Audience. Ahhh.

The President. -- -- who was invited, yes. But I have to tell you, I found out that I'm the only one in the family that gets paid, but the Government gets another employee free -- Nancy. They've got her working, too. [Laughter]

But I think I should tell you why I've come here today and why I'm so honored by this degree. Now, it's true that I've heard about a rare and exotic flower that grows only in Queens. I think you call it the mulberry. And I wanted to see it. [Laughter] And it's true that I'm ever in search for candidates for our diplomatic staff -- [laughter] -- and so I wanted to meet a gentleman named Louis Carnesecca. I know he's elsewhere on a very important engagement right now. And it's also true that I wanted to see the school that some people are saying is just A - number one, top of the heap, king of the hill. And I know that right now that's being said in connection with college basketball, but from what I've learned of your university, the honor extends to a great many other areas as well. But there is more. For some time I've been hearing about a university in New York that boasts among its alumni the Governors of our two biggest States: Governor Mario Cuomo of New York and Governor George Deukmejian of California.

I've heard that this university has the highest bar exam pass ratio in the Nation; that it attracts more than a thousand students a year from 88 countries on six continents of the Earth; and that among its alumni are a third of one State legislature and more than 250 judges. So, naturally, I wanted to see the new Harvard. [Laughter] And thanks, St. John's, for inviting me.

Audience members. We love you, Ronnie!

The President. Thank you.

I've come here today to talk about where our country has been for the past few years and where it's going. And I want to talk to you about our vision of the future and the kind of America that we now have a dazzling opportunity to create.

When I took office 4 years ago, many of you were in high school. But in spite of your youth, I know you were aware that America at that time was in a crisis. Inflation was over 12 percent, the prime interest rate was over 21 percent, unemployment was growing, and recent graduates were having trouble finding jobs. Government was weighing all of our people down with excessive personal taxes, with business taxes, and meddlesome regulations.

In 1981 we rolled up our sleeves and applied new thinking to these by now old problems. We cut tax rates for all individuals and businesses. We passed tax indexing so that inflation wouldn't force your parents into ever higher brackets as their income increased. We drove inflation down to below 4 percent. We got the economy moving again. And in truth, we can't take complete credit for the ideas that reignited our current economic growth. After all, John Kennedy had done what we had done, and great growth followed; and Japan had done what we had done, and became the economic dynamo of the East.

By 1984, last year, our economy was growing stronger and faster than it had in over 30 years, while inflation stayed lower than at any time since 1967. Civilian employment has grown by 7\1/2\ million new jobs over the past 2 years, and the number of unemployed has fallen by more than 3 million in the past 5 months alone. And that is more than a million-and-a-half Americans -- what is more, I should say, have found jobs.

We have made great progress the past 4 years, but it's what we do in the next 4 years that will determine whether the American economy really lasts. Now is the time, now is the key moment, to make dramatic change. I'm speaking of a change so fundamental that I could really call it radical -- radical as in reaching down to the roots.

The revolution that I'm talking about involves three things. One is taxes -- the amount you and your parents and friends pay to the Government that demands your money. Another is spending -- what the Government spends your money on and what effect that has on your life. But taxes and spending are like the foundation of a big house called growth. If our tax and spending policies are sound and balanced, the foundation will be rock solid, and the house of growth will stand and endure.

Our administration has reduced tax rates, as I've noted, but that's only the beginning. We have to do better. I believe we have to tear down our present tax structure and build a new one. We will propose a tax simplification plan. Tax simplification will make the rate structure simpler and more fair -- that will limit deductions and that will lower tax rates further.

With a simplified tax system, we would have a top rate far lower than the current top personal tax rate of 50 percent. A side benefit of this is that it will move us away from the whole strange world of unproductive tax shelters. For once, all Americans will know that their neighbors, as well as they, are paying their fair share and not hiding behind loopholes and shelters. We want to make the tax system simpler and more fair, and we want to push tax rates down still further. This is economic justice; it is economic sense and the key to America's economic future.

I want to talk a little here about how tax rates impinge directly on you. If you were a senior majoring in business, you'll get out of school and go into the job market in June. Let's say you have the good fortune to be hired as a salesperson for a firm with a starting salary of $20,000 a year. That's enough to live on with some comfort, but not luxurious by any means in these days.

Now, you're young and single. You share a small apartment in Manhattan, and your share of the -- [laughter]. I mean that ``share'' in a certainly -- [laughter] -- different way than you reacted. And your share of the rent is, say, $500 a month.

Audience. Boo-o-o!

