(FOOTNOTE) \1\White House correction.

And I think you all should know -- you know, reaching 21 is a wonderful thing for anyone. It's kind of an historic moment in anyone's life. Few get to do it twice. [Laughter] John has, because now it's the second 21 for him -- 21 years in the United States Senate.

Sergeant Benavidez, I was delighted to see you here and glad to have you with us tonight. [M. Sgt. Roy P. Benavidez was presented the Medal of Honor by the President in a White House ceremony on February 24, 1981.] And, of course, the man we came to honor tonight, Governor Bill Clements, and Rita. All the other distinguished people up here and you, ladies and gentlemen, I thank you for a heartwarming Texas welcome.

I'm not surprised by your Texas hospitality, but still I am a little astonished by this event. When Bill Clements mentioned dropping by for dinner, that he was having a few friends in -- [laughter] -- I didn't think that I'd be going to a backyard barbecue, but I also hadn't pictured anything like this. Bill, you wouldn't like to have a little potluck dropby in Washington, would you, and we could balance the budget. [Laughter]

You know, I'm beginning to believe some of those stories about Texas -- that one about the good ol' boy from Kentucky. He was bragging that they had enough gold in Fort Knox to build a 6-foot, solid gold fence all the way around Texas. And the Texan he was talking to said, ``Yeah, well, you build it, and we'll buy it.'' [Laughter]

But, seriously, I am delighted to be here to help pay tribute to a great Governor of a great State. For one thing, I am glad to have the chance to thank him for all that he did to help me 2 years ago when I was looking for a job. [Laughter] Now, I know the fact that he gave me a hand is not a reason why anyone should vote for someone. You should just simply elect as Governor of Texas the present Governor, Bill Clements, because he's the best man for the job.

This is a political dinner, but it's not a partisan dinner, and that figures. Last year and, again in just the last few weeks, a number of Texas Democrats in the Congress showed they had the courage and the common sense to put the welfare of this State and this nation before partisanship, even in an election year. They have my appreciation and respect and, I'm sure, yours also.

Both the Senate and the House have passed budget resolutions not too dissimilar, which means the conference committee should have little trouble in reconciling what differences there are. This budget resolution, like the one last year, sets us on a course of declining deficits, which should in the next few years bring us back to spending within our means, and then -- and, oh, what a dream this is of mine -- we can look forward to starting to reduce that trillion-dollar debt that was piled up over 40 years of economic irresponsibility.

Have we forgotten all those bromides that came to us under the title of ``The New Economics'' in those decades? ``A little inflation was good for us. It was necessary to maintain prosperity.'' With regard to the debt: ``No need to worry -- we owe it to ourselves.'' The interest on the present debt, whoever we owe it to, is enough to balance the budget -- more than a hundred billion dollars.

Loud voices will be heard. In fact, some are tuning up already, denouncing this budget resolution: ``We're cutting too deep, depriving the elderly, the poor, and the handicapped of the support they need; our defense spending is out of proportion and should be cut back.''

Well, you know, in all the confusing rhetoric of the term ``budget cuts'' to describe what was done last year and now, with the '83 budget, has lent credence to tales of suffering imposed by ``budget cuts.'' There have been no budget cuts. The present 1982 budget is larger than the 1981 budget we inherited. The 1983 budget, when passed by both Houses of Congress, will be larger than the 1982 budget. What we're referring to as ``budget cuts'' are only reductions in the rate of increase in spending which had reached 17 percent a year before our administration began. We cut that rate nearly in half in 1982, and it'll be further reduced in 1983.

Now, frankly, I'd like nothing better than to be able to offer a budget proposal that actually called for less spending than we had the year before. The last time that happened in this country of ours was 1 year during the 8 years of Dwight David Eisenhower. Now, this could be done if we were willing to destroy the so-called safety net, which protects those who, through no fault of their own, must have our help. I have pledged this we will not do, nor do I think that Americans, the most generous people in all the world, would want us to take that help away from the people that need it.

Another way would be to reverse our defense buildup, which has been made necessary by the dangerous decline in our security over the recent years, and this I cannot do without violating my constitutional responsibility to protect our national security. And I am grateful to your Senator John Tower for the powerful support that he has given me every day that I've been there in meeting that responsibility for our national security.

Now, President Ford took us back a little bit in memory. Let me nudge your memory a little. We met here just 21 months ago during the 1980 campaign. Inflation had been running at double-digit levels, as you've been told, for 2 years in a row, and that was the first time that had happened since World War I. The 1960 dollar in 1980 was only worth 36 cents.

Let me nudge your memory back a little further, about 4 years farther. President Ford has already told you some of the comparisons of what things were like in 1976 and then what happened to them. But in 1980 I was campaigning in cities where even then the unemployment rate was anywhere from 15 to 20 percent -- in the Midwest and up in the Northeast and some of the industrial States where already the trouble had started. In poll after poll at that time, the people declared that inflation was the number-one problem in need of immediate solution. But as our administration picked up the mess, we were told by the pundits that inflation was so deeply entrenched that it could not be pried out of the economy for at least another 10 years.

