For almost 45 years, the United Jewish Appeal has served as the main fundraising organization of American Jews, and you certainly have proven that to me this morning with the figures that we've just heard. Through the agencies it funds, the UJA provides vital social and economic assistance, including resettlement, rehabilitation, and development programs for Jews in Israel and more than 30 other countries. And through its Young Leadership Cabinet, the UJA trains the hundreds of young men and women for service positions of responsibility around the world. In recognition of your historic task and your great humanitarian achievements, I certainly commend you.

In your lives, you must overcome great challenges. I know you draw strength and inspiration from the well of a rich spiritual heritage, from the fundamental values of faith and family, work, neighborhood, and peace.

Two centuries ago, those values led Americans to build democratic institutions and begin their Constitution with those courageous and historic words, ``We, the people . . . .'' And today our democratic institutions and ideals unite all Americans, regardless of color or creed. Yet as we enjoy the freedom that America offers, we must remember that millions on Earth are denied a voice in government and must struggle for their rights. They live under brutal dictatorships or Communist regimes that systematically suppress human rights.

Under communism, Jews, in particular, suffer cruel persecution. Here in our own hemisphere, the Communist Sandinista regime in Nicaragua has used threats and harassment to force virtually every Nicaraguan Jew to flee his country.

In the Soviet Union, Jews are virtually forbidden to teach Hebrew to their children, are limited to a small number of synagogues, and cannot publish books of Hebrew liturgy. Emigration of Jews from the Soviet Union has been brought to a near standstill. Prominent Jews like Iosif Begun have been arraigned in mock trials and given harsh sentences. Hebrew scholars like Lev Furman have seen their teaching materials robbed and their homes ransacked. And Jewish dissidents like Anatoly Shcharanskiy have been put in mental wards or thrown in jail. We must support Soviet Jews in their struggle for basic rights, and I urge all Americans to observe the International Day of Concern for Soviet Jews this Thursday, day after tomorrow, March 15th.

In this world where so many are hostile to democracy, how can Americans best preserve and promote the democratic ideals that we hold dear, ideals which are the keys to the golden door of human progress?

Here at home, I believe we can move forward together toward a genuine opportunity society by meeting two important challenges.

First, we must teach tolerance and denounce racism, anti-Semitism, and all ethnic or religious bigotry, wherever they exist, as unacceptable evils. And down through our history, American Jews have been on the frontlines in our nation's great struggles for equal rights. A century ago, the 14th amendment proclaimed the full protection of the law for all. In the fifties and sixties, the struggle for civil rights stirred our nation's soul. Americans must continue that great tradition, because even today vestiges of racism and anti-Semitism remain. Synagogues are vandalized, Jews and others are harassed and mocked, and Nazis and the Ku Klux Klan have attempted to march through black and Jewish neighborhoods. Well, let us reject prejudice, turn our backs on bigotry, and stand shoulder to shoulder for equal rights.

Our second challenge is to promote economic growth. Throughout history, civil and economic rights have gone hand in hand. For centuries, rulers kept Jews down by limiting their occupational choices. In our own country, many blacks suffered from Jim Crow prejudice, denied all but the poorest of jobs. But in a strong and growing economy, all groups have the opportunity to advance through hard work, enterprise, and heart.

Just 3 years ago, our nation was an economic disaster area. Double-digit inflation, record interest rates, huge tax increases, and too much regulation were destroying growth, drying up opportunities, and freezing those at the bottom of our society into a bleak existence of dependency. And that's why economic recovery without inflation was our top priority. We cut taxes, reduced the growth of the Federal budget, eliminated useless regulations, and passed an historic reform called tax indexing. Indexing means government can never again profit from inflation at your expense.

Today America's economic engine is pulling this nation forward again. Inflation is down from more than 12 percent in 1980 to about 4 percent. The prime interest rate has fallen by almost half. New businesses are the biggest innovators and job producers, and from January to November 1983, more than 548,000 companies incorporated. That's nearly half again the yearly rate during the 1970's. It means more jobs and opportunities, so it's no accident that unemployment is down to 7.7 percent, the sharpest drop in more than 30 years. More Americans are holding jobs today than any other time in this nation's history.

