And speaking of talent, what about this magnificent group of musicians who have been performing here today -- those who left and those who will stay with us. You know, I just know John Philip Sousa must have been a Republican. [Laughter] And rumor has it that there might even be a Republican or two in the hall today. [Laughter]

To all of you loyal members of our team, please let me express my deepest appreciation for what you're doing. Sometimes when I think of how much you do and how little recognition you get, I find myself reminded of a story about Orville and Wilbur Wright and this getting recognition.

They had tried repeatedly, as we all know, to get off the ground with their new flying contraption. They had one disappointment after another. And then finally, on one December day, there on and above the sands of Kitty Hawk, Orville did what no man had ever done before. It had to be the greatest news scoop in history. And I think that sometimes many of us have done things that we think were pretty good news scoops, and this story fits.

They wired their sister Katherine, ``We have actually flown 120 feet. We'll be home for Christmas.'' And she received the wire of that news and ran all the way to the local newspaper office, handed the wire to the city editor of her local paper. He looked at the wire and said, ``Well, isn't it nice? They're going to be home for Christmas.'' [Laughter]

There's no way that I could list all your names and cite all your accomplishments, but I want you to know how proud I am, because we are making a new beginning. Problems that had been building for years are now being addressed and they will be solved.

So, while I'm at it, I wonder if I might ask Drew Lewis and Dick Schweiker to stand so we can salute them for the dedication and excellence with which they served their country. And we're fortunate to replace Drew and Dick with two individuals of great experience and skill -- Elizabeth Dole and Margaret Heckler. You, too, can stand.

Well, we're going to miss Drew and Dick, and yet the pain, as you can see, is being eased. [Laughter] On behalf of everyone here, though, to the newcomers, welcome to the family, and let me warn you -- the two of you -- this'll be the last time you'll get part of a day off. [Laughter]

You know, I've been a little surprised to read that, with Elizabeth Dole and Margaret Heckler coming on board, we now have two women on our Cabinet. Well, that's not quite accurate. We have three. Mrs. Jeane Kirkpatrick is not only a member of the Cabinet, she's without doubt one of the finest Ambassadors to the United Nations this country's ever had. Through her words and actions, she's made one message plain to every member of the U.N.: The defense of American interests is tantamount to the defense of national independence, liberal democracy, and human rights throughout the world, and our defense of these principles must be considered a moral imperative.

Let us all remember, ideas do matter. We didn't come to Washington to be caretakers of power. We weren't elected to become managers of the decline or just to see if we couldn't run the same old shop and maybe do it a little more efficiently. We were sent here to move America forward again by putting people back in charge of their own country, to promote growth by placing limits on the size and power of government, to give individuals the opportunities to reach for their dreams, to strengthen institutions of family, school, church, and community, to make the United States a stronger leader for peace, freedom, and progress abroad, and, through it all, to renew our faith in the God who has blessed our land.

Is this really some radical, new, untested doctrine that we brought here? Forgive me, but those ideas and values are the heart and soul of what makes America a powerful force for good and the hope of all mankind. This is America's birthright, and we shall never betray it.

You know, not too many years ago, a Prime Minister of Australia, Prime Minister Gorton, spoke about our country. He said he wondered if the smaller nations of the world had ever thought what their situation might be if there were not this great nation -- ours -- in the world, so generous, so willing to help out wherever needed.

Yes, we face some awesome problems, but don't believe for one second the drumbeaters of gloom who see only storm clouds on the horizon. There's a new confidence building across America. And it's well justified. Reducing the rate of inflation by nearly two-thirds has increased Americans' real earning powers for the first time since 1978, and that's progress. Reducing interest rates from the record levels we inherited -- the prime had reached its highest peak in more than 100 years -- means new hope for housing, autos, entrepreneurs, consumers, and jobseekers everywhere. And that's progress.

Reducing the Federal income tax for a family of four earning $25,000 by $550 this year and nearly $700 next year, and then indexing their tax rates, sends a new message to Americans: ``It's your money, you earned it, and together we'll stop the big spenders from grabbing more and more of it away.'' And, believe me, that's progress, too.

