I know you understand how happy I am to be back, standing before you today. If it's all the same to you, though, when I finish speaking, I think I'll slip out the back door this time. [Laughter]

A funny thing happened to me on the way to the White House last year. [Laughter] No, seriously, it wasn't funny at all, and I thank you for the prayers you said that day -- especially your prayers for three very brave men -- Special Agent Tim McCarthy, Tom Delahanty, and press spokesman Jim Brady. God bless them all.

There was someone else outside this hotel last year who did something I'll always remember. He personally helped bring down the man who was accused of doing the shooting. He's almost as old as I am -- all 5 feet 2 inches of him -- almost, but not quite, and his heroics landed him in the hospital. But I understand that he's here today, stronger than ever. And, Al Antenucci, where are you? Would you mind standing up? Where is he? [Applause] Well, everyone else is standing up. There he is. God bless you.

You know, when you think of the courage of men like McCarthy, Delahanty, Brady, and Antenucci, when you think of the warmth and support that always pour forth in our times of trouble, it brings home something awfully important. There are many blessings in this good world, but surely the greatest is the one that we all share: We're Americans.

It's been said that courage is the one quality that guarantees all others. America faces a challenge of courage in the months ahead that will be decisive. We're in a tough period. No one has felt its pain any worse than the members of the building trades. And I want you to know that our highest domestic priority is to revive this economy, to spur employment in hard-hit industries like housing and construction, your stock in trade.

We are in a worldwide recession. The great thing is that -- tragedy is that it might have been avoided, or at least curtailed, if the first phase of the tax cut was not so little and so late. Personal taxes actually went up by about $41 billion in 1981, which I think helped drag down the economy. We must not compound that error.

There's good reason to believe the recession is bottoming out. We're on the verge of a major victory over inflation -- a disease which has sapped our economic strength, driven up interest rates, and ruined the dreams of homeownership for millions of families. If we stick together and finish the job the bipartisan coalition in Congress began last year, we will soon have that victory. American families will be able to pay their bills again, save for the future, and ignite an economic recovery that can last for years.

John F. Kennedy wrote: ``The courage of life is often a less dramatic spectacle than the courage of a final moment, but it is no less a magnificent mixture of triumph and tragedy. A man does what he must in spite of personal consequences -- obstacles, dangers and pressures -- and that is the basis of all human morality.'' Well, last year, with the support from the people, we began to do what must be done: attack the monumental problems blocking our progress that had built up for years.

And here's what we were up against: double-digit inflation; 21\1/2\-percent interest rates -- the highest in more than a century -- personal savings and investment rates that had plunged lower here than in any major industrial nation; a trillion-dollar debt, despite the highest tax burden in our peacetime history; a military machine so neglected that many ships couldn't sail and fighter planes couldn't fly for want of spare parts; and a foreign policy wavering in weakness, apologetic for our past, incapable of responding to terrorist attacks on our people, property, and the desecration of our flag.

We knew that climbing out of that swamp wouldn't be easy. We knew there would be strong pressures from many interest groups -- yes, and including some within organized labor -- to resist the steps we felt had to be taken. And that's why it has meant so much to me that some labor leaders have had the courage to set aside partisan differences, roll up their sleeves, look for the areas where we could agree, and then work together for the good of the country.

This is a special brand of courage, the quiet kind that flows from confidence and inner peace and strength. Bob Georgine, Bill Konyha, Harold Buoy -- I thank you for your leadership. Bob is working with our survey on cost control group, and Bill and Harold are working on the productivity advisory committee. They're all giving us important support to cut back redtape impeding growth and new jobs.

Let me just say something here about the initiative of Bob Georgine. You know, one of the values we're trying hardest to save in this country is self-reliance, taking care of our own. And what better example could there be than 15 building and construction trades unions taking one-half billion dollars of their hard-earned pension funds and investing that money to create more jobs for your workers? This country will owe you all a debt of gratitude, and with initiatives like yours, we can and we will rebuild America.

We're trying to help. Last week we announced a series of actions that include moving within the limits of fiduciary responsibility to free up critically needed funds for housing from pension funds such as your own. We're going to modify the Mortgage Revenue Bond program to loosen arbitrage restriction and broaden our definition of distressed areas. And we'll ease existing guidelines to expand the number of potential homebuyers qualifying for FHA mortgages. I spent enough years in my own union to know that when workers have the opportunity to work, and when they're properly and fairly paid for their work, they can provide for themselves without having to hold out their hands to anybody.

