I'm grateful to the American Conservative Union, Young Americans for Freedom, National Review, and Human Events for organizing this third annual memorial service for the Democratic platform of 1980. Someone asked me why I wanted to make it three in a row. Well, you know how the Irish love wakes. [Laughter]

But I'm delighted to be back here with you, at your 10th annual conference. In my last two addresses, I've talked about our common perceptions and goals, and I thought I might report to you here tonight on where we stand in achieving those goals -- a sort of state of the Reagan report, if you will.

Now, I'm the first to acknowledge that there's a good deal left unfinished on the conservative agenda. Our cleanup crew will need more than 2 years to deal with the mess left by others for over half a century. But I'm not disheartened. In fact, my attitude about that unfinished agenda isn't very different from that expressed in an anecdote about one of my favorite Presidents, Calvin Coolidge. [Laughter]

Some of you may know that after Cal Coolidge was introduced to the sport of fishing by his Secret Service detail, it got to be quite a passion with him, if you can use that word about ``Silent Cal.'' [Laughter] Anyway, he was once asked by reporters how many fish were in one of his favorite angling places, the River Brule. And Coolidge said the waters were estimated to carry 45,000 trout. And then he said, ``I haven't caught them all yet, but I sure have intimidated them.'' [Laughter]

Well, it's true we haven't brought about every change important to the conscience of a conservative, but we conservatives can take a great deal of honest pride in what we have achieved. In a few minutes I want to talk about just how far we've come and what we need to do to win further victories. But right now, I think a word or two on strategy is in order. You may remember that in the past, I mentioned that it was not our task as conservatives to just point out the mistakes made over all the decades of liberal government, not just to form an able opposition, but to govern, to lead a nation. And I noted this would make new demands upon our movement, upon all of us.

For the first time in half a century, we've developed a whole new cadre of young conservatives in government. We've shown that conservatives can do more than criticize; we've shown that we can govern and move our legislation through the Congress.

Now, I know there's concern over attempts to roll back some of the gains that we've made. And it seems to me that here we ought to give some thought to strategy -- to making sure that we stop and think before we act. For example, some of our critics have been saying recently that they want to take back the people's third-year tax cut and abolish tax indexing. And some others, including members of my staff, wanted immediately to open up a verbal barrage against them. Well, I hope you know that sometimes it's better if a President doesn't say exactly what's on his mind. [Laughter] There's an old story about a farmer and a lawyer that illustrates my point.

It seems that these two got into a pretty bad collision, a traffic accident. They both got out of their cars. The farmer took one look at the lawyer, walked back to his car, got a package, brought it back. There was a bottle inside, and he said, ``Here, you look pretty shook up. I think you ought to take a nip of this, it'll steady your nerves.'' Well, the lawyer did. And the farmer said, ``You still look a little bit pale. How about another?'' [Laughter] And the lawyer took another swallow. And under the urging of the farmer, he took another and another and another. And then, finally, he said he was feeling pretty good and asked the farmer if he didn't think that he ought to have a little nip, too. And the farmer said, ``Not me, I'm waiting for the State trooper.'' [Laughter]

I wonder if we can't learn something from that farmer. If our liberal friends really want to head into the next election under the banner of taking away from the American people their first real tax cut in nearly 20 years; if, after peering into their heart of hearts, they feel they must tell the American people that over the next 6 years they want to reduce the income of an average family by $3,000; and if they want to voice these deeply held convictions in an election year -- well, fellow conservatives, who are we to stifle the voices of conscience? [Laughter]

Now, in talking about our legislative agenda, I know that some of you have been disturbed by the notion of standby tax increases in the so-called out-years. Well, I wasn't wild about the idea myself. But the economy is getting better, and I believe these improvements are only the beginning. And with some luck, and if the American people respond with the kind of energy and initiative they've always shown in the past, well, maybe it's time we started thinking about some standby tax cuts, too.

But you know, the great thing about that standby tax increase is that if it's passed, they can't put it into effect unless they have first agreed to all our spending cuts. It does give them something to think about.

But you know, with regard to the economy, I wonder if our political adversaries haven't once again proved that they're our best allies. They spent the last 16 months or so placing all the responsibility for the state of the economy on our shoulders. And with some help from the media, it's been a pretty impressive campaign. They've created quite an image -- we're responsible for the economy.

