 I'd intend to make some remarks about the problem of social security tonight. But the immediacy of congressional action on the tax program, a key component of our economic package, has to take priority. Let me just say, however, I've been deeply disturbed by the way those of you who are dependent on social security have been needlessly frightened by some of the inaccuracies which have been given wide circulation. It's true that the social security system has financial problems. It's also true that these financial problems have been building for more than 20 years, and nothing has been done. I hope to address you on this entire subject in the near future. In the meantime, let me just say this. I stated during the campaign, and I repeat now, I will not stand by and see those of you who are dependent on social security deprived of the benefits you've worked so hard to earn. I make that pledge to you as your president. You have no reason to be frightened. You will continue to receive your checks in the full amount do you. In any plan to restore fiscal integrity of social security, I personally will see that the plan will not be at the expense of you who are now dependent on your monthly social security checks. Now, let us turn to the business at hand. It's been nearly six months since I first reported to you on the state of the nation's economy. I'm afraid my message that night was grim and disturbing. I remember telling you we were in the worst economic mess since the Great Depression. Prices were continuing to spiral upward, unemployment was reaching intolerable levels, and all because government was too big and spent too much of our money. We're still not out of the woods, but we've made a start, and we've certainly surprised those long-time and somewhat cynical observers of the Washington scene who looked, listened and said, it can never be done. Washington will never change its spending habits. Well, something very exciting has been happening here in Washington, and you're responsible. Your voices have been heard. Millions of you, Democrats, Republicans and independents, from every profession, trade and line of work, and from every part of this land. You sent a message that you wanted a new beginning. You wanted to change one little, two little word, tend to letter word, I should say. It doesn't sound like much, but it sure can make a difference changing by government, control by government, to control of government. In that earlier broadcast, you'll recall I proposed a program to drastically cut back government spending in the 1982 budget, which begins October 1st, and to continue cutting in the 83 and 84 budgets. Along with this, I suggested an across-the-board tax cut spread over those same three years, and the elimination of unnecessary regulations, which were adding billions to the cost of things we buy. All the lobbying, the organized demonstrations, and the cries of protest by those whose way of life depends on maintaining government's wasteful ways, where no match for your voices, which were heard loud and clear in these marble halls of government. And you made history with your telegrams, your letters, your phone calls, and, yes, personal visits to talk to your elected representatives. You reaffirmed the mandate you delivered in the election last November, a mandate that called for an end to government policies that sent prices and mortgage rates skyrocketing while millions of Americans went jobless. Because of what you did, Republicans and Democrats in the Congress came together and passed the most sweeping cutbacks in the history of the federal budget. Right now, members of the House and Senate are meeting in a conference committee to reconcile the differences between the two budget-cutting bills passed by the House and Senate. When they finish, all Americans will benefit from savings of approximately $140 billion in reduced government costs over just the next three years. And that doesn't include the additional savings from the hundreds of burdensome regulations already canceled or facing cancellation. By 19 out of the last 20 years, the federal government has spent more than it took in. There will be another large deficit in this present year, which ends September 30. But with our program in place, it won't be quite as big as it might have been. And starting next year, the deficits will get smaller until in just a few years the budget can be balanced. And we hope we can begin whittling at that almost $1 trillion debt that hangs over the future of our children. Now, so far, I've been talking about only one part of our program for economic recovery, the budget-cutting part. I don't minimize its importance. Just the fact that Democrats and Republicans could work together as they have, proving the strength of our system has created an optimism in our land. The rate of inflation is no longer in double-digit figures. The dollar has regained strength in the international money markets and businessmen and investors are making decisions with regard to industrial development, modernization and expansion. All of this, based on anticipation of our program being adopted and put into operation. A recent poll shows that, where a year and a half ago, only 24% of our people believed things would get better. Today, 46% believe they will. To justify their faith, we must deliver the other part of our program. Our economic package is a closely knit, carefully constructed plan to restore America's economic strength and put our nation back on the road to prosperity. Each part of this package is vital. It cannot be considered piecemeal. It was proposed as a package and it has been supported as such by the American people. Only if the Congress passes all of its major components does it have any real chance of success. This is absolutely essential if we are to provide incentives and make capital available for the increased productivity required to provide real permanent jobs for our people. And let us not forget that the rest of the world is watching America carefully to see how we'll act at this critical moment. I've recently returned from a summit meeting with world leaders in Ottawa, Canada and the message I heard from them was quite clear. Our allies depend on a strong and economically sound America and they're watching events in this country, particularly those surrounding our program for economic recovery with close attention and great hopes. In short, the best way to have a strong foreign