thought of enacting reforms we were only able to talk about a few years ago, we should always remember that our strength still lies in our faith in the good sense of the American people. And that the climate in Washington is still opposed to those enduring values, those ``permanent things'' that we've always believed in.

But Washington's fascination with passing trends and one-day headlines can sometimes cause serious problems over in the West Wing of the White House -- they cause them. There's the problem of leaks. Before we even announced the giveaway of surplus cheese, the warehouse mice had hired a lobbyist. [Laughter]

And then a few weeks ago, those stories broke about the Kennedy tapes. And that caused something of a stir. Al Haig came in to brief me on his trip to Europe. I uncapped my pen, and he stopped talking. [Laughter] Up on the Hill, I understand they were saying, ``You need eloquence in the State Dining Room, wit in the East Room, and sign language in the Oval Office.'' [Laughter] It got so bad that I found myself telling every visitor there were absolutely no tape recordings being made. And if they wanted a transcript of that remark, just mention it to the potted plant on their way out. [Laughter]

But Washington is a place of fads and one-week stories. It's also a company town, and the company's name is government, big government. Now, I have a sneaking suspicion that a few of you just might have agreed when we decided not to ask Congress for higher taxes. And I hope you realize it's going to take more than 402 days to completely change what's been going on for 40 years.

I realized that the other day when I read a story about a private citizen in Louisiana who asked the government for help in developing his property. And he got back a letter that said, ``We have observed that you have not traced the title prior to 1803. Before final approval, it will be necessary that the title be traced previous to that year. Well, the citizen's answer was eloquent.

``Gentlemen,'' he wrote, ``I am unaware that any educated man failed to know that Louisiana was purchased from France in 1803. The title of the land was acquired by France by right of conquest from Spain. The land came into the possession of Spain in 1492 by right of discovery by an Italian sailor, Christopher Columbus. The good Queen Isabella took the precaution of receiving the blessing of the Pope. . . . The Pope is emissary of the Son of God, who made the world. Therefore, I believe that it is safe to assume that He also made that part of the United States called Louisiana. And I hope to hell you're satisfied.'' [Laughter]

Now, changing the habits of four decades is, as I say, going to take more than 402 days. But change will come if we conservatives are in this for the long haul, if we owe our first loyalty to the ideas and principles we discussed, debated, developed, and popularized over the years. Last year I pointed to these principles as the real source of our strength as a political movement, and mentioned some of the intellectual giants who fostered and developed them -- men like Frank Meyer, who reminded us that the robust individualism of America was part of deeper currents in Western civilization, currents that dictated respect for the law and the careful preservation of our political traditions.

Only a short time ago, conservatives filled this very room for a testimonial dinner to a great conservative intellect and scholar, author of the ``The Conservative Mind,'' Russell Kirk. In a recent speech, Dr. Kirk has offered some political advice for the upcoming elections. He said now, more than ever, we must seek out the ``gift of audacity.'' We must not become too comfortable with our new-found status in Washington. ``When the walls of order are breached, the vigorous conservative must exclaim: Arm me, audacity, from head to foot.'' It was Napoleon, master of the huge battalions, who once said, ``It is imagination that rules the human race.'' And Disraeli who mentioned that ``success is the child of audacity.''

We must approach the upcoming elections with a forthright and direct message for the American people. We must remind them of the economic catastrophe that we faced on January 20th, 1981: millions out of work, inflation in double digits for 2 years in a row, interest rates hovering at 21\1/2\ percent, productivity and the rate of growth in the gross national product down for the third year in a row, the money supply increasing by 12 percent -- and all this due to one overriding cause: Government was too big and had spent too much money.

Federal spending, in the last decade, went up more than 300 percent. In 1980 alone, it increased by 17 percent. Almost three-quarters of the Federal budget was routinely referred to as ``uncontrollable,'' largely due to increases in programs like food stamps, which in 15 years had increased by 16,000 percent, or Medicare and Medicaid -- up by more than 500 percent in just 10 years. Our national debt was approaching $1 trillion, and we were paying nearly $100 billion a year in interest on that debt -- more than enough money to run the entire Federal Government only 20 years ago.

In an effort to keep pace, taxes had increased by 220 percent in just 10 years, and we were looking at a tax increase from 1980 to 1984, already passed before we got here, of more than $300 billion. Unless we stop the spending juggernaut and reverse the trend toward even higher taxes, government by 1984 would be taking nearly one-quarter of the gross national product. Inflation and interest rates, according to several studies, would be heading toward 25 percent -- levels that would stifle enterprise and initiative and plunge the Nation into even deeper economic crisis.

