I am here under false pretenses. I must have missed out someplace in reading all the materials that have been coming across the desk, because I thought that we were coming here to honor the Members of the House and the Senate and salute them. So, I don't care what you say this dinner is; I'm going to salute the people I came here to salute. [Laughter]

It is a great pleasure to be here tonight among those of you who have, with your interest and generosity, made a real difference in American politics. We need more people like yourselves to make that vital difference to help in the struggle for the principles that we all believe in.

Now, that doesn't mean involvement in politics is always rewarding or fun. I can't tell you the sympathy I felt for some members of a midwestern State legislature whose quotations were recently pasted up on the bulletin board in their Capitol pressroom. One legislator began a speech with this statement: ``Before I give you the benefit of my remarks, I'd like to know what we're talking about.'' [Laughter] And then there was the one who announced, ``Some of our friends wanted it in the bill; some of our friends wanted it out. And Jerry and I are going to stick with our friends.'' [Laughter]

Another warned, ``From now on I'm watching everything you do with a fine-tooth comb.'' [Laughter] And one gentleman said bluntly, ``I don't think people appreciate how difficult it is to be a pawn of labor.'' [Laughter] My own favorite is, ``Mr. Speaker, what bill did we just pass?'' [Laughter]

But if politics has its drawbacks, I think you'll also agree that it also has its great moments. And being here tonight is one. What we accomplish between now and next November can provide us with another one.

Now, let me put you at ease. I didn't come here tonight to lecture you on the economy or to make off-hand predictions about the exact figures making up this year's growth rate. The problems of interest rate, unemployment, and deficits aren't any secret. And you, of all people, know that it was the policies, as Guy has told us, of tax and tax and spend and spend over many decades that brought those problems on.

On the second point, I'm sure all of you've gotten a little weary of the great seers and prophets in the financial and political worlds, some optimistic, some pessimistic, who, even if they don't know how to predict accurately, at least know how to predict often. [Laughter] It reminds me of the sweet revenge that one businessman had recently when he told the company economist who was jumping out of an upper-story window, ``Don't worry, Herb. You'll be bottoming out soon.'' [Laughter]

So, this isn't a night for lecturing or prophesying. You know where we stand and where we're going, and you're ready to go to work for our cause. We have an important job ahead of us. Getting our message across will take time and effort, but we do have tremendous advantages. The issues are with us this year. And by November 2d, if we do our job well, the voters will be in a mood to reconfirm the mandate that they gave us in 1980.

Remember, after the national political debate gets underway, it's the other party that will have to make some stark admissions to the American people. It's the liberal leadership of the other party that is going to have to say, ``We're the ones who refuse to cut spending. We're the ones who tried to take away your tax cut. We're the ones who tried to protect every lord and fiefdom in the Federal bureaucracy. We're the ones who wanted a bargain-basement military and held a fire sale on national security.'' And, believe me, when they start talking like that, I think we, as Republicans, ought to give them all the running room they need and want.

You know, some people in Washington tend to forget one very important insight that our Republic was founded on: that there resides in the American people a common wisdom, a basic decency that comes to the fore just when it's needed most. The American people know the kind of economic catastrophe that this administration and this new majority in the Senate and these Congressmen who are here tonight inherited. They sense the enormous strides that we've made in reversing that trend and laying the foundation for economic recovery.

With the help of responsible Democrats and Independents, the American people also know that our party has done something that hasn't been done in politics for a very long time. Yes, as Guy said, we were going to cut spending, reduce the tax burden, rebuild our national defenses, and keep the peace by being firm with the Soviets. We said those things, and we meant them. We made our promises, and we kept them. Now it's vital that all of us, officeholders and nonofficeholders alike, remind the people of what they already instinctively know and feel.

Most Americans spend their time bringing up their families and making a living. They don't talk and think politics nearly as much as we who are in this room do. Remember, something that might sound repetitive to us in politics is probably something that most Americans will be hearing for the first time. So, starting tonight, let's go to the American people.

Let's remind them of the economic mess we faced when we took office that January: inflation in double digits, as you've been told, for 2 years in a row, back to back; first time in peacetime, interest rates that had hit, yes, 21\1/2\ percent; productivity and the rate of growth in the gross national product down for the third year in a row; and a money supply that had increased at a 13-percent annual rate in the last half of 1980.

Let's remind them that in 1976 the inflation rate stood at 4.8. By 1980 it was two-and-a-half times as high -- 12.4. Let's remind them that in December of 1976 the prime rate -- interest rate averaged 6.4 percent. By December 1980, as you've been told, it reached that 21\1/2\ percent, a 200-percent increase.

Let's remind them that when we took office, unemployment had been climbing and business failures increasing. When the recession hit us, it was our legacy from the years of boom-and-bust, of erratic spending and monetary policy. And that recession didn't just come out of the sky; it actually began in 1979.