Well, I assume that we're responsible then for inflation which, after back-to-back years in double digits before we got here, has now been reduced to 3.9 percent in 1982. And for the last 3 months of that year, it ran at only 1.1 percent. In 1982 real wages increased for the first time in 3 years. Interest rates, as you've already been told, have dropped dramatically, with the prime rate shrinking by nearly 50 percent. And in December, the index of leading indicators was a full 6.3 percent above last March's low point and has risen in 8 of the last 9 months. Last month housing starts were up 95 percent and building permits 88 percent over last year at this time. New home sales are up by 54 percent since April, and inventories of unsold homes are at the lowest levels in more than a decade. Auto production this quarter is scheduled to increase by 22 percent, and General Motors alone is putting 21,400 of their workers back on the job. Last month's sharp decline in the unemployment rate was the most heartening sign of all. It would have taken a $5 billion jobs bill to reduce unemployment by the same amount -- and it didn't cost us anything.

It's time to admit our guilt, time we admitted that our liberal critics have been right all the time. And they should go right on telling the American people that the state of the economy is precisely the fault of that wicked creature, Kemp-Roth and its havoc-breaking truth [havoc-wreaking twin],\1\ (FOOTNOTE) Reaganomics.

(FOOTNOTE) \1\White House correction.

Let's confess, let's admit that we've turned the corner on the economy. And we're especially proud of one thing: When we hit heavy weather, we didn't panic, we didn't go for fast bromides and quick fixes, the huge tax increases or wage and price controls recommended by so many. And our stubbornness, if you want to call it that, will quite literally pay off for every American in the years ahead.

So, let me pledge to you tonight: Carefully, we have set out on the road to recovery. We will not be deterred. We will not be turned back. I reject the policies of the past, the policies of tax and tax, spend and spend, elect and elect. The lesson of these failed policies is clear; I've said this before: You can't drink yourself sober or spend yourself rich, and you can't prime the pump without pumping the prime -- as somebody did, like to 21\1/2\ percent in 1980.

And a word is in order here on the most historic of all the legislative reforms we've achieved in the last 2 years -- that of tax indexing. You can understand the terror that strikes in the heart of those whose principal constituency is big government. Bracket creep is government's hidden incentive to inflate the currency and bring on inflation, and indexing will end that. It will end those huge, hidden subsidies for bigger and bigger government. In the future, if we get indexing planted firmly as a law of the land, the advocates of big government who want money, more money for their social spending, their social engineering schemes, will have to go to the people and say right out loud: We want more money from your weekly paycheck, so we're raising your taxes. Do that instead of sneaking it out by way of inflation, which they have helped bring on.

So, all the professional Washingtonians, from bureaucrats to lobbyists to the special interest groups, are frightened -- plain scared -- and they're working overtime to take this one back. Well, I think I speak for all conservatives when I say: Tax indexing is nonnegotiable. It's a fight we'll take to the people, and we'll win.

But I think you can see how even this debate shows things are changing for the better. It highlights the essential differences between two philosophies now contending for power in American political life. One is the philosophy of the past -- a philosophy that has as its constituents an ill-assorted mix of elitists and special-interest groups who see government as the principal vehicle of social change, who believe that the only thing we have to fear is the people, who must be watched and regulated and superintended from Washington.

On the other hand, our political philosophy is at the heart of the new political consensus that emerged in America at the beginning of this decade, one that I believe all -- well, I believe it will dominate American politics for many decades. The economic disasters brought about by too much government were the catalysts for this consensus. During the seventies, the American people began to see misdirected, overgrown government as the source of many of our social problems -- not the solution.

This new consensus has a view of government that's essentially that of our Founding Fathers -- that government is the servant, not the master; that it was meant to maintain order, to protect our nation's safety, but otherwise, in the words of that noted political philosopher, schnozzle Jimmy Durante, ``Don't put no constrictions on da people. Leave 'em da heck alone.'' [Laughter]

The overriding goal during the past 2 years has been to give the government back to the American people, to make it responsive again to their wishes and desires, to do more than bring about a healthy economy or a growing gross national product. We've truly brought about a quiet revolution in American Government.

For too many years, bureaucratic self-interest and political maneuvering held sway over efficiency and honesty in government. Federal dollars were treated as the property of bureaucrats, not taxpayers. Those in the Federal Establishment who pointed to the misuse of those dollars were looked upon as malcontents or troublemakers.

Well, this administration has broken with what was a kind of a buddy system. There have been dramatic turnabouts in some of the more scandal-ridden and wasteful Federal agencies and programs. Only a few years ago, the General Services Administration was racked by indictments and report after report of inefficiency and waste. Today at GSA, Jerry Carmen has not only put the whistleblowers back in charge, he's promoted them and given them new responsibilities. Just listen to this little set of figures. Today, General Services Administration work-in-progress time is down from 30 days to 7, even while the agency has sustained budget cuts of 20 percent, office space reductions of 20 percent, and the attrition of 7,000 employees.