Well, we had to address this economic problem first. History tells us of great nations brought to their knees by unchecked inflation and wild government spending. Brooks Adams once put it this way: ``Nature has cast the United States into the vortex of the fiercest struggle which the world has ever known. She has become the heart of the economic system of the age, and she must maintain her supremacy by wit and force or share the fate of the discarded.''

At this point last year, much of the smart money in Washington was betting, as it is today, on the failure of our proposals for restoring the economy, that we could never assemble the votes we needed to get our program for economic recovery through the Congress. But assemble the votes we did. For the first time in nearly 25 years, we slowed the spending juggernaut and got the taxpayers out from under the Federal steamroller. We cut the rate of growth in Federal spending almost in half. We lowered inflation to a single-digit rate, and it's still going down. It was 8.9 percent for all of 1981, but our January figure at an annualized rate is only 3\1/2\ percent.

When they talk of what should be done for the poor, well, one thing alone, by reducing inflation, we increase the purchasing power of poor families by more than $250. We cut taxes for business and individuals and index taxes to inflation. This last step ended once and for all that hidden profit on inflation that had made the Federal bureaucracy America's largest growth industry.

We've moved against waste and fraud with a task force including our Inspectors General, who have already found thousands of people who've been dead for as long as 7 years still receiving benefit checks from the government. We've concentrated on criminal prosecutions, and we've cut back in other areas like the multitude of films, pamphlets, and public relations experts, or, as we sometimes call them, the Federal flood of flicks, flacks, and foldouts. [Laughter]

We're cutting the size of the Federal payroll by 75,000 over the next few years and are fighting to dismantle the Department of Energy and the Department of Education, agencies whose policies have frequently been exactly the opposite of what we need for real energy growth and sound education for our children.

Even now, less than 5 months after our program took full effect, we've seen the first signs of recovery. In January, leading economic indicators like housing permits showed an upturn. By 1983 we will begin bringing down the percentage of the gross national product consumed by both the Federal deficit and by Federal spending and taxes.

Our situation now is in some ways similar to that which confronted the United States and other Western nations shortly after World War II. Many economists then were predicting a return to depression once the stimulus of wartime spending was ended. But people were weary of wartime government controls, and here and in other nations like West Germany, those controls were eliminated against the advice of some experts. At first, there was a period of hardship -- higher unemployment and declining growth. In fact, in 1946, our gross national product dropped 15 percent, but by 1947, the next year, it was holding steady and in 1948 increased by 4 percent. Unemployment began a steady decline. And in 1949 consumer prices were decreasing. A lot of the experts underestimated the economic growth that occurs once government stops meddling and the people take over. Well, they were wrong then, and they're wrong now.

The job of this administration and of the Congress is to move forward with additional cuts in the growth of Federal spending and thereby ensure America's economic recovery. We have proposed budget cuts for 1983, and our proposals have met with cries of anguish. And those who utter the cries are equally anguished because there will be a budget deficit. They're a little like a dog sitting on a sharp rock howling with pain, when all he has to do is get up and move. [Laughter]

On the spending cuts now before the Congress and those tax reductions we've already passed for the American people, let me state we're standing by our program. We will not turn back or sound retreat.

You know, if I could just interject here, some of those people who say we must change direction when we've only been on this new direction for 5 months -- and it's only the first limited phase of the whole program -- it was described pretty well by Mickey Edwards, sitting right here, while we were having dinner. He said, ``If you were sliding downhill on a snowy hill, and you know there's a cliff down there ahead of you at the bottom and suddenly there's a road that turns off to the right,'' he said, ``you don't know where that road to the right goes, but,'' he says, ``you take it.'' [Laughter] We know where that other one goes. [Laughter]

In the discussion of Federal spending, the time has come to put to rest the sob sister attempts to portray our desire to get government spending under control as a hard-hearted attack on the poor people of America. In the first place, even with the economies that we've proposed, spending for entitlements -- benefits paid directly to individuals -- will actually increase by one-third over the next 5 years. And in 1983 nondefense items will amount to more than 70 percent of total spending.

