But it's a real pleasure to be with you in the Nation's ``Treasure State.'' Every day at the White House I pass a painting that's hanging in the hall near my office. It's a spectacular view of Montana, captured by your native son, Charles Russell. And one could argue whether your treasure is in your shining mountains, your forests, your farms, cattle ranges, or in the metal under the ground. I know you have these riches and more, but in the State of Montana you nurture an American treasure that's even more priceless: the frontier spirit of your people.

An Englishman in the 19th century described the pioneers of the American West by saying, ``Motion was in their days.'' City dwellers, cowpunchers, miners, mountainmen across this vast State share a strength that was born of self-reliance, the kind of ``can-do'' attitude that tamed this continent. This harvest season, as your fields of green wheat ripen, America needs to reap more than your abundant grain -- to export your spirit, to help with the renewal of America. Send Larry Williams to Washington to work with us as a United States Senator. We have a Congressman that's here -- Marlenee -- there already, so we have an expectation of what another Montanan can do to help in Washington.

Republicans have been a majority in the Senate now for a year and a half -- an important reason why we have been able to achieve such historic reversals of the big spending, big taxing policies that got us into this recession. With their help we not only slowed the growth of government, we cut it nearly in half -- the annual rate of spending increasing far greater than the annual rate of increase in revenues from our taxing system.

We passed a tax bill that reduced the tax burden on American citizens by about -- well, it will be $406 [$402 -- White House correction] billion of savings to you over the 3 years -- '83 through '85. We put in place an economic program that was already -- has reduced inflation, as Larry told you, by half -- more than half. And interest rates have come down also, and, as he said, by more than a quarter.

We have much more to do if we're to sustain the recovery that has just begun. We can't afford to yield to the budgetbusting currents of the past. And those Republican Senators are an important bulwark against the riptide of big government that had been dragging us under.

Because of the importance of building our margin in the Senate and Larry's commitment to our program, it's a special pleasure for me to speak on his behalf. As I've said before, no matter how tough my job gets, sometimes I wake up at night in a cold sweat thinking how much worse it could be if we didn't have a Republican majority in the Senate. As I said to a little group just a short time ago, imagine having two Tip O'Neills. [Laughter] But with your help we're going to make it an even bigger margin this November.

Some of you may not know that in 1980 nine Senate seats were decided by less than 2 percent of the vote, and Republicans won seven of those. And these few extra Senators have made all the difference.

We're this very week engaged in a battle to restore fiscal responsibility to the Federal Government. Now the battle is being waged over a tax bill passed by the Senate and being considered by the House. But the larger issue is whether or not the Federal Government can be made to live within its means.

Past Congresses and past administrations racked up huge deficits during the last 20 years as year after year the budget went unbalanced 19 times in those 20 years and our national debt grew larger. Today interest payments alone on that debt are more than the entire budget was in 1962, just 20 years ago. As a matter of fact, those who can remember back will remember for a while there, when it was getting close to a hundred billion, how Lyndon Johnson worked to try and not be the first one to hit a hundred billion dollars. And today that's the interest we pay on the debt that they were piling up.

The Federal Government has usurped more and more of our natural and national resources, driving interest rates skyward, our people out of work, and our country into recession. Now, I don't think the people of Montana will accept much more of that, and you shouldn't. And I'm determined to set this government on a course of fiscal sanity, eventually balancing the budget, but not on the back of the American taxpayer.

Now, I know that lately you've heard something different. You've heard that we're now backing the biggest single tax increase in our nation's history, and supposedly I have turned around and have given up on the original philosophy of cutting spending and so forth, and going in a different direction. Well, the tax bill that is now before the House will not raise income taxes on the average American. Three-quarters of the bill won't even have much of an effect on that middle-income taxpayer who faithfully and honestly fills out his forms every year. The bill is actually designed to better collect taxes that are owed but are not now being paid, to close unintended tax advantages for the few, and cut off unintended benefits. And this bill will help ensure that all businesses, no matter what their size, and all Americans, no matter how great their wealth, pay their fair share of taxes along with everyone else.

But, if I may, I welcome this opportunity to try and explain, because it hasn't been properly explained, and it hasn't been reported this way. Last year, we were successful in getting our tax-cut program phased in over a 3-year period. The next phase is coming in in July of 1983 -- another 10-percent cut in the income tax, some other things -- and then indexing. And as you know what that means, that for all these years of inflation, every time a worker got a cost-of-living pay raise, that didn't make him any better off, just had him try to keep up with the cost of living. It, however, pushed him into a higher bracket of the income tax. And by the time he paid that, he was worse off than he'd been the year before. So, the standard of living in this country has been going down steadily.

When we finish getting that last installment of the income tax, then the last thing that is done is we index the brackets so they are indexed to inflation, if there's any left by then. And you won't move up into another bracket just from getting a cost-of-living increase.

