This is a special day for us, and already you've given us many gifts. As we flew into Newark, we saw the lovely steeples of Elizabeth. It almost seemed that they were reaching up to say, ``Come over to see us.'' And you do make us feel that welcome.

Along with Congressmen Rinaldo and Courter; and our outstanding candidate for the Senate, Mary Mochary; our Secretary of Labor, Ray Donovan; and reverend clergy -- I have the -- our great Governor, Tom Kean -- and of meeting and being able to give my heartfelt thanks to your fine mayor, Tom Dunn, of being able to listen to one of the best bands in New Jersey, and maybe even in America, the Elizabeth High School Band -- and, of course, meeting all of you.

Your devotion to your city makes me understand why you say, ``Elizabeth is a proud lady.'' You know, so often when people talk of America's heartland, they speak of the Middle West or the Great Plains, and certainly those regions are deserving of that description. But there's another heartland in America -- a heartland of the streets; a kind of place that welcomes tremendous numbers of people -- Italians, Cubans, Puerto Ricans, Portuguese, blacks, Irish, Polish-Americans, and all the others here that the mayor mentioned; the kind of a place where more than 30 languages are spoken in an excellent school system, and they're proud of it. It's the kind of place that doesn't subtract from America's strength, but adds to it by bringing us new dreams, filling us with new strength, and enriching the values, traditions, and patriotism that we share. It's a place like Elizabeth, New Jersey, and you be proud of what you give America.

You know, somewhere in the history of every American family is a person or persons who became American not by birth, but by choice. I've always believed that ours is a chosen land, that it was placed here by some divine providence, placed here between the two oceans to be sought out and found by people from every corner of the Earth, people who had a special love for freedom and the courage to uproot themselves and leave their homelands and friends and to come here to create something new in all the history of mankind, a country where man is not beholden to government; government is beholden to man.

These people came with their faith and their families to work and to build. They didn't come seeking streets paved with gold. They didn't come asking for welfare or some special treatment. They came for freedom and opportunity. And they seized both with such a vengeance that no matter how often they fell down, they kept picking themselves up until they could leave a better life for their loved ones. And their examples of courage, multiplied millions of times over, created the greatest success story the world has ever known.

But 4 years ago we knew that dream was being stolen from us. Interest rates were rising to record thresholds of pain. Inflation had come like a thief in the night -- as you've already been told here today -- to rob us of our earnings, our savings, and to take the bread off our tables. And all this was done, mind you, under the guise of compassion and fairness. Well, it's true that those policies were fair in one sense; they didn't discriminate. They made everybody miserable.

But did they have the courage to rein in a government that was growing by 17 percent a year in cost? No. In fact, they said it was your fault. Do you remember when they told you that you suffered from a malaise? They said the problem wasn't government spending too much; the problem was that you weren't being taxed enough. Well, that was nonsense then, and it's nonsense today.

Do you mind if I just interject something here and explain something to you? The other night on the press conference, I replied to a question that had to do with someone who has said there will be a tax if he is elected -- and then said that there would be a tax even if he wasn't because, while I won't admit it, I will have to do it. Well, I responded, and I said flatly, ``I will not raise taxes.'' And then I went on to explain that there could be one situation that would defeat anyone in that regard. And since then, that has been distorted, and several voices have been raised, the latest one in Washington, to say that I was really waffling and holding the door open, saying, ``Well, I won't raise taxes -- well, I will.'' No.

What I said was -- and I think you'd all have to agree with the common sense of this -- if, when we have gotten government spending in Washington down to the point that it is the lowest that it can be reduced to and still allow the government to provide the services that government is responsible for to the people of this country, and then it should turn out that the percentage to maintain that minimum level is more of the gross national product than the percentage presently being taken in taxes, obviously, you would have to readjust. But that is only if you have gotten government down to where it cannot be reduced one more penny and perform those services.

It was not saying that, ``Well, if I get some deductions but can't get all I want -- '' No, if you raise taxes before you've gotten government down to that point, you will never get rid of government deficits and government spending.

Four years ago, a tyrant held our diplomats hostage. Our defenses had deteriorated to where many of our ships couldn't leave port. Many of our aircraft were so old that they'd been flown by the fathers of the current flyers, pilots of those machines.

Four years ago, the Soviets invaded the free nation of Afghanistan, the latest in the series of countries to fall to communism in that decade. The former Vice President said, ``I cannot understand; it just baffles me, why the Soviets these last few years have behaved as they have.'' He didn't understand. But the American people did.

