I'd like to talk about three items today, beginning with taxes. About 10 days ago we all kept our rendezvous with the Internal Revenue Service and anted up our income tax. If it'll help ease the pain, let me remind you that in about 2 months, on July 1st, you'll start paying 10 percent less income tax on what you earn.

But that won't mean anything to a growing group of citizens who've already given themselves a tax cut. It's estimated that about $95 billion in income tax is not being paid. That's enough to balance the budget.

Now, if your first reaction was that these are big money operators using tax shelters -- and there are some doing that -- I'm not talking about them. The $95 billion is tax owed on an estimated $450 billion in, for want of a better word, the underground economy. The people in this economy are, I'm sure, honest people in most of their activities; they just have a double standard where taxes are concerned. They can be the friendly neighborhood fix-it man, a mechanic, craftsman, or a member of the professions. They have one thing in common -- they prefer to be paid in cash. The underground economy is a kind of cash-and-carry barter system -- no checks, no records or bookkeeping, and thus no tax.

As we struggle to trim government spending, it's hard not to think of how close that unpaid tax could come to wiping out the deficit. If I could paraphrase a line from a well-known old poem, ``Breathes there a man with soul so dead who never to himself has said: I owe it to my country and my fellow citizens to quit being a freeloader.''

Item two: A short time ago, I announced I was asking Congress to pass a bill allowing a tuition tax credit for families sending children to independent or parochial schools. The credit would be for half the tuition up to a ceiling of $500 per child. That ceiling wouldn't apply until 1985. It would be lower to start with and would only apply to families with adjusted gross incomes below $50,000 a year. It would also only be for tuition to elementary and secondary schools. I wish it could be for college, also, but maybe we can do that later when we've solved a few problems.

The public school lobby has protested that this is an attack on the public schools for the benefit of students attending exclusive finishing or prep schools. Well, the overwhelming majority of so-called private schools are church-supported -- Catholic, Protestant, and Jewish. The majority of students are from families earning less than $25,000. In some of our large cities, 40 percent of the parochial school students are from minority neighborhoods. Their families pay their full share of taxes to fund the public schools. How high would those taxes go for everyone if those parents decided to send their children to public schools? I think they're entitled to some relief since they're supporting two school systems and only using one.

And now item three: A couple of weeks ago, I told you of how high interest rates were holding back recovery, that a lender must get a return on his money, plus the rate of inflation. For 6 months, inflation has been running at an annualized rate of only 3.2 percent. And, as you know, last month it actually went down three-tenths of 1 percent, the first time in 17 years.

Adding on to that a fair return for a lender, interest rates shouldn't be higher than 10 percent. They are, of course, because the money market, having been burned in past recessions by artificial quick fixes, is afraid that inflation will take off again.

Two industries vital to economic recovery have been especially hard hit by high interest rates -- automobiles and housing. But it seems not everyone out there in the marketplace is afraid. The Automobile Dealers Association of Eastern Ohio asked some banks to lower interest rates for new car purchases. The rates were lowered from a 16- to 18-percent level down to 12.9 percent for a 2-week period, March 1st to 13th. The response was so overwhelming they extended the period to March 20th. In the first 3 weeks of February, car dealers of the Youngstown-Warren area had only sold 344 cars and trucks. In those first 20 days in March, they sold 2,200.

In Plainfield, Indiana, whether by coincidence or because he'd heard about this, Mr. Hursel C. Disney, chairman of the First National Bank and Trust, lowered interest rates almost four points for loans to buy cars and trucks, making $2 million available for that purpose. His offer has met with the same overwhelming response. Mr. Disney says the offer is good as long as the $2 million lasts.

I have no way of knowing how far this idea has spread. But one of the major automobile companies which has its own lending operation is now advertising that until May 31st the interest rate on loans for their cars and trucks will be 12.8 percent. And just the other day, the news reported something similar had started in home mortgages.

You know, there really is something magic about the marketplace when it's free to operate. As the song says, ``This could be the start of something big.''

Thanks for listening, and God bless you.

Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.