Unions represent some of the freest institutions in this land. Too often, discussions about the labor movement dwell only on disputes or corruption or strikes. Well, I know that makes for good headlines. The point is, thousands of good agreements are reached and put into practice every year that benefit unions, management, and the country. So, wouldn't it be nice if sometimes we could hear about that, too. It also might be nice for once if we could hear about the thousands of hard-working, honest, union officials who have done so much to improve your movement and raise the standard of living for all Americans.

One great feature of collective bargaining is the opportunity for straightforward talk. A number of Presidents have observed that of all the meetings in the Oval Office, the most frank and memorable have been with the leaders of organized labor. And I think I know what they mean. I pledge to you today that there will always be an open door to my office for your leadership. We want your counsel and your participation as we tackle these tough problems that face the Nation.

Now, some outside your organization will say, ``Well, why bother? After all, Ronald Reagan won't go to bat for you.'' Well, I wonder, because in the past year I've had many suggestions that what this country really needs is a so-called wage restraint policy. Well, I have one answer to that. This administration will never ever fight inflation by permitting some fuzzy-minded economist to attack the sacred right of American workers to negotiate their own wages.

I believe with all my heart that providing people incentives to pull themselves up is the best path to human progress. I believe that faith in God, love of freedom, family, work, and neighborhood are what made America strong and will keep her free. I think you and I have a lot in common, even though, as Bob said, we can't always agree on all issues. But what we can do, I hope, is seek out areas of possible compromise that don't violate fundamental principles.

One area where we definitely agree, I'm glad to say, is on the need to improve the Clean Air Act. We're working hard with a bipartisan group in Congress to obtain revisions of that act that will help create jobs while maintaining our commitment to clean air. We appreciate your support on this and hope that House Resolution 5252 will move as rapidly as possible.

Now, I spoke a moment ago of my gratitude for the courage that your leaders have demonstrated. May I reassure you today on legislation of importance to your own organization: I believe there have been abuses of the Davis-Bacon Act, but as your President, I have not and will not seek repeal of that act.

Now, there are three areas where we cannot retreat on fundamentals: a need to restore the strength and credibility of America's foreign policy, genuine relief for overburdened taxpayers, and a reduction in the bankrupt growth of Federal spending of the past decade.

Your presence at this conference proves that democracy and freedom are alive and well in America. But as you know, America's more the exception than the rule around the globe.

Now, some in this country say, ``Freedom is fine for us, but we can't worry about it for everyone else. Let's not stick our necks out anywhere.'' Have they forgotten that freedom was not won here without the help of others? Have they forgotten that people who turn their backs on friends often lose what they cherish most for themselves? Have they forgotten that freedom is never more than one generation away from extinction? Your presence at this conference proves that democracy and freedom are alive and well. So, we'll just keep it that way.

I don't think you've forgotten. You've had to live too often the meaning of struggle, perseverance, and unity. An American, a compatriot of yours once said, ``The role of American labor in the struggle for the preservation of human freedom and decency is decisive.'' No one ever put it better than George Meany did 30 years ago. And he lived up to the responsibility that he gave you.

Today you are needed more than ever to support and sustain the struggle of others whose sacrifice is greater than our own. In Poland, where citizens must meet in secret to resist military tyranny, courageous workers still struggle underground. Recently they published a plea for continued resistance. ``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.

The Polish authorities want the West to close its eyes, accept martial law. The American people will not accept martial law. They demand that Lech Walesa and the political -- and the prisoners of Solidarity be set free.

Poland's government says it will crush democratic freedoms. Well, let us tell them, ``You can imprison your people. You can close their schools. You can take away their books, harass their priests, and smash their unions. You can never destroy the love of God and freedom that burns in their hearts. They will triumph over you.''

Could I just interject something here that -- our team of Representatives from Congress just came back from El Salvador, watching the elections down there, led by Senator Nancy Kassebaum. They came in the office to report the other day. And they told me what a thrill it was and how inspiring to see those people stand in line hours for the privilege of voting.

And they spoke to a woman -- well, one woman was wounded by a ricocheting bullet. She refused to leave the line for treatment until she'd voted. But another woman said that they had told her personally, the guerrillas, that they would kill her and cut off the finger that's dipped in that invisible ink to identify voters, if she voted. And she said she told them just about what I've just said. She said to them, ``you can kill me, you can kill my family, but you can't kill us all.''

Francis Bacon wrote that ``In this theater of man's life, it is reserved only for gods and angels to be lookers on.'' America will not drift through the 1980's as a spectator. Liberty belongs to the brave. We will stand up for our ideals, and we will work for peace.