And four years ago, the American people said, ``We want a new beginning.'' You reminded Washington -- there must be an echo in here.\1\ (FOOTNOTE) [Laughter]

(FOOTNOTE) \1\The President was referring to a heckler in the audience.

You reminded Washington that we're a government of, by, and for the people; not the other way around. And you said it's time to put earnings back in the hands of the people, time to put trust back in the hands of the people, and time to put America back in the hands of the people.

Well, now, 4 years later, America's quite a different place. And our friends out in San Francisco kept saying that it's all my fault. [Laughter] They kept demanding that we take responsibility. Well, all right, I'm ready, if you are, because we couldn't have done any of the things we did without your help.

Inflation has fallen from 12.6 percent in June of 1980 to under 4 percent; as a matter of fact, 3.3 percent for the last 3 months. And in that same period of time the Producers' Price Index, which indicates what the inflation rate's going to be down the road, has been zero for that period of time. But if that's what they want, okay, we'll take the responsibility for that.

Now America's leading the world with the most powerful economic expansion in peacetime history. Nearly 7 million jobs have been created in the last 18 or 19 months. Investment is rising at the fastest rate in 30 years. And after-tax personal income is up by the sharpest amount since 1973. It's all our fault, and we'll take the blame.

The misery index and the inflation rate to the -- you know, you add the inflation rate to the unemployment rate. You'll remember that the previous administration, they did that in 1976. They said that Jerry Ford's misery rate, unemployment plus inflation, was 12\1/2\, and that was disgraceful and that no man had a right to seek reelection with a misery rate of that size. Well, it was 20 percent the day I walked into the Oval Office, and now it's only 10.3 percent, and that's our fault, again.

And, yes -- --

Audience. We want Reagan! We want Reagan! We want Reagan!

The President. Thank you very much. You've talked me into it. You can have me. But let me go on, again, if I can.

We take the blame for cutting taxes so that you can keep more of what you earn to spend on your children and in your neighborhoods, which is your right.

And please be patient, I have to take the responsibility for something else. Today, the young men and women who protect our freedom are better educated, have a higher percentage of high school graduates than any military force in our nation's history. They are better paid. They are better equipped. They are better trained than 4 years ago. They're keeping the peace and our freedoms more secure.

Look around the world, in the past 4 years, not a single country has fallen to communism, and that in itself makes it a safer world. But none have fallen to communism, but one nation has been set free from the clutches of Fidel Castro. I'm talking about Grenada. And we'll take the responsibility for that one, too.

Audience. Reagan! Reagan! Reagan!

The President. When American soldiers -- --

Audience. Reagan! Reagan! Reagan!

The President. I have a terrible feeling that I'm enjoying what you're saying more than you're enjoying what I'm saying. [Laughter]

Well, listen, when American soldiers and sailors and marines arrived in Grenada, thousands of people lined the streets to cheer and shower them with gratitude. Yet our critics in San Francisco were upset, angry, and ashamed. Well, I don't believe that our medical students who were getting an education there in the medical school in Grenada were upset to see those Army Rangers coming. And I don't believe their parents were upset to see them home safe again.

We had a little gathering on the South Lawn of the White House after some of our forces came back -- about 400 or 500 of those students and then 40, representing the branches of the service, 40 in uniform, who had returned from Grenada, and it was so wonderful. They were all about the same age, those in uniform and the students. And to have the students -- they couldn't keep their hands off those young people in uniform. And they came back to us and they said, ``We, once upon a time, we didn't feel like this, but now, they saved our lives.''

And they told me, one group, of how they were lying under the beds in their dormitory with the bullets coming through the building and the gunfight. And then they heard an American voice, identified himself as a sergeant in the Rangers. And he told them, ``Come on out.'' And they took them to the helicopters to get them out of there. And they -- these students told me the Rangers put themselves between them and where the firing was coming from, in order to get them to the helicopters. I don't believe the people of New Jersey are the least bit ashamed of America standing up for human freedom.

You know, sometimes our friends seem so upset by what we do that it makes them talk funny. One speaker in San Francisco called the economic expansion an illusion. That's right. They think prosperity is an illusion. And they think peace through strength is destabilizing. Well, let me tell you what I think: Only if you read the record of their administration backward does it have a happy ending. [Laughter]

Well, this is 1984, and we might remember George Orwell's warning about '84, that ``. . . if thought corrupts language, language can also corrupt thought.'' Others may try to fool the public; our campaign will be one of clear thinking and honest talk with the American people. We will never accuse you of greed when you work to earn extra income to spend it the way you want to. And we will never thank them for compassion when they try to take your money to spend it the way they want to spend it.

