It's sobering to be among you today, among people whose livelihood is the American dream. Your business is the heart and hope of American life. The dark days that you are in reflect the pain of the unrealized hopes, the sacrifice, and the struggling of the rest of America.

A year ago when members of your executive committee met with me at the White House, we shared our hopes for reducing the growth of government spending. Your 2-percent solution proposal was considered carefully in the design of our program, and with your help, we were able to convince the Congress to make that program the law of the land. I thank you for your hard work and ask for even more as we continue our struggle to reduce the size and appetite of the Federal Government.

You are the professionals the rest of us turn to -- not only to buy and sell our homes but, increasingly, to help us find ways to afford them. You deal with America's families every hour of your working day -- young couples anxious to make a new start in life, families moving for new opportunities, ones that need space, ones that now need less space, and elderly couples looking for a place to retire.

But the dream of ownership, home ownership that is your stock-in-trade, has turned into a nightmare -- not suddenly, not overnight, but after a decade or more of economic abuse. After years of fiscal blundering in Washington, after the big spending, big government policies of the past brought our national economy to the brink of disaster, home ownership has become an impossible dream now for too many of our people.

In America, private ownership has been the bedrock of our social system. But through the values of neighborhood, work, and family that such ownership encourages -- though they're necessary to our future health and well-being today -- too many American families can no longer afford the price of an average new home.

The typical monthly payment on a typical American home more than doubled between 1977 and 1980. Something has gone very wrong. For the good of our country and for the sake of our children, something must be done to make it right. And if you're willing to help, and I believe you are, we in this administration intend to do something about it.

We will not look the other way as the rock upon which we have built this society continues to crumble. We will work to restore health to our ailing housing industry, and in so doing, help to restore health to our national economy.

You're not asking the Federal Government for multi-billion dollar bailout schemes. You recognize, as I do, that budget-busting bailouts will only aggravate the interest rate problem -- the underlying problem in the housing industry.

On my direction, Secretary Pierce and a Cabinet-level task force have developed a plan for short-term relief of the housing industry. This morning, I'm pleased to announce a series of several early actions that we will take in response to their findings.

First, changes will be undertaken regarding the mortgage revenue bond program to loosen the arbitrage restriction and broaden our definitions of distressed areas. And since the basic program is already in place, we can move quickly. These changes will make it possible for State agencies to provide mortgage funds for 50,000 more homebuyers at lower cost.

Second, further action is being taken under the Employment Retirement Income Security Act of 1974, the act which regulates pension plans. Within 30 to 60 days, the Department of Labor will have completed action to remove barriers, within the limits of fiduciary responsibility, to free a flow of critically needed funds for housing from pension funds.

Today, in excess of $500 billion dollars are invested by pension funds, and that figure is expected to grow to some $3 trillion by 1995. Of that amount, only 10 percent is currently invested in mortgages. The increase in pension fund investment in mortgages will be determined by the pension plans themselves, both union and private pensions. These changes are not intended to water down basic ERISA investment protections but to demonstrate our commitment to eliminating barriers and unlocking important new doors to broader investment in the housing market.

Now, third, we're easing existing guidelines to expand the number of potential homebuyers qualifying for FHA [Federal Housing Administration] mortgage loans. And this action will be of particular benefit to those purchasing their first homes, such as lower-cost condominiums, and will allow relatives to assist young people in the down payment.

Now, fourth, we're taking action to remove restrictions on ``controlled business.'' Today, real estate brokers, among others, are limited in ways that they can provide services to homebuyers. As a result of our actions, real estate firms will be free to establish subsidiaries to provide additional services, like title insurance, which are necessary to complete the purchase of a home.

Fifth, we're also taking action to speed the processing of mortgages to encourage the private sector to take over the basic processing of loan applications.

And while we're taking these short-term actions, we're looking at the long-term as well. Last June I created a housing commission to review the entire range of housing policy. Its report is due within the next 5 weeks. And today, I'm establishing a working group of the Cabinet Council for Economic Affairs, chaired by Secretary Pierce, to bridge our short-term measures and the structural reform proposals of our housing commission. Formation of the working group now will ensure prompt action to rejuvenate housing.

Let me state, categorically, that for this administration, housing is one of our highest social priorities. Our policies for this industry are based on the essential right to private property. And in private property, nothing is more important than home ownership. I also want to state my firm, personal commitment to preservation of the homeowner mortgage tax reduction [Deduction {White House correction}] and maintenance of the important roles of FHA and GINNIE MAE [Government National Mortgage Association]. You have my pledge that this administration will take no precipitous action. Our actions will be measured against the ability of the private sector to bear more responsibility in home financing.