Never again will we shrink from denouncing the terrible nightmare totalitarianism has wrought: occupation of an entire section of Europe, genocide in Cambodia, boat people in Vietnam, a bloody invasion of Afghanistan, and everywhere the suppression of human rights and growing want from economic failure. We will not remain silent when, in Afghanistan, yellow rain is dropped on innocent people, solemn agreements are flagrantly broken, and Soviet helicopters drop thousands of ``butterfly'' mines, which maim and blind Afghan children who pick them up thinking they're toys. We will condemn these crimes and work for international repudiation.

And we will speak and work for democracy. Winston Churchill said that it was ``the worst form of government in the world, except for all the others that have been tried.'' Yes, we have our warts and our imperfections. But we can be proud that there's so much to love in this land. No nation has worked harder for peace or done more to lift up the downtrodden than the United States of America.

Treasury Secretary Don Regan recently told the students at Bucknell University, ``We have brought light where before there was darkness, heat where once there was cold, medicines where there was sickness and disease, food where there was scarcity, and wealth where humanity was living in squalor.'' We provide more food assistance each year to developing nations than all the other nations of the world combined.

America has a secret weapon; it's called ``trust the people.'' We're not afraid of free enterprise or free trade unions or freedom of thought. We depend on them, because only when individuals are free to worship, create, and build, only when they're given a personal stake in deciding their destiny and benefiting from their own risks -- only then do societies become dynamic, prosperous, progressive, and free.

Our democratic dream of human fulfillment through individual equality and opportunity is still the most exciting, successful, and revolutionary idea in the world today. But don't take my word for it. Look at Poland, where Solidarity captured the hearts and minds of the people. Look at Afghanistan, where courageous freedom-fighters are battling a 100,000-man army, a Soviet war machine to a standstill. Look at Vietnam, where 500,000 boat people have escaped since we left. And look at brave El Salvador, where, in one of the most inspiring demonstrations of personal courage in modern history, 1 million citizens -- a greater percentage of their electorate than turn out for our own elections -- risked their lives to go to the ballot box, so they could vote to give freedom a chance.

Well, let's give El Salvador a chance. Critics question whether we're on the side of right, justice, and progress in El Salvador. Well, we found out an answer to that a week ago Sunday.

But if our commitments to our allies and freedom are to be credible, American security must be restored. We've neglected our national defense for more than a decade. The Soviets haven't. They've built up and deployed a military arsenal unequaled in all history, capable of confronting our allies in Europe and Asia and threatening the free world's source of oil. We cannot allow this dangerous momentum to continue. But even after our buildup, spending on defense will take a smaller share of our budget than it did 20 years ago, when the world was a far safer place. The bulk of the buildup will be for basic manpower, maintenance, and readiness.

Now, some would have us get at the deficit by reducing defense spending. I'm sure that savings can be made in any government program just by improved efficiency, and we have a plan to do that, but not by eliminating needed weapons systems -- planes, tanks, and missiles. If we canceled outright all the major weapons systems we plan to order in fiscal year 1983, we'd only reduce next year's budget by $6\1/2\ billion. But we would also send a dangerous signal to the world that we were unilaterally disarming. And I don't believe that American labor wants us to do that.

Every penny we spend is for one sacred purpose: to prevent that first shot from being fired, to prevent young Americans from dying in battle. Let us ask those who say we're spending too much: ``How much would it have been worth to you to avoid World War II? Who would put a price on the lives that were lost on Guadalcanal, Tarawa, Omaha Beach, Anzio, or Bastogne?'' For the sake of our children and their children, I consider it my duty, indeed all of our duties as citizens, to make sure that America is strong enough to remain free and at peace.

Now, this doesn't mean that we shouldn't work for eventual reductions in the weapons of mass destruction. A freeze in the arsenals of these weapons is not good enough. We want to go one better -- mutual and verifiable reduction.

Courage to stand up for American ideals, to work for peace, to defend our freedom, and courage to follow through on the bipartisan economic recovery program begun last year -- courage to seize the opportunities in this time of challenges. There was a famous French diplomat, Talleyrand, who once said, ``Women sometimes forgive a man who forces the opportunity, but never a man who misses one.'' [Laughter] Well, let me take this opportunity to say again, I want nothing more than to work with Members of the Congress to reach an agreement on the budget that is fair, compassionate, and bipartisan.

Let us have the courage to recognize what needs to be done, and let us do it. We won't get this economy moving again by adding to the highest tax burden on American workers in our peacetime history. Taxes went up by more than 300 percent in the last 10 years, but all we got out of that were higher deficits and higher interest rates. Why? Because the cost of programs we all agree are important were zooming out of control.

The cost of food stamps went up by 16,000 percent in the last 15 years. Medicaid and Medicare -- again, essential programs -- have increased by more than 500 percent in the last 10 years. We don't have a trillion-dollar debt because you aren't taxed enough. We have a trillion-dollar debt because government spends too much.

