You know, this has been a wonderful time. Oh, I had a little difficulty with a knife and fork. [Laughter] Nancy wasn't here to help me cut my meat. [Laughter] I didn't have chopsticks, but we're delighted to be with you this evening.

Drew Lewis, Dick Lugar, Guy Vander Jagt, Ted Welch, Jack McDonald, you've done a superb job of putting this event together. To the Members of the House and Senate here tonight, you have my heartfelt thanks for all that you've done over these past 3 years to help put America back on course. And a special thanks to Howard Baker and Bob Michel for your outstanding leadership on the Hill. We saw an example of that in one of the Houses there today.

And to those of you who've come here tonight from across the country, you have my deepest gratitude for your generous support of the cause that unites us. With your help, we're making history.

Now, it's no secret that this is an election year. And we've already begun to hear talk about various political strategies -- the Northern strategy, the Western strategy, the Sunbelt strategy. My favorite is the Rose Garden strategy -- a sure winner if all you want is the horticulture vote. [Laughter]

But I want you all to know that I've already decided on my strategy. We'll stand on the record.

Think back just 3 years ago. Big taxing and spending had led to soaring interest rates and inflation. Our defenses had grown weak. All over the world, America's reputation was no longer one of strength and resolve, but of vacillation and self-doubt. Many in Washington seemed to forget that the bedrock values of faith, freedom, and family were what made us a great and good people. It seemed for a season as though any sense of justice, self-discipline, and duty was ebbing out of our national life and that our nation was in an inevitable decline.

But on this Earth, there's no such thing as inevitable. And the American people decided it was time to put a stop to that decline, time to give our country a rebirth of feedom and faith, time for a great national renewal. Well, we Republicans took office determined to make a new beginning. And today, America is back.

We've knocked inflation down to about a third of what it was. The prime rate has fallen 9 percentage points since its peak the month we took office. And all across the country, a surging economic expansion is taking place.

As a matter of fact, I've been getting letters from some prominent economists who are asking me to stop calling it an economic recovery. They said we've passed that point. It is now an economic expansion. And all across the country, a surging economic expansion is taking place.

Retail sales and factory orders are up. And tomorrow morning at about 8:30, the figures will be released, and you'll find they're up some more. The stock market has shown new strength. Since the expansion began 16 months ago, 5.4 million Americans have found jobs, and the unemployment rate has shown the steepest drop in 30 years. Today more Americans have jobs than at any other time in our history -- 106 million.

Despite the overwhelming success of our economic program, the opposition won't rest. They'll never stop calling our tax cuts unfair. Now, that just shows how the Democrats think. When inflation pushes Americans into higher tax brackets year after year, taking more and more money away from the people who earned it, giving it instead to big government, the Democrats think everything's hunky-dory. But when we pass through a long overdue, 25-percent, across-the-board, personal income tax rate cut, the Democrats scream foul play and say that we gave a windfall to the rich. Well, with regard to fairness, let's take a look at the facts.

In 1982, the last year for which we have complete statistics, people with incomes below $20,000 a year contributed 10 percent less to tax revenues than they did a year before, in large part because of our tax cuts. For those with incomes from $20,000 to $50,000, their tax payments as a share of the total tax return dropped by 1 percent. But those with incomes of $50,000 and up contributed not less, but 8 percent more to the total tax revenues. And if you go one step further and narrow that group down to those earning $500,000 and up, the share of taxes paid by them increased by a whopping 41 percent.

1982 wasn't a fluke. History has shown again and again that when high marginal tax rates are cut and the economy expands, revenues actually rise. In the 1920's, Treasury Secretary Andrew Mellon instituted a series of tax cuts that reduced the top rate from 73 percent to 25 percent. The cuts increased revenues from the rich by 186 percent between 1921 and '28. The share of total income taxes paid by those with net incomes over $50,000 rose from under a half to more than three-quarters.

Just 20 years ago, the Kennedy tax cuts reduced marginal rates on personal income by an average of 20 percent. Did the rich pay less? No, they paid more. And overall revenues rose. The plain fact is that while our tax cuts spurred the economy on to new vigor, they actually shifted a larger percentage of the tax burden from the middle class to the rich. Today our tax code is fairer than it was under the Carter-Mondale administration.

And now, if you'll just bear with me, for all the Capitol Hill Democrats who'll read this with disbelief in tomorrow's papers, let me say that again -- [laughter] -- today our tax code is fairer than it was under Carter and Mondale.

The opposition needs to spend less time carping and more time supporting things like tax cuts that really, truly help the American people.

Earlier this month, liberal Democrat Paul Tsongas put it well when he rose on the floor of the Senate to say this to his fellow Democrats: ``The weakness that we have is that we, as Democrats, have never convinced the country we know how to run the economy; that Democrats are viewed as people who care less about how well the economy is doing and spend all of their time worrying about how you distribute the golden eggs. The goose's health is irrelevant.'' [Laughter] You know -- and then this liberal Democrat added, ``You know, the funny thing about it is we deserve it because it's true.'' Isn't it funny how a fellow will get religion when he's decided to quit running for office? [Laughter]

But just as we've moved ahead on the economy, our administration has taken vigorous action against waste and fraud in the Federal Government. 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 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.

At the same time, we've begun rebuilding our defenses and given our foreign policy a new sense of direction. In Grenada, we set a nation free. In Europe, we and our NATO allies went through months of Soviet bluff and bluster and came out of it more firmly united than ever.

