You know, I can't help but -- with all of you here and with all of the reputation that this area has for trouble in transportation when we have snow and the weather is such, you've proven you're entirely different than the young man in the story. He was talking to his sweetheart, and he told her that he loved her so much that he could climb the highest mountain, he would swim the deepest ocean to be by her side. He'd be over Thursday night, if it didn't rain. [Laughter]

But I know you join me in thanking this wonderful Marine Band and the Drum and Bugle Corps. They sound better every year. And you'll never hear me criticizing any organization that's as old as the Marine Corps. [Laughter] That patriotic music, I think, is a reminder of how much God has blessed this great and beautiful land of ours.

But it's up to us to keep her prosperous and free. And all of you have devoted yourselves to that task. Whether in the White House, the departments, or the agencies, everyone in this hall and on this stage has worked with skill and diligence and heart. I can tell you that you have my deepest personal gratitude. But more important, you have the gratitude, I think, of the American people.

And something else: When historians write the story of these years, they'll find that hundreds of skilled and talented women played vital roles -- women like Transportation Secretary Elizabeth Dole; women like Health and Human Services Secretary Margaret Heckler. And, by the way, I just noticed that HHS has announced that there have been new gains in life expectancy for Americans. I'm happy about that. [Laughter] I've already lived about 20-odd years longer than my life expectancy when I was born. That's a source of annoyance to a number of people. [Laughter]

And then we have women like the finest, as George said, [The Vice President had addressed the forum prior to the President's remarks.] U.N. Ambassador ever to serve our nation, Ambassador Jeane Kirkpatrick. And, Jeane, I must say, after the downing of the Korean airliner and on so many other occasions, the way you've spoken out for human freedom, democracy, and civilized behavior has thrilled and inspired the world. And on behalf of all Americans, I want to thank you.

As I stand here, I can't help thinking about, well, back to this date 3 years ago. It was a winter day like this one -- only colder, because on that day we held the meeting outdoors. But as I look back on that January 20th 3 years ago, I can't help thinking we have made a new beginning.

In 1980 America faced a crisis. The month when George and I took our oaths of office, inflation stood in double digits; the prime interest rate hit the highest point since the Civil War; and economic growth was disappearing. It didn't matter where you came from, whether you were a man or woman, or black or white. If you had scrimped, struggled, and saved to send your children to college, 21\1/2\ -- or 12\1/2\-percent, I should say, inflation rate was slamming shut the doors of opportunity. And if you had dreamed of owning your own home, inflation and interest rates were closing those doors of opportunity. And for working men and women who needed loans to start their own business, 21\1/2\-percent prime interst rates were closing the doors on their dreams, too.

At the same time, our defenses had grown weak. Real spending on defense had dropped, and research and development had been cut back. The Navy had fallen from nearly a thousand battle-ready ships to under 500 -- nearer 400. And as real military pay declined and respect for our Armed Forces eroded, morale among our men and women in uniform hit a low.

Overseas, American influence -- always the strongest force for peace in the world -- was shrinking. We Americans watched, seemingly helpless, as the Soviets amassed vast military might, then intimidated our allies, fueled regional conflicts, and propped up dictators around the world.

I'm convinced that in 1980 America faced one of those historic choices that come to a nation only a few times a century. We could continue our decline, perhaps comforting ourselves by calling it inevitable, or we could realize that there is no such thing as inevitable, and choose instead to make a new beginning. The American people chose the way of courage, and on this January day 3 years ago, this administration and all of you began to make a new beginning.

We cut the growth of spending; we pruned needless regulations; we reduced personal income tax rates; and we passed an historic reform called tax indexing. Government can no longer use inflation to profit at the people's expense. And today, less than 3 years since we set our policies in place, our nation has one big program to help every American man, woman, and child. And it's called economic recovery.

Inflation has plummeted to about 3 percent -- 3.2 if we want to be exact -- during the past year. That's the lowest rate in more than a decade-and-a-half. The prime rate is almost half what it was when we took office. Factory orders, retail sales, and housing starts are up; the stock market has come back to life; and the American worker's real wages are rising. Unemployment is dropping at the fastest rate in more than 30 years. Last year alone 4 million Americans found jobs, and more people are working than ever before in our history.

And at the same time that we've moved ahead on the economy, we've moved against waste and fraud in the Federal Government, saving billions of dollars. We've taken aim at crime, increasing drug-related arrests, more than doubling organized crime convictions, and setting up drug task forces across the country. And we've moved education to the very top of the national agenda. When we took office, only a handful of States had task forces on education. Today that number is 50.