As Dave Stockman pointed out the other day, we're still subsidizing 95 million meals a day, providing $70 billion in health care to the elderly and poor, some 47 million people. Some 10 million or more are living in subsidized housing. And we're still providing scholarships for a million and a half students. Only here in this city of Oz would a budget this big and this generous be characterized as a miserly attack on the poor. [Laughter]

Now, where do some of these attacks originate? They're coming from the very people whose past policies, all done in the name of compassion, brought us the current recession. Their policies drove up inflation and interest rates, and their policies stifled incentive, creativity, and halted the movement of the poor up the economic ladder. Some of their criticism is perfectly sincere. But let's also understand that some of their criticisms comes from those who have a vested interest in a permanent welfare constituency and in government programs that reinforce the dependency of our people.

Well, I would suggest that no one should have a vested interest in poverty or dependency, that these tragedies must never be looked at as a source of votes for politicians or paychecks for bureaucrats. They are blights on our society that we must work to eliminate, not institutionalize.

Now, there are those who will always require help from the rest of us on a permanent basis, and we'll provide that help. To those with temporary need, we should have programs that are aimed at making them self-sufficient as soon as possible. How can limited government and fiscal restraint be equated with lack of compassion for the poor? How can a tax break that puts a little more money in the weekly paychecks of working people be seen as an attack on the needy?

Since when do we in America believe that our society is made up of two diametrically opposed classes -- one rich, one poor -- both in a permanent state of conflict and neither able to get ahead except at the expense of the other? Since when do we in America accept this alien and discredited theory of social and class warfare? Since when do we in America endorse the politics of envy and division?

When we reformed the welfare system in California and got the cheaters and the undeserving off the welfare rolls, instead of hurting the poor, we were able to increase their benefits by more than 40 percent. By reducing the cost of government, we can continue bringing down inflation, the cruelest of all economic exploitations of the poor and the elderly. And by getting the economy moving again, we can create a vastly expanded job market that will offer the poor a way out of permanent dependency.

So, let's tell the American people the truth tonight and next fall about our economic recovery program. It isn't for one class or group. It's for all Americans -- working people, the truly needy, the rich and the poor.

One man who held this office, a President vastly underrated by history, Calvin Coolidge, pointed out that a nation that is united in its belief in the work ethic and its desire for commercial success and economic progress is usually a healthy nation, a nation where it is easier to pursue the higher things in life like the development of science, the cultivation of the arts, the exploration of the great truths of religion and higher learning.

In arguing for economy in government, President Coolidge spoke of the burden of excessive government. He said, ``I favor a policy of economy, not because I wish to save money, but because I wish to save people. The men and women of this country who toil are the ones who bear the cost of the government. Every dollar that we carelessly waste means that their life will be so much [the] more meager. Every dollar that we save means that their life will be so much the more abundant. Economy is idealism in its most practical form.'' And this is the message we conservatives can bring to the American people about our economic program. Higher productivity, a larger gross national product, a healthy Dow Jones average -- they are our goals and are worthy ones.

But our real concerns are not statistical goals or material gain. We want to expand personal freedom, to renew the American dream for every American. We seek to restore opportunity and reward, to value again personal achievement and individual excellence. We seek to rely on the ingenuity and energy of the American people to better their own lives and those of millions of others around the world.

We can be proud of the fact that a conservative administration has pursued these goals by confronting the Nation's economic problems head-on. At the same time, we dealt with one other less publicized but equally grave problem: the serious state of disrepair in our national defenses.

The last Democratic administration had increased real defense spending at a rate of 3.3 percent a year. You know how much inflation was, so they were actually losing ground. By 1980 we had fighter planes that couldn't fly, Navy ships that couldn't leave port, a Rapid Deployment Force that was neither rapid nor deployable and not much of a force.

The protection of this nation's security is the most solemn duty of any President, and that's why I've asked for substantial increases in our defense budget -- substantial, but not excessive.

In 1962 President Kennedy's defense budget amounted to 44 percent of the entire budget. Ours is only 29 percent. In 1962 President Kennedy's request for military spending was 8.6 percent of the gross national product. Ours is only 6.3 percent. The Soviet Union outspends us on defense by 50 percent, an amount equal to 15 percent of their gross national product. During the campaign I was asked any number of times: If I were faced with a choice of balancing the budget or restoring our national defenses, what would I do? Every time I said, ``Restore our defenses.'' And every time I was applauded.

