Good morning, and thank you for a very warm welcome. I didn't bring a fig leaf with me, but I'm pleased to be here -- a real pleasure to be with you today.

Your help, and especially that of your leaders like Richard Conder, Bill Murphy, Roy Orr, and Bernie Hillenbrand, [President, vice president, past president, and executive director, respectively, of the National Association of Counties] has been invaluable during the last year as we have worked to reshape American government, crafting a plan to return the reins of government to the American people.

You were elected to offices that are among the closest to the people. I'm sure you know the names of many of your constituents, and they know yours. When you pass them on the street, they ask you about a recent decision or a vote. They attend your board and commission meetings to speak about their concerns. You're held responsible for your decisions by the people you represent, and that's what democracy is all about.

At the level of government you deal with, the daily lives of your citizens, managing their schools, repairing their roads, protecting their neighborhoods from fire and crime -- of course, Washington involves itself in these things too, but too often that kind of Federal intrusiveness has become part of the problem, not the solution.

I'm reminded of the story about a young student who handed in a test paper riddled with errors, and his teacher asked him how one person could make so many mistakes. And he said, ``One person didn't. My father helped me.'' [Laughter] Well, maybe the Federal Government has helped local governments make some mistakes, and that's what I want to talk with you about today.

Together you and I are involved in an epic struggle to restore the governmental balance intended in our Constitution and desired by our people. We're turning America away from yesterday's policies of big brother government. We're determined to restore power and authority to States and localities, returning as much decisionmaking as possible to the level of government where services are delivered.

Thomas Jefferson once said, ``I know no safe depository of the ultimate powers of society but the people themselves.'' Well, I agree with him. And I think you do too. The more government we can keep at the local levels, in local hands, the better off we are and the more freedom we will have.

Now, there are some in Washington who scoff at such an idea. They speak condescendingly about America's county seats or city halls and State legislatures. Claiming a monopoly on compassion and wisdom, they airily dismiss grassroots representatives as incapable of seeing the big picture. Well, forcing the American people to accept the dictates of a swollen government in Washington has been one of the more serious mistakes of this century. Either you believe in democracy or you don't. And like you, I believe.

Our Founding Fathers knew the value of diversity in America. They understood the need to control the size of government and to hold it accountable to our people. They wrote those principles into the Constitution and, as Madison points out in the Federalist Papers, ensured republican remedies -- now, that's republican with a small ``r'' -- for problems that have brought down other republics.

Traditionally, we've been able to adapt well to change and to meet our challenges, because we could reach across a vast continent for ideas and experience. In the recent past, as the Federal Government has pushed each city, county, and State to be more like every other, we've begun to lose one of our greatest strengths -- our diversity as a people. If we're to renew our country, we must stop trying to homogenize America.

I believe the extent of the problems that we face today is in direct proportion to the extent to which we have allowed the Federal Government to mushroom out of control. Ignoring careful checks and balances, Federal bureaucrats now dictate where a community will build a bridge or lay a sewer system. We've lost the sense of which problems require national solutions and which are best handled at the local level.

Let me quote Jefferson again. I'm sure you've all heard and possibly used yourself in a speech as I have his statement that if we look to Washington to find out ``when to sow and when to reap, we shall soon want for bread.'' Well, that line takes on much more meaning if we hear it in the entire context of what Jefferson was discussing.

He said, ``Were not this great country already divided into states, that division must be made, that each might do for itself what concerns itself directly, and what it can do so much better than a distant authority. Every state is again divided into counties each to take care of what lies within its local bounds; each county again into townships or wards to manage minute details . . . were we directed from Washington when to sow and when to reap, we should soon want for bread.''

As the distinctions blur, our people have lost far too much control over public policies that affect their daily lives. They no longer know who to blame when things go wrong. For example, if you have a problem with the way your child's school is run, who do you talk to? The teacher? The principal? The superintendent? The Governor? The courts? A department in Washington or, perhaps, the President? We must sort out responsibilities to better manage resources and restore accountability in government.

Having mentioned education, may I digress for a moment. Recently a national convention having to do with education was held in California. A central theme at that gathering was an attack on our efforts to get control of runaway Federal spending and what a threat that was to education. They painted some pretty horrendous pictures -- horrendous but untrue.

I have charged that the Federal Government in recent years has interfered unnecessarily in the classroom, claiming its right to do that by virtue of Federal financial aid to public schools. Well, that aid amounts to only 8.1 percent of the total cost of public school education. Local and State government put up the other 91.9 percent.