As government took more and more of our income, savings on the part of individuals and investment by industry dropped lower and lower. So, we haven't had the capital pool we need to make funds available for the mortgages and investment that will sustain and create new jobs for your members.

We pretended we could hang on to prosperity by going deeper and deeper into debt. Now common sense dictates that we must slow the dangerous increase in spending and taxes so more resources are available for people to produce and save. This is all we're trying to do. And, far from being radical, our program will lead us back to safety without sacrificing compassion.

For all the media talk about fairness, you might not have heard that our 1983 budget will spend nearly three times as much for tuition support for higher education than was available in 1977. Better than one out of every two students will be eligible for assistance. Through Medicaid and Medicare, the Federal Government will pay for the medical care of 99 percent of those Americans over the age 65. Twenty-eight percent of all Federal spending will go to the elderly -- an average of $7,850 per senior citizen in payments and services. The Federal Government will still subsidize approximately 95 million meals per day -- 14 percent of all the meals served. And about $2.8 billion will be spent on job training and employment.

We haven't sacrificed fairness for those in need. But how about some fairness for a group whose voice is rarely heard in Washington -- the wage earners and the bill-payers of America?

I think that fairness also means going to the mat for a 25-percent tax rate reduction, indexing of tax rates, and strong new incentives for retirement savings -- the first decent program for working, middle-income taxpayers since John Kennedy's tax cut nearly 20 years ago. Fairness is saying you don't raise taxes on American workers who had to take cuts in their paychecks just to keep their jobs. And fairness is insisting that when business gets its tax cut, you have no right to turn around and take the people's tax cut away.

Let me tell you why tampering with the third year of the tax cut and indexing should set off alarm bells in your heads and send shivers up your spines. It would increase the tax bill of your members by hundreds of dollars a year. It would prevent us from realizing the increase of $260 billion in private savings which we expect by 1984, which is essential for job creation. And it would further weaken the competitive position of U.S. labor in the world economy.

One of the least reported stories in this country is the way government-imposed higher tax rates have pitted labor against management and undermined the competitive position of both. Many median-income workers now face tax rates of up to 44 percent on added income, up from just 30 percent in the late 1960's. They're being pushed into tax brackets formerly reserved for the wealthy.

High tax rates make it harder for workers to increase their take-home pay, and they make it more expensive for management to compensate them for an increase in the cost of living. It now costs firms $1.70 to compensate a worker for every dollar increase in the cost of living. No wonder we're not competitive with other industrial nations.

Eliminating the third year of the tax cut and indexing will make this bad situation worse. A $20,000-a-year wage earner would pay hundreds of dollars in higher taxes as a direct cost, but the weaker economy -- reduced savings investment and lower productivity and growth -- would reduce his family's real earnings by much more than the direct cost of higher taxes.

Instead of workers and management trying to solve the dilemma of high tax rates by opposing each other, it's time you joined forces and told government to get off your backs so you can get on with the task of rebuilding our economy. Saving American jobs and raising the standard of living for all our people -- that's part of the job.

In 1963 President Kennedy said, ``The most urgent task facing our Nation at home today is to end the tragic waste of unemployment and unused resources. It has become increasingly clear,'' he said, ``that the largest single barrier to full employment and to a higher rate of economic growth is the unrealistically heavy drag of Federal income taxes on private purchasing power, initiative, and incentive.'' What was becoming increasingly clear then should be crystal clear by now. We cannot compromise on fundamental principles without compromising ourselves.

We're not asking the Congress to do what's easy. We're asking them to work with us to do what's right. And our program has begun to work.

We inherited double-digit inflation. We ended 1981 with inflation down to 8.9 percent, and in the last 5 months it's declined to 4\1/2\ percent. If inflation had kept running at the rate it was before the 1980 election, a family of four on a fixed income of $15,000 would be about a thousand dollars poorer in purchasing power than they are today.

Now, I'm not going to stand here today and promise you that all your concerns will be swept away in the near future. But I can tell you that we're on the verge of a major breakthrough against problems considered impossible only a year ago.

I don't believe for a minute that America's best days are behind her. I don't believe anyone here doubts that. With the tools and incentives to do the job, America's working men and women are every bit as dedicated, skilled, and productive as their German and Japanese counterparts.

America's greatest moments have come when America dared to be great -- when we believed in ourselves, in our values and our courage, and when we reached out to each other to do the impossible. I believe we still can. And because I believe in you, I know we will.

Thank you, and God bless you.

Note: The President spoke at 2 p.m. in the International Ballroom at the Washington Hilton Hotel.