Despite all we've accomplished, we must go forward to new goals to keep the nightmare of inflation from ever coming back. We must enact constitutional budget reforms like the line-item veto and the balanced budget amendment. And to make taxes more simple and fair and to provide greater incentives to our people, we must press for tax simplification -- a sweeping and comprehensive reform of the entire tax code.

Could I interject something here? When we talk about simplification, it sounds awfully simple. But the other day I got a figure from the Treasury Department that astounded me. If you were a young lawyer deciding, maybe, to get into the area of tax counseling and advice and so forth, do you know how many books of regulations you would have on your shelves just to help you with the income tax? Well, you've heard of the Harvard Classics -- 5-foot shelf of books. You'd have to have a shelf of 31 feet of books just for that one subject.

Well, as we move ahead, we're determined to leave no one behind. Under this administration more funds go to needy Americans, even after adjusting for inflation, than ever before. And total spending on social programs has increased by $71 billion during these last 3 years.

And while I'm on this subject, I wonder if you who are intensely committed to social justice and Jewish charity would join us in questioning the relationship between greater Federal spending and a healthy, prosperous, and growing country. During the sixties and seventies, the Great Society and other Federal programs led to massive increases in social spending. Why, then, at the same time, did the number of Americans below the poverty line stop shrinking? Why did we see a drop in the number of males in the work force and a huge increase in births out of wedlock?

I believe the answer lies in the firm difference between the New Deal and the Great Society. The New Deal gave cash to the poor, but the Great Society failed to target assistance to the truly needy and made government the instrument of vast transfer payments, erecting huge bureaucracies to manage hundreds of social programs. The Great Society failed in two crucial aspects: It fostered dependence on government subsidies, and it made the transfer of money from Washington bureaucrats to those in need seem like a mission impossible.

I was a New Deal Democrat. And I still believe, today, that there is only one compassionate, sensible, and effective policy for Federal assistance: We must focus domestic spending on the poor and bypass the bureaucracies by giving assistance directly to those who need it. We must end dependency, eliminate quotas, and foster a vital, innovative economy that rewards all Americans according to their talent and hard work. If we do, we can enhance our democratic ideals and can make America a genuine opportunity society.

To promote our democratic ideals abroad, we must also meet great challenges, and I see three that are paramount.

First, we must keep America strong. During the seventies the United States made a conscious choice to restrict its military development, fervently hoping the Soviets would respond in kind. Well, during those 10 years our spending on defense dropped over 20 percent in real terms. We canceled major weapons programs, reduced our nuclear stockpile to its lowest level in 20 years, and slackened in the training of our Armed Forces. Between 1968 and 1978, we cut our Navy, the fleet, by more than half.

But far from responding to our good intentions with restraint, the Soviets launched the most massive military buildup in world history. From 1974 to 1980, they outproduced us in practically every category of weapons: 3 times more tanks, twice as many tactical combat aircraft, 5 times more ICBM's, and 15 times more ballistic missile submarines. By 1980 total Soviet military investment was more than 1\1/2\ times ours.

President Carter's Secretary of Defense, Harold Brown, put it very well. He acknowledged a bitter lesson about Soviet practice in saying, ``When we build, they build. When we don't build, they build.''

Since taking office, our administration has made significant headway in rebuilding our defenses and making America more secure. Perhaps you remember the 29th Psalm in which King David said, ``The Lord will give strength to His people; the Lord will bless His people with peace.'' Well, today America once again recognizes that peace and strength are inseparable.

But we've only begun to repair past damage. Make no mistake: If we heed those who would cripple America's rebuilding program, we will undermine our own security and the security of our closest friends, like Israel, and I am not prepared to let that happen. After two decades of military expansion by the Soviet Union and a decade of neglect by the United States, we're struggling not to regain the superiority we once enjoyed, but simply to restore the military equivalence we need to keep the peace.

