Mr. Speaker, Mr. President, and distinguished Members of the House and
Senate: When we first met here 7 years ago--many of us for the first
time--it was with the hope of beginning something new for America. We meet
here tonight in this historic Chamber to continue that work. If anyone
expects just a proud recitation of the accomplishments of my
administration, I say let's leave that to history; we're not finished yet.
So, my message to you tonight is put on your work shoes; we're still on the
job.

History records the power of the ideas that brought us here those 7 years
ago--ideas like the individual's right to reach as far and as high as his or
her talents will permit; the free market as an engine of economic progress.
And as an ancient Chinese philosopher, Lao-tzu, said: "Govern a great
nation as you would cook a small fish; do not overdo it." Well, these ideas
were part of a larger notion, a vision, if you will, of America
herself--an America not only rich in opportunity for the individual but an
America, too, of strong families and vibrant neighborhoods; an America
whose divergent but harmonizing communities were a reflection of a deeper
community of values: the value of work, of family, of religion, and of the
love of freedom that God places in each of us and whose defense He has
entrusted in a special way to this nation.

All of this was made possible by an idea I spoke of when Mr. Gorbachev was
here--the belief that the most exciting revolution ever known to humankind
began with three simple words: "We the People," the revolutionary notion
that the people grant government its rights, and not the other way around.
And there's one lesson that has come home powerfully to me, which I would
offer to you now. Just as those who created this Republic pledged to each
other their lives, their fortunes, and their sacred honor, so, too,
America's leaders today must pledge to each other that we will keep
foremost in our hearts and minds not what is best for ourselves or for our
party but what is best for America.

In the spirit of Jefferson, let us affirm that in this Chamber tonight
there are no Republicans, no Democrats--just Americans. Yes, we will have
our differences, but let us always remember what unites us far outweighs
whatever divides us. Those who sent us here to serve them--the millions of
Americans watching and listening tonight--expect this of us. Let's prove to
them and to ourselves that democracy works even in an election year. We've
done this before. And as we have worked together to bring down spending,
tax rates, and inflation, employment has climbed to record heights; America
has created more jobs and better, higher paying jobs; family income has
risen for 4 straight years, and America's poor climbed out of poverty at
the fastest rate in more than 10 years.

Our record is not just the longest peacetime expansion in history but an
economic and social revolution of hope based on work, incentives, growth,
and opportunity; a revolution of compassion that led to private sector
initiatives and a 77-percent increase in charitable giving; a revolution
that at a critical moment in world history reclaimed and restored the
American dream.

In international relations, too, there's only one description for what,
together, we have achieved: a complete turnabout, a revolution. Seven years
ago, America was weak, and freedom everywhere was under siege. Today
America is strong, and democracy is everywhere on the move. From Central
America to East Asia, ideas like free markets and democratic reforms and
human rights are taking hold. We've replaced "Blame America" with "Look up
to America." We've rebuilt our defenses. And of all our accomplishments,
none can give us more satisfaction than knowing that our young people are
again proud to wear our country's uniform.

And in a few moments, I'm going to talk about three developments--arms
reduction, the Strategic Defense Initiative, and the global democratic
revolution--that, when taken together, offer a chance none of us would have
dared imagine 7 years ago, a chance to rid the world of the two great
nightmares of the postwar era. I speak of the startling hope of giving our
children a future free of both totalitarianism and nuclear terror.

Tonight, then, we're strong, prosperous, at peace, and we are free. This is
the state of our Union. And if we will work together this year, I believe
we can give a future President and a future Congress the chance to make
that prosperity, that peace, that freedom not just the state of our Union
but the state of our world.

Toward this end, we have four basic objectives tonight. First, steps we can
take this year to keep our economy strong and growing, to give our children
a future of low inflation and full employment. Second, let's check our
progress in attacking social problems, where important gains have been
made, but which still need critical attention. I mean schools that work,
economic independence for the poor, restoring respect for family life and
family values. Our third objective tonight is global: continuing the
exciting economic and democratic revolutions we've seen around the world.
Fourth and finally, our nation has remained at peace for nearly a decade
and a half, as we move toward our goals of world prosperity and world
freedom. We must protect that peace and deter war by making sure the next
President inherits what you and I have a moral obligation to give that
President: a national security that is unassailable and a national defense
that takes full advantage of new technology and is fully funded.

