 Ladies and gentlemen, the President of the United States. Thank you very much and welcome to the White House. And to make a slight correction, there was a mix-up of signals here, and Nancy regrets that she can't be here, but you know she's the one unpaid employee of the federal government. They've got a schedule for her too, and so they've had her booked elsewhere. But it's a pleasure and an honor to welcome you. Special greetings to Frank Ferenkoff, the chairman of the Republican National Committee, and to Betty Heitman, the party co-chairman. Frank and Betty are both labored long and hard, I can tell you. I knew you would join me in expressing thanks. Now in just a moment, I may have a chance to make my way through again and at least say hello to a few of you informally, but permit me to say a few words about our party and the challenges that lie ahead. Sort of a state-of-the-party address to get in practice for the State of the Union next week. There can be no doubt that these are historic times for the Republican Party. Six years ago, when the opposition held the White House and both houses of Congress, our nation was foundering and the American people knew it. Many Republicans have restored the country to greatness and the people know that too. Our defenses are being rebuilt, employment is at an historic high, and the stock market is setting new records. And throughout the land, there's a new sense of pride in ourselves and confidence in our future. Perhaps this shows up most dramatically among our students. Ten years ago, Republican candidates were routinely booed on college campuses. I know from experience that I think I was burned in effigy on every campus in the state of California. But the wonderful thing during the campaign of 1984, nothing gave me a greater lift than to appear before college students. To hear them applaud the age-old American values of freedom and individual achievement. Believe me, looking at today's young people there in the campuses, and incidentally, they are registered in the Republican Party as a majority virtually throughout the United States, which means they're coming to join us in the process. And I never see them without thinking that in the year 2000 and on, America's going to be in good hands. America is back and it's Republicans who brought her back. So it is today that we face an enormous opportunity. The opportunity to replace the defeated Democratic coalition with our own coalition dedicated to freedom and economic growth. Last year alone, some 200 state and local officials left the Democratic Party to register as Republicans. These were elected officials. Among young people, as I say, Republicans hold a commanding lead. Indeed, in 1985, Gallup polls show that among the 18 to 29 year olds, only 31% prefer the Democrats, while 38% support the GOP. So this year, we'll be able to make gains across the country. In state legislatures, we can take vital steps toward Frank Ferenkoff's 1991 plan, the effort to win Republican control of crucial state houses in time for redistricting and to prepare our party for majority status. We've got a good argument in the face of fairness alone out there, because recently a higher percentage of people have been voting for Republican candidates for Congress. Then the Democrats have voting for theirs, and yet due to the redistricting in which they've been in charge for about the last 50 years, they elect more congressmen than we do. I used to say after the last redistricting in California, the only district they left us was south of the border. In gubernatorial races, our prospects are outstanding. 13 of the 28 Democratic incumbents are retiring, and strong Republican challenges are shaping up. Here at the national level, we should remain powerful in the House and retain control of the Senate. I've looked at the figures, and I have a hunch we may even pick up a Senate seat or two, more than we have, and we couldn't have done any of the things we've done if we didn't have that one House. And I want you to know that I have a special place in my heart for those Republican senators who were elected with me back in 1980. Let's make it our goal to re-elect the 15 who are running for another term. These campaigns are going to take hard work, money, and dedication, and each of you has shown the ability to bring together all three. I want to remind you again, because it can't be said too often, that in participating in electoral politics, even at unglamorous levels, you're helping to shape American history. You have my personal thanks, but most important, you'll have the gratitude of generations to come. At the same time, we'll have to remember that the GOP is doing well now because we've shown our ability to govern, and that to keep on governing, we'll have to stage plenty of battles this year right here in the nation's capital. None will be more important than the struggle over tax reform. Last year, our proposal emerged from the House of Representatives and moved on to the Senate. There are several important corrections we'll be working for, among them a return of the full $2,000 personal exemption for those with lower and middle incomes who itemize as well as those who don't. Young