The President. When you make out your taxes, you claim one exemption for yourself. And you find that once you've worked for a year, that between Federal taxes, State taxes, city taxes, Social Security, and sales taxes you're giving over 30 percent of your entire $20,000 salary to taxes -- more than $6,000.

Now, I could argue the morality of this -- of your paying so much and involuntarily finding yourself in a condition of something approaching servitude. And I will. But I wish right now to speak of broader practical purposes.

If you were allowed to keep more of your money, you'd likely do one of three things with it. You could spend it on a portable computer, say, or -- [laughter] -- clothing or entertainment, and thereby stimulate the economy to hire more computer, clothing, and entertainment makers -- [laughter] -- thus creating jobs. Or you could save it and add to the pool of capital from which banks lend money, thereby stimulating the economy by making capital available for businesses to grow. Or you could be very creative and invest your money in a private enterprise.

Now, some of you are only a generation or two removed from the immigrant experience. Some of you are the grandsons and granddaughters of sharecroppers who came north for jobs. Many of you are the first in your family to go to college. I was the first in mine, and I, too, am a grandson of immigrants. All of you come from hardy, risk-taking stock, and you're very much the sort of people who would, in a few years, take the few thousand you'd gain from a tax cut and pool it with friends and acquaintances in order to invest it.

Twenty of you might put up as much as $5,000 each and start a business -- a local newspaper, a small record company, a service industry, a small computer firm -- whatever. And that expands the economy, creating new businesses, new jobs, and new wealth. This is the magic that is and always has been at the heart of America's economic strength.

We have lived through the age of big industry and the age of the giant corporation. But I believe that this is the age of the entrepreneur, the age of the individual.

That's where American prosperity is coming from now, and that's where it's going to come from in the future. Could I just pause here for a second and tell you about a couple of fellows who came to see me the other day -- young men, 1981, just 4 years ago they started a business with only a thousand between them, and everyone told them they were crazy. Last year their business did $1\1/2\ million, and they expect to do $2\1/2\ million this year. And part of it was because they had the wit to use their names productively. Their business is using their names -- the Cane and Able Electric Business. [Laughter]

The technological revolution has seen to some of the things that I'm talking about. We have to recognize that and encourage the brave men and women who are taking risks in investing in the future. They ought to be honored. But to invest your time and money and concern is a leap of faith: a profoundly hopeful act that says, yes, I have faith in the future; I am the future; the future is what I make it.

Economic growth and economic freedom are the economic answer. But we cannot stop at reforming our tax structure; we must also reform our spending policies. You may remember what I said last summer: that we could compare the big spenders in Congress with a drunken sailor out on a spree -- but that would really be unfair to the sailor, because at least he's spending his own money.

We have to be frank about the Federal budget and deficit spending. Our problem is simple: Your Federal Government is now, and long has been, spending too much of your money. In the past 10 years tax revenues have grown by more than $400 billion, but spending by government has grown by almost $600 billion. That's about 50 percent more than the revenue. Government spending has grown more than one-third faster than the growth of our economy. Even our economy, the strongest in the world, hasn't been able to keep up with government's incessant demands.

Now, I've recommended a freeze on overall domestic spending for the recently submitted Federal budget, and I need your help in supporting these efforts. There's all sorts of ways for waste to be cut. There are many entitlements to be reexamined. We can and must do this, because if we don't get the size and weight of government down, then it will simply flatten the economy like a steamroller and make economic vitality an impossible dream.

I have asked for the support of Congress in getting spending down, and we're making some headway. But it takes a lot of courage for some Senators and Congress men and women to support us, because there's always more of a constituency for spending than for cutting. They'll have to make some brave decisions. And when they make them, they will deserve the support and the thanks of our country.

I want to mention, by the way, that I know that some of you are concerned about our proposed limits on financial aid for students. All right, well, we're trying to ensure an aid system that helps all those who need it. Now, you know that spending on higher education is still more than $7 billion -- as much as it was in 1982 and 1983, and more than double what it was 10 years ago. As Education Secretary Bill Bennett has pointed out, our student aid program is big, and our commitment to it will continue, and its primary purpose will be to provide the vital assistance to those who couldn't get an education without it.

Now, there are some Members of Congress who make a great show of concern about the problem of deficit spending. But they know that it's in the nature of a peaceful democracy not to want to spend money on weapons for defense but to prefer spending that money on social programs. If you really want to control spending, they say, if you really want to control spending, then cut defense. Well -- --

Audience. Boo-o-o!

Audience. [Applause]

The President. All right, I see you're divided in that, and I can understand, because you've been treated to a drumbeat of demagogic propaganda with regard to that.