Now, we haven't canceled out that 8.1 percent of Federal help in our budgeting. We've shifted some of that spending to other government agencies for administrative purposes. Rehabilitation programs for adults, for instance, will be part of the Health and Human Services budget now. Other funds are being incorporated in block grants.

Yes, there will be savings, but not because we're depriving children of necessary educational programs. Many of the savings will be in the elimination of Federal administrative overhead and in giving local authorities more flexibility, free of useless regulations and redtape. And that, incidentally, is the underlying principle of federalism.

Our federalism initiatives are not incidental proposals. They lie at the very heart of our philosophy of government -- a philosophy I've long held and, I believe, most of you have as well. We are committed to restoring the intended balance between the levels of government, and, although some people may find this cause not as glamorous or as immediate as some others, we're determined to see it through.

We in this administration have taken another look at the Constitution and are applying it to the America of today. We will restore the 10th amendment to the Constitution, which says that the Federal Government shall do only those things provided in the Constitution, and all other powers shall remain with the States and with the people.

For the first time in too many years, the Federal Government will recognize a limit on what it should do, how fat it can grow, and the power it can claim. With your help, we'll reverse the flow of power, sending it back to the localities.

But the battle is barely begun. So, while I want to thank you, I also want to ask for your continued help. Rest assured that we in this administration understand that such support is a two-way street. As your partners in government, we pledge that this administration will never turn its back on the problems you face in the counties of America.

In my State of the Union message last January, I outlined the principles of our federalism proposals. I pledged to place federalism at the top of our national agenda, recognizing that the Federal Government has become overloaded with far more responsibilities than it can properly manage. Then as now, we focused on the need to sort out responsibilities and turn back to States and localities many Federal programs, insisting they be accompanied by the resources to pay for them.

We also promised to create no winners or losers among the States, and that these initiatives would not be means to simply cut the budget. Even at that early stage, our proposal reflected many of your concerns. It included an 8-year transition to avoid dislocations for States and local governments, revenue sharing was protected, funding of $4.6 billion a year was called for. The original turnback proposal, including more than 40 programs and the funds to pay for them, was in itself a giant revenue sharing program. The package guaranteed stability and certainty by guaranteeing 1983 budget figures through 1987.

Though only an outline, our proposal opened a great, national debate on the structure of our government. We presented a working proposal to be altered and polished during consultations with State and local officials. Since that January address, my staff and I have consulted with State and local officials as well as Members of the Congress. As I said earlier, NACO's representatives played a key role in shaping the package which we will send to the Congress by the end of this month.

While we've remained true to our first principles, significant changes have been made. The new package calls for Federal assumption of Medicaid responsibilities in return for State takeover of Aid to Families With Dependent Children. But the food stamp program has been dropped from the swap. The number of programs to be turned back has been reduced to about 35. And the windfall profits tax has been replaced by general revenues as a funding source. The pass-through provision has been revised so that localities will be guaranteed 100 percent of funds historically passed to them from the Federal Government. States will not be able to opt out of programs until 1985, and, when they do, will be required to consult with local elected officials.

Now, these measures are designed to strengthen the stability and certainty of funding. I believe that together they go along toward answering your needs as we begin to reorder the way the American people govern themselves. I hope that we can count on your support.

Baltimore's H. L. Mencken, a profound observer of American life, once said, ``It doesn't take a majority to make a rebellion; it takes only a few determined leaders and a sound cause.'' Well, let those be our rallying words. For it falls to us and our responsible colleagues at all levels of government to carry the message of the people to the Congress. Representative Barber Conable of New York has pointed out that if the States and localities want these federalism reforms, they can get them.

Roy Orr, your past president, has often said that with fewer strings attached, you people could do more with half the money that Congress appropriates than Federal bureaucrats -- even with the best of intentions -- are able to do with all of it. I believe him.

Our tax dollars have been filtering through too many hands at too many levels with a little less getting through at each step. Together we can reduce Washington's percentage and get the power and the resources back to the American people. After all, it's their money, and they've demanded a reform of the excesses, the duplication, and the bureaucracy that have led to a tremendous waste of our national resources. Let us form an alliance to send the Congress an unmistakable message: Americans want more of their taxes spent where they're raised and spent by people they can hold accountable.

Your organization has formed an alliance of another kind that's adding to local resources and solving problems where they occur. ``The Alliance of Business and Counties'' -- the theme of this conference -- and your Good Neighbor Awards are excellent examples of what can be done when communities look inward for answers to problems.

