As I'm sure you heard, the majority in the House of Representatives passed its budget resolution this week. Since the vote on that budget was announced by those who supported it, they've proclaimed it a great victory over me. You, the people, are treated as mere spectators in the contest. But you weren't. You were down on the field very much in that game. And if those proposals ever become law, you'll find you're on the losing team.

Let me remind you what lies at the heart of that liberal budget -- a $315 billion tax increase over the next 5 years, falling squarely on the backs of you who work and earn to support your families and pay the government's bills. It's not just a coincidence that that $315 billion they want to raise would require canceling the third year of your tax cut, due in July, and tax indexing. Three-quarters of that tax increase would have to be paid by low- and middle-income families and many of you who are already living from paycheck to paycheck.

Indexing is an historic reform that'll put an end to bracket creep. The unfair thing about our present income tax system is that it's based on the number of dollars you earn, not their value. As you earn a greater number of dollars, you're pushed into a higher tax bracket, and the government takes a higher percentage of your paycheck, even though you might only be receiving a cost-of-living raise to stay even with inflation.

Indexing puts an end to the injustice of bracket creep. Indexing is not a tax cut per se; it prevents an automatic tax increase and keeps you from getting poorer.

How can those who talk so much about fairness and compassion turn around and take away the third year of your tax cut and the indexing? How can they justify hitting the median-income family with a $3,550 tax increase over the next 5 years? How can they pretend to help you cope with your bills, put money aside for education, and save for your retirement when they're reaching deeper and deeper into your pockets?

They can't. And they won't, if we don't let them. It's not right for them to overtax you just so they can spend more. And they do want to spend more -- a lot more. Their budget would cancel virtually all the savings we've made in the last 2 years. It would turn back the clock to the high inflation, high interest rate nightmare of 1980 by giving a green light to at least 10 brand new government spending programs. At the same time, it would allow a program of crucial importance to our senior citizens -- Medicare -- to go bankrupt. It would wipe out our initiatives to reduce food stamp waste, despite documented evidence that food stamp rip-off artists plunder the system and cost taxpayers hundreds of millions of dollars a year.

In all, the liberal alternative budget would approve nearly $200 billion in additional inflationary spending. Make no mistake, this money cannot be retrieved and the deficit reduced, as they claim, by slashing defense spending authority by more than $200 billion. Once you begin reducing personnel in our armed services, closing down aircraft plants, decommissioning ships, fighter squadrons, and one weapons program after another, you not only gamble with America's security, you create a new army of unemployed. And that means the deficit would go up, not down.

It's this simple: If you liked the 21-percent prime interest rate, 18-percent mortgage rates, double-digit inflation, and sky-is-the-limit tax increases of 2 years ago, you'll love their budget, because that's what it would bring back. Those who fought to get this budget passed are the same people who began saying our economic program had failed almost the day it was passed. That was more than a year ago, and much of our tax reduction program is still not in place today. But more and more evidence is coming in that proves America is on the mend and recovery has definitely begun.

Last Monday the Commerce Department estimated that during these first 3 months of 1983, our economy will grow at an annual rate of 4 percent. And we believe the recovery will pick up strength as the year goes on. The double-digit inflation of 1980, which drove up costs and robbed you of your earnings, has been knocked all the way down to four-tenths of 1 percent in the last 6 months -- the lowest 6-month rate in 22 years. This February consumer prices actually declined for only the second time since 1965. The first time was in December.

Those towering interest rates which closed factory gates and industries like autos and steel, leveled the housing industry, and brought so many small businesses to their knees have now been knocked down themselves. The prime rate was 21\1/2\ percent in 1980; today it's down to 10\1/2\. I believe interest rates can, should, and will go lower.

As inflation and interest rates come down and our tax cuts come on stream, families have more to spend or save, as you wish. And that is why savings and productivity are growing again. Recently I received a letter from the president of a family-owned lumber company in Minneapolis, one which -- like so many other small firms -- has been hard-hit by the recession. But now this man's mood has turned optimistic. He told me that his sales for the months of December and January were the best for 3 months in his company's 50-year history. And he wrote, ``Mr. President, don't get stampeded into some ill-conceived pump-priming scheme that will lead to another round of inflation boom and bust. You were elected to break that cycle. What you've done is working.'' Well, my answer to that fine gentleman is, ``I won't be stampeded. I intend to do everything I can to protect this recovery all of us have worked so hard to achieve.''

But this isn't just my struggle; it's yours, too. You're not spectators, and I need your help. Together we still have time to beat back the unfair tax increases, hold the line on spending, and keep America strong. If you can't make the big spenders see the light, you can make them feel the heat. Please tell your Representatives not to turn back the clock and squander America's future. Tell them to work with us to keep America on the upswing. If you do, we can usher in a bright new age of prosperity that outshines any other in our history.

Until next week, thanks for listening, and God bless you.

Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.