Let's look at the facts. Defense spending accounts for less than 7 percent of our gross national product. That's far less than it was in the 1950's and 60's, when the threat facing us was not nearly so great. And since we first took office, we have cut $150 billion out of our own proposals for defense spending. In fact, right now, we're running almost $16 billion less than the Carter administration had projected would be their 1985 budget if they were still in office.

Now, at this point, it's a simple necessity to continue to bring our Armed Forces up to date. I've told the Senate leadership that I'm willing to consider more defense savings in noncritical areas, but I cannot compromise on the defense programs that are vital to our security.

The first responsibility of an American President is to see that this country is securely defended in a world in which trouble is, unfortunately, not the exception but the rule. All the great leaders of our time, from Winston Churchill to John Kennedy, have understood that to maintain the peace we must maintain our strength. If we don't, our adversaries will be inspired to wild action by our weakness.

Well, we can maintain the peace, and we will. We can maintain economic growth, and we must. Our economy is in good shape now, but we've got to make sure this isn't just a passing phase, a temporary pause in cycles of recession. We've got to see to it that economic growth becomes an unbreaking cycle of its own. And we can do that through getting tax rates down and spending down.

Now, back to that moral equation that I mentioned. It has to do with one word, and that word is freedom.

We live in difficult times; it's been a difficult century. Perhaps the biggest mistake mankind has made in this century is to think that the big answer is how difficult life is. Well, the big thing that will fill the void of the spiritual values that some of us rejected is the state -- that's their idea -- the state, with a capital ``S'' -- well, the political edifice that man has built to govern himself.

Some have said that this is the thing from which all blessings come. But if we've discovered anything these past few decades, it is that our salvation is not in the state. Our salvation is in ourselves and what we do with our lives and the choices that we make. It is in the things that we choose to worship.

If we've learned anything, it is that government that is big enough to give you everything you want is more likely to simply take everything you've got. And that's not freedom, that's servitude. That isn't the way Americans were meant to live.

We will always take care of the poor and the helpless among us, because that's the kind of people we are and have always been. But we're a people who've discovered anew what a deep fountain freedom is and how we cannot live without drinking deep from it.

I am no longer young. You might have suspected that. [Laughter] The house we hope to build is one that is not for my generation, but for yours. It is your future that matters. And I hope that when you're my age, you'll be able to say as I have been able to say: We lived in freedom, we lived lives that were a statement, not an apology.

And so, if you can help us, we welcome your support. And either way, we welcome your interest in how our country is governed and how together we can secure justice for our people. When I ask for your help, it's very simple. You are the citizens; government works for you. And it doesn't hurt if sometimes you decide to be the boss and tell 'em.

I have said very many times that those elected in office who sit there in our Capitol Hill building, in the halls of Congress -- it isn't necessary that you make them see the light; sometimes you have to make them feel the heat. [Laughter]

I've enjoyed being here very much. You've greatly honored me. And I thank you, and I love you, too.

I know you have an exciting weekend coming up. And knowing your faith, you may have considered how far you would go in trying for victory. Well, can I just tell you something? When I was playing college football -- and I did -- I found out one night in a chalk-talk that was going on with the coach up in front, and I don't know how the conversation got around to prayer, but it did.

Now, I had never gone into a game in all those 4 years that I hadn't said a prayer. And I was surprised and amazed to learn -- I never told anyone that -- that everybody else on the team did, too. But, now, the subject was: What do you pray, and what do you ask for? And believe it or not, all of us had figured out for ourselves you can't ask God to help you win. How can He favor you over others of His children that are on the other team? And what we'd figured out for ourselves was that there be no injuries, that everyone, everyone do their best, that the best team win, and that, thus, we have no regrets when the game is over.

Audience. Let's go Reagan! Let's go Reagan! Let's go Reagan!

The President. Well, if you don't mind -- [laughter] -- I can say that prayer for the Redmen. God bless you all. Thank you very much.

[At this point, the President was given a replica of the university basketball team's lucky sweater and the university's gold medal.]

The President. Thank you very much. I can't tell you how deeply honored I am. I'd like to tell you also that during World War II, playing on a post basketball team, one of my teammates was an alumnus of St. John's and a great basketball player. Just so that I can even make it feel a little closer, in that school where I was playing football, we were called the Red Devils. Thank you very much. Thank you all.

Note: The President spoke at 12:07 p.m. at the university's Athletic Center. Prior to his remarks, he was awarded an honorary doctor of laws degree by Rev. Joseph I. Dirvin, vice president for university relations. Earlier, the President attended a reception with members of the university's board of trustees. Following his remarks, the President returned to Washington, DC.