Seriously, though, where are those Democratic candidates with their grandiose solutions now that we need them? The America's Cup race, for example. Now, there was a problem that could have been solved with more money and a lot of wind. [Laughter]

And I'm delighted to be here with Heritage. I remember the days when a conservative intellectual was considered a contradiction in terms -- you know, like ``thrifty liberal'' -- [laughter] -- ``modest government,'' and ``pennypinching Congressman.'' [Laughter] But it's a great privilege to be here tonight at an extraordinary moment not only in the history of the Heritage Foundation but, I firmly believe, in the intellectual history of the West.

Historians who seek the real meaning of events in the latter part of the 20th century must look back on gatherings such as this. They will find among your numbers the leaders of an intellectual revolution that recaptured and renewed the great lessons of Western culture, a revolution that is rallying the democracies to the defense of that culture and to the cause of human freedom, a revolution that I believe is also writing the last sad pages of a bizarre chapter in human history known as communism.

Now, we have been living in an age when the cult of overwhelming government was the reigning ideology. It dominated our intellectual thought and claimed some of the best minds of our society and civilization. And now all of that is changing. The evidence is before us in this room and in the astonishing growth of a remarkable institution called the Heritage Foundation.

You know, during the years when I was out on the mashed-potatoes circuit I was sometimes asked to define conservatism, and I must confess that, while I have the cream of the conservative intellectual movement before me, I'm tempted to use Justice Potter Stewart's definition. He gave it for another subject, by the way. He said he couldn't define it exactly, but ``I know it when I see it.'' [Laughter] He was talking about pornography. [Laughter] Well, I can see conservatism here tonight. There is no better evidence that the time of the conservative idea has come than the growth of the Heritage Foundation.

Back in the midseventies this foundation was begun, as you've been told, by Paul Weyrich and Ed Feulner with only a few staff members, some modest offices, and not very much in the way of funding. And today, of course, you know Heritage has more than a hundred staff members, many more associates and consultants, as you've been told, a brand-new office building -- its picture is on the program there -- a budget that's gone from 3 million to 10 million in 5 years. But it's not money or numbers of people or size of the offices that measure Heritage's impact. Your frequent publications, timely research, policy papers, seminars, and conferences account for your enormous influence on Capitol Hill and, believe me, I know at the White House. Yes, the Heritage Foundation is an enormous undertaking and achievement.

It's great to see old friends from California that are also Heritage activists, like Frank Walton, but I particularly want to single out here for their enormous efforts some who've already been mentioned: Joe Coors, the Noble family, our master of ceremonies, Frank Shakespeare, and, of course, Heritage's guiding light, Ed Feulner.

Ed likes to say that not too many years ago a phone booth was just about big enough to hold a meeting of conservative intellectuals in Washington; he said it here tonight. I know what he means. Washington has a way of being the last to catch on. [Laughter] Just as the growth of Heritage has stunned the pundits, the conservative cause itself -- the Goldwater nomination in 1964, the growth of the New Right in the 1970's, the conservative victory in 1980, and the tax-cut victory of 1981 -- all of these came as huge surprises to the Washington technocrats who pride themselves on knowing what's going on in politics.

Well, the reason is plain. Many people in the power structure of our Capital think that appealing to someone's narrow self-interest is the best way to appeal to the American people as a whole, and that's where they're wrong. When the American people go to the polls, when they speak out on the issues of the day, they know how high the stakes are. They know the future of freedom depends not on ``what's in it for me,'' but on the ethic of what's good for the country, what will serve and protect freedom.

Success in politics is about issues, ideas, and the vision we have for our country and the world -- in fact, the very sum and substance of the work of the Heritage Foundation. Don't take my word for it. In a book called ``The Real Campaign,'' a study of the 1980 campaign, commentator Jeff Greenfield argues that gaffes or polls or momentum and all those other issues Washington experts thought were important in the election of 1980 were not. Mr. Greenfield argues that issues and ideas did count, that the electorate voted the way they did in large part because they rejected what liberalism had become, and they agreed with the coherent conservative message they heard from our side.

This point about politics and elections is reflected in what some have been saying about our economic system. As George Gilder points out, it isn't just self-gain or personal profit that drives the free market and accounts for the entrepreneurial spirit. There are larger issues involved: faith, a clear vision of the future, a hidden altruism, that simple human desire to make things better.

One current bestseller, ``In Search of Excellence,'' has caused a great flurry in the business management world, because it argues that intangibles like shared values and a sense of mission are the great overlooked factors in accounting for the success of business institutions. Well, this is true of nations as well. The American electorate seeks from its national leadership this sense of shared values, this reaffirmation of traditional American beliefs. They do not want a President who's a broker of parochial concerns; they do not want a definition of national purpose, a vision of the future. And I believe that we conservatives have provided that vision during the past few years.

