 president of the United States. Thank you. I am sure that we all agree that it is with great pride and pleasure that he is honoring us with his presence in the 80th year in the life of our club. On the subject of anniversaries, the president of the United States. Thank you very much. Thank you. Thank you very much. Thank you very much. We're a warm welcome that warms my heart and I will confess that it's kind of lump in the throat time also. And Henry, I thank you very much. Chairman, the distinguished ladies and gentlemen here at the head table. I almost feel like we all should be going back to Sacramento. The I forgive me for a bit of nostalgia here. I remember so well those previous eight times and many of them during those happy days in Sacramento. And this time I can claim the best of both worlds. California Homecoming and a reunion with my fellow members of the Commonwealth Club all wrapped up in one. And Nancy and I couldn't think of a better way to spend our anniversary. But it is a pleasure to be back here with the crossroads of trade or meeting places for ideas that stretch our sights to the to the limits of the horizon and beyond. This Golden Gate City is a place where entrepreneurs with great dreams, daring, determination, sharp new paths to progress through the winds and waters of commerce. You provide an appropriate setting for an American challenge for the 80s. With the help of your vision, courage and leadership, we can begin the first leg of a new voyage into the future. A future in which commerce will be king, the eagle with sore and America will be the mightiest trading nation on earth. I haven't come here to echo those faint hearts who have little faith in American enterprise and ingenuity. They plead for retreat and seek refuge in the rusty armor of a failed protectionist past. Well, I believe and I think you do too, that the world hungers for leadership and growth that America can provide it. And my message is that our administration will fight to give you the tools you need because we know you can get the job done. Our forefathers didn't shed their blood to create this union so that we could become a victim nation. We're not sons and daughters of second rate stock. We have no mission of mediocrity. We were born to carry liberty's banner and build the very meaning of progress and our opportunities have never been greater. We can improve the well meaning, well being of our people and we can enhance the forces for democracy, freedom, peace and human fulfillment around the world. If we stand up for principles of trade expansion through freer markets and greater competition among nations. In dealing with our economy, more is in question than just prosperity. Ultimately, peace and freedom are at stake. The United States took the lead after World War II in creating an international trading and financial system that limited government's ability to disrupt trade. We did this because history had taught us the freer the flow of trade, across borders, the greater the world economic progress and the greater the impetus for world peace. But the deterioration of the free world and the U.S. economies in the 1970s led to the decline of western security and the confidence of the people of the free world. Too many otherwise free nations adopted policies of government intervention in the marketplace. Many people began thinking that equity was incompatible with growth and they argued for no growth societies, for policies that undermined free markets and compromised our collective security. There could be no real security without a strong western economy and there can be no freedom unless we preserve the open and competitive international and financial systems that we created after World War II. Prosperity alone cannot restore confidence or protect our basic values. We must also remember our objectives of peace and freedom and then we can build a prosperity that will once again lift our heads and renew our spirits. Now I'm not going to minimize the problems that we face or the long tough road that we must travel to solve them. For a quarter of a century after the Second World War we exported more goods each year to the rest of the world than we imported. We accumulated a surplus of funds which was invested at home and abroad and which created jobs and increased economic prosperity but during the past decade we began importing more than we were exporting. Since 1976 imports have exceeded exports every year and our trade deficit is expected to rise sharply in this year of 1983. In the past few years high real interest rates have inhibited investment, greatly increased the value of the dollar and made our goods as a result less competitive. High interest rates reflect skepticism by financial markets that our government has the courage to keep inflation down by reducing deficit spending. Well if the history of our great nation and the character of this breed called American mean anything at all it is that when we have believed in ourselves when we pull together putting our wisdom and faith into action we made the future work for us and we can do that now. Welp is not created inside some think tank on the Potomac. It is born in the hearts and minds of entrepreneurs all across Main Street America. For too long government has treated the entrepreneur more as an enemy than an ally. Our administration has a better idea. We'll give you less bureaucracy if you give America your audacity. We want you to out plan out produce and out sell the pants off this nation's competitors. You see I believe in what General Patton once said I'm partial to cavalry officers. He said don't tell people how to do things. Tell them what needs doing and then watch them surprise you with their ingenuity. Every citizen has a role and a stake in helping the United States meet her trade challenge in the 80s. We need jobs. Well one of the best job programs we can have is a great national drive to expand exports and that's part of our program. We have only to look beyond our own old borders the potential for growth is enormous a two trillion dollar market abroad a chance to create millions of jobs and more income security for our people. We have barely seen the tip of that iceberg. Four out of five new manufacturing jobs created in the last five years were in export related industries and yet 90 percent of American manufacturers do not export at all. We believe tens of thousands of U.S. producers offer products and services which can be competitive abroad. Now many of these are small and medium sized firms. Our