families starting out in new homes, beset with mortgage payments, all the other costs of raising children urgently need that full exemption, and we're going to make sure they get it. As far as the top rate is concerned, in our minds, 35% is a good round number. That's exactly half the 70% we started with here five years ago. The final bill must also include incentives for American industry, and effective dates will have to be ironed out, dates will have to be ironed out so that investment decisions aren't disrupted or delayed due to uncertainty. Any tax reform worth the name must give significant relief to the middle class. That's really the bottom line. To accomplish all this, we'll need your unstinting support, but I'm convinced that together, we Republicans can produce a tax reform that will produce powerful incentives to work, save, and invest, leading our country on into a time of unparalleled prosperity. The other great challenge, indeed the one which is already upon us, is meeting the Graham Rudman-Hollings budget requirements in a responsible way. We intend to stress efficiency and a lovely word called privatization. If the private sector can provide certain services more efficiently and better than government can, then we intend to let it. Right now up on the hill is the matter of selling Conrail. I'm old enough to remember the government took over the running of the railroads in World War I, and if World War I had lasted as long as World War II, there wouldn't be any railroads in America. It was a total disaster, so they tried to interfere with a filibuster up on the hill today, but enough votes killed the filibuster, so they can go on with the business of accepting that $1,250,000,000 that's been offered for Conrail. There's no question that Graham Rudman-Hollings is going to demand some hard choices, and retaining a consensus for our defense buildup won't be as easy as every special interest lines up against the one interest that's essential to all Americans, the number one interest of a strong and secure defense, and that's why I'm once again asking for your help. The people and yourselves included, I know, have been treated to a drumbeat for the last few years of propaganda that would have you believe that we're throwing money down the drain, that the defense is wallowing in all kinds of money and wasteful spending and so forth. You've all heard about that $6,000 coffee pot, or $3,000 coffee pot, haven't you? But no one's told you that isn't a coffee pot, that is an all-time time cooker for our transport planes in the military that will carry 365 men that may be up there 10 hours at a time. It's the same that's in all of the transport planes that brought you here. And we're paying $150 less for that thing than the airlines are paying for it. So it isn't the kind of a snare and delusion you've been taught about. And that $400 hammer, that was in an invoice. A single hammer and a bright-eyed fellow in the Navy department saw that, put his finger on it and the invoice went back and that was straightened out. We buy hammers for $6 to $8 a piece. But not that one. The only other one has to do with the toilet lid. That was, you all heard Cap Weinberger's been cartooned all over the country today. No, once again, that is a molded plastic cover that covers the entire toilet system of a transport plane and is the same thing that's being used in the commercial airliners today just like the other things. So, haven't been throwing them on the way, but I'll tell you one thing that we have of all the things I'm proud of. I'm proudest of the young men and women in uniform in this country. You know that today percentage ever in the history of the United States, 91% of our young people in uniform are high school graduates. We've never achieved that even with the universal draft. We have three brackets of intelligence rating determining where people will be assigned in the military. The highest percentage in the top rated intelligence section that we have ever had in the history of the military in our country. And I feel just like the kid in the submarine that wrote me a letter wrote to tell me, he says, we haven't got the biggest navy in the world, we just got the best. Well, that's why I'm asking for your help again. Deficit spending is the last major obstacle to long-term prosperity and when we finally bring that to an end, America will enter a period of unparalleled economic prosperity that you can be done. It meets the Gram Rudman-Hollings deficit limit and it leaves social security and the safety net programs intact and does all of this with no tax hike. My friends, I'm convinced the budget deserves your support. So, let your voices be heard in all 50 states and please make sure they echo loud and clear here in Washington. I've said it to you before, I'll say it again, you don't have to make them feel the heat. Together with your continuing leadership, we can lay the foundations for a Republican America in the 1990s and beyond. A Republican America, my friends, on that short hand for an America of strength, freedom, prosperity and pride. And isn't that why we all got into politics in the first place? So, thank you all. God bless you all.