When this administration took office, we declined to go with patchwork solutions and quick fixes. We delivered, instead, on the promises we'd made to the American people, promises that were part of a consistent and coherent view of this nation's needs and problems. We had a policy; we put it into effect. We made our promises, and we kept them. We said we would stop the juggernaut buildup of 40 years of increased Federal spending, and we did.

Despite the momentum accumulating from a host of new social welfare and entitlement programs, we still managed to cut the growth in Federal spending by nearly 40 percent. For the first time since 1964 all personal income tax rates have been cut, and cut by a hefty 25 percent across the board. And we made the most important reform of them all; in 1985, your income taxes will be indexed, so never again will you be pushed into higher tax brackets by inflation.

The story is the same for our efforts to deregulate the American economy. It was only a few years ago that every time you turned around, some government bureau had slapped on more restrictions on our commerce, our trade, and our lives. We were at the point where we could hardly adjust our thermostats or use our credit cards without checking first with Washington. Our regulatory task force has already cut the number of final regulations issued by almost 25 percent and saved American industry some 300 million hours of filling out forms.

And now that inflation has been reduced to 2.6 percent and the economy is on the move again, I'm just wondering where are all those folks who kept insisting that Reaganomics would lead to crippling recession or runaway inflation. In fact, how come no one calls it Reaganomics anymore? I never did call it that. That was their name when they thought it wouldn't work. I just called it common sense. But is it because our program is doing what we said it would, making America prosperous and strong again?

I think the picture on the foreign front is very much the same. You can all remember the days of national malaise and international humiliation. Everywhere in the world freedom was in retreat, and America's prestige and influence were at low ebb. In Afghanistan the liberty of a proud people was crushed by brutal Soviet aggression. In Central America and Africa Soviet-backed attempts to install Marxist dictatorships were successfully underway. In Iran international law and common decency were mocked, as 50 American citizens were held hostage. And in international forums the United States was routinely held up to abuse and ridicule by outlaw regimes and police state dictatorships.

That was an America that once upon a time not too long ago knew that an American in some distant corner of the world could be caught up in revolution or conflict of war of some kind, and all he had to do was pin a little American flag to his lapel, and he could walk through that war and no one would lay a finger on him because they knew this country stood by its people wherever they might be. We're going to have that kind of America again.

Verifiable and equitable arms control agreements were nowhere in sight, and our own military might had sharply declined. Even friendly governments were toning down their pro-American rhetoric, abandoning their anti-Soviet declarations, withdrawing support for our diplomatic initiatives, and beginning to be influenced by Soviet diplomatic and commercial programs they had previously dismissed outright.

All this is changing. While we cannot end decades of decay in only a thousand days, we have fundamentally reversed the ominous trends of a few years ago.

First, our economic program is working, and our recovery sets the pace for the rest of the world. We strengthen the hand of other democracies.

Second, the willingness of the American people to back our program for rebuilding America's defenses has added to the respect, the prestige, and deterrent capability we need to support our foreign policy goals.

Third, we have significantly slowed the transfer of valuable free world technology to the Soviet Union.

Fourth, throughout the world today the aspirations for freedom and democracy are growing. In the Third World, in Afghanistan, in Central America, in Africa and Southeast Asia, opposition to totalitarian regimes is on the rise. It may not grab the headlines, but there is a democratic revolution underway.

Finally, our new willingness to speak out forthrightly about communism has been a critically effective foreign policy step. We're making clear that the free world, far from plunging into irreversible decline, retains the moral energy and spiritual stamina to tell the truth about the Soviets, to state clearly the real issues now before the world. That issue is not, as our adversaries would have us believe, the choice between peace and war, between being dead or Red, but, rather, the choice between freedom and servitude, human dignity and state oppression.

And now let me speak a word for a moment about a matter that needs to be cleared up. There are a number of Congressmen on the Hill, including conservatives, who, while being inclined to vote for our defense policies want to be absolutely sure of our desire for arms control agreements. Well, I hope my recent speech at the United Nations has helped to clarify this. But just let me add a personal note -- and this is a matter of conscience.

Any American President, anyone charged with the safety of the American people, any person who sits in the Oval Office and contemplates the horrible dimensions of a nuclear war must, in conscience, do all in his power to seriously pursue and achieve effective arms reduction agreements. The search for genuine, verifiable arms reduction is not a campaign pledge or a sideline item in my national security agenda. Reducing the risk of war and the level of nuclear arms is an imperative, precisely because it enhances our security.