I'd like to pause right here and just tell you something about those -- when every time I see those young men and women in uniform that we have today and remember back to when I was Governor, and young people that age, if I got any place around them, I started a riot -- [laughter] -- but I see them, and I know they weren't conscripted. They're in those uniforms because they chose to be in them. And let me just tell you one little thing out of a letter that I got from an ex-marine, a Vietnam veteran, now a man with a grown son who is in the service.

He wrote a letter, and it was tragic. He told me of how, on Christmas Day, his wife passed away from cancer, and his son was home from his boot training with the Rangers and had to leave to go back to camp. And this former ex-marine, this bereaved husband, said that he actually toyed with the idea of suicide, that it seemed that life held nothing for him. And then he said one day the mail arrived and, he said, ``from young men that I have never known or never seen, the members of my son's platoon.'' He said, ``I received these letters telling this old marine to stand up and fight back, that there were people that cared'' about him. And he said, ``All of a sudden,'' he said, ``I thought I was back on the drill field. I could hear the marine hymn. I thought I could feel the breeze on the deck of the Midway where I was stationed.'' And he said, ``all from a bunch of young fellows that I've never known.'' And I thought there sure has been a change. They are the best damned kids in the world today again.

In the Pacific, a trip to Korea and Japan strengthened our ties with our Asian allies. Our recent visit to China improved the prospects for a continued development of this important relationship and produced agreements to cooperate more closely on trade, investment, technology, nuclear energy, and scientific and managerial exchanges. No one should underestimate the differences between China and the United States, and yet the Chinese have chosen not to threaten our interests, but to follow the path of cooperation.

In Central America, our administration has firmly supported the forces of democracy and economic progress. Three out of four American dollars -- or of dollars of American aid to that region have not been military, but economic. And as I said last night on TV, the United States must not allow the free governments of this vitally important region to be overrun by Soviet- and Cuban-backed guerrillas.

And while I'm on this subject, I want to ask those who seem ready to desert the forces of democracy in Central America, name one totalitarian country where the people can practice the freedom of speech that these critics themselves value so highly and that people in free Central American nations now enjoy. Name one country that was taken over by Marxist guerrillas that has held a truly democratic election like the one that just took place last Sunday in El Salvador. And name one Communist country where the people are as free to worship their God as the millions of faithful are in El Salvador, Honduras, and the other free Central American nations. They can't do it, because no such country exists. And that's why I, for one, refuse to sell out the liberty of our hemisphere.

Yes, from the economy to foreign policy we have made a new beginning. It's a record we can take to the people with pride. But we must give the people more than our record; we must give them our vision. We Republicans see America forever free from the evils of inflation. To make that dream a reality, we will enact structural reforms like the line-item veto and the balanced budget amendment.

We see an America with a fair and simple tax code that allows the American people to keep a greater share of their earnings. To bring that about, we'll design a major tax reform, not tinkering here and there, but a sweeping and comprehensive reform of the entire tax code. We won't accept that one plan that was sent in to me the other day. It was a tax form with only two lines on it. The top line said ``How much did you earn last year?'' And the second line said ``Send it.'' [Laughter]

We see a world of peace and ever-growing freedom, so we'll keep our defenses strong, support the forces of progress in Central America and elsewhere, and remain eager to negotiate equitable and verifiable nuclear arms reductions -- not just limitations, an actual reduction. The Democrats can run on gloom, if they want to; we'll run on reality, and the American reality is good.

Our basic industries are gaining new strength, and we're leading the world in a dazzling technological revolution. Our people are once again self-confident, and polls show that Americans are more optimistic about the future of this nation than at any time in the past 5 years. Together we're building an opportunity society here at home and making America a powerful force for peace among nations throughout the world.

The Republican message is simple: Our country's best days are still to come. And with faith, freedom, and courage, there's no limit to what the American people can accomplish. If we do everything in our power to carry that message to the voters on November 6th, they'll respond by keeping Republicans where we belong: on the job, in the House, in the Senate, and in the administration.

I know I should say ``thank you and good night'' right here, but I told my two charming dinner partners here at the table a little incident that happened a week or so ago, and I just think I'll share it with you just to finish.

I've talked here about diplomacy and trips to foreign governments, and everything, but diplomacy can be very treacherous. And a week or so ago, a couple of weeks ago -- well, no, before the China trip -- we had the President of France and Mrs. Mitterrand as our guests at a state dinner. And after all the guests had gone into the State Dining Room and were standing around the tables, similar to these, then the four of us, Nancy and Mrs. Mitterrand and the President and I followed. And Nancy and the President turned to go to their table, and the diplomatic crisis began right then.

Nancy tripped over a TV wire and lost a shoe. The President was holding her. Mrs. Mitterrand got to the first row of tables and stopped, absolutely motionless. And the butler ahead was motioning to come on, and I leaned up and said, ``We can go on.'' She said something very calmly in French, which I didn't understand -- [laughter] -- and then I again motioned, and she again said the same thing in French. I still didn't understand. And, fortunately, just then the interpreter arrived. She was telling me I was standing on her gown. [Laughter] One more step and diplomatic relations with France would have ended. [Laughter]

Well, this has been just wonderful and what you're doing -- and we've got to have that majority back, as you've been told, in the Senate. We couldn't have done anything we've done without having that one House, but what a wonder it would be if, for the first time in 26 years, Republicans once again had a majority in both Houses of the Congress. It hasn't happened since then.

Thank you for all you've done. God bless you. Thank you.

Note: The President spoke at 9:27 p.m. in the International Ballroom at the Washington Hilton Hotel. He was introduced by Senator Richard G. Lugar of Indiana, chairman of the National Republican Senatorial Committee, one of the sponsoring organizations for the dinner.

Earlier in the evening, the President attended a reception for the dinner committee members on the State Floor of the White House.