This is a full agenda. It's meant to be. You see, my thinking on the next
year is quite simple: Let's make this the best of 8. And that means it's
all out--right to the finish line. I don't buy the idea that this is the
last year of anything, because we're not talking here tonight about
registering temporary gains but ways of making permanent our successes. And
that's why our focus is the values, the principles, and ideas that made
America great. Let's be clear on this point. We're for limited government,
because we understand, as the Founding Fathers did, that it is the best way
of ensuring personal liberty and empowering the individual so that every
American of every race and region shares fully in the flowering of American
prosperity and freedom.

One other thing we Americans like--the future--like the sound of it, the
idea of it, the hope of it. Where others fear trade and economic growth, we
see opportunities for creating new wealth and undreamed-of opportunities
for millions in our own land and beyond. Where others seek to throw up
barriers, we seek to bring them down. Where others take counsel of their
fears, we follow our hopes. Yes, we Americans like the future and like
making the most of it. Let's do that now.

And let's begin by discussing how to maintain economic growth by
controlling and eventually eliminating the problem of Federal deficits. We
have had a balanced budget only eight times in the last 57 years. For the
first time in 14 years, the Federal Government spent less in real terms
last year than the year before. We took $73 billion off last year's deficit
compared to the year before. The deficit itself has moved from 6.3 percent
of the gross national product to only 3.4 percent. And perhaps the most
important sign of progress has been the change in our view of deficits. You
know, a few of us can remember when, not too many years ago, those who
created the deficits said they would make us prosperous and not to worry
about the debt, because we owe it to ourselves. Well, at last there is
agreement that we can't spend ourselves rich.

Our recent budget agreement, designed to reduce Federal deficits by $76
billion over the next 2 years, builds on this consensus. But this agreement
must be adhered to without slipping into the errors of the past: more
broken promises and more unchecked spending. As I indicated in my first
State of the Union, what ails us can be simply put: The Federal Government
is too big, and it spends too much money. I can assure you, the bipartisan
leadership of Congress, of my help in fighting off any attempt to bust our
budget agreement. And this includes the swift and certain use of the veto
power.

Now, it's also time for some plain talk about the most immediate obstacle
to controlling Federal deficits. The simple but frustrating problem of
making expenses match revenues--something American families do and the
Federal Government can't--has caused crisis after crisis in this city. Mr.
Speaker, Mr. President, I will say to you tonight what I have said before
and will continue to say: The budget process has broken down; it needs a
drastic overhaul. With each ensuing year, the spectacle before the American
people is the same as it was this Christmas: budget deadlines delayed or
missed completely, monstrous continuing resolutions that pack hundreds of
billions of dollars worth of spending into one bill, and a Federal
Government on the brink of default.

I know I'm echoing what you here in the Congress have said, because you
suffered so directly. But let's recall that in 7 years, of 91
appropriations bills scheduled to arrive on my desk by a certain date, only
10 made it on time. Last year, of the 13 appropriations bills due by
October 1st, none of them made it. Instead, we had four continuing
resolutions lasting 41 days, then 36 days, and 2 days, and 3 days,
respectively.

And then, along came these behemoths. This is the conference report--1,053
pages, report weighing 14 pounds. Then this--a reconciliation bill 6 months
late that was 1,186 pages long, weighing 15 pounds. And the long-term
continuing resolution--this one was 2 months late, and it's 1,057 pages
long, weighing 14 pounds. That was a total of 43 pounds of paper and ink.
You had 3 hours--yes, 3 hours--to consider each, and it took 300 people at
my Office of Management and Budget just to read the bill so the Government
wouldn't shut down. Congress shouldn't send another one of these. No, and
if you do, I will not sign it.

Let's change all this. Instead of a Presidential budget that gets discarded
and a congressional budget resolution that is not enforced, why not a
simple partnership, a joint agreement that sets out the spending priorities
within the available revenues? And let's remember our deadline is October
1st, not Christmas. Let's get the people's work done in time to avoid a
footrace with Santa Claus. And, yes, this year--to coin a phrase--a new
beginning: 13 individual bills, on time and fully reviewed by Congress.

I'm also certain you join me in saying: Let's help ensure our future of
prosperity by giving the President a tool that, though I will not get to
use it, is one I know future Presidents of either party must have. Give the
President the same authority that 43 Governors use in their States: the
right to reach into massive appropriation bills, pare away the waste, and
enforce budget discipline. Let's approve the line-item veto.