Homeownership creates incentives for people to save and invest -- a unique stabilizing force in our democratic system. Unfortunately, years of inflation and high interest rates have put today's housing industry in transition and crisis. Consumers can't buy; sellers can't sell; and builders can't build. Interest rates have come down from their dizzying heights, but they have not come down enough. Recent gains in controlling inflation, in the savings rate, in tax incentives, and in budget reductions will continue to push them downward, but the only hope for long-term improvement in interest rates is for the Congress to join me in a bipartisan effort to cut spending.

We must reduce these intolerable budget deficits that have haunted us for so many years. We must all realize that our economic problems and the problems of your industry are neither Republican nor Democrat. They hurt us all. They're the painful consequences of a spending addiction that has mushroomed out of control -- consequences inflicted on all of our citizens, in every region, in every station, and of every age. We will not pit party against party, State against State, or class against class in the demagoguery used by some of our critics. Those who would lead our people must recognize that we're all Americans and that our collective fate must rise or fall as one nation and one people. Our solutions must be fair and compassionate -- and they must be bipartisan.

Now, I have no quarrel with those who cry out every evening on the network news against the size of our projected deficits. I abhor them, too. What I don't understand is how many of those same people can then retreat from the spotlight to vote in some congressional committee to spend even more. How can they carp about deficits in one breath, and vote to make them bigger in the next? They're part of the problem, not the solution.

I want with all my heart to balance the budget and hold open the door for discussion with the Congress. We must put aside our political differences if we're ever to set our economy to rights. In the array of choices before us, however, there are three areas in which there must be no retreat on fundamentals -- on fundamentals: the ability of this nation to maintain a strong defense, relief for the weary and overburdened American taxpayer, and reduction in the exorbitant growth of Federal spending.

Attempts to saddle this administration with the blame for economic problems long-in-the-making only sink our economy deeper in the quagmire of partisan debate. And they don't fool anyone, either. The American people don't believe it and never will. This administration holds no patent on recession. We didn't invent sky-high interest rates and inflation or the tragedy of unemployment. Those problems were in place long before we took office. They were the result of something that was called ``the new economics'' -- about 20 years ago they called it that.

In 1980 alone, no less than three different national economic policies were tried. Our economy was jerked in one direction after another in a vain effort to trim sails to each change in the political breeze. Well, I believe we have in place a solid program for economic recovery, and it's going to do the job. With your help and with a bipartisan coalition in the Congress, we have cut the peoples' taxes, held down government spending, cut the growth of regulations, and urged the Federal Reserve to maintain a slow and steady growth in our money supply. Our programs will encourage saving and investment and provide incentive for our people to work harder, produce more, and expand our economy.

It's true that the budget we've proposed includes deficits, but let me reassure you, I have no intention of giving up on balancing the budget. I have given no ground in my belief that government deficits, spending more than we take in, are a plague on our economy. I am open to any and all suggestions to reduce the size of the Federal deficit in a way that does not endanger our freedom.

But let us not be naive. Just cutting the peoples' taxes in October did not cause the recession in July. Just as reducing their taxes by 1.25 percent suddenly did not create our trillion-dollar debt, neither will raising taxes on working Americans solve our spending problems.

We must learn from the mistakes of the past. Government doesn't tax money to get its needs, it taxes to get money it wants. Big government has a way of spending all the money it can get its hands on, and then some. And in the last 10 years, America's taxes have gone up by more than 200 percent, and we still had the largest string of deficits in our history.

Not only does this excessive taxation put a ball and chain around our economy, it simply does not solve our spending problem. Federal programs have been growing like Topsy. In the last 15 years, the cost of food stamps has gone up 16,000 percent. Now, I've said that number before, but I think you have to pause to really take it in. Medicaid and Medicare have gone up by more than 500 percent in the last 10 years. We don't have a trillion-dollar debt because we haven't taxed enough; we have a trillion-dollar debt because we spend too much.

Once you realize the staggering rate at which government programs have been growing and the reckless way it has been spending, our proposals to cut the rate of increase appear in their true light -- as a moderate, necessary remedy to a serious, potentially fatal economic illness.

Our historic tax cuts last year didn't cut our revenues. The U.S. Treasury will continue taking in more money every year than the year before. In 1981, personal taxes actually went up by about $41 billion. If we were to repeal the so-called 1983 tax cut and our indexing provision, the tax bill for the average working family would increase by hundreds of dollars per year. Our tax cuts only partially offset the historic tax increases that are already on schedule.

In the same way, we've never proposed reducing the level of Federal spending. We have simply proposed controlling the rate by which it will grow.

Let me give you a few examples of the level of human services that we're still providing in the 1983 budget, while everyone is screaming that we're throwing people out in the snow to die.

-- About 3.4 million American households will receive subsidized housing assistance at the beginning of 1983. By the end of 1985, under our proposals, 400,000 more households will be added to the list.

