I congratulate Newsweek and its dedicated team on their 50th anniversary and thank them for making this remarkable teleconference possible. Our communication today, beaming into space and bouncing off satellites, relies on technology that few of us dreamed of just a few years ago, and yet it has become almost commonplace. It is one more powerful example of how we in the free world can draw closer together using high technology as a tool.

The innovation represented by this broadcast is typical of Newsweek's first 50 years. The history of the magazine is one of invention and breakthrough. We Americans are very proud of Newsweek and are pleased to point out that it began as a competitive twinkle in an entrepreneurial eye. Many weekly news magazines now bring insights and information to our people. But Newsweek, in particular, can be proud that its keen competitive spirit has made it one of the most respected in the field.

During the last 2 years, we in America have been reawakening the same entrepreneurial, competitive spirit among our people. Not long ago, our economy, like each of yours, was in the grip of a painful worldwide recession and one of the worst sieges of inflation in our history. In the many meetings I've had with other Presidents and Prime Ministers, whether in Washington or other capitals, it's become clear that we in the industrial democracies face many common economic challenges. It is also clear that many nations look to the democracies for leadership. And we will provide it.

Of course, here in the United States over the last 2 years has not been an easy one. The length and depth of the recession which brought on so much unemployment have made this a painful transition. But we're making progress now, and we're doing so because we remained firm in our commitment to sound, fundamental principles.

Let me recall for you the four principles upon which we based our economic program here in the United States and review just how far we've come.

First, we pledged to restrain the growth of government spending. We were concerned that the rapid and sometimes mindless expansion of government services was not only wasteful but was eroding the very foundations of our economy. Federal spending in the United States in 1980 was increasing at the rate of 17 percent a year. Today, that increase is down to 10\1/2\ percent a year. In next year's budget we propose holding the spending rate to the level of inflation; in other words, a spending freeze.

Second, we pledged to halt the upward spiral in taxation, restoring incentives for savings and investment. It was a matter of grave concern to us that the savings rate in the United States was the lowest of any of the major industrialized democracies. Some of our industries were losing their competitive edge, and our workers were becoming less productive. In the last 2 years, we cut the increases in taxation, too. Taking into account all the tax changes that have been made since I took office and all those we now propose, I'm pleased to report that between 1981 and 1988, an 8-year span, we will save the American people more than half a trillion dollars in new taxes.

Third, we pledged to reduce the heavy burden of government regulation that was weighing so heavily on the economy. Vice President Bush is heading up a governmentwide task force, and today the flow of new regulatory proposals is down by one-third from what it was when he took office.

Finally, we pledged to pursue a course of steady, consistent monetary growth. The central responsibility for monetary policy in the United States rests, of course, with the Federal Reserve Board. But my administration supports its policies for noninflationary growth in our money supply, policies which have helped us cut the rate of U.S. inflation from over 12 percent to less than 4 percent today.

As the winter snows melt in many parts of America, we're seeing that these policies are beginning to bring rich rewards. A new vibrancy is evident in our economy. Spring is almost here and nearly everywhere we turn -- housing sales, consumer spending -- we see the economy reviving. The recent decline in international oil prices provides more good news for the world economy. There are some short-term concerns, to be sure. But over the long run, more realistic, market-oriented oil prices will spur economic recovery and free vast amounts of real resources that previously had been devoted to energy.

Another concern in the United States that we must address is the threat to recovery posed by deficit spending. We believe we can meet basic human needs and basic defense needs without borrowing enormous sums from our private capital markets. We intend to do just that. But we have a struggle on our hands trying to win the cooperation of our Congress. Still, we're confident we're on the right track, and the signs of new vigor in the American economy give us great encouragement.

We in the West are on the threshold of a new economic era. Our common problems have a common solution -- economic growth. Our challenge is to create healthy, sustained growth without inflation. Inflationary policies in the past caused this last recession and, if resumed, would just as surely bring on another. We must rely again on the strength and vitality of our market-oriented economies and democratic governments. In this age of growing interdependence, through wholehearted cooperation, we can realize the hopes and dreams of our people.

Look at recent history. Whenever we've stood together, our accomplishments have been great. A basic premise of the foreign policy of America and of each nation in the free world must be to restore global prosperity and stability. All of us in the United States, Europe, and Japan recognize that our task is difficult.