At the Government Printing Office, under Dan Sawyer, losses of millions of dollars have suddenly been ended as the workforce was cut through attrition and a hiring freeze, and overtime pay was cut by $6 million in 1 year alone. The Government publication program, which ran a cumulative loss of $20 million over a 3-year period, registered a $4.9 million profit, and the GPO as a whole has experienced a profit of $4.1 million last year.

It is said by some that this administration has turned a blind eye to waste and fraud at the Pentagon while overzealously concentrating on the social programs. Well, at the Pentagon, under Cap Weinberger's leadership and our superb service Secretaries, Jack Marsh, John Lehman, and Verne Orr, we have identified more than a billion dollars in savings on waste and fraud and, over the next 7 years, multiyear procurement and other acquisition initiatives will save us almost $30 billion.

Now, these are only three examples of what we're attempting to do to make government more efficient. The list goes on. We have wielded our inspectors general as a strike force accounting for nearly $17 billion in savings in 18 months. With Peter Grace's help, we've called on top management executives and experts from the private sector to suggest modern management techniques for every aspect of government operations. And with an exciting new project called Reform 88, we're going to streamline and reorganize the processes that control the money, information, personnel, and property of the Federal bureaucracy -- the maze through which nearly $2 trillion passes each year and which includes 350 different payroll systems and 1,750 personnel offices.

There is more, much more -- from cutting down wasteful travel practices to reducing paperwork, from aggressively pursuing the $40 billion in bad debts owed the Federal Government to reducing publication of more than 70 million copies of wasteful or unnecessary government publications.

But, you know, making government responsive again to the people involves more than eliminating waste and fraud and inefficiency. During the decades when government was intruding into areas where it's neither competent nor needed, it was also ignoring its legitimate and constitutional duties such as preserving the domestic peace and providing for the common defense.

I'll talk about defense in a moment. I know you've already heard about that today, some of you. But on the matter of domestic order, a few things need to be said. First of all, it is abundantly clear that much of our crime problem was provoked by a social philosophy that saw man as primarily a creature of his material environment. The same liberal philosophy that saw an era of prosperity and virtue ushered in by changing man's environment through massive Federal spending programs also viewed criminals as the unfortunate products of poor socioeconomic conditions or an underprivileged upbringing. Society, not the individual, they said, was at fault for criminal wrongdoing. We were to blame.

Well, today, a new political consensus utterly rejects this point of view. The American people demand that government exercise its legitimate and constitutional duty to punish career criminals -- those who consciously choose to make their life by preying on the innocent.

Now, we conservatives have been warning about the crime problem for many years, about that permissive social philosophy that did so much to foster it, about a legal system that seemed to specialize in letting hardened criminals go free. And now we have the means and the power to do something. Let's get to work.

Drugpusher after drugpusher, mobster after mobster has escaped justice by taking advantage of our flawed bail and parole system. Criminals who have committed atrocious acts have cynically utilized the technicalities of the exclusionary rule, a miscarriage of justice unique to our legal system. Indeed, one National Institute of Justice study showed that of those arrested for drug felonies in Los Angeles County in 1981, 32 percent were back out on the streets because of perceived problems with the exclusionary rule.

Now, the exclusionary rule -- that isn't a law that was passed by Congress or a State legislature, it's what is called case law, the result of judicial decisions. If a law enforcement officer obtains evidence as the result of a violation of the laws regarding search and seizure, that evidence cannot be introduced in a trial even if it proves the guilt of the accused. Now, this is hardly punishment of the officer for his violation of legal procedures, and it's only effect, in many cases, is to free someone patently guilty of a crime.

I don't know, maybe I've told you this before, but I have to give you a glaring example of what I've taken too much time to explain here. San Bernardino, California, several years ago: Two narcotics agents, based on the evidence that they had, obtained a legal warrant to search a home of a man and woman suspected of peddling heroin. They searched the home. They didn't find anything. But as they were leaving, just on a hunch, they turned back to the baby in the crib and took down the diapers, and there was the stash of heroin. The evidence was thrown out of court and the couple went free because the baby hadn't given permission for the violation of its constitutional rights.

Well, this administration has proposed vital reforms of our bail and parole systems and criminal forfeiture and sentencing statutes. These reforms were passed by the Senate 95 to 1 last year. Our anticrime package never got out of committee in the House of Representatives. Do you see a target there? [Laughter] The American people want these reforms, and they want them now. I'm asking tonight that you mobilize all the powerful resources of this political movement to get these measures passed by the Congress.