In our relations with the Soviet Union, we're engaged in a comprehensive agenda of major arms control negotiations. And for the first time, the Soviets are now talking about more than nuclear arms ceilings; they're talking about nuclear arms reductions. And tomorrow I will be meeting with Ambassador Ed Rowny to give him the new instructions he will carry back to the START talks in Geneva on Wednesday. In fact, let me take this a step further and explain why it's our willingness to be candid about the Soviet Union, about its nature and expansionist policies. It improves the chances of success in the arms control area.

History shows us what works and doesn't work. Unilateral restraint and good will does not provide similar reactions from the Soviet Union, and it doesn't produce genuine arms control. But history does teach that when the United States has the resolve to remain strong and united, when we stand up for what we believe in, and when we speak out forthrightly about the world as it is, then positive results can be achieved. Weakness does not offer the chance for success; strength does. And that strength is based on military capability, strong alliances, a willingness to speak the truth and to state our hope that someday all peoples of the world will enjoy the right to self-government and personal freedom.

You can remember one administration that tried to minimize the differences between the Soviets and the democracies. They lectured us on our ``inordinate fear of communism.'' Under that administration arms control efforts not only failed, but the hope of improved East-West relations ended in Soviet expansionism on three continents, the invasion of Afghanistan, and an actual discussion by an American President before a joint session of Congress about the use of military force against any attempt to seize control of the Persian Gulf.

We must never be inhibited by those who say telling the truth about the Soviet empire is an act of belligerence on our part. To the contrary, we must continue to remind the world that self-delusion in the face of unpleasant facts is folly, that whatever the imperfections of the democratic nations, the struggle now going on in the world is essentially the struggle between freedom and totalitarianism, between what is right and what is wrong. This is not a simplistic or unsophisticated observation. Rather, it's the beginning of wisdom about the world we live in, the perils we face, and the great opportunity we have in the years ahead to broaden the frontiers of freedom and to build a durable, meaningful peace.

Let us never underestimate the power of truth. Not long ago, Aleksandr Solzhenitsyn reminded us that righteousness, not just revolutionary violence, has such power. Indeed, that's why I believe the struggle in the world will never be decided by arms, but by a test of wills -- a test of Western faith and resolve.

And this brings me to a second point: The goal of the free world must no longer be stated in the negative, that is, resistance to Soviet expansionism. The goal of the free world must instead be stated in the affirmative. We must go on the offensive with a forward strategy for freedom. As I told the British Parliament in June of 1982, we must foster the hope of liberty throughout the world and work for the day when the peoples of every land can enjoy the blessings of liberty and the right to self-government.

This, then, is our task. We must present to the world not just an America that's militarily strong, but an America that is morally powerful, an America that has a creed, a cause, a vision of a future time when all peoples have the right to self-government and personal freedom.

I think American conservatives are uniquely equipped to present to the world this vision of the future -- a vision worthy of the American past. I've always had a great affection for the words of John Winthrop, delivered to a small band of Pilgrims on the tiny ship Arabella off the coast of Massachusetts in 1630: ``We shall be a city upon a hill. The eyes of all people are upon us, so that if we shall deal falsely with our God in this work we have undertaken and so cause Him to withdraw His present help from us, we shall be made a story and a byword throughout the world.''

Well, America has not been a story or a byword. That small community of Pilgrims prospered and, driven by the dreams and, yes, by the ideas of the Founding Fathers, went on to become a beacon to all the oppressed and poor of the world.

One of those early founders was a man named Joseph Warren, a revolutionary who would have an enormous impact on our early history -- would have had, had not his life been cut short by a bullet at Bunker Hill. His words about the perils America faced then are worth hearing today. ``Our country is in danger,'' he said, ``but not to be despaired of. On you depends the fortunes of America. You are to decide the important question on which rests the happiness and liberty of millions yet unborn. Act worthy of yourselves.'' Well, let his idealism guide us as we turn conservative ideas into political realities.

And as I urged in those closing days of the 1980 campaign, let us remember the purpose behind our activities, the real wellspring of the American way of life. Even as we meet here tonight some young American coming up along the Virginia or Maryland shores of the Potomac is looking with awe for the first time at the lights that glow in the great halls of our government and the monuments to the memory of our great men.

We're resolved tonight that young Americans will always see those Potomac lights, that they will always find here a city of hope in a country that's free so that when other generations look back at this conservative era in American politics and our time in power, they'll say of us that we did hold true to that dream of Joseph Winthrop and Joseph Warren, that we did keep faith with our God, that we did act worthy of ourselves, that we did protect and pass on lovingly that shining city on a hill.

Thank you very much, and God bless you all.

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