There are classic examples of that right here in this city that I've just seen with your fine mayor of Baltimore. I'm told, for example, that in Essex County, New Jersey, the Chamber of Commerce has recruited a team of business executives to do a budget and management analysis for the county. Results included the coordination of cost-containment activities and the drafting of specific steps to reduce energy consumption.

In Fairfield County, South Carolina, the utility company and county government built an efficient, modern facility to house not only a 24-hour ambulance service but a 60-member fire department in a sparsely populated area of the State. They tell me that response time has dropped from 20 minutes to 6.

I'm sure you know these case histories better than I do, and there are dozens more I don't have time to mention now. But I want to congratulate NACO and these counties, the businesses, and all the best of your ``good neighbors'' for reviving the ``can do'' spirit. We built America with the good neighbor policy. I believe that kind of attitude can make us great again.

Earlier this morning I visited an area of Baltimore that would be depressed were it not for the great hope of its citizens, their readiness for hard work, and the cooperative bond between local government and private business. Just over a year ago a bindery was begun in a warehouse in Park Heights in the northwest corner of this city. The enterprise was designed to turn a profit while providing jobs and training for 2,500 people within 5 years.

This afternoon I will visit the top of the World Trade Center to look out on Baltimore's beautiful Inner Harbor, an area that is being restored through the cooperation, once again, of government and business. So far, about half the funds for the Inner Harbor restoration have come from the government, but the private sector is expected to pick up nearly 95 percent of future costs. And maybe you missed my point about a fig leaf -- that's quite a fig leaf that you've heard about before.

The idea used in Baltimore is similar to the enterprise zone experiment our administration would like to test across America. Designated zones would be relieved of many tax and regulatory burdens, producing incentives for new business and new jobs. Although not a comprehensive answer to the problems in our inner cities, enterprise zones offer real hope for the mostly minority communities trapped at the bottom of America's economic ladder, in the heart -- the forgotten heart, all too often -- of our cities.

My administration remains committed to the enterprise zone experiment as part of our overall economic recovery plan. Of course a growing economy will be the best Federal program we can provide local governments, as well as the larger share of the tax base that will go along with it.

It's a simple yet a revolutionary concept -- this idea of giving the voters what they voted for. And it has startled some people a little bit we're actually doing what we said we were going to do, and that's not something Washington is used to. We're determined to return our government and our economy to the people. Together, with the support of people like you, we will shrink the Federal establishment, start our economy growing again, and restore America to greatness.

I have no doubt that the American people, with God's help, are up to the challenge. We need only believe in ourselves. In the course of our history we've overcome far greater challenges. If we look at the daily lives of Americans we can see case after case of individual mettle and pluck.

Just a few weeks ago in City Island Park in Daytona Beach such a story of courage took place. Thirty-two-year-old J. R. Richard, once an ace pitcher for the Houston Astros, stepped up to a minor league mound. Two summers ago a stroke had left him partially paralyzed, and his doctors wouldn't predict whether he could ever play again. But that summer night in Daytona the packed ballpark erupted in thunderous applause as J. R. jogged onto the field.

Newspaper accounts reported his performance was not overpowering, but neither was it an embarrassment. In four innings, the lanky righthander gave up only two earned runs and left the game to another enthusiastic ovation.

After the game, J. R. said, ``I'm ready to work myself back up -- it took a lot of hard work to get here; it's going to take a lot more hard work to get back into the majors.'' And then he looked at the Astro's general manager who was present and said, ``I will be back.''

J. R. has the kind of American spirit that we all must tap to continue our struggle for national renewal. We've won some major victories in the last year and a half, but there's a long, hard road still ahead of us. If we can focus as clearly on our goal as J. R. Richard has on his, if we can imagine America once again strong and vibrant and alive with jobs for all our people, security for our elderly, wealth enough for our poor, and new opportunities for every new generation, then I believe we, too, can find the strength to make our dreams come true.

I commend you in the National Association of Counties for all that you're doing to improve America's communities. I thank you for your support and hope I can count on you for more. If we continue to have faith in ourselves and trust in our people, there's nothing we cannot accomplish.

Thank you very much.

Note: The President spoke at 10:27 a.m. in Hall D at the Baltimore Convention Center. In his opening remarks, he referred to Governor Harry R. Hughes, Senator Charles McC. Mathias, Jr., and Representative Marjorie S. Holt.

Prior to his appearance at the convention, the President, accompanied by Baltimore Mayor William Donald Schaefer, toured the Commercial Credit Bindery and observed the youth training program at that facility.