And while it's fine to talk in abstract concerns -- or about their concern for our great national family, how about a little help for the real families who support our churches, our neighborhoods, and our schools? The parents who sit around the table at night deciding how to pay their bills and put the kids through school -- how about a little compassion for them, too?

So, how about a vote on tuition tax credits -- a vote to help low- and middle-income parents paying to send their children to parochial or independent schools while they also pay their full share of taxes to support the public schools?

And fairness for families means a spouse working in the home should enjoy the same individual retirement right,IRA's, as a spouse working outside the home. Each spouse should be able to save and deduct from taxation up to $2,000 a year, and we'd like that bill passed now.

You know, when I see those who helped create a national crisis systematically resisting the good we're now trying to do, I'm reminded of a comment by a great leader. He said, ``Those . . . who are frightened by boldness and cowed by the necessity for making decisions, complain that all we have done is unnecessary and subject to great risks. Now that these people are coming out of their storm cellars, they forget there ever was a storm.'' Well, those words were spoken about the Great Depression of the thirties; they were spoken by President Franklin Delano Roosevelt in the fall of 1934.

I know there are many among you who are old enough to remember it firsthand, as I do, what we struggled through together in that Great Depression. And that's why I want to ask you something important -- a question you may have heard before. Tell me, are you better off than you were 4 years ago?

Audience. Yes!

The President. I think you've already told me the answer to the next one. Is America better off?

Audience. Yes!

The President. Then I won't even ask the third one, because I know the answer already. No, you don't want to go back to the days of America being second best.

Audience. No!

The President. Well, with you by our side, I know that America's best days are ahead. Our best days are ahead if we remember growth and opportunity are what the American dream is all about.

Now, the other side has a plan for your future. They call it new realism. But it would seem to begin right where their old ideas left off -- higher and higher taxes on your families. Now, is that what your idea of the American dream is all about?

Audience. No!

The President. Not mine. Is that what your idea of fairness is all about?

Audience. No!

The President. Well, we have a different vision. We must not stop until we simplify the entire tax system; until we make your taxes more fair, easier to understand; and most important, until we have a reform that brings your personal tax rates further down. And those incentives -- with those incentives must come a long overdue reform still bottled up by the House leadership -- a constitutional amendment mandating a balanced Federal budget, government spending no more than it takes in.

To those who think that tax rates are the answer to all the problems -- here in your city, Mayor Dunn has reduced tax rates in 3 of the last 6 years. Growth has increased; jobs have increased; revenues have increased. And you've always had a balanced budget, because by law you can spend no more than 5 percent above the previous year's budget. It makes sense.

Andrew Jackson described this. He said, ``One man with courage makes a majority.'' I happen to believe the Democratic mayor of Elizabeth, New Jersey, has more courage than all the members of the House Democratic leadership in Washington, DC.

Now, we've proposed -- as has been hinted up here once today -- we've proposed an innovative idea called enterprise zones to stimulate investment in areas of high unemployment. Areas in this region would be helped by enterprise zones. So, wouldn't you think that they would embrace this initiative to create jobs, independence, and hope for people trapped in welfare bondage -- --

Audience. Reagan! Reagan! Reagan!

The President. No. Thank you very much. I'll have an answer in a minute for that, but I just wanted to tell you that despite more than 2 years of waiting, despite support from a majority of Democrates and Republicans, led by your own fighting Matt Rinaldo, the House leadership has blocked enterprise zones from coming to a vote, even though their own membership would vote for it if they would allow them to.

Forgive me, but I must ask them: In the name of growth, stop talking billions for dependency, and start creating enterprise zones for opportunity.

And now I think they deserve an answer over there. We are trying to rebuild the United States Navy back up to 600 ships, and the only thing that is slowing us down is the Democrat leadership of the Congress that keeps cutting the budget for building those ships.

In the name of America, stop spreading bondage, and let's start spreading freedom. We can preserve the dream of America, but we must not waste the genius of one mind, the strength of one body, or the spirit of one soul. We need all our people, men and women, young and old, individuals of every race, to be happy, healthy, and whole. And that's what our job is all about.

And if you stick by us, as you have before, then we'll keep proving all those so-called experts wrong, and we'll show them that 1985 will be even better than 1984.

So, thank you. Thank God for Elizabeth. God bless Elizabeth, and God bless all of you. Thank you.

Note: The President spoke at 4:22 p.m. outside the Elizabeth City Hall.

Following his remarks, the President traveled to Hoboken, NJ.