The international financial system continues to be severely strained. Many developing countries now face a serious cash-flow problem created in part by a lack of confidence. To prevent this temporary problem from becoming a crisis, the United States has been and will continue working with other governments and international institutions, such as the International Monetary Fund, to provide appropriate assistance to debtor nations.

Since about 40 percent of American exports are shipped to developing countries, we realize much more is at stake than faraway ledgers and foreign economies. In a world where we depend on one another for our well-being, helping others is often the best way to help ourselves. We will join in a needed enlargement of the IMF's lending resources. This joint effort, aimed at averting a crisis while encouraging countries to pursue effective domestic policies, is essential to world recovery.

At the same time, the international trade system is also under stress. Unemployment caused by international inflation and past market-distorting policies has created worldwide pressures for protectionism. We must resist these pressures. Such economic nationalism is always self-defeating. And today, because of the world financial situation, it would be even more dangerous.

Next week in San Francisco, I will address more fully America's international economic and trade policy, but today let me underscore a central point. If protectionist measures deprive developing nations of their export markets, our problems will become deeper and harder to solve. The United States will continue to push for free trade and fair trade at home and abroad. The economic summit this spring at Williamsburg will provide the heads of state of the major industrial nations an opportunity to discuss informally the direction of the world economy. We hope to build on agreements made last year at Versailles and work toward even closer cooperation.

Let me also speak for a moment about another concern we in America share with all the people of the world -- the need for nuclear arms reductions. Americans have always been a peace-loving people. We yearn, as each of you do, for a world in which all nations can live in harmony, safe from conflict and the threat of nuclear disaster. This administration will leave no stone unturned in our effort to strengthen the peace and lessen the risk of war.

America neither wants nor seeks an arms race. But history teaches us that weakness only tempts aggression. So, we're rebuilding and modernizing our defenses. We in the free world share a joint responsibility, for this generation and for generations to come, to assure an effective deterrent and genuine arms control on an equal, verifiable basis.

Our agenda for peace is the most sweeping and comprehensive in postwar history. Our representatives at the Geneva negotiations on intermediate-range nuclear forces have proposed the global elimination of the entire class of land-based, intermediate-range nuclear missiles. Ours is a simple, honest, and moral proposal, not an ultimatum. We continue to negotiate in good faith, with the full support and agreement of our allies, guided by four sound principles.

First, the only basis on which a fair agreement can be reached is that of equality of levels between the United States and the Soviet Union. Second, British and French strategic systems are by definition not a part of these bilateral negotiations and, therefore, not to be considered in them. Third, Soviet proposals which have the effect of merely shifting the threat from Europe to Asia cannot be considered reasonable. And, fourth, as in all areas of arms control, it will be essential that an INF agreement be underwritten by effective measures for verification.

I sympathize with the desires of many who call for a freeze. They genuinely want to reduce the threat of war, and so do I. But a freeze now would remove any Soviet incentive to negotiate real arms reductions, which is what we must achieve. Americans and people everywhere long to be free of fear. There is no higher moral goal than to rid the world of a nuclear nightmare. But let no one take advantage of the deep and sincere feelings of our people. Let no nation think it can exploit our humanitarian concern for their own ends. To those who fear nuclear war, I say, again, I'm with you. We must reduce the risk of war. We must prevent it through deterrence. We must serve mankind through genuine and mutual arms reduction, and that is the path the nations of the West are committed to. With God's help, we can and will secure life, peace, and freedom for generations to come.

Let's not lose our perspective. The decade ahead is filled with promise for the Western World. We're entering economic recovery. New technologies and expanded trade can spur greater economic growth than we've yet known. Cooperation among nations can restore the world financial markets, revitalize the developing countries, and benefit us all. And Western solidarity on arms reduction can ensure political stability and lasting peace.

To paraphrase Winston Churchill, these are not dark days. These can be great days, the greatest days we've ever lived. And we must all thank God that we've been allowed, each of us according to our stations, to play a part in making these days memorable in the history of our civilization.

Thank you very much. God bless you. And may God guide us all.

Note: The President spoke at 8:34 a.m. from the Diplomatic Reception Room at the White House. He was introduced by Katharine Graham, chairman of the board of the Washington Post Co., which owns the magazine.