So, let me be very clear. We will press for further cuts in Federal spending. We will protect the tax reductions already passed. We will spend on defense what is necessary for our national security. I have no intention of leading the Republican Party into next fall's election on a platform of higher taxes and cut-rate defense. If our opponents want to go to the American people next fall and say, ``We're the party that refused to cut spending, we're the party that tried to take away your tax cuts, we're the party that wanted a bargain-basement military and held a fire sale on national security,'' let's give them all the running room they want. [Laughter]

There are other matters on the political agenda for this coming year, matters I know that you've been discussing during the course of this conference. I hope one of them will be our attempt to give government back to the people. One hundred and thirty-two Federal grants-in-aid in 1960 have grown to over 500 in 1981. Our federalism proposal, as Mickey Edwards told you, would return the bulk of these programs to State and local governments, where they can be made more responsive to the people.

We're deeply committed to this program, because it has its roots in deep conservative principles. We've talked a long time about revitalizing our system of federalism. Now, with a single, bold stroke, we can restore the vigor and health of our State and local governments. This proposal lies at the heart of our legislative agenda for the next year, and we'll need your active support in getting it passed.

There are other issues before us. This administration is unalterably opposed to the forced busing of schoolchildren, just as we also support constitutional protection for the right of prayer in our schools. And there is the matter of abortion. We must with calmness and resolve help the vast majority of our fellow Americans understand that the more than 1\1/2\ million abortions performed in America in 1980 amount to a great moral evil, an assault on the sacredness of human life.

And, finally, there's the problem of crime, a problem whose gravity cannot be underestimated. This administration has moved in its appointments to the Federal bench and in its legislative proposals for bail and parole reform to assist in the battle against the lawless. But we must always remember that our legal system does not need reform so much as it needs transformation. And this cannot occur at just the Federal level. It can really occur only when society as a whole acknowledges principles that lie at the heart of modern conservatism. Right and wrong matters, individuals are responsible for their actions. Society has a right to be protected from those who prey on the innocent.

This then is the political agenda before us. Perhaps more than any group, your grassroots leadership, your candidate recruitment and training programs, your long years of hard work and dedication have brought us to this point and made this agenda possible.

We live today in a time of climactic struggle for the human spirit, a time that will tell whether the great civilized ideas of individual liberty, representative government, and the rule of law under God will perish or endure.

Whittaker Chambers, who sought idealism in communism and found only disillusionment, wrote very movingly of his moment of awakening. It was at breakfast, and he was looking at the delicate ear of his tiny baby daughter, and he said that, suddenly, looking at that, he knew that couldn't just be an accident of nature. He said, while he didn't realize it at the time, he knows now that in that moment God had touched his forehead with his finger.

And later he wrote, ``For in this century, within the next decades, will be decided for generations whether all mankind is to become Communist, whether the whole world is to become free, or whether in the struggle civilization as we know it is to be completely destroyed or completely changed. It is our fate to live upon that turning point in history.''

We've already come a long way together. Thank you for all that you've done for me, for the common values we cherish. Join me in a new effort, a new crusade.

Nostalgia has its time and place. Coming here tonight has been a sentimental journey for me, as I'm sure it has been for many of you. But nostalgia isn't enough. The challenge is now. It's time we stopped looking backward at how we got here. We must ask ourselves tonight how we can forge and wield a popular majority from one end of this country to the other, a majority united on basic, positive goals with a platform broad enough and deep enough to endure long into the future, far beyond the lifespan of any single issue or personality.

We must reach out and appeal to the patriotic and fundamental ideals of average Americans who do not consider themselves ``movement'' people, but who respond to the same American ideals that we do. I'm not talking about some vague notion of an abstract, amorphous American mainstream. I'm talking about ``Main Street'' Americans in their millions. They come in all sizes, shapes and colors -- blue-collar workers, blacks, Hispanics, shopkeepers, scholars, service people, housewives, and professional men and women. They are the backbone of America, and we can't move America without moving their hearts and minds as well.

Fellow Americans, our duty is before us tonight. Let us go forward, determined to serve selflessly a vision of man with God, government for people, and humanity at peace. For it is now our task to tend and preserve, through the darkest and coldest nights, that ``sacred fire of liberty'' that President Washington spoke of two centuries ago, a fire that tonight remains a beacon to all the oppressed of the world, shining forth from this kindly, pleasant, greening land we call America.

God bless you, and thank you.