Well, being new to the job, we just didn't believe 'em. While we were submitting our budget plan for 1982 we managed to squeeze several billions of dollars out of the 1981 budget that was already in place.

In addition to reducing spending, we promised to cut the tax rates for both business and individuals, and, here again, we were only reducing an increase. The largest single tax increase ever adopted in our history had been passed in 1977. Austin O'Malley once observed that, ``In levying taxes and in shearing sheep, it is well to stop when you get down to the skin.'' [Laughter] That rule had been broken pretty completely in the years leading up to 1981.

Between 1976 and 1981, taxes had risen $300 billion, and deficits in that same period totaled $318 billion, which is pretty good evidence that high taxes don't reduce deficits. We don't have the deficits and we're not in trouble because we're not taxing enough. We're in trouble because the government is spending too much.

Now, we didn't get all that we wanted in our economic recovery program in '82, either in savings or tax cuts, but we got about three-fourths of it, and I figured that was a pretty good chunk. But some diehards are now declaring the present recession was caused by our program, just as Gerald Ford told us. May I just point out, we had the recession before we got the program. But the voices keep right on carping.

Just the other day I read where some astronomers predict that one of the largest stars in the Milky Way is going to explode sometime in the next 10,000 years. And the fellow who was writing the story said they weren't quite sure when in these 10,000 years the blowup would take place, but it would be the result of our economic recovery program. [Laughter]

So far we've only had a 5-percent cut in individual income tax rates, plus some business tax breaks and new incentives for saving. In a few weeks, the income tax rates will be reduced another 10 percent across the board. In the meantime, however, the personal savings rate has increased, meaning a bigger capital pool for investment. Real wages are showing positive growth for the first time in 3 years, and retail sales continue to show an increase.

And while we have an unemployment rate of 9.5 percent, which must be lowered, for the last 6 months inflation -- and Jerry told you what it was when we started -- inflation has been running at an annualized rate of only 2.8 percent -- and for the last 3 months, less than 1 percent. Now, that's quite a drop and we've only used up 1\1/2\ of those 10 years the pundits told us that we had to get it down. This drop in inflation has meant over a thousand dollars in increased purchasing power for an average family of four with a fixed income of $15,000.

When the special pleaders start campaigning against our budget cuts as penalizing the poor, when they assail our tax program as favoring the rich, that defense spending is too high, here are a few points you might like to remember in conversations you may have in this election year.

Twenty years ago, during John F. Kennedy's Camelot, spending for human needs was 29 percent of his budget; defense spending was 46 percent of his budget. In our proposed budget for 1983, the social needs, the human needs total 51 percent of the budget, and defense spending is only 29 percent.

President Kennedy's tax cut program, which was phased in over 2 years and proved greatly beneficial to this country -- oh, they told him, all of his advisers, he shouldn't do that, that it'd lose billions of dollars in revenue. Well, we gained billions of dollars in revenue by making the country more prosperous. But that was phased in over 2 years and gave 36 percent of the relief to corporations and 64 percent to individuals. Our program is phased in over 3 years and gives corporations 20 percent of the total and individuals 80 percent. I just say this because there's been a little demagoguery going around in Washington recently.

In giving all these figures, please don't think I'm trying to minimize the tragedy of unemployment, which plagues us and which has been steadily increasing since 1979. As one who entered the job market in the depths of the Great Depression in 1932, I bleed for the man or woman able and willing to work but who can find no job opening. But we believe that economic recovery, not government social programs, is the best and most permanent solution to the problem of unemployment. The best social program we can have is a job.

There have been seven recessions in recent decades, and now the eighth. And the traditional liberal cure for each one has been to give it a quick fix -- the artificial stimulant of government spending programs. And every time that was done, the cure was temporary and led to another recession, and another recession was worse than the one before.

In this recession, while the unemployment rate is higher, it is not accompanied by higher and higher inflation as the others were. Unemployment is concentrated in those industries most affected by high interest rates. And those rates are down now about 25 percent from what they were, the 21\1/2\ that the President told you about when we took over. They must come down more. And with inflation as low as it is, they can. I believe final passage of the '83 budget will send the signal the money market needs to hear.

In the meantime, there are other facets to our recovery program. George Bush has done a great job heading up a task force to eliminate unnecessary government regulation. He and his task force have reduced that blizzard of paperwork which came out of those regulations and which contributed about a hundred billion dollars a year to the cost of goods and services. By the end of this fiscal year, they will have eliminated 200 million manhours of paperwork simply by eliminating 23,000 pages of the regulations listed in the Federal Register.

In that line, you'll remember they told us oil prices would go up if we decontrolled oil. Well, we did, and prices went down and there was an almost immediate increase in domestic production.

In the areas of waste and fraud, during the last year the Inspectors General have really earned their title of being ``meaner than junkyard dogs.'' Just this afternoon before I climbed on the plane to come down here, I got their latest 6-months report -- every 6 months. This was the third report since I've been there that they've given us. In these 6 months, the 6 months that ended March 31st, they issued over 54,000 audit reports and handled over 13,000 investigations. And the results are the kind of news that I know you'd like to hear: $5.8 billion in direct savings and better use of funds in just 6 months. There were over a thousand convictions and over 900 indictments.