On another front, all of you know how vitally important it is for us to reverse the decline in American education, to take responsibility for the education of our children out of the hands of the bureaucrats and put it back in the hands of parents and teachers. That's why the Congress must stop dithering. We need those tuition tax credits. We need a voucher system for the parents of disadvantaged children. We need education savings accounts, a sort of IRA for college. And finally -- and don't think for a moment I've given up -- we need to eliminate that unnecessary and politically engendered Department of Education.

There are other steps we're taking to restore government to its rightful duties, to restore the political consensus upon which this nation was founded. Our Founding Fathers prohibited a Federal establishment of religion, but there is no evidence that they intended to set up a wall of separation between the state and religious belief itself.

The evidence of this is all around us. In the Declaration of Independence, alone, there are no fewer than four mentions of a Supreme Being. ``In God We Trust'' is engraved on our coinage. The Supreme Court opens its proceedings with a religious invocation. And the Congress opens each day with prayer from its chaplains. The schoolchildren of the United States are entitled to the same privileges as Supreme Court Justices and Congressmen. Join me in persuading the Congress to accede to the overwhelming desire of the American people for a constitutional amendment permitting prayer in our schools.

And finally, on our domestic agenda, there is a subject that weighs heavily on all of us -- the tragedy of abortion on demand. This is a grave moral evil and one that requires the fullest discussion on the floors of the House and Senate. As we saw in the last century with the issue of slavery, any attempt by the Congress to stifle or compromise away discussion of important moral issues only further inflames emotions on both sides and leads ultimately to even more social disruption and disunity.

So, tonight, I would ask that the Congress discuss the issue of abortion openly and freely on the floors of the House and Senate. Let those who believe the practice of abortion to be a moral evil join us in taking this case to our fellow Americans. And let us do so rationally, calmly, and with an honest regard for our fellow Americans.

Speaking for myself, I believe that once the implications of abortion on demand are fully aired and understood by the American people, they will resolutely seek its abolition. Now, I know there are many who sincerely believe that limiting the right of abortion violates the freedom of choice of the individual. But if the unborn child is a living entity, then there are two individuals, each with the right to life, liberty, and the pursuit of happiness. Unless and until someone can prove the unborn is not alive -- and all medical evidence indicates it is -- then we must concede the benefit of the doubt to the unborn infant.

But whether it's cutting spending and taxing, shrinking the size of the deficit, ending overregulation, inefficiency, fraud, and waste in government, cracking down on career criminals, revitalizing American education, pressing for prayer and abortion legislation, I think you can see that the agenda we've put before America these past 2 years has been a conservative one. Oh, and there are two other matters that I think you'd be interested in. First, as part of our federalism effort, next week we will be sending to the Congress our proposal for four megablock grants that will return vital prerogatives to the States where they belong. And second, the Office of Management and Budget will press ahead with new regulations prohibiting the use of Federal tax dollars for purposes of political advocacy.

And these important domestic initiatives have been complemented by the conservative ideas we've brought to the pursuit of foreign policy. In the struggle now going on for the world, we have not been afraid to characterize our adversaries for what they are. We have focused world attention on forced labor on the Soviet pipeline and Soviet repression in Poland and all the other nations that make up what is called the ``fourth world'' -- those living under totalitarian rule who long for freedom.

We publicized the evidence of chemical warfare and other atrocities in Cambodia, which we're now supposed to call Kampuchea, and in Afghanistan. We pointed out that totalitarian powers hold a radically different view of morality and human dignity than we do. We must develop a forward strategy for freedom, one based on our hope that someday representative government will be enjoyed by all the people and all the nations of the Earth.

We've been striving to give the world the facts about the international arms race. Ever since our nearly total demobilization after World War II, we in the West have been playing catchup. Yes, there's been an international arms race, as some of the declared Democratic candidates for the Presidency tell us. But let them also tell us, there's only been one side doing the racing.

Those of you in the frontline of the conservative movement can be of special assistance in furthering our strategy for freedom, our fight against totalitarianism. First of all, there is no more important foreign policy initiative in this administration, and none that frightens our adversaries more, than our attempts through our international radios to build constituencies for peace in nations dominated by totalitarian, militaristic regimes. We've proposed to the Congress modest but vitally important expenditures for the Voice of America, Radio Free Europe/Radio Liberty, and Radio Marti. These proposals stalled last year, but with your help we can get them through the Congress this year. And believe me, nothing could mean more to the Poles, Lithuanians, Cubans, and all the millions of others living in that fourth world.