And let's take a partial step in this direction. Most of you in this
Chamber didn't know what was in this catchall bill and report. Over the
past few weeks, we've all learned what was tucked away behind a little
comma here and there. For example, there's millions for items such as
cranberry research, blueberry research, the study of crawfish, and the
commercialization of wildflowers. And that's not to mention the five or so
million ($.5 million) that--so that people from developing nations could
come here to watch Congress at work. I won't even touch that. So, tonight I
offer you this challenge. In 30 days I will send back to you those items as
rescissions, which if I had the authority to line them out I would do so.

Now, review this multibillion-dollar package that will not undercut our
bipartisan budget agreement. As a matter of fact, if adopted, it will
improve our deficit reduction goals. And what an example we can set, that
we're serious about getting our financial accounts in order. By acting and
approving this plan, you have the opportunity to override a congressional
process that is out of control.

There is another vital reform. Yes, Gramm-Rudman-Hollings has been
profoundly helpful, but let us take its goal of a balanced budget and make
it permanent. Let us do now what so many States do to hold down spending
and what 32 State legislatures have asked us to do. Let us heed the wishes
of an overwhelming plurality of Americans and pass a constitutional
amendment that mandates a balanced budget and forces the Federal Government
to live within its means. Reform of the budget process--including the
line-item veto and balanced budget amendment--will, together with real
restraint on government spending, prevent the Federal budget from ever
again ravaging the family budget.

Let's ensure that the Federal Government never again legislates against the
family and the home. Last September 1 signed an Executive order on the
family requiring that every department and agency review its activities in
light of seven standards designed to promote and not harm the family. But
let us make certain that the family is always at the center of the public
policy process not just in this administration but in all future
administrations. It's time for Congress to consider, at the beginning, a
statement of the impact that legislation will have on the basic unit of
American society, the family.

And speaking of the family, let's turn to a matter on the mind of every
American parent tonight: education. We all know the sorry story of the
sixties and seventies--soaring spending, plummeting test scores--and that
hopeful trend of the eighties, when we replaced an obsession with dollars
with a commitment to quality, and test scores started back up. There's a
lesson here that we all should write on the blackboard a hundred times: In
a child's education, money can never take the place of basics like
discipline, hard work, and, yes, homework.

As a nation we do, of course, spend heavily on education--more than we
spend on defense. Yet across our country, Governors like New Jersey's Tom
Kean are giving classroom demonstrations that how we spend is as important
as how much we spend. Opening up the teaching profession to all qualified
candidates, merit pay--so that good teachers get A's as well as apples--and
stronger curriculum, as Secretary Bennett has proposed for high
schools--these imaginative reforms are making common sense the most popular
new kid in America's schools. How can we help? Well, we can talk about and
push for these reforms. But the most important thing we can do is to
reaffirm that control of our schools belongs to the States, local
communities and, most of all, to the parents and teachers.

My friends, some years ago, the Federal Government declared war on poverty,
and poverty won. Today the Federal Government has 59 major welfare programs
and spends more than $100 billion a year on them. What has all this money
done? Well, too often it has only made poverty harder to escape. Federal
welfare programs have created a massive social problem. With the best of
intentions, government created a poverty trap that wreaks havoc on the very
support system the poor need most to lift themselves out of poverty: the
family. Dependency has become the one enduring heirloom, passed from one
generation to the next, of too many fragmented families.

It is time--this may be the most radical thing I've said in 7 years in this
office--it's time for Washington to show a little humility. There are a
thousand sparks of genius in 50 States and a thousand communities around
the Nation. It is time to nurture them and see which ones can catch fire
and become guiding lights. States have begun to show us the way. They've
demonstrated that successful welfare programs can be built around more
effective child support enforcement practices and innovative programs
requiring welfare recipients to work or prepare for work. Let us give the
States more flexibility and encourage more reforms. Let's start making our
welfare system the first rung on America's ladder of opportunity, a boost
up from dependency, not a graveyard but a birthplace of hope.

And now let me turn to three other matters vital to family values and the
quality of family life. The first is an untold American success story.
Recently, we released our annual survey of what graduating high school
seniors have to say about drugs. Cocaine use is declining, and marijuana
use was the lowest since surveying began. We can be proud that our students
are just saying no to drugs. But let us remember what this menace requires:
commitment from every part of America and every single American, a
commitment to a drugfree America. The war against drugs is a war of
individual battles, a crusade with many heroes, including America's young
people and also someone very special to me. She has helped so many of our
young people to say no to drugs. Nancy, much credit belongs to you, and I
want to express to you your husband's pride and your country's thanks.'.
Surprised you, didn't I?