administration has a positive plan to meet the trade challenge on three key points. First lay a firm foundation for non-inflationary growth based on enduring economic principles of fiscal and monetary discipline, competition incentives, thrift and reward. Second enhance the ability of U.S. producers and industries to compete on a fair and equal basis in the international marketplace. Work with our trading partners to resolve outstanding problems of market access and to chart new directions for free and fair trade in the products of the future. Third take the lead in assisting international financial and trade institutions to strengthen world growth and both to the forces of freedom and democracy. Take it together these actions give the United States a positive framework for leading our producers and trading partners toward more open markets, greater freedom and human progress. But progress begins at home. Our economic reforms are based on time tested principles spending and monetary restraint to bring down inflation and interest rates and to give leaders confidence in long-term price stability. Less regulatory interference so as to stimulate greater competition and growth of enterprise and employment through tax incentives to encourage work, thrift, investment and productivity. Now we've suffered a long painful recession brought about by more than a decade of overtaxing and spending and yes, government intervention. But recession is giving way to a rainbow of recovery reflecting a renaissance and enterprise. America is on the mend. Inflation is plunged from 12.4 percent in 1980 to just 3.8 in the last 12 months and in the last six months it's been running at 1.4. We've sought common sense in government and competition not controls in the marketplace. Two years ago we accelerated the deregulation of crude oil and we heard ourselves denounced for fueling inflation. Well the national average for a gallon of gasoline when we took office was a dollar and 27 cents and now you can buy it in most places for less than a dollar. The prime interest rate was a crippling 21.5 percent. Now it's down to 10.5. Tax rates have been cut. Real wages are improving. Personal savings and productivity are growing again. The stock market has hit a record high. Venture capital investments have reached record levels. Production in housing, autos and steel is gaining strength and new breakthroughs in high technology are busting out all over. Katie, bar the door, we're on our way back. I may say to the pessimists who would cancel our remaining tax incentives, I have one thing to say. Don't lay a hand on the third year of the people's tax cut or the indexing provision. Indexing is our promise. It's our promise to every working man and woman that the future will not be like the past. There will be no more sneaky midnight tax increases by a government resorting to bracket creep to indulge its thirst for deficit spending. To pretend eliminating indexes is somehow fair to working people reminds me of Samuel Johnson's comment about the fellow who couldn't see any difference between vice and virtue. He said well when he leaves the house let's count the spoons. Capping the third year tax cut and eliminating indexing and our remaining tax cuts would send the worst possible signal to potential exporters. As I mentioned 90% of U.S. businesses do not export at all and about 85% of our firms pay their taxes by the personal income tax. If those who would dismantle the tax cuts get their way the chilling message to the business community will be don't scrap and struggle to succeed, export, expand your business and hire more workers because we won't thank and reward you for helping your country. We'll punish you. Well maybe I'm old-fashioned but I don't think pitting one group of Americans against another is what the founding fathers had in mind. This nation was not built on a foundation of envy and resentment. The dream I've always believed in is no matter who you are no matter where you come from if you work hard pull yourself up and succeed then by golly you deserve life's prize. And trying for that prize made America the greatest nation on earth. Let us create more opportunities for all our citizens and let us encourage achievement and excellence. We want America to be a nation of winners again so you might as well know that we will not turn our backs on the principles of our recovery program especially on the principles of free trade. The great English historian Thomas Bavington Macaulay wrote more than a century ago that free trade one of the greatest blessings which a government can confer on a people is unpopular in almost every country. Well for some times haven't changed there's a great hue and cry for us to bend to protectionist pressures. Well I've been around long enough to remember that when we did that once before in this century something called smooth holly we lived through a nightmare. World trade fell by 60 contributing to the great depression and to the political turmoil that led to world war two. We and our trading partners are in the same boat. If one partner shoots a hole in the bottom of the boat does it make sense for the other partner to shoot another hole in the boat? There are those who say yes and call it getting tough. I call it getting wet all over. We must plug the holes in the boat of open markets and free trade and set sail again in the direction of prosperity. No one no one should mistake our determination to use our full power and influence to prevent anyone from destroying the boat and sinking us all. There's a fundamental difference between positive support of legitimate American interests and rights in world trade and the negative actions of protectionists. Free trade can only survive if all parties play by the same rules but we're determined to ensure equity in our markets defending workers and industries from unfair and predatory trade practices is not protectionism it's legitimate action under U.S. and international law. Now one example of protectionist legislation that could quickly sabotage recovery is the local content rule. This legislation proposed in the Congress would force foreign and domestic manufacturers of automobiles sold in the United States to build their cars with an escalating percentage of U.S. parts and domestic labor. The Congressional Budget Office concluded that this would destroy more jobs than it would save and that's true it would add substantially to the cost of a new car. What the proponents of this bunker mentality never point out is that the