policy abroad is to have a strong economy at home. The day after tomorrow, Wednesday, the House of Representatives will begin debate on two tax bells and once again they need to hear from you. I know that doesn't give you much time but a great deal is at stake. A few days ago I was visited here in the office by a Democratic congressman from one of our southern states. He'd been back in his district and one day one of his constituents asked him where he stood on our economic recovery program. I'd outlined that program in an earlier broadcast, particularly the tax cut. Well, the congressman who happens to be a strong leader of our program replied at some length with the discussion of the technical points involved but he also mentioned a few reservations he had on certain points. The constituent, a farmer, listened politely until he'd finished and then he said, don't give me an essay. What I want to know is, are you for him or again him? Well, I appreciate the gentleman's support and suggest his questions and message your own representatives should hear. Honestly and sincerely want to know your feelings. They get plenty of input from the special interest groups. They'd like to hear from their home folks. Let me explain what the situation is and what's at issue. With our budget cuts we presented a complete program of reduction in tax rates. Again, our purpose was to provide incentive for the individual, incentives for business to encourage production and hiring of the unemployed and to free up money for investment. Our bill calls for a 5% reduction in the income tax rates by October 1st a 10% reduction beginning July 1st, 1982 and another 10% cut a year later a 25% total reduction over three years. But then to ensure the tax cut is permanent we call for indexing the tax rates in 1985 which means adjusting them for inflation. As it is now, if you get a cost of living raised that's intended to keep you even with inflation you find that the increase in the number of dollars you get may very likely move you into a higher tax bracket and you wind up poorer than you were. This is called bracket creep. Bracket creep is an insidious tax. Let me give an example. If you earned $10,000 a year in 1972 by 1980 you had to earn $19,700 just to stay even with inflation. But that's before taxes. Come April 15th you find your tax rates have increased 30%. Now if you've been wondering why you don't seem as well off as you were a few years back it's because government makes a profit on inflation. It gets an automatic tax increase without having to vote on it. We intend to stop that. Time won't allow me to explain every detail but our bill includes just about everything to help the economy. We reduce the marriage penalty. That unfair tax that has a working husband and wife pay more tax than if they were single. We increase the exemption on the inheritance or a state tax to $600,000 so that farmers and family owned businesses don't have to sell the farm or store in the event of death just to pay the taxes. Most important we wipe out the tax entirely for a surviving spouse no longer for example with a widow have to sell a family source of income to pay a tax on her husband's death. There are deductions to encourage investment and savings business gets realistic depreciation on equipment and machinery and there are tax breaks for small independent businesses which create 80% of all our new jobs. This bill also provides major credits to the research and development industry. These credits will help spark the high technology breakthroughs that are so critical to America's economic leadership in the world. There are also added incentives for small businesses including a provision that will lift much of the burden of costly paperwork that government has imposed on small business. In addition, there is short term but substantial assistance for the hard pressed thrift industry as well as reductions in oil taxes that will benefit new or independent oil producers and move our nation a step closer to energy self-sufficiency. Our bill is in short the first real tax cut for everyone in almost 20 years. Now when I first proposed this and incidentally it has now become a bipartisan measure co-authored by Republican Barbara Conable and Democrat Kent Hans. The democratic leadership said a tax cut was out of the question. It would be wildly inflationary. That was before my inauguration and then your voices began to be heard and suddenly in February the leadership discovered that well a one year tax cut was feasible. We kept on pushing our three year tax cut and by June the opposition found that a two year tax cut might work. Now it's July and they find they could even go for a third year cut provided there was a trigger arrangement that would only allow it to go into effect if certain economic goals had been met by 1983. But by holding the people's tax reduction hostage to future economic events they will eliminate the people's ability to plan ahead. Shopkeepers, farmers and individuals will be denied the certainty they must have to begin saving or investing more of their money. And encouraging more savings and investment is precisely what we need now to rebuild our economy. There's also a little slight a hand in that trigger mechanism. You see their bill the committee bill ensures that the 1983 deficit will be six and a half billion dollars greater than their own trigger requires. As it stands now the design of their own bill will not meet the trigger they've put in therefore the third year tax cut will automatically never take place. If I could paraphrase a well-known statement by Will Rogers that he had never met a man he didn't like I'm afraid we have some people around here who never met a tax they didn't hike. Their tax proposal similar in a number of ways to ours but differing in some very vital parts was passed out of the house ways and means committee and from now on I'll refer to it as the committee bill and ours as the bipartisan bill. They'll be the bills taken up Wednesday. The majority leadership claims theirs gives a greater break to the worker than ours and it does. That is if you're only planning to live two more years. The plain truth is our choice is not between two plans to reduce taxes it's between a tax cut and a tax increase. There is now built into our present system including payroll, social security taxes and the bracket creep I've mentioned a 22 percent tax increase over the next three years. The committee