-- Nearly 7 million separate loans or awards will be available for students in higher education through Federal assistance programs. Since the college-level population numbers only slightly more than 11 million, that means that better than one out of every two students has the opportunity for assistance. The 1983 budget provides more than $12 billion in total tuition support, nearly three times the level available just as recently as 1977.

-- The Federal Government will subsidize approximately 95 million meals per day, or 14 percent of all the meals served in the United States.

-- Through Medicare and Medicaid, the Federal Government will pay for the medical care of 99 percent of those Americans who are over age 65, and a total of 20 percent of our population -- approximately 47 million aged, disabled, and needy people.

-- Twenty-eight percent of all Federal spending will go to the elderly -- an average of $7,850 per senior citizen in payments and service.

-- About $2.8 billion will be spent on training and employment programs for almost 1 million low-income people, nearly 90 percent of whom will be below the age of 25 or recipients of Aid to Families with Dependent Children.

These examples clearly demonstrate that we in this administration are not turning our backs on America's needy. There's no question that we must protect those who are truly needy, care for those who are sick, feed those who are hungry, and shelter those who are cold. And we must build a better economy that provides a job for every American who wants one.

But some of our leaders seem to have forgotten where prosperity comes from. America's abundance was not a gift from government or anyone else. Free enterprise, not government, is the source from which our blessings flow, and we in this administration intend to restore it.

Our program has already begun to work. After unprecedented years of double-digit inflation, we ended 1981 with inflation measured for that past year at 8.9 percent. In the last 5 months, it has been down to 4\1/2\ percent. We have begun to tame the inflation monster.

Now, let me put those gains into a more human context. If inflation had kept running at the rate it was before the 1980 election rather than at the rate we've achieved in the last 6 months, a family of four on a fixed income of $15,000 would be $994 poorer in purchasing power than they are today.

The decline in the inflation rate and new incentives for saving have strong implications for future prosperity and financing the budget deficit. We project that Federal borrowing in 1983 and 1984 will be several times less than the total private savings pool, and we believe that proportion to be a direct result of the tax cuts. We expect $260 billion more in private savings by 1984 than in 1981. Private savings will far outweigh the projected increases in the deficit.

These economic gains are early harbingers of recovery, signs that have strong implications for future prosperity. And the return of American prosperity is the most compassionate program anyone can offer.

For the sake of the young couple who wants to buy their first home but can't afford today's interest rates, we've designed an economic program geared to a healthier economy that will have lower interest rates and make the dream of their own home come true.

For the sake of the automobile workers who have just volunteered to take unprecedented pay cuts in order to keep their jobs, we're bringing down the inflation that would have cut their real incomes even more, further threatening the tenuous security for which they've sacrificed.

For those who are out of work and looking for jobs, we're cutting the excessive taxing and spending to open the way to more productivity and more employment. Our whole program is geared to generating new jobs and new opportunities for all of our citizens.

And for the sake of our elderly, pensioners, and senior citizens trapped by inflation, we have finally begun to control the cost of living. Last month, for the first time in 6 years, the Producer Price Index actually declined. I don't mean the rate of increase went down, I mean there was no increase -- there was an actual decrease.

There are no sugar pill remedies for serious illnesses. The damage of a generation of economic abuse cannot be erased overnight. But there is a cure. I believe the best hope for Americans -- and that includes those of you in the housing industry -- is the sustained recovery of our economy, continued low inflation, declining interest rates, increased employment, and a rise in the real income of our people. But we can only work this cure if we hold firm to the recovery program now in place.

In the words of Thomas Paine: These are times that try men's souls. We need more than summer soldiers and sunshine patriots. If we believe in principles of free enterprise that made our country great, we must stand up for them again, today. We must draw anew on the individual strength, ingenuity, and vision that built America. But our gaze is not set on the past; it's firmly fixed on tomorrow. We must not mortgage our children's future to pay for the mistakes of today. The choice before our generation is grave but clear: We must either face and solve our problems now or surrender to them forever.

We're not the only people at the crossroads. For many, the requirement of courage and sacrifice is far greater. In Poland, where citizens must meet in secret to resist military tyranny, courageous workers still struggle underground. They've recently published a plea for continued resistance. It goes, ``so that our children do not have to be ashamed of us,'' they said, so that their children ``will have a chance to grow up as free and courageous people.''

Well, you and I are ahead of them. We already enjoy that freedom. It's our task to preserve it for our children.

Join us in our effort to renew our way of life. Stay with us, as I'm sure you will, as we pass through this dark corner in time. In your communities, and tomorrow in the Congress, spread the word that you have faith in these programs, that together we can sustain the courage and the patience of our people, and together we can restore the health of our nation.

Thank you, and God bless you.

Note: The President spoke at 10:56 a.m. at the Washington Hilton Hotel.

Prior to his departure for the hotel, the President met in the Oval Office with the executive branch of the association.