Now, it would be also unconscionable during any discussion of the need for candor in our foreign policy not to mention here the tragic event that last year shocked the world -- the attack on His Holiness, Pope John Paul II -- an act of unspeakable evil, an assault on man and God. It was an international outrage and merits the fullest possible investigation. Tonight, I want to take this opportunity to applaud the courage and resourcefulness of the Government of Italy in bringing this matter to the attention of the world. And, contrary to what some have suggested, you can depend on it, there is no one on our side that is acting embarrassed or feeling embarrassed because they're going ahead with that investigation. We mean to help them.

And, now, Cap, you can breathe easy, because here we come. We must continue to revitalize and strengthen our Armed Forces. Cap Weinberger's been waging an heroic's battle on this front. I'm asking you, the conservative leaders here tonight, to make support for our defense buildup one of your top priorities.

But besides progress in furthering all of these items on the conservative agenda, something else is occurring -- something that someday we conservatives may be very proud happened under our leadership. Even with all our recent economic hardships, I believe a feeling of optimism is now entering the American consciousness, a belief that the days of division and discord are behind us and that an era of unity and national renewal is upon us.

A vivid reminder of how our nation has learned and grown and transcended the tragedies of the past was given to us here in Washington only a few months ago. Last November, on the Mall, between the Lincoln Memorial and the Washington Monument, a new memorial was dedicated -- one of dark, low-lying walls inscribed with the names of those who gave their lives in the Vietnam conflict. Soon, there will be added a sculpture of three infantrymen representing different racial and ethnic backgrounds.

During the dedication ceremonies, the rolls of the missing and dead were read for 3 days, morning till night, in a candlelight ceremony at the National Cathedral. And those veterans of Vietnam who were never welcomed home with speeches and bands, but who were undefeated in battle and were heroes as surely as any who ever fought in a noble cause, staged their own parade on Constitution Avenue.

As America watched them, some in wheelchairs, all of them proud, there was a feeling that as a nation we were coming together, coming together again, and that we had at long last brought the boys home.

``A lot of healing . . . went on,'' said Jan Scruggs, the wounded combat veteran who helped organize support for the memorial. And then there was this newspaper account that appeared after the ceremonies. I'd like to read it to you.

``Yesterday, crowds returned to the memorial. Among them was Herbie Petit, a machinist and former marine from New Orleans. `Last night,' he said, standing near the wall, `I went out to dinner with some ex-marines. There was also a group of college students in the restaurant. We started talking to each other, and before we left, they stood up and cheered. `The whole week,' Petit said, his eyes red, `it was worth it just for that.'''

It has been worth it. We Americans have learned again to listen to each other, to trust each other. We've learned that government owes the people an explanation and needs their support for its actions at home and abroad. And we've learned -- and I pray this time for good -- that we must never again send our young men to fight and die in conflicts that our leaders are not prepared to win. [Applause]

Thank you very much.

Yet, the most valuable lesson of all, the preciousness of human freedom, has been relearned not just by Americans but all the people of the world. It is ``the stark lesson'' that Truongs Nhu Tang, one of the founders of the National Liberation Front, a former Viet Cong minister and vice-minister of the postwar Vietnamese Communist government, spoke of recently when he explained why he fled Vietnam for freedom. ``No previous regime in my country,'' he wrote about the concentration camps and boat people of Vietnam, ``brought such numbers of people to such desperation. Not the military dictators, not the colonialists, not even the ancient Chinese warlords. It is a lesson that my compatriots and I learned through witnessing and through suffering in our own lives the fate of our countrymen. It is a lesson that must eventually move the conscience of the world.'' This man who had fought on the other side learned the value of freedom only after helping to destroy it and seeing those who had had to give it up.

The task that has fallen to us as Americans is to move the conscience of the world, to keep alive the hope and dream of freedom. For if we fail or falter, there'll be no place for the world's oppressed to flee to. This is not a role we sought. We preach no manifest destiny. But like the Americans who brought a new nation into the world 200 years ago, history has asked much of us in our time. Much we've already given; much more we must be prepared to give.

This is not a task we shrink from; it's a task we welcome. For with the privilege of living in this kindly, pleasant, greening land called America, this land of generous spirit and great ideals, there is also a destiny and a duty, a duty to preserve and hold in sacred trust mankind's age-old aspirations of peace and freedom and a better life for generations to come.

God bless you all, and thank you for what you're doing.

Note: The President spoke at approximately 9 p.m. in the main ballroom at the Sheraton Washington Hotel following an introduction by Representative Mickey Edwards of Oklahoma, national chairman of the American Conservative Union.