A second great challenge is to defend and promote human rights throughout the world. Aleksandr Herzen, the great Russian writer, warned, ``To shrink from saying a word in defense of the oppressed is as bad as any crime. . . .'' Well, we who are blessed by the fruits of liberty have a personal responsibility and a moral obligation to speak out in defense of our brothers and sisters. We must not and we will not remain silent.

Our administration has repeatedly and vigorously protested the persecution of Jews and others in the Soviet Union and other Communist nations. We're also using our influence with countries that receive American assistance to give human rights firm support. In El Salvador, we're insisting that the leaders take steps to end human rights abuse. And although El Salvador is far from perfect, we've seen marked progress.

In the United Nations, Iran's representative once called Israel, ``a cancerous growth,'' and Libya's representative has referred to the people of Israel as ``the most vile people upon Earth.'' Well, this so-called anti-Zionism is just another mask for vicious anti-Semitism, and that's something the United States will not tolerate.

As I wrote last month to Stanley Blend, the president of the Jewish Federation of San Antonio, ``. . . the lesson of history is overwhelmingly clear. Silence is never an acceptable response to anti-Semitism.''

U.N. Ambassador Jeane Kirkpatrick is our leader on this. And let me assure you of one thing about Jeane: She is a very tenacious woman. She has defended Israel and stood up for human rights with persistence and courage. But just so no one gets any ideas, I will be blunt: If Israel is ever forced to walk out of the U.N., the United States and Israel will walk out together.

Standing steadfast with our allies in support of greater economic growth and of peace with freedom is our third great challenge. Our administration is working hard to do just that. In Europe we and our NATO allies have shown the Soviets our willingness to negotiate and our unshakable resolve to defend Western Europe. In the Far East, we are strengthening our ties to the Asian democracies and developing our relations with China. In Central America we have supported democracy and fostered economic development. And in the Middle East we have strengthened our relations with a nation close to your heart and mine -- the State of Israel.

Now, let me take a moment to describe our relations with Israel and our efforts in the Middle East. Israel and the United States are bound together by the ties of friendship, shared ideals, and mutual interests. We're allies in the defense of freedom in the Middle East. The United States was the first nation to recognize the State of Israel, and ever since, our support for Israel has remained unflinching. Today, when even our NATO allies vote with us in the United States [United Nations] only some 6 out of 10 votes, the alliance between the United States and Israel is so strong that we vote together more than nine times out of ten.

Since I took office, the U.S.-Israeli relationship has grown closer than ever before in three crucial ways.

First, the U.S.-Israeli strategic relationship has been elevated and formalized. This is the first time in Israel's history that a formal strategic relationship has existed. The new American-Israeli Joint Political-Military Group is working to decide how the U.S. and Israel can counter the threat that growing Soviet involvement in the Middle East poses to our mutual interests. Our cooperation adds to deterrence and improves and protects the prospects for peace and security. The negotiations have been positive, and they're moving forward.

Second, we're negotiating to establish a free trade area between the United States and Israel, and this will launch a new era of closer economic relations between our countries. By substantially eliminating duties and nontariff barriers between our nations, we will enable American producers to sell and compete in Israel while providing Israeli manufacturers unimpeded access to the free world's largest market.

Now, third, the United States will soon be giving Israel military aid on a grant, not a loan, basis. We have restructured our 1985 foreign aid package, and Israel will now receive economic aid totaling $850 million and a military grant of some $1.4 billion. This will ensure that Israel maintains its qualitative military edge.

All in all, the friendship between Israel and the United States is closer and stronger today than ever before. And I intend to keep it that way.

In the Middle East, as a whole, the United States has three aims.

First, we must deter the Soviet threat. As the crossroad between three continents and the source of oil for much of the industrialized world, the Middle East is of enormous strategic importance. Were the Soviets to control the region -- and they have expanded their influence there in a number of ways, notably, by stationing 7,000 troops and advisers in Syria -- the entire world would be vulnerable to economic blackmail. Their brutal war against the Afghan people continues with increasing ferocity. We must not allow them to dominate the region.

Second, we must prevent a widening of the conflict in the Persian Gulf which could threaten the sealanes carrying much of the free world's oil. It could also damage the infrastructure that pumps the oil out of the ground, and we must not permit this to happen.