costs of protectionism for one group of workers are always passed on to another group down the line and once such legislation is passed every other industry would be a target for foreign retaliation. We would buy less from our partners they'd buy less from us the world economic pie would shrink chances for political turmoil would increase dramatically rather than reacting in fear with beggar-the-neighbor policies let us lead from strength and believe in our abilities let's work at home and abroad to enhance the ability of U.S. producers and industries to compete on a fair and equal basis in the international marketplace we're very excited about some landmark legislation that i signed last year signed as a matter of fact here in california the export trading company act it's an innovative idea based on teamwork i'm confident it will create thousands of new exporters and i hope some of them are sitting in this room the law is designed to attract manufacturers export management companies banks freight forwarders and other export services into joint efforts to gain foreign markets the commerce department is holding seminars across the country to promote the legislation and the response has been remarkable thousands have attended and in some cases the numbers were so overwhelming people had to be turned away the majority of attendees have not been lawyers tax accountants or forgive me bankers but business people the people who can take this legislation and use it they can expand our markets become exporters or sell to export trading companies who can do it for them the bottom line will be a breakthrough in exports higher growth lower deficits and a tremendous surge in new jobs and opportunities for our people each billion dollars that we add in exports means tens of thousands of new jobs more companies will seek the world of exports when they realize that government is not an adversary it's your partner and i don't mean senior partner we have eased substantially taxation of foreign earned income and introduced a 25 percent tax credit for research and development we're also working to reform the foreign corrupt practices act not to weaken safeguards against bribery but to remove disincentives that discourage legitimate business transactions overseas another obstacle in is export controls on technology a backlog of 2000 applications greeted us when we arrived in office but we eliminated those and relaxed export controls on low technology items that do not jeopardize our national security still there are limits i'm confident each of you understand we must avoid strengthening those who wish us ill by pursuing short-term profits at the expense of free world security trade must serve the cause of freedom not the foes of freedom to export more we must do a better job promoting our products we're strengthening our export credit programs by increasing the level of the export import bank ceiling on export guarantees we're also designing a tax alternative to the domestic international sales corporation that will fully maintain existing incentives to our exporters we've begun a commodity credit corporation blended export credit program for our farmers and that's in addition to the increases this year in the regular loan guarantee program for promoting us farm exports to retain america's technological edge of which there's no greater evidence than california's silicon valley and to revive our leadership in manufacturing we've implemented an r&d policy to enhance the competitiveness of u.s. industry and the world economy in our 1984 budget we've asked for significant increases for basic research and we will seek to improve the teaching of science and mathematics in secondary schools so tomorrow's workforce can better contribute to economic growth we will also seek we will also seek to encourage greater and more creative interaction between university and industry scientists and engineers through programs similar to the one between hulet packard and stanford university finally we're taking steps to encourage more industrial r&d through changes in our tax and antitrust policy and we will attempt to remove legal impediments that prevent inventors of new technology from reaping the rewards of their discoveries supporting american producers gives us the means to press our trading partners toward more free and open markets we're challenging the unfair agricultural trade practices of japan and the european community and we're charting a new course for the products of the future we have agreed to a work program with the government of japan to eliminate trade and investment barriers to high technology industries we have also established a working group with the japanese to actively explore opportunities for the development of abundant energy resources by restoring strength to our economy enhancing the ability of our producers to compete america is leading its trading partners toward renewed growth around the world the world economy like ours has been through a wrenching experience a decade of inflation ballooning government spending and creeping constraints on productive enterprise other countries including many of the developing countries are now making major efforts to restrain inflation and restore growth the united states applaud these efforts and we're working in the international monetary fund to keep a firm focus on the role of effective domestic policies and the growth and stability of the world economy but for all countries international trade and financial flows are extremely important either the free world continues to move forward and sustain the post war drive toward more open markets or we risk sliding back to the tragic mistakes of the 30s when governments convince themselves that bureaucrats could do it better than entrepreneurs the choice we make affects not only our prosperity but our peace and freedom if we abandon the principle of limiting government intervention in the world economy political conflicts will multiply and peace will suffer and that's no choice at all the united states will carry the banner for free trade and a responsible financial system these were the great principles at breton woods new hampshire in 1944 and they remain the core of u.s policy we will do so well aware of the changes that have occurred in the international trade and monetary system in trade for example we've practically eliminated the barriers which industrial countries maintain at the border on manufactured products today tariffs among these countries average less than five percent our problems