And by facing up to a difficult problem in a responsible way, rather than simply copping out with demagoguery and scare tactics, we will ensure that the lifeline of social security remains strong for every one of our senior citizens. And that's a great step forward for America.

You know, all this thing that's been going on in this furor about social security -- every time I got in the elevator and went upstairs tonight, living over the store as we do -- [laughter] -- Nancy would say, ``But I've heard you talking about social security and it being out of balance for almost 30 years, and isn't it time?'' Well, the time has come, and something is being done.

I almost forgot something else you and I can feel mighty good about. Americans will spend 300 million fewer hours on government paperwork this year than they were doing when we took office. That bureaucratic monster who would slay private enterprise is learning a new command, and it's called ``Heel.'' [Laughter]

The pieces of the puzzle are falling in place. Bringing down inflation, interest rates, and tax rates gives our families new faith to save and invest. It's not just some coincidence that we've seen a record-breaking surge in our equity markets. That's a powerful vote of confidence in America's future. It means more capital to modernize plants and to finance sunrise industries that bring new technological leadership and more jobs.

Our great challenge and our great opportunity is to prepare today's work force for tomorrow's world. This is a challenge in which government, business, labor, and our universities should all be partners. We have too many people willing to work but unable to match their skills with the needs of our changing economy. The Washington Post recently carried a report about a consumer electronics show in which a thousand manufacturers were gathered to exhibit their products. This is an area of the economy where business is booming, American ingenuity is unmatched. And one of their representatives said, ``We're doing great. Our companies are looking for workers.'' So, let's roll up our sleeves and get the people looking for work trained so they can step into the jobs that are available.

There's an exciting world developing out there: computers, new technologies that can stretch our minds and carry us toward new horizons of growth and fulfillment. All we need is to believe in ourselves, to remember that we're Americans, and in this country we make the future work for us.

I think there's another very good reason why Americans are feeling better about their future. We're reversing the dangerous decline of this nation's defenses, and we're strengthening America's ability to protect the peace. Too many people have already forgotten the dismal state of readiness we inherited 2 years ago -- shortage of manpower, faulty equipment, lack of spare parts, insufficient fuel and ammunition for proper training. We were in trouble. In 1980 our military reenlistment rate was only 55 percent. I'm proud to say that in 1982 it has reached 68 percent, the highest level since almost 20 years ago, 1964.

The quality of recruits, their training, and our overall readiness are all being upgraded. We're restoring dignity, honor, and pride to the uniform of the United States. And, by strengthening our Armed Forces, we increase our ability to reach an agreement with the Soviet Union that will not just limit strategic weapons but actually reduce them.

I think it's time for those who sincerely desire peace to refrain from propaganda and to join us in a genuine disarmament. The people of the world share no greater yearning than to be free and to be free of fear. I deeply believe in the moral power of Western civilization and in America's enduring commitment as a leader in search for a true, just, and lasting peace.

As we begin our third year together, let me thank you all again and encourage you for the days ahead. Don't be swayed by Washington's whining voices and crying-towels. I know it's true that sometimes you don't get a fair shake, but if you get discouraged, I want you to remember some words a poet I've always admired once penned. His name was Robert Service, and he wrote:

``. . . You've had a raw deal! I know -- but don't squeal,

Buck up, do your damnedest, and fight.

It's the plugging away that will win you the day,

So don't be a piker old pard!

Just draw on your grit; it's so easy to quit:

It's the keeping-your-chin-up that's hard.''

And, for an encore, I could do ``The Shooting of Dan McGrew,'' but I don't think it would be appropriate. [Laughter]

So remember, with those words of Mr. Service, we inherited a mess, and we didn't run away from it. And now we're turning it around. Together, we'll build a far better future for America -- a future of growth, opportunity, and security, anchored by the values of a people who are confident, compassionate, and whose heart is good.

So, keep your chin up. We're on our way. And thank you all, and God bless you.

Note: The President spoke at 2:36 p.m. to the Presidential appointees gathered in Constitution Hall.