I remember standing in one town in the Midwest during the campaign and calling attention of the audience to the fact that in that town then unemployment was 20 percent. And in the next city that I went to it was 18 percent. And so it went down through the Ohio Valley, into the midwestern States, where the collapse had already begun in several important industries.

Let's point out that for all of this, there's been one overriding cause -- we've said it before and let's say it again -- government is too big, and it spends too much money.

In the last 10 years Federal spending tripled. In the last 5 years Federal taxes doubled, largely because of the growth of social programs. In 1950 social programs cost the taxpayers $12 billion; in 1980, nearly 300 billion -- an increase of an incredible 2,300 percent. In that same period, prices rose by 278 percent. So, real social spending was actually five-and-a-half times higher than in 1950.

By 1980 one out of every three American families was receiving Federal assistance of one sort or another -- one out of every three families. The budget for the Department of Health and Human Services -- $250 billion roughly, the third largest budget in the world, exceeded only by the total budgets of the Soviet Union and the United States.

Take just one social program as an illustration. Sixteen years ago we were spending $65 million on food stamps -- 65 million. In 1981 we spent $11.3 billion. That's an increase of over 16,000 percent.

I use the food stamp program here because surveys show that it is the one Federal program whose abuses Americans have personally seen on a weekly basis at the checkout counters of their supermarkets. One report a few years ago by the auditor general of Florida, for example, showed that in a single month, 16 percent of the State's recipients had fraudulently obtained food stamp benefits totaling $4 million, and another 15 percent of the Florida recipients had received 1\1/2\ million in benefits through bureaucratic errors. And those figures were for a single month in a single State.

Much of the spending for these social programs is virtually automatic. They were part of the Topsy-like growth of all entitlement programs. Total payments as to individuals grew 400 percent in the last decade alone. Now, include in this picture the interest payments on our tremendous Federal debt, that, as you've been told, reached more than a trillion dollars last year. The yearly interest payments are a hundred billion dollars, and that's as much as the entire Federal budget was just 20 years ago -- and we can all remember back 20 years ago, and I don't think that we were lacking for any amount of government with what we were spending then.

In fact, if you take the cost of automatic spending increases and entitlement programs, add them to the interest payments and the Federal debt and the other uncontrollables, and it means that 70 percent of the entire Federal budget is made up of items over which the Congress and the administration are supposed to have no control. I wonder how some of you in the private sector would feel if you were told to rescue a sinking business, but only on the condition that you could work with 30 percent of that business' budget and the other 70 percent was off-limits. So I think you can begin to understand the difficulty of halting the kind of momentum built up by the Federal spending juggernaut over the past few decades.

You know, it was a difficult and darn-near pathetic situation that confronted us in late January of 1981. I was in office just a little over an hour, and I left the Inaugural platform, walked into the Capitol, and signed an Executive order [memorandum] that began the long and difficult process of slowing the growth of government. It was an Executive order freezing the hiring of Federal employees at the limit at which they were then in their offices and jobs.

Our economic recovery program has cut the rate of growth in Federal spending nearly in half. It'll cut taxes for individuals and business by more than $300 billion by 1984. It will cut taxes for individuals and business by more than $300 billion by 1984. For the first time in history, taxes are scheduled to be indexed to the rate of inflation. That takes away government's hidden incentive to inflate the currency. And finally we acted quickly and effectively to cut away the thicket of Federal regulations -- a thicket that was stifling business and industrial growth.

In less than a year, the increase in those regulations was reduced by nearly one-third. George Bush is on his way to China right now to have some conversations with them, but George has been chairing that task force that has been whittling away at those regulations. And the Federal Register is smaller by some 23,000 pages. That's the book that lists the regulations.

We also moved against waste and fraud with a task force, including our Inspectors General, who have already found thousands and thousands of people who've been dead for as long as 7 years and are still receiving their benefit checks. Now, I've heard of cradle to grave security -- [laughter] -- but cradle to the Pearly Gates is something else. [Laughter] Who said you can't take it with you? [Laughter]

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 have come to call them here now, the Federal flood of flicks, flacks, and foldouts. [Laughter]

We're cutting the number of people in 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.

I think we can stand on the record. We managed in less than 1 year to substantially slow the momentum of decades of growth in government. The new management of a failing company that made changes like this in only 1 year would soon be the talk of Wall Street. Things are a little different in Washington.

Our program has been in effect for only a little more than 7 months. Our dollar is stronger than it's been in 10 years. The inflation rate, which a year ago was the number one economic concern of most Americans, has taken a dramatic turn. The year 1981 ended with an inflation rate of 8.9 percent. It had been 12.4 in 1980. And since the beginning of this fiscal year, in October, inflation has averaged 3.2 percent. The rate for February was only 3 percent. And then in March, for the first time in nearly 17 years, the Consumer Price Index actually declined. It actually went below zero, and the prices went down. Now, that's a record we can point to.