Third, we seek to go on promoting peace between Israel and her Arab neighbors. In response to the growth of Syrian power and the rise of the Iranian threat, we must help to protect moderate Arabs who seek peace from the radical pressures that have done such harm in Lebanon.

Syria is trying to lead a radical effort to dominate the region through terrorism and intimidation aimed, in particular, at America's friends. One such friend we continue to urge to negotiate with Israel is King Hussein of Jordan. Today, Jordan is crucial to the peace process, and for that very reason, Jordan, like Israel, is confronted by Syria and faces military threats and terrorist attacks.

Since the security of Jordan is crucial to the security of the entire region, it is in America's strategic interest, and I believe it is in Israel's strategic interest, for us to help meet Jordan's legitimate needs for defense against the growing power of Syria and Iran. Now such assistance to Jordan does not threaten Israel, but enhances the prospects for Mideast peace by reducing the dangers of the radical threat.

This is an historic moment in the Middle East. Syria must decide whether to allow Lebanon to retain control over its own destiny or condemn it to occupation. Syria forced the Lebanese Government to renounce the May 17th agreement with Israel precisely because it was a good agreement. Now those who have chosen this course will have to find other ways to secure the withdrawal of Israeli forces. Arab governments and the Palestinian Arabs must decide whether to reach peace with Israel through direct negotiations. And if Arab negotiators step forward, Israel must decide if she will take the risks necessary to attain the real security that comes only with genuine peace. I have no doubt that given that choice, the Israelis will once again have the courage to choose peace.

I'm convinced that the initiative that I presented on September 1st, 1982, remains the best option for all the parties. It is squarely based on the Camp David framework and U.N. Security Council Resolution 242. It is time for the Arab world to negotiate directly with Israel and to recognize Israel's right to exist.

Now, we hope that the Government of Israel will understand that continued settlement activity in the West Bank and Gaza will make the peace process more difficult. Peace can only come about through the give-and-take of direct negotiations. These negotiations will deal with many issues, including the status of Jerusalem, voting rights, land use, and security. If there's to be any hope for these negotiations, however, we must preserve our credibility as a fairminded broker seeking a comprehensive solution. Only the United States can advance this process. And we must not undermine our role.

And permit me to reaffirm a longstanding American commitment: So long as the PLO refuses to recognize Israel's right to exist and to accept Security Council Resolutions 242 and 338, the United States will neither recognize nor negotiate with the PLO.

Only 2 weeks ago, terrorists planted hand grenades outside a store on a crowded street in Jerusalem. When they exploded, 21 shoppers and passers-by were injured, some seriously. Yasser Arafat, on behalf of the PLO, praised the attack on innocent civilians. He had the gall to call it a ``military operation.'' Well, terrorism, whether by government or individuals, is repulsive, and peaceful coexistence can never come from indiscriminate violence.

If I could leave you with one thought today it would be this: Even though in the Middle East and elsewhere the world seems hostile to democratic ideals, it's the free men and women on this Earth who are making history.

Here in the United States we've only seen the beginning of what a free and a brave people can do. Today America is leading a revolution even more sweeping than the Industrial Revolution of a century ago. It's a revolution ranging from tiny microchips to voyages into the vast, dark spaces of space; from home computers that can put the great music, film, and literature at a family's fingertips to new medical breakthroughs that can add years to our lives, even helping the lame to walk and the blind to see.

In Israel free men and women are every day demonstrating the power of courage and faith. Back in 1948 when Israel was founded, pundits claimed the new country could never survive. Well, today no one questions that Israel is a land of stability and democracy in a region of tyranny and unrest.

So, this Sunday, as Jews the world over observe Purim, they'll celebrate not only the ancient deliverance of Jews from the wicked but a modern joy as well -- the miracle of the State of Israel.

Permit me to join you and all Jews -- and I'm now going to demonstrate my own courage -- [laughter] -- your fervent and triumphant affirmation: Am Yisrael Chai! [The people of Israel live!]

Thank you, and God bless you.

Note: The President spoke at 11:12 a.m. in the International Ballroom at the Washington Hilton Hotel.