arise instead from non-tariff barriers which often reflect basic differences in domestic economic policies and structures among countries these barriers are tougher to remove but we're determined to reduce government intervention as far as possible and where that is unrealistic to insist on limits to such intervention in trade with developing countries on the other hand tariffs and quotas still play a significant role here the task is to find a way to integrate the developing countries into the liberal trading orders of lower tariffs and dismantled quotas they must come to experience the full benefits and responsibilities of the system that has produced unprecedented prosperity among the industrial countries we've taken the lead proposing the caribbean basin initiative to encourage poor and middle income countries to trade more and we proposed a north south round of trade negotiations to maintain expanding trading opportunities for more advanced developing countries we seek to build a collective partnership with all developing countries for peace prosperity and democracy at the gatt ministerial meeting last november the united states took the lead in resisting protectionism strengthening existing institutions and addressing the key trade issues of the future while we're not totally satisfied with the outcome of that meeting we'll continue in our support of free and equal trade opportunities for all countries expanding trade is also the answer to our most pressing international financial problem the mounting debt of many developing countries without the opportunity to export debt troubled countries will have difficulty servicing and eventually reducing their large debts meanwhile the united states will support the efforts of the international financial community to provide adequate financing to sustain trade and to encourage developing countries in the efforts they're making to improve the basic elements of their domestic economic programs earlier this week i forward a draft legislation to the congress for additional american support for the international monetary fund leading by the imf as a or lending i should say has a has a direct impact on american jobs and supports continued leading or lending by commercial institutions if such lending were to stop the consequences for the american economy would be very negative this spring in may the united states will host the annual economic summit of the major industrial countries in williamsburg virginia the leaders of the greatest democracies will have a quiet opportunity to discuss the critical issues of domestic and international economic policy and reflect on their individual and collective responsibilities to free peoples throughout the world it's not a forum for decision making each leader is responsible primarily to his or her own electorate but by exchanging views these leaders can gain a better understanding of how the future of their own people depends on that of others and may i just interject here something brand new in international relations has been brought about by one prime minister margaret thatcher when we sit around those summit tables the protocol is gone and we're all on a first name basis and she saw to that i began today by saying that if we believe in our abilities and work together we can make america the mightiest trading nation on earth here in this room and not far from this building are people and companies with the burning commitment that we need to make our country great one of those companies the daisy systems corporation is a computer firm in sunnyvale california it was formed in august 1980 and it made seven million dollars in sales its first shipping year this year it expects to earn 25 million and by 1986 300 million daisy corporation is already selling its products in the markets of france norway belgium great britain germany israel and japan its workforce has nearly quadrupled in the last year well my dream for america and i know it's one you share is to take that kind of success story and multiply it by a million we can do it albert einstein told us everything that is really great and inspiring is created by individuals who labor in freedom with all the wisdom in our minds and all the love in our hearts let's give of ourselves and make these coming years the greatest america has ever known thank you very much god bless you thank you mr president nelson weller president of the commonwealth club california will now conduct the question and answer period thank you professor keith mr president these questions are from your fellow members the first question why do you deny congress access to epa files why shouldn't they see everything well we've we are letting them see everything and as a matter of fact they started squealing before they were hurt we had almost 800 thousand documents which we were ready to make completely available to them and they turned us down there were less than a hundred documents which the justice department felt uh would would have violated the principle of confidentiality because they dealt with litigation and pending cases of that kind and that this in the hands of someone who might leak the information could be adverse to what we were what we might be faced with in such litigation so this decision was made by the justice department in keeping i might add with the tradition of executive privilege that goes all the way back to george washington but now because of the accusations and allegations that have not been forwarded to us or to the justice department as we have suggested but our first made public and many of them without any substantiation we have made available to the congressional committees all of the documents and those in which the justice department believes there is some sensitive thing having to do with this litigation and so forth are whited out but then they are able to we will tell them and inform them what is the nature of what is whited out so that in reality they are being offered and given everything and i think what's happened to them is their eyes have started to glaze over there's so many documents and they don't know how to get out of their request mr president we have some questions on foreign affairs how far are you willing to go in pursuit of your middle east peace plan by applying pressure on israel to meet your peace plan requirement well we're doing everything that we can to speed this up because we believe that to bring the Arab nations the concert the uh might say the more moderate Arab nations that have expressed to us now a willingness