 The President of the United States. Thank you very much. Thank you very much. My goodness, if I'd have gotten that kind of a reception from the California legislature, I'd have still been governor. But I thank you and welcome to Washington. The last time we met, I think I reminded you that as a former governor, I was accustomed to standing before legislators. The only question was, I going to ask for an appropriation or veto something. But as you're probably surmised from Joe Wright's presentation, these days we don't have the luxury of asking for many additional appropriations. We're in the midst of a budget battle here that will, I think, determine the vitality of the American economy. It's important that you as representatives of state government fully understand the alternatives. Spending restraint is not just a federal issue. We understand that what we do to a great degree will determine the outcome of your effort in state government. Five years ago, with an inflation raging and stagnation sapping the strength of our economy, government at every level was under escalating pressure. Your costs, just like everybody else's, were skyrocketing. Economic decline was at the same time eroding your tax base. There's been a world of change since those days. We've put the economy back on track, and this morning we received the final economic figures for 1984. And I hope I'm not repeating something that maybe Joe told you, but the news is better than we had even anticipated. The U.S. economy grew at a rate of almost 5 percent in the fourth quarter, and the real final sales increased at a rate of eight and a half percent. Economic growth for calendar year 84 measured just a shade under 7 percent, and it was the strongest performance in a single year by the American economy since 1951. Our future, I think, looks very promising. Economic recovery and low inflation have been a boon to our citizens, more people are working now than ever before, and a boon to state government as well. It cut costs and increased the tax base. No federal program or legislative package could be more important to the viability of state government than vigorous economic expansion. If there's one lesson we should have learned, however, it is that we cannot take the economic health of our country for granted. I know that Joe Wright just outlined some of the hard realities about the budget for you. Tax simplification and spending restraints are essential if our economy is to keep moving forward. And yes, cuts will hit programs for the state and local governments. It's incumbent upon us to work closely together during this period. With the spirit of goodwill and cooperation, we can mold the federal-state relationship to receive the maximum benefit from limited resources, to cut waste, and to further reduce the federal regulatory burden. That, I think, is one of the greatest responsibilities we have, although I'd advise anyone in any level of government to take a look at regulations. I was pretty sensitive to them when I came here, having been a governor, knowing what happened at the state level when messages or word came from Washington. We have, in consolidating some 52-categorical grants into 10-block grants, I was gratified to see that we reduced 905 pages of regulations imposed on you down to 31 by that one simple change. I have confidence in the ingenuity and the resourcefulness of those working for state government. There's a parochial view held by too many here in this town that all the sophisticated, competent, and compassionate people working in the public sector are here in Washington, D.C. Well, that type of thinking led to a wasteful concentration of power, authority, and resources. Now is the time to reverse the power flow, to decentralize authority and to streamline government in America. The founding fathers had tremendous faith in state government, and today that faith is being justified time and again by the innovation and creativity evident in state government throughout the country. The states, for example, are in the forefront of putting enterprise zones to work, channeling the strength of the private sector to people who need it the most. And by the way, any help you can be in prying loose enterprise zone legislation up on Capitol Hill will be most appropriate. We've been three years and we're still trying to get it through the House. I can't help but think that the initiative taken by the states on issues like enterprise zones demonstrates the wisdom of returning maximum power and authority to the states. Now is the time to be bold. With the success of the 1981 block grants in mind, we shouldn't be afraid to consider structural change. We must keep our minds open as well as our lines of communication. And I will seek and appreciate your advice and that should go both ways. I know how difficult it is to take advice sometimes. There's a little story and maybe it's known to you about the fellow that fell off a steep cliff and managed to grab a limb on the way down and he was dangling above the rock several hundred feet below and he looked up and said, Lord, if you're up there, tell me what to do. And a voice from the cloud said, if you have faith, let go. Well, he took another look at those rocks down there and then he turned and looked up again and said, is there anybody else up there? Seriously, though, I'm not asking anyone to do something just simply on faith. There are many more things that we can accomplish by cooperating and communicating with each other. These are exciting times. Together we've started the task of restoring a proper constitutional balance of power between state and federal government. And I'd like to thank the National Conference, state legislators and each of you for all that you've contributed to this effort. Now it's time to build upon what we've already accomplished. You know, in meeting in the summit, meetings with leaders of the other nations that I have had to do now for several years, I have to tell you that I'm aware of the most unique difference about our country and all the others, even including our closest allies, is that we are a federation of sovereign states. And that's very hard for some of our friends and neighbors to understand that sometimes when they say something to us that they think we should do and we say, that is a matter that belongs to our states. No, we cannot do what you ask. They're astounded, but I still think it's the greatest part of the secret of America's success. As long as we keep that federation intact and keep it on that basis, that you are not just participants in administrative districts of the federal government. You are legislators of sovereign states within this federation. And that is the basis of our strength. Thank you for giving me this opportunity to be with you. God bless all of you. And now as the little girl said in her letter when I first got here, get back to the Oval Office and go to work. That's what I'll do. Thank you all very much.