And just as our administration is curing our domestic ills, we're restoring respect for our Armed Forces and giving a new sense of purpose to our foreign policy.

In the military, morale has soared. The percentage of new recruits with high school diplomas has risen throughout our Armed Forces, and since 1980 the reenlistment rate has gone up almost a quarter. We all remember when so many pundits claimed that we could only attract recruits when the economy was weak. But today we're filling our ranks with better recruits than ever before. They know that America is giving our men and women in uniform better pay, better equipment, and the respect they've always deserved.

I just have to tell you something -- I wasn't going to do this, but you're so nice. [Laughter] I wasn't going to do it because I've told so many of the people here on the stage this, and they've had to listen to it several times. But if you don't know, recently, one of our young lieutenants -- marine lieutenant flying a Cobra was off Grenada and then went on to Beirut. And from there he wrote back to the Armed Forces Journal something that he had been doing. He said that he noticed that every news story about the Grenada rescue mission contained a line -- every story -- that Grenada produces more nutmeg than any other place in the world. And he decided that was a code, and he was going to break the code. [Laughter] And he did.

He wrote back and said, ``Number one, Grenada produces more nutmeg than any place in the world. Number two, the Soviets and the Cubans are trying to take Grenada. Number three, you can't make good eggnog without nutmeg.'' [Laughter] ``And number four, you can't have Christmas without eggnog.'' [Laughter] ``Number five, the Soviets and the Cubans are trying to steal Christmas.'' [Laughter] ``And number six, we stopped them.'' [Laughter]

But in foreign policy, we've let the world know once again that America stands for the political, religious, and economic freedom of mankind. In Grenada, we did set a nation free. And with the help of the National Bipartisan Commission on Central America, we've worked to develop a new consensus to support democracy in that region. The peace process in Lebanon has been slow and painful. But there has been genuine progress toward the goals of internal stability and the withdrawal of all foreign forces.

In Europe, the NATO alliance has held firm, despite months of Soviet bluster. Sooner or later the Soviets are going to realize that equitable and verifiable arms reductions are in their interest, too. And, as I made clear in my address earlier this week, when they do, we'll be at the table, waiting for them, ready to go on negotiating real arms reductions. And we'll be determined that they will abide by the agreements that they have made. By strengthening our defenses and showing the world our willingness to negotiate, we have laid the foundation for a lasting world peace.

We still have a lot to do: wringing out more waste and fraud in government, putting more Americans back to work, attacking the Federal deficit, getting inflation and interest rates down still further -- these and other great labors lie before us.

And I have to say to you that -- and I think it's time we remind ourselves, because you know, it's easy to when you're in Rome do as the Romans do, and now we're in Washington. [Laughter] There's been a tendency in the past every time someone raised a voice about reducing government cost, reducing extravagance and so forth or spending, that then there were voices raised with special interests in mind who would say, ``All right. You want to cut government spending. Which program do you want to eliminate?'' And that usually wins the argument until we think through to something else.

Most government programs are well intentioned, and they serve a purpose. And it isn't necessary to eliminate some of government's legitimate functions in order to bring down government spending. What we came here to do, we must remind ourselves and remind those others in and out of government, is to run all those programs efficiently and more economically than they have ever been run before. And it can be done.

Now, one thing also that I want to make plain: For this administration, it isn't going to matter that this is a political year. We'll do what is best for the people and let politics take care of themselves. And won't some of the people in this town be surprised when they find out that doing what's good for the people also turns out to be good politics.

You may remember that verse in the Bible that says, ``Your old men will dream dreams; your young men will see visions.'' Well, I deeply believe that this is just such a time of reawakening in America, a time when our country is healing the wounds of the past and beginning to look with courage and confidence to the future. Yes, we are making a new beginning.

The dream we share is a great dream -- perhaps the greatest dream in all history. It's a dream of broad and open land that offers opportunity to all. It's a dream of a magnificent country that represents a force for peace and good will among nations. All of us have been laboring in the name of that dream. Today let us rededicate ourselves to that great work.

Yes, we'll suffer setbacks, and yes, others will do all they can to place obstacles in our path. But if we have the courage to do all that we can to make our dream come true, then we will achieve great good in this world, and we'll do our duty to our fellow men, to our beloved country, and to our God.

Thank you, and God bless you all.

Note: The President spoke at 11:39 a.m. to the Presidential appointees assembled in Constitution Hall.