I have to tell you, with the South Lawn out here alternately being white and then green -- and I'm so desperate to see it green permanently -- that if it doesn't stop snowing that way, I'm going to have the House painted green -- [laughter] -- have a different welcome here.

Well, I want to start by thanking all of you for the support that you've given us over the last 4 years. Back in the beginning of our first term, it was in large measure the support from the business community, from other groups such as yours that enabled us to pass the dramatic tax cuts of '81 and the budget cuts, which lifted the pall of malaise from our economy and put us back in the path of strong, noninflationary growth.

We need your help again. We have before us an historic opportunity to build on the achievements of our first term and secure the foundation of economic prosperity. The American economy is growing faster and stronger than many ever dreamed possible. The resilience with which we snapped back from more than a decade of overtaxation, excessive spending, and stifling regulation demonstrates the tremendous vitality of the American community -- or the American economy, I should say. I guess both are all right.

We must continue to lift the burdens of wasteful government and tap the energy that still lies dormant in our economy. We must move ahead with a comprehensive tax reform that would liberate incentives by cutting rates still further, while making the tax system fairer and simpler for every American. And we must finally, once and for all, gain control of our runaway budget.

If we deal successfully with those major tasks -- budget and tax reform -- I'm convinced that economic growth in the second half of the eighties will exceed the record of strong, sustained expansion sparked by the Kennedy tax cuts two decades ago.

Earlier today, I presented our new fiscal '86 budget to the Congress, many of them sitting right here where you're sitting. And I had my brand new Treasury Secretary, Jim Baker, and David Stockman [Director of the Office of Management and Budget] behind me, as well as my Secret Service detail, so I wasn't too worried. [Laughter]

Needless to say, I didn't expect immediate and unanimous approval from Congress. But I believe that working together we have what it takes to get our budget under control, without either damaging the economy or endangering the national security.

Basically, we're proposing a freeze for the overall budget, excluding uncontrollable debt service costs. Our budget is $974 billion. That's only about 1\1/2\ percent higher than the fiscal '86 ['85] level.

We've asked for structural reforms and other economies in a wide range of programs, from entitlements to government lending. We've requested real cuts in certain areas of discretionary spending, such as Federal overhead costs, where I'm sure the Government can get by on less next year. And there are a number of programs that we suggest canceling entirely. Some of these, such as Amtrak, could be run much more efficiently in the private sector.

The defense of our nation is the one budget item which cannot be dictated by domestic considerations. Despite severe constraints on our budget, we must respond to the unprecedented military buildup of the Soviet Union, the largest military buildup in world history. Unfortunately, we had to start from a weakened position, brought on by long years of neglect and underfunding, and we still have a ways to go.

You might be interested to know that the Scriptures are on our side in this -- Luke 14:31, in which Jesus in talking to the disciples spoke about a king who might be contemplating going to war against another king, with his 10,000 men. But he sits down and counsels how good he's going to do against the other fellow's 20,000 and then says he may have to send a delegation to talk peace terms. Well, I don't think we ever want to be in a position of only being half as strong and having to send a delegation to negotiate under those circumstances -- peace terms -- with the Soviet Union. So, ultimately, our security and our hopes for success at the arms reduction talks hinge on the determination that we show here to continue our program to rebuild and refortify our defenses.

In this session of the Congress, we'll also be presenting our bill for an historic, comprehensive reform of our tax structure. Although we'll be pursuing budget reform and tax reform separately, they're each vital and necessary complements of the other. They're the twin elements of our program to keep our economy growing, creating jobs, and spreading opportunity.

We've seen how high taxes will choke off incentive and drive the economy into a downward spiral of disinvestment and unemployment. The mirror image of that is the expanding cycle of prosperity that lowering taxes brings, where more investment brings more growth; and more growth brings more jobs, which means more people paying taxes.

We've already seen this work. It's no accident that during fiscal 1984, the first full year that all three installments of our income tax cuts were finally in place, Federal revenues actually rose 7 percent in full terms.

Now is the time to get control of our budget, cut tax rates still further, and keep the cycle of prosperity going. Budget and tax reform won't be easy, and we're going to need every ounce of support that you can give us in the months ahead to move this through the Congress. We're counting on you. And with your help, we can make the frustration, the stagnation, and the decline of only 4 years ago a distant memory.

Together, we can open the way to a bright future of continuing prosperity. Together, we can really make history. We can get back to a principle of government not spending more than government takes in.

So, I thank you, and God bless you all. And I wish I were just saying, permanently, thank you and that we've done the job, but thank you and stay with us. Thank you.

Note: The President spoke at 2:03 p.m. in the East Room at the White House.