Now, what we started this year -- as we promised we would last -- that there were more cuts to go in government spending, more reductions that had to be made in that rate of increase until we get that rate of increase down to, at least, level or less than the rate of normal increase in government's revenues. And this time, however, we found we could not put together the coalition, because we only control one House, not two -- the coalition to get what we got last year, unless we would agree to some increased revenues. And what revenues do you think our opponents wanted us to increase? They didn't really call for an increase. They said, ``Cancel the rest of those tax cuts that are yet to go into effect.'' And I dug in my heels and said, ``Not by a -- sight.'' [Laughter]

But it became evident that we could not get the spending cuts that were needed without. So, we had known and had spoken the year before of some areas that we knew where taxes were not being paid that were owed under the present tax laws. And we started volunteering a program of better administration of the tax program, better collection of those revenues. It wasn't enough of a compromise. So, the compromise has led to what is the $99 billion package over 3 years. And this is what they're calling the biggest tax increase in history. The tax increase they passed a couple of years ago -- before we got here -- in social security payroll tax will take $112 billion more in those same 3 years, which is a little bigger than 99.

But the 99 is not entirely a tax increase -- $31 billion of it is the collection of money presently owed, and not being paid; $17 billion of it represents some tax increases. And the other, roughly, 50 percent of the 99 billion represents correcting some legislation from the past that has led to unintended tax benefits. A piece of legislation, for example, that was passed several years ago, and that one particular industry in this country found an obscure paragraph, and it was interpreted by the courts in such way that they were able to get a 60-percent tax cut for themselves. That had not been intended in the legislation.

So, the actual tax increase is 17 percent. The containment of these others that are escaping is 31 percent. And the rest of it is, as I say, a tax reform closing some of these things that we think were giving advantages to some, but weren't available to all.

But that is the price we have had to pay for getting the reductions in spending. And what it amounts to over the next 3 years is -- we will reduce -- if this bill is passed -- we will reduce the deficits by $380 billion, and 280 of that will be in reduction in spending outlays, and 99 -- call it a hundred -- will be this present tax program. I figure that, yes, it's a compromise, but we're getting $3 reduction in outlays for $1 in the increased revenues. And you're still getting that $406 [$402] billion in tax cuts that we passed last year. And I figure the compromise is worth it, because the most important thing is, we must curtail those deficits, eliminate those deficits as soon as we can, and get the interest rates down so that prosperity will come back to this country.

You know, here in Montana it's easy to understand why Thomas Jefferson believed that America had room enough for our descendants to the thousandth and thousandth generation. And our task today is to reaffirm the principles that shaped on this land a way of life that is unique in history.

We've for too many years been told that the only logical place to turn for help of any kind is to Washington. And you know sometime -- and I know that the people that have said this are well-intentioned. I know that many of the programs that have been proposed over the past had the best of intention -- and set out and only wanted to help people. But when you set out to help people, you'd better be sure of what you're doing. And they weren't all that sure.

They make me think of the old story -- and maybe some of you know it -- of the fellow riding a motorcycle on a cold, winter day. And the wind was coming through the button holes on his leather jacket and chilling him till he stopped, got off the motorcycle, turned the jacket around, and put it on backward. Well, now he's all right from the cold, but his arm movement's kind of restricted. He hit a patch of ice, skidded into a tree. And when the police got there and elbowed their way through the crowd that had gathered, and they said, ``What happened?'' They said, ``We don't know. When we got here he seemed to be all right, but by the time we had his head turned around straight, he was dead.'' [Laughter]

I've talked and stretched this tax thing, but I want you to know that we haven't neglected a lot of other things. We're asking for some constitutional amendments -- and I'm very amused when I stop to think that 40 States or more have in their State constitutions that the budget must be balanced. The Federal Government's never had that, so it's got a trillion-dollar debt. And we have asked for a budget-balancing amendment to the United States Constitution that the Federal budget has to be balanced. And some people are calling it a hoax and saying that it'll never work. Why should the Federal Government think it can do what all the rest of us don't have to do in our private lives and what we don't have to do at local government and everyplace else. They'd better start spending within their means, and we're going to keep whittling at 'em until that's the way it turns out. [Applause]

And now that you've hinted that that's what you'd like -- [laughter] -- why, let me just say, you just be sure that you run Larry Williams out of Montana -- just send him to Washington, D.C. He'll come back often, I know, to check on things here, but we need him there. We need him in that Senate. We need his help just as we need your Congressman Marlenee there on the other side. And we hope in November that we'll add some more allies to his House over there so that we can move faster in what it is we're trying to do. But you know that you've got a good man here. You know where he stands and what he stands for. And I'll know when he gets there that he was sent there by Montanans. [Laughter]

Thank you very much.

Note: The President spoke at 1:32 p.m. in the Sheraton Ballroom at the Billings Sheraton Hotel. Earlier, he attended a reception for Mr. Williams at the hotel.

Following his appearance at the luncheon, the President returned to Washington, D.C.