Well, now we come to a family issue that we must have the courage to
confront. Tonight, I call America--a good nation, a moral people--to
charitable but realistic consideration of the terrible cost of abortion on
demand. To those who say this violates a woman's right to control of her
own body: Can they deny that now medical evidence confirms the unborn child
is a living human being entitled to life, liberty, and the pursuit of
happiness? Let us unite as a nation and protect the unborn with legislation
that would stop all Federal funding for abortion and with a human life
amendment making, of course, an exception where the unborn child threatens
the life of the mother. Our Judeo-Christian tradition recognizes the right
of taking a life in self-defense. But with that one exception, let us look
to those others in our land who cry out for children to adopt. I pledge to
you tonight I will work to remove barriers to adoption and extend full
sharing in family life to millions of Americans so that children who need
homes can be welcomed to families who want them and love them.

And let me add here: So many of our greatest statesmen have reminded us
that spiritual values alone are essential to our nation's health and vigor.
The Congress opens its proceedings each day, as does the Supreme Court,
with an acknowledgment of the Supreme Being. Yet we are denied the right to
set aside in our schools a moment each day for those who wish to pray. I
believe Congress should pass our school prayer amendment.

Now, to make sure there is a full nine member Supreme Court to interpret
the law, to protect the rights of all Americans, I urge the Senate to move
quickly and decisively in confirming Judge Anthony Kennedy to the highest
Court in the land and to also confirm 27 nominees now waiting to fill
vacancies in the Federal judiciary.

Here then are our domestic priorities. Yet if the Congress and the
administration work together, even greater opportunities lie ahead to
expand a growing world economy, to continue to reduce the threat of nuclear
arms, and to extend the frontiers of freedom and the growth of democratic
institutions.

Our policies consistently received the strongest support of the late
Congressman Dan Daniel of Virginia. I'm sure all of you join me in
expressing heartfelt condolences on his passing.

One of the greatest contributions the United States can make to the world
is to promote freedom as the key to economic growth. A creative,
competitive America is the answer to a changing world, not trade wars that
would close doors, create greater barriers, and destroy millions of jobs.
We should always remember: Protectionism is destructionism. America's jobs,
America's growth, America's future depend on trade--trade that is free,
open, and fair.

This year, we have it within our power to take a major step toward a
growing global economy and an expanding cycle of prosperity that reaches to
all the free nations of this Earth. I'm speaking of the historic free trade
agreement negotiated between our country and Canada. And I can also tell
you that we're determined to expand this concept, south as well as north.
Next month I will be traveling to Mexico, where trade matters will be of
foremost concern. And over the next several months, our Congress and the
Canadian Parliament can make the start of such a North American accord a
reality. Our goal must be a day when the free flow of trade, from the tip
of Tierra del Fuego to the Arctic Circle, unites the people of the Western
Hemisphere in a bond of mutually beneficial exchange, when all borders
become what the U.S.-Canadian border so long has been: a meeting place
rather than a dividing line.

This movement we see in so many places toward economic freedom is
indivisible from the worldwide movement toward political freedom and
against totalitarian rule. This global democratic revolution has removed
the specter, so frightening a decade ago, of democracy doomed to permanent
minority status in the world. In South and Central America, only a third of
the people enjoyed democratic rule in 1976. Today over 90 percent of Latin
Americans live in nations committed to democratic principles. And the
resurgence of democracy is owed to these courageous people on almost every
continent who have struggled to take control of their own destiny.

In Nicaragua the struggle has extra meaning, because that nation is so near
our own borders. The recent revelations of a former high-level Sandinista
major, Roger Miranda, show us that, even as they talk peace, the Communist
Sandinista government of Nicaragua has established plans for a large
600,000-man army. Yet even as these plans are made, the Sandinista regime
knows the tide is turning, and the cause of Nicaraguan freedom is riding at
its crest. Because of the freedom fighters, who are resisting Communist
rule, the Sandinistas have been forced to extend some democratic rights,
negotiate with church authorities, and release a few political prisoners.

The focus is on the Sandinistas, their promises and their actions. There is
a consensus among the four Central American democratic Presidents that the
Sandinistas have not complied with the plan to bring peace and democracy to
all of Central America. The Sandinistas again have promised reforms. Their
challenge is to take irreversible steps toward democracy. On Wednesday my
request to sustain the freedom fighters will be submitted, which reflects
our mutual desire for peace, freedom, and democracy in Nicaragua. I ask
Congress to pass this request. Let us be for the people of Nicaragua what
Lafayette, Pulaski, and Von Steuben were for our forefathers and the cause
of American independence.