Americans are beginning to feel the effects of lowered inflation. And this summer and fall they'll begin feeling the full effects of those substantial July tax cuts they have coming.

Now, one other thing that we'll have to do is meet head-on some of the myths that have been perpetrated about what this administration has been trying to do. Some of our adversaries like to portray America as made up of two diametrically opposed classes -- one rich, one poor, both locked in a permanent state of conflict and neither one able to get ahead except at the expense of the other. I have often described our opponents on the other side of the aisle as being people who can't see a fat man standing beside a thin one without automatically coming to the conclusion the fat man got that way by taking advantage of the thin one. [Laughter]

We have to go to the American people and explain how our economic recovery program is designed to help everyone. We have to go to the American people and make clear the basic philosophical difference between we Republicans and the liberal leadership of the Democratic Party, that that is the difference that sets us apart and that the people must choose between.

I don't believe it's the job of government to play to the politics of envy or division, to hand to Federal bureaucrats the right to redistribute our people's income in the hope of ushering in some great new utopia. Our economic program will try to help everyone. It'll encourage wealthier Americans to stop seeking tax shelters and invest in productive industries and businesses that will provide new jobs and greater wealth for all of us. It'll give the middle class -- the middle-class, working American a fatter paycheck, a lowered inflation rate, a chance to invest and save, a chance to get a little ahead of the game again.

It'll help entrepreneurs, small businessmen, those who hope someday to go into business for themselves by giving them greater rewards for the risks they take in the marketplace. Small business, as you all know, provides 80 percent of the new jobs in America. So, our tax cuts will help gradually to cut the rate of unemployment and get Americans back to work by stimulating small business and new enterprise.

And our program is going to help lower income Americans. Let me revise that. It has already helped them. A family of four with a fixed income of $15,000 has over $1,000 more in spending power because of the decreased inflation rate already. Now, that's a bigger increase in help to lower income Americans than was ever given in a single year by the increase in many of the aid programs dreamed up by the other party during the last few decades.

Now, we also know that some people don't want us to cut into scandal-ridden or ineffective Federal programs partly because they're interested in preserving the huge bureaucracies that those programs feed on. You know, with all of the attempt to help the truly needy and the people who must have our help, actually too many of those programs really set up, established, and then perpetuated an upper-middle class level of bureaucrats who had to maintain those needy people in their needy state as a clientele to preserve their own new-found wealth.

Dependency on government should never be looked on as a chance to build a political constituency. Those who were dependent on government through no fault of their own must always be provided for. But to the millions of Americans who want to end their own dependency, we must offer a better way to improve their lives and climb the economic ladder as high as their aspirations will take them.

There are people who are sharpening their pencils tonight to talk about this dinner and write about this dinner, and it will be listed as the ultimate in wealth and so forth. And we, of course, will be referred to as we are so often as the party of the rich. You know, that isn't what is -- that isn't true. And that isn't what our party wants to be. No party, I guess, wants to be that. But I'll tell you what I think we can be proud of. We're the party that wants to see an America in which people can still get rich.

And that's what it all comes down to in the end. Yes, we have a real record of accomplishment. We've actually cut tax rates and the rate of growth in spending, something that American politicians have been promising for more than 20 years but somehow never delivered. But even more than that, we offer the American people what Franklin Roosevelt offered them in the 1930's -- not the policies, of course, but hope -- a way out and a way up, the hope of returning this country to the road of greatness that it once enjoyed.

Here is a formula for reelection, a program for America, a message that we can bring to the American people -- Republicans, Democrats, and Independents alike -- in this November, a message that with your help can win us the seats in the Senate and the House that we need to finish the job that we have so well begun.

We have a majority in the Senate, which we must keep. But do you realize that our opponents, virtually without exception -- there's only one 2-year exception in 27 years -- that they have controlled both Houses of the Congress, that they are responsible for the programs. They are responsible for the tax structure that took away incentive from both business and individuals. Can you imagine what it is like to go to bed at night in that public housing we live in and dream what it would be like to wake up one day soon and know that the administration was doing business with a House and a Senate that were both under the majority leadership of Republicans?

You know, when our friend, Pearl [Bailey] was singing the National Anthem tonight -- I don't know or have heard all the national anthems of the world, but I do know this: The only anthem of those I do know that ends with a question is ours, and may it be ever thus. Does that banner still wave ``o'er the land of the free and the home of the brave?'' Yes, it does, and we're going to see that it continues to wave over that kind of a country.

Thank you, and God bless you.

Note: The President spoke at approximately 9:30 p.m. in the International Ballroom at the Washington Hilton Hotel.