to negotiate with israel and try to arrive at a long-term peace arrangement in the middle east but they have predicated it on that lebanon must be allowed now to resume sovereignty over its own nation and this calls for the leaving of lebanese soil of all foreign troops the israelis the syrians and the remnants of the plo that are still in there and we are i must say disappointed by the length of time it's taken and by the haggling in the negotiations because no one of them will leave until all three agree to leave uh there has been some reason for optimism in the last few days we have ambassador habib and his assistant philip draper over there uh helping in this negotiation but we do want to get that settled and get to the table then on the whole overall matter of international peace and i can tell you we will not retreat from every effort that is open to us to bring that about now back to our own hemisphere the recent request for escalation of military aid to el salvador appears to be the beginning of a replay of the early days of vietnam what assurances can you offer that this is not the case i can give you assurances and there is no parallel whatsoever with vietnam we have the instance here of a government that duly elected and just a short time ago in election the people of el salvador proved their desire for order in their country and democracy and that they had no sympathy whatsoever for the rebels who are armed who are trained by countries such as cuba and others of the iron curtain countries they're supplied with weapons that come in by way of nicaragua the the threat is more to the entire western hemisphere and toward the area than it is to one country if they get a foothold and with nicaragua already there and el salvador should fall as a result of this armed violence in the part of the gorillas i think costa rica honduras panama all of these would follow and i ask anyone 50 percent of everything that we have to import comes through the caribbean through the panama canal it is vital to us that democracy be allowed to succeed in these countries as i say it did in that last election now right now el salvador is considering calling a new election hopefully before the year is out but we had a bipartisan team of congressmen go down and witness that last election observe the stories they came back with they were converted any who had had any doubts they told of a grandmother standing in that line who had been threatened by the gorillas that if she voted on that day and incidentally they had destroyed and bombed and and burned over 150 buses so that people had to walk for miles in the hot sun to get to a polling place but they did and they stood in line for hours this woman said to them you can kill me you can kill my family you can kill my neighbors you can't kill us all another woman stood in the line and refused to leave the line she had been shot by the gorillas wounded and refused treatment until she had been able to mark that ballot then she would submit to treatment and they came back and we're convinced that sure there are things to be corrected down there but we're working with them now what we mean by expansion is that we have a limit on 55 of our military personnel only for the sake of training their forces down there and they they need that training so far we've only averaged for the last couple of years 37 of those 55 positions being filled and right now there are 45 we may want to go beyond that 55 but in no sense are we speaking of participation in combat by american forces we are trying to give economic aid which is necessary to their economy because of the destruction of power plants and the and bridges and things of this kind and industries and we believe that the government of El Salvador is on the front line in a battle that is really aimed at the very heart of the western hemisphere and eventually at us now some questions on the domestic scene can social security be saved can social security be saved yes as a matter of fact we really had an example just the other day we started out here on this trip of bipartisanship when the all-powerful ways and means committee heavily democratic of course with a majority in the house chaired by uh dan rostenkowski represent democrat representative uh with barber conable our minority leader on that committee when they brought out i think the vote was 33 to 2 the recommendation for the commission's plan for social security to put it on restore its fiscal integrity now that still will leave additional legislation because that solves the chlor the short-range problem and for a number of years and gives us time then to deal with an actuarial imbalance that still exists out on the long range the 75-year plan for social security but i can assure anyone who is dependent on social security they are going to continue to get their checks we certainly have a timely question now a member asks i have just started working on my taxes start working on when will you start drafting a flat tax rate proposal i lost a word there i have just started working on my taxes when will we start drafting i can tell you we are convinced in washington that there is more objection to the tax system and its complications than there is to the amount of tax you're being required to pay and uh that brought a smile and applause from don reagan we we are studying and looking at including that that the proposal there as to whether that is the way to go but at a simplification of the tax structure it is very much needed and we would like to be able to bring it to the people thank you mr president unfortunately our time is nearly up so this will be our last question oh dear before asking it may i remind you to remain seated until the president and our head table guests have departed and now mr president our last question when will you decide to run for the presidency in 1984 well now the chances are 50 50 that you won't 50 that you will but i have to just repeat the answer that i always you know i don't think this is the time to make such an announcement if you make it that it's negative you don't have any power anymore in washington and if you make it positive then they say everything you're trying to do is political but the other thing is i also believe that the people of this country indicate whether you should run again or not so i'm watching thank you mr president for joining us today next friday our speaker will be the honorable mary calling fuller member of the national commission on social security reform thank you thank you all very much