We've put in hotlines so that Federal employees can do their part, too -- pick up a phone and call and say, ``Hey, do you know what's going on over here, and what could be done to straighten things out?'' Overall, there are more than 6,500 hotline calls and referrals received by these Inspector Generals.

A pizza vendor, for example, turned out to be overcharging a commissary by more than $50,000, and someone was selling the government brackets for $310 that could be bought locally in a store for $4. Now, this has to be better than raising taxes. Justice Oliver Wendell Holmes once said, ``Keep government poor and remain free.''

Fifty years ago, in the campaign of 1932, Franklin Delano Roosevelt charged that the Federal Government had usurped resources and functions that properly belonged to State and local governments. In the 50 years since then, the Federal Government has come close to making States mere administrative districts of a Federal Government. Well, this, too, we're determined to change.

We have met continuously with local officials, State legislators, and Governors to work out a new federalism plan whereby functions that properly belong at State and local levels, plus the resources to fund them can be turned back to those governments that are closest to the people.

That's why the cause that brings you here tonight is so important. If government services that play an important part in your everyday life are going to be taken out of the hands of bureaucrats on the shores of the Potomac and returned to Texas, then you want someone in charge here who will see that they're properly administered.

Governor Bill Clements has demonstrated with hard work and leadership that State government can work and work well. He's reduced the number of State employees and cut taxes at the same time and has brought in corporate executives to lend their expertise to make State government more efficient. He has launched an effort to control waste and fraud. Texas parents can be grateful that he's put a new emphasis on basics and discipline in the classroom. And in that connection, I hope you will agree with something that we've set in motion -- has nothing to do with the budget -- a constitutional amendment to once again let God back into the classroom and permit voluntary prayer there.

With protection of young people in mind, Bill declared war on crime and went on the offensive against drugs. And finally, a subject close to my heart: Bill Clements has been one of the most responsive Governors in the 50 States in our efforts to promote volunteerism. Building on that frontier spirit for which Texas is famous, he has been encouraging people to get involved, to help one another, to take more responsibility for their family and community. He's promoted the use of volunteers and direct citizen involvement in mental health and human resource programs.

Let me just say again: The best future Governor of Texas is the present Governor of Texas, Bill Clements.

And now, if you don't mind, I'd like to mention an area of vital concern to all Americans -- Republicans, Democrats, and I was going to say Independents, but I'll say ticket-splitters -- [laughter] -- when in Rome -- [laughter]. But I have, as the President told you, just returned from Europe, where I met with our allies and discussed our common defense and economic concerns. I was never more aware of how important a strong and vibrant America is to the rest of world and to the future freedom of mankind.

Not too long ago, our friends and adversaries had begun to doubt our resolve. Our defenses were permitted to erode. We seemed paralyzed by self-doubt and a loss of confidence. Well, those days of self-doubt are over. While we didn't agree on everything, our allies understand our commitment, our sense of purpose, our strength of character.

I was fortunate enough to be permitted to address a joint session of Parliament in the cradle of democracy, and the Bundestag, the parliament of West Germany. Now, I know you've heard about the hostile demonstrations. They were well organized and orchestrated. But they were no match for the people in each of the cities -- six cities that we visited, who lined the streets to cheer as we went by. They waved American flags, and they held up homemade signs that read ``We love America.''

Now, I know that a great many of the peace demonstrators are truly sincere. Indeed, I think all of us share their desire for peace. But I'm equally sure that those who plan and promote some of the demonstrations have motives of their own. And I will believe in their sincerity when they promote or demand a peace demonstration on the other side of the Iron Curtain.

You who live here in Texas, a place where the spirit of freedom has played such a significant role, you serve to remind the rest of us about the true value of freedom. While many States look to government programs or Federal assistance, you stress individual responsibility and free enterprise. What you've created here has captured the imagination of the world. Entrepreneurs, laborers, and men and women looking for opportunity are flocking here not expecting a handout, but knowing that with hard work they can improve their lives. That's what Texas is and, I hope, will always be about.

One hundred and fifty years ago there was a similar migration. They had tougher battles to fight, but they established a tradition of rugged independence that lives on today. Sam Houston once said, ``Texas could exist without the United States, but the United States cannot, except at very great hazard, exist without Texas.''

Over the years through two World Wars and in Korea and Vietnam, we've learned the truth of Sam Houston's words. And they're as true in peace as in war. We can count on Texas.

So, tonight let me thank you for standing firm. Together as Americans we can stand firm with that same pride. Together we can keep this great and free country the way God intended it to be. And may I just say one thing. I can't claim that -- I told some people the other day that I know all the national anthems in the world -- but I do know that the only national anthem I know that ends in a question is our national anthem: ``Does that banner still wave o'er the land of the free and the home of the brave?'' And I know the answer to that question where you're concerned. You bet it does, and it's going to stay waving over that land.

God bless you, and thank you very much.

Note: The President spoke at 9:58 p.m. in the West Room at the Albert Thomas Convention Center.