bill offers a 15 percent cut over two years. Our bipartisan bill gives a 25 percent reduction over three years. Now as you can see by this chart there is the 22 percent tax increase. Their cut is below that line. But ours wipes out that increase and with a little despair and there it is as you can see the red column that is the 15 percent tax cut and it still leaves you with an increase. The green column is our bipartisan bill which wipes out the tax increase and gives you an ongoing cut. Incidentally their claim that cutting taxes for individuals for as much as three years ahead is risky. Rings a little hollow when you realize that their bill calls for business tax cuts each year for seven years ahead. It rings even more hollow when you consider the fact the majority leadership routinely endorses federal spending bills that project years into the future but objects to a tax bill that will return your money over a three year period. Now here is another chart which illustrates what I said about they're giving a better break if you only intend to live for two more years. Their tax cut so called is the dotted line. Ours is the solid line. As you can see in an earning bracket of $20,000 their tax cut is slightly more generous than ours for the first two years. Then as you can see their tax bill, the dotted line starts going up and up and up. On the other hand in our bipartisan tax bill the solid line, our tax cut keeps on going down and then stays down permanently. This is true of all earning brackets but not just the $20,000 level that I've used as an example from the lowest to the highest. This red space between the two lines is the tax money that will remain in your pockets if our bill passes and it's the amount that will leave your pockets if their tax bill is passed. I take no pleasure in saying this but those who will seek to defeat our accountable hands bipartisan bill as debate begins Wednesday are the ones who have given us five quote-unquote tax cuts in the last 10 years but our taxes went up $400 billion in those same 10 years. The lines on these charts say a lot about who's really fighting for whom. On the one hand you see a genuine and lasting commitment to the future of working Americans on the other, just another empty promise. Those of us in the bipartisan coalition want to give this economy and the future of this nation back to the people because putting people first has always been America's secret weapon. The House majority leadership seems less concerned about protecting your family budget than with spending more on the federal budget. Our bipartisan tax bill targets three quarters of its tax relief to middle income wage earners who presently pay almost three quarters of the total income tax. It also then indexes the tax brackets to ensure that you can keep that tax reduction in the years ahead. There also is, as I said, a state tax relief that will keep family farms and family owned businesses in the family and there are provisions for personal retirement plans and individual savings accounts. Because our bipartisan bill is so clearly drawn and broadly based it provides the kind of predictability and certainty that the financial segments of our society need to make investment decisions that stimulate productivity and make our economy grow. Even more important if the tax cut goes to you, the American people in the third year, that money returned to you won't be available to the Congress to spend. And that in my view is what this whole controversy comes down to. Are you entitled to the fruits of your own labor? Or does government have some presumptive right to spend and spend and spend? I'm also convinced our business tax cut is superior to theirs because it's more equitable and it will do a much better job promoting the surge in investment we so badly need to rebuild our industrial base. There's something else I want to tell you. Our bipartisan coalition worked out a tax bill we felt would provide incentive and stimulate productivity thus reducing inflation and providing jobs for the unemployed. That was our only goal. Our opponents in the beginning didn't want a tax bill at all. So what is the purpose behind their change of heart? They've put a tax program together for one reason only to provide themselves with a political victory. Never mind that it won't solve economic problems confronting our country. Never mind that it won't get the wheels of industry turning again or eliminate the inflation which is eating us alive. This is not the time for political fun and games. This is the time for a new beginning. I ask you now to put aside any feelings of frustration or helplessness about our political institutions and join me in this dramatic but responsible plan to reduce the enormous burden of terrible taxation on you and your family. During recent months many of you have asked what can you do to help make America strong again. I urge you again to contact your senators and congressmen. Tell them of your support for this bipartisan proposal. Tell them you believe this is an unequaled opportunity to help return America to prosperity and make government again the servant of the people. Congress will stand at the fork of two roads. One road is all too familiar to us. It leads ultimately to higher taxes. It merely brings us full circle back to the source of our economic problems. For the government decides that it knows better than you what should be done with your earnings and in fact how you should conduct your life. The other road promises to renew the American spirit. It's a road of hope and opportunity. It places the direction of your life back in your hands where it belongs. I've not taken your time this evening merely to ask you to trust me. Instead I asked you to trust yourselves. That's what America is all about. Our struggle for nationhood, our unrelenting fight for freedom, our very existence. These have all rested on the assurance that you must be free to shape your life as you're best able to. That no one can stop you from reaching higher or take from you the creativity that has made America the envy of mankind. One road is timid and fearful. The other bold and hopeful. In these six months we've done so much and have come so far. It's been the power of millions of people like you who've determined that we will make America great again. You have made the difference up to now. You will make the difference again. Let us not stop now. Thank you. God bless you. Good night.