So, too, in Afghanistan, the freedom fighters are the key to peace. We
support the Mujahidin. There can be no settlement unless all Soviet troops
are removed and the Afghan people are allowed genuine self-determination. I
have made my views on this matter known to Mr. Gorbachev. But not just
Nicaragua or Afghanistan--yes, everywhere we see a swelling freedom tide
across the world: freedom fighters rising up in Cambodia and Angola,
fighting and dying for the same democratic liberties we hold sacred. Their
cause is our cause: freedom.

Yet even as we work to expand world freedom, we must build a safer peace
and reduce the danger of nuclear war. But let's have no illusions. Three
years of steady decline in the value of our annual defense investment have
increased the risk of our most basic security interests, jeopardizing
earlier hard-won goals. We must face squarely the implications of this
negative trend and make adequate, stable defense spending a top goal both
this year and in the future.

This same concern applies to economic and security assistance programs as
well. But the resolve of America and its NATO allies has opened the way for
unprecedented achievement in arms reduction. Our recently signed INF treaty
is historic, because it reduces nuclear arms and establishes the most
stringent verification regime in arms control history, including several
forms of short-notice, on-site inspection. I submitted the treaty today,
and I urge the Senate to give its advice and consent to ratification of
this landmark agreement. Thank you very much.

In addition to the INF treaty, we're within reach of an even more
significant START agreement that will reduce U.S. and Soviet long-range
missile--or strategic arsenals by half. But let me be clear. Our approach
is not to seek agreement for agreement's sake but to settle only for
agreements that truly enhance our national security and that of our allies.
We will never put our security at risk--or that of our allies--just to reach
an agreement with the Soviets. No agreement is better than a bad
agreement.

As I mentioned earlier, our efforts are to give future generations what we
never had--a future free of nuclear terror. Reduction of strategic
offensive arms is one step, SDI another. Our funding request for our
Strategic Defense Initiative is less than 2 percent of the total defense
budget. SDI funding is money wisely appropriated and money well spent. SDI
has the same purpose and supports the same goals of arms reduction. It
reduces the risk of war and the threat of nuclear weapons to all mankind.
Strategic defenses that threaten no one could offer the world a safer, more
stable basis for deterrence. We must also remember that SDI is our
insurance policy against a nuclear accident, a Chernobyl of the sky, or an
accidental launch or some madman who might come along.

We've seen such changes in the world in 7 years. As totalitarianism
struggles to avoid being overwhelmed by the forces of economic advance and
the aspiration for human freedom, it is the free nations that are resilient
and resurgent. As the global democratic revolution has put totalitarianism
on the defensive, we have left behind the days of retreat. America is again
a vigorous leader of the free world, a nation that acts decisively and
firmly in the furtherance of her principles and vital interests. No legacy
would make me more proud than leaving in place a bipartisan consensus for
the cause of world freedom, a consensus that prevents a paralysis of
American power from ever occurring again.

But my thoughts tonight go beyond this, and I hope you'll let me end this
evening with a personal reflection. You know, the world could never be
quite the same again after Jacob Shallus, a trustworthy and dependable
clerk of the Pennsylvania General Assembly, took his pen and engrossed
those words about representative government in the preamble of our
Constitution. And in a quiet but final way, the course of human events was
forever altered when, on a ridge overlooking the Emmitsburg Pike in an
obscure Pennsylvania town called Gettysburg, Lincoln spoke of our duty to
government of and by the people and never letting it perish from the
Earth.

At the start of this decade, I suggested that we live in equally momentous
times, that it is up to us now to decide whether our form of government
would endure and whether history still had a place of greatness for a
quiet, pleasant, greening land called America. Not everything has been made
perfect in 7 years, nor will it be made perfect in seven times 70 years,
but before us, this year and beyond, are great prospects for the cause of
peace and world freedom.

It means, too, that the young Americans I spoke of 7 years ago, as well as
those who might be coming along the Virginia or Maryland shores this night
and seeing for the first time the lights of this Capital City--the lights
that cast their glow on our great halls of government and the monuments to
the memory of our great men--it means those young Americans will find a
city of hope in a land that is free.

We can be proud that for them and for us, as those lights along the Potomac
are still seen this night signaling as they have for nearly two centuries
and as we pray God they always will, that another generation of Americans
has protected and passed on lovingly this place called America, this
shining city on a hill, this government of, by, and for the people.

Thank you, and God bless you.

NOTE: The President spoke at 9:07 p.m. in the House Chamber of the Capitol.
He was introduced by Jim Wright, Speaker of the